House, car and contents. Health, life and income. Liability, assets and interruption.
These are all types of personal and business insurance commonly available in New Zealand.
What is not commonly available in New Zealand is insurance cover for IP claims. More specifically, insurance cover for legal expenses incurred in enforcing or defending claims involving intellectual property rights. Perhaps insurers don’t think businesses need it? If so, as an IP litigator, I encourage them to think again.
Like most litigation, IP litigation is not typically an event that businesses – especially SMEs – plan or budget for in advance. If, then, a business unexpectedly becomes embroiled in litigation, as enforcer or defender, its involvement often comes at a significant human and financial cost.
Looking at the financial cost, like most litigation IP, litigation can be expensive, whether you’re the enforcer or the defender. The toll on cashflow and bottom line can be heavy. This is partly because New Zealand is not currently set up with an economical and efficient tribunal or court-based process for resolving “low-level” IP disputes (the exception being the .nz domain name dispute resolution system). For example, businesses can’t take a simple trade mark or copyright dispute to an IP Disputes Tribunal because there isn’t such a tribunal (not at the moment, anyway).
In my experience, if a business hasn’t budgeted for IP litigation then one of the following scenarios will likely occur: if enforcer, the business will take initial steps to enforce its rights, but stop short of filing court proceedings, allowing innovation to give way to imitation. If defender, the business will, if it cannot rely on business liability insurance, borrow as much as possible to defend the claims or go into liquidation. Whether you’re the enforcer or the defender, none of these are satisfactory outcomes.
The simple solution is to take out intellectual property legal expenses insurance. In New Zealand, businesses can do so with Delta Insurance, and have been able to do so since September 2018. (For the record, I have no affiliation with Delta Insurance.) To the best of my knowledge, Delta is currently the only insurer in New Zealand offering IP legal expenses insurance.
Under Delta’s policy, Kiwi businesses can claim up to $500,000 in legal expenses, although Delta will explore higher limits depending on the proposal. Further, although the policy only covers New Zealand-originating risks to start with, worldwide jurisdiction can be considered on request, meaning that exporters may be able to insure for overseas-originating risks, too. For further information, visit https://deltainsurance.co.nz/products/intellectual-property-legal-expenses-insurance/.
In Singapore, Antares Underwriting has recently announced a similar policy (https://www.antaresunderwriting.com/intellectual_property_insurance/).
The policy is supported by the Intellectual Property Office of Singapore under the banner “IP Insurance Initiative for Innovators”. Clearly, then, the concept of IP legal expenses insurance has merit.
For every business that values its IP assets, my recommendation is this: in the first instance, consult with an IP attorney about protecting your own – and minimising your risk of infringing others’ – IP. Then, don’t rely on a “she’ll be right” approach to IP litigation. Consider taking out IP legal expenses insurance.