IP Insurance for Contractual Obligations

An important use of intellectual property insurance is to provide financial stability and protection for a company's indemnification of intellectual property obligations found in contracts.

License agreements: To provide financial protection to licensee and/or licensor when the licensor agrees to defend the product being licensed and/or agrees to enforce the intellectual property rights.

Example: A university agrees to license their technology, product or patent to a company. In the license agreement the university agrees to take the necessary steps including litigation to protect and defend the product or patents. The insurance provides the university with the ability to budget future unknown litigation costs into the license agreement.

Supplier and vendor agreements: To provide financial protection to the dealer and/or vendor under the contractual intellectual property indemnity clause.

Example: A major retailer requires a vendor to indemnify them in the event they are a party to patent litigation as a result of selling vendor's product.

Mergers and acquisitions: To provide financial protection to the buyer and/or seller of a business in the event the seller's product(s) ends up in an IP dispute.

Example: Company A is buying Company B. As protection for Company A's investment and to protect the shareholders of Company B intellectual property insurance is purchased to place a "financial collar" or certainty around the transaction.