What is Patent Insurance

Patent insurance is a specialised type of intellectual property (IP) insurance designed to protect inventors, companies, and organisations from the financial risks associated with patent-related legal disputes.

Patents are valuable assets, but enforcing them or defending against infringement claims can be extremely expensive. Patent insurance helps manage these risks by covering legal fees, court costs, settlements, and sometimes even damages.

Types of Patent Insurance

There are generally two main types:

1. Patent Infringement Defence Insurance

Covers you if you are accused of infringing someone else's patent.

Pays for your legal defence if another party claims your product, service, or process violates their patent.
Covers solicitor fees, court expenses, expert witness costs, and settlements or judgments.
Often essential for manufacturers, tech companies, product developers, and startups that may unknowingly infringe on existing patents.

2. Patent Enforcement (or Pursuit) Insurance

Covers you if you need to enforce your patent rights against someone else.

Pays for the legal costs to pursue legal action against companies or individuals who are infringing your patent.
Helps cover expenses such as sending cease-and-desist letters, initiating court proceedings, and securing settlements.
Important if you want to actively protect your invention but don't have deep financial resources to fund a legal fight.

Optional Add-Ons or Variations

Multinational Cover : Protection across different jurisdictions if your patents are filed internationally.
Portfolio Cover : Insurance that covers an entire group of patents rather than one single patent.
Post-Grant Opposition Insurance : Covers challenges that happen after your patent is granted, such as appeals or oppositions in patent offices.

Why Patent Insurance Matters

Legal Costs Are High : Patent litigation can easily cost hundreds of thousands to millions of pounds.
Level the Playing Field : Small businesses and individual inventors can take on larger competitors.
Increased Patent Value : Insured patents can sometimes appear more valuable to investors or buyers because enforcement is more feasible.
Risk Management : Protects your company’s balance sheet and cash flow from unexpected legal battles.

Things to Keep in Mind

Premiums : Costs vary based on patent strength, industry sector, turnover, and past litigation history.
Exclusions : Some policies won't cover wilful infringement, poorly written patents, or disputes arising outside agreed jurisdictions.
Underwriting : Insurers will often assess the quality and strength of the patent before agreeing to offer coverage.

Real Example

Suppose you invent a new type of smart coffee machine and receive a patent. Six months later, a big multinational launches a suspiciously similar product. You want to sue, but fighting a major corporation could cost £250,000 or more. If you have Patent Enforcement Insurance, your insurer could cover the majority of the legal expenses, making it financially possible to defend your rights.