IP litigation insurance seen as ‘niche’ in Europe, says report
Rights owners in Europe are less aware of and interested in IP litigation insurance compared to those in the US, Asia and Australia, according to a new report.
The European Observatory on Infringements of Intellectual Property Rights made the report available to the public on Thursday, May 3, following its presentation to the European Commission last month.
In 2009 the European Commission created the Observatory, a network of IP specialists, to allow EU policy makers to shape IP enforcement and support innovation. It works closely with the European Union Intellectual Property Office under a memorandum of understanding, signed in 2011.
The Commission asked the Observatory to create a report on the IP litigation insurance landscape in the EU. This was to provide an insight into existing IP insurance providers and to decipher what IP owners think of the insurers’ products.
A survey informed the report, which found that IP insurance is more popular in regions such as the US, China, Japan and Australia compared to Europe, where insurance schemes are seen as more of a niche product.
Some respondents suggested that there is increasing demand for IP litigation insurance which has been accelerated in light of the unitary patent’s pending introduction. However, one respondent said that instead, this has been caused by an enhanced knowledge of IP.
The Observatory said the introduction of the unitary patent has a “positive perception” in the IP insurance industry, as it “represents an improved business opportunity for insurance providers to offer existing products on a broader geographical scope”.
The unitary patent will become available when the Unified Patent Court (UPC) is implemented. This was brought closer by the UK’s ratification of the related agreement last month.
However Germany’s ratification has been delayed by a constitutional complaint regarding the court, and the UPC cannot be implemented without Germany’s agreement.
The Observatory noted that the Commission encourages the “creation of EU-level insurance schemes for IP litigation” in order to assist start-ups and SMEs seeking to protect their rights.
It said that such companies often lack the financial means to exploit and protect their IP but insurance allows the burden and risks to be shared, which could be a “significant benefit to innovative SMEs”.
However, few IP owners have an interest in or an awareness of IP litigation insurance, the report said.
According to the Observatory, the main reason for this is the cost of IP insurance, which is perceived to be financially high but with limited coverage. The report suggested that lowering the premiums is likely to make IP insurance products more attractive for rights owners in Europe.
Another reason noted in the report centres on concern regarding the complexity of IP insurance products, or that the schemes require the disclosure of “a great deal of information”.
The Observatory said the costs of litigation in certain jurisdictions are also considered to be reasonable, meaning there is little need for insurance coverage.
Also, IP insurance has been available in the UK for a long time but has gained “the poor reputation of not being very useful”. The UK Intellectual Property Office is tackling this by “actively” helping IP insurance providers to understand the needs of rights owners.
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