Intellectual Property Insurance is becoming More Prevalent.

Intellectual property (IP) is the fundamental basis for many organizations and companies. Their products are the life of any company and thus will be guarded. In 2025, these IPs are just as valuable and vulnerable to being stolen or copied. In the US, various rules exist to protect them but there’s only so much they can do without direct input from the company.

Foundation

In the US, the foundation of IP laws is in the US Constitution. Article 1 Section 8 outlines what US Congress can do. Clause 8 in particular deals with the Intellectual Property rights. “The Congress shall have Power . . . ] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” While some states have different laws, the core principles still trace back to the Founding Fathers. (1)

Type of Intellectual Property

Most IP can fall under four specific categories:

1. Patents: Probably the most well known, patents are issued to a person or group to exclusively use it for a period of time, normally twenty years, in exchange for telling the patent office how the product or service is done. WD40 is famously not patented, but something like an iPad is patented.
2. Trademarks: These IP’s are the symbols and logos, to make sure no one can copy their exact style making sure to register it with the government. Every major company has a logo that identifies their product, like Nike or McDonalds.
3. Copyright: a form of IP protection that grants the creator of the exclusive right on how their works are made and distributed. This is normally seen in books, music and artwork and in today’s AI driven world it is a legitimate concern for people stealing their hard earned work.
4. Trade Secrets: This type of protection is given to items that give a company a leg up in their business. Stuff like the formula for Coca cola and the algorithm for ChatGPT. They are filed to protect said secrets from becoming publicly known as then there would be imitators. Those familiar with Willy Wonka would know this is eventually why he shut down his factory as people kept stealing said secrets.(2)

Challenges facing IP holders.

Like with anything related to litigation, there are many challenges in working with IP, including:

1. Uncertainty: Another company might produce a similar product and could get the trademark before you.
2. Lack of enforcement: There is no centralized IP protection. Even with states that have laws in place, the only way that regulators and by extension the courts will even know is if the victim reports it.
3. Costs of litigation: Defending your IP through litigation and court battles will get expensive fast. Those expenses can be too high for a business, leading to its inevitable closure.
4. Frivolous lawsuits: Even if you do everything by the book, some people will sue you despite no clear case of infringement.

What IP Insurance covers

An IP Insurance policy covers many things that an IP holder would find helpful when defending its IP. These coverages often include:

1. Covering costs of enforcing IP rights when infringed upon by others. Also covers costs to defend allegation you have infringed upon someone else’s protected IP.
2. Provides you with legal and capital resources to compete with larger companies who use litigation strategically.
3. Avoid being forced to settle due to said costs
4. Allowing cases to actually be decided on merits
5. Ensure that frivolous lawsuits do not overpower you financially.

Case Study

An insured company protected its agricultural equipment patent against potential infringement, avoiding loss of market share. The policy supported seven years of litigation, including challenges at the Patent Trial and Appeals Board. The trial court awarded the company over $11 million and issued a permanent injunction against the competitor.

About PL Risk

PLRisk Specialty Insurance Agency, LLC is a leading wholesale insurance brokerage covering the professional liability market. Our featured policies include: Errors & Omissions insurance for across a variety of professions, Directors & Officers insurance, for private and public companies; Employment Practices Liability (EPLI), Cyber Liability, Commercial Crime and Fiduciary insurance.

We have fostered strong partnerships with the top-rated carriers across the U.S. These powerful relationships enable us to find coverage for even the hardest-to-place risks. Our years of expertise in the industry have given us the credibility and stellar reputation that many agencies have come to trust.

Mike Smith, founder of PLRisk Specialty Insurance Agency, LLC, has been in the Professional Liability insurance business for over 20 years and believes that it is crucial to be intimately involved with every client. In this ever-changing landscape where regulation and increased litigation concerns are constant, you and your clients need a partner that understands how these regulations have the potential to increase exposure and how to mitigate risk. That partner is PLRisk Specialty Insurance Agency, LLC.