Infringement of intellectual property (IP) - the rights protecting industrial designs, patents, trade marks, copyright and trade secrets - has long been a risk covered by insurers' public liability and professional indemnity policy wordings.

A more recent development is the specialist "silver bullet" IP policy which enables the insurer to assess properly the premium by looking at one risk in isolation. For insureds, such a policy allows them to target expenditure on insurance in one particular area.

Anyone taking out legal expenses insurance for IP claims should note that cover may not be available, particularly in the clothing and franchising industries. It is essential on the application form that the insured discloses anything that may be relevant to the insurer in deciding the level of risk. Many silver bullet IP policies require the insured to inform the insurer of any change in patents, registered trade marks and designs and licences or risk losing cover.

For insurers offering a silver bullet IP Policy, the background of the potential insured needs to be examined very carefully. For example, is the insured in an industry sector where counterfeiting is rife?

Care too should be taken before accepting the insured's nominated solicitor in the event of a claim. In addition to being an IP specialist, the firm should be prepared to accept a costs protocol, blended charging rate, reduced charging rate or other mechanisms for keeping costs under control.

It remains to be seen whether insurers will continue to issue IP policies which are at very moderate premiums and usually based on company turnover and number of employees.

Catrin Lloyd Turner and Nicholas Bradley

Catrin Lloyd Turner is a senior Intellectual Property lawyer and Nicholas Bradley is a litigation partner at international insurance law firm Davies Arnold Cooper.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances from Catrin Lloyd Turner or Nicholas Bradley (Tel.071 936 2222) or Michael Cover (Tel. 061 839 8396).
opyright Mondaq Ltd 1995 Tel +44 171 820 7733.