Post on 26-Dec-2015
Matthew Hogg LL.B (Hons), LL.M., ACII,R J Kiln & Co. Ltd.Marsh Technology Conference 2005Zurich, Switzerland.
Intellectual PropertyA key asset as well as risk for technology firms – the challenge and the solution
May 26 & 27
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Intellectual PropertyAgenda
Relevance of IP rights
Risks to IP rights and the business model
Risk management
Insurance
Claims Example
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Intellectual PropertyRelevance of IP Rights
Intangible Assets represent about ¾ of market value of medium-sized US companies
IP assets estimated to represent 22% of market value
Corporate Governance – Sarbanes-Oxley, Turnbull Report
Accounting Standards – IFRS, FASB, US GAAP
Increase in IP applications/litigation/awards & settlements
Top 5 risk to Risk Management community
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Intellectual PropertyRelevance of IP Rights
Patents – how things work Registered
Trade marks – how things are
recognised – branding Mostly Registered
Designs – what things look like A mixture of registered and unregistered
Copyright – protectable original
expressions Unregistered
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Intellectual PropertyRelevance of IP Rights
The Importance of IP assets
– Hewlett Packard
– IBM
– Lucent
– Texas Instruments
– National Semiconductor
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Intellectual PropertyUncertainty from the start
Intellectual Property
– It has vague boundaries which appear on paper and are prescribed by language/words
– The boundaries are frequently only made clear by a legal challenge of some sort
– A challenge can involve complete/partial destruction of the right
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Intellectual PropertyUncertainty from the start
Additional Confusions
– Poor quality patents (examination procedures)
– National Rights – diverse laws
– Only an asset if protected and enforced
– IP rights selection – finding the appropriate medium
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Intellectual PropertyRisks
Perils to IP
Enforcement
Infringement = Liability
Cost of Defence
Loss of Position
Warranty -To -Title
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Intellectual PropertyRisk Management
Considerable upside and downside risk that needs to be considered
Estimated £8 billion (€11.7 billion) of income lost annually in Europe alone from failing to maximise IP value
Only 5% of companies believe they have robust system to measure and track IP
Shared task? Importance of board/lawyers/accountants/risk managers
Readdressing cost centre mentality
Application of traditional risk management skills
Identify
Assess
Control
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Intellectual PropertyInsurance
Legal Expense Insurance
– Legal Costs & Expenses (Pursuit or Defence Cover)
– Legal Liability
– Contractual Liability
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Intellectual PropertyInsurance
Loss of IP Value Insurance
– Legal Challenges – invalidity, infringement, employees
– Government Action – renders IP null & void, restricts exploitation
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Intellectual PropertyInsurance
What can be insured?
IP-Rich Products’ future revenue streams
Licensing Revenue
Royalty Receipts
IP “value” – accounting principles
R&D Expenditure
Financial Investment
Loan arrangement
Transaction involving IP rights
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Intellectual PropertyConclusions
First party has been deemed the “holy grail” by some in insurance market and industry
Extremely flexible, tailor-made policy if necessary to deal with client concerns
Still a role for IP Legal Costs Insurance – particularly for SMEs
Intangible Assets only recently being taken seriously within a company’s strategy