Blog

Many people, who have gained success and prosperity through their business, have done so with their intellectual capital. What exactly is intellectual capital? This is the sum of the business’s hidden assets, such as its human resources, knowledge, intellectual property, and client and stakeholder relationships, bringing extensive value to the company. In essence, it is that which gives your business its competing advantage. When the formula is lost or stolen, your business can lose most, if not all, of its value.

In simple legal terms, intellectual capital is composed of the trademarks, licenses, brand names, and patents accumulated in a business. However, as commerce advances into the digital age, more and more intellectual capital is fueled by knowledge and relationships. Business today flourishes on networks and partnerships. It is often a pivotal person or partner who holds this knowledge; keep in mind that critical people may leave a business, and partners can turn into competitors. To give you an impression of just how valuable intellectual capital is, consider the bankruptcy liquidation of telecom giant Nortel. Its hard assets – capital equipment, properties, towers, and subsidiaries – went for $2.5 billion, while its patents delivered more than $4.5 billion.

A significant blunder many entrepreneurs and business owners make is that they don’t patent their creations, or, if they do, they patent the wrong things. For instance, if a business creates an unprecedented manufacturing process and patents it, the “secret” becomes available to your competitors, and trade secrets should remain secret. However, if the new process is intended to be marketed to the public, it needs to be patented.

If your success and, ultimately, your wealth are inextricably tied to a trade secret (a patent, a brand, or trademark), you should safeguard it as if you were securing a vault of gold; because it is likely that it is worth far more than gold. It’s strongly suggested that you hire an attorney who specializes in intellectual capital.

Intellectual Property Insurance

Most general liability policies do not provide coverage for intellectual property. Without intellectual property insurance coverage, your company is—in essence—self-insuring against the risk of loss or damage. Patent insurance is a specialized form of intellectual property insurance that can indemnify your company from loss due to patent litigation. One type of coverage, referred to as “offensive coverage,” protects you, as the patent holder, and “defensive coverage” protects if your company is accused of patent infringement.

Getting intellectual property insurance may be more complicated than getting a patent, but the effort is well worth it. The application and underwriting process is fairly extensive, requiring an in-depth patent search, legal opinions, and a customized proposal from the insurer stating the terms that will cover your intellectual property. Should you have a claim, either defensive or offensive, the insurer will investigate the claim, and, if need be, they will manage the lawsuit and possible negotiated settlements.

Insuring intellectual property is a complex issue that should only be addressed with an insurance broker who specializes in this particular area.

-----

More than ever, we need to remain informed and responsible in our personal and business activities through this unprecedented time.

At TLH Benefits Advisors, we continue to guarantee ease of doing business with the same excellence and service levels. All applications and no-obligation quotes can be completed over the phone from the comfort and convenience of your own home. We are open and can be reached should you have any questions.

We thank you for placing your trust in TLH Benefits Advisors. We are continuously working to meet your coverage needs.

This Covid-19 Communication is not intended to be a part of any existing or future acquired insurance policy; it has been provided for information purposes only.