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Special Policies Provide IP Insurance

Connecticut Law Tribune

April 19, 2010

Authors: Christopher R. Drury

Intellectual property assets comprise some of the most valuable assets a business can own. IP assets include patents, copyrights, trademarks, and trade secrets. Because of their high value and importance, businesses need to ensure that their IP assets are adequately protected. They must be able to defend against infringement suits and prevent others from infringing on their own IP rights. Insurance is an often overlooked tool that can assist businesses with managing risks and addressing their IP concerns.

Prior to 2001, businesses were sometimes able to obtain insurance coverage for certain types of IP claims under the “Advertising Injury” provisions of their commercial general liability (CGL) policies. The types of IP claims that were usually covered included claims for copyright, trademark, and trade dress infringement, as well as certain types of trade secret and unfair competition claims. Patent infringement claims were almost never covered under the CGL form. In 1998, the Insurance Services Office Inc. (ISO), the organization that promulgates standard insurance forms used by the insurance industry, started to reduce coverage for intellectual property claims under the CGL policy. It began by revising the 1998 form to reduce the scope of offenses that constituted “Advertising Injuries.”

Then, in 2001, the ISO added specific language to the CGL form to exclude coverage for most types of IP claims. As a result, nearly all CGL policies written after the 2001 changes took place do not provide coverage for most types of IP claims. Some insurance companies responded to the reduction in coverage by offering specific insurance products that provide expanded coverage for IP claims.

This article discusses the types of IP claims that were sometimes covered under the standard CGL form, the changes made by the Insurance Services Office to reduce coverage for IP claims, and some of the insurance products now available to provide expanded coverage for IP related claims.

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