Intellectual property (IP) is a piece of work, or an invention triggered by an individual’s creativity. As IP is an intangible asset, it can come in many different forms. It might be:
Creators – those who have the rights to the IP – can apply for legal protection in the form of a patent, copyright, and trademarks. This enables people to earn recognition and exclusively reap the financial benefits from their creation.
In the corporate world, IP is the seed that can blossom into an entire business empire. As such, companies will do everything they can to protect their IP from the prying eyes of competitors or anyone who wishes to “appropriate” the IP and pass it off as their own.
In recent years, the global importance of IP rights and their related expenditures – lawsuits revolving around IP infringement, for example – have risen significantly. As a result, the benefits of intellectual property insurance are getting more deserved attention.
In this article, Insurance Business delves into intellectual property insurance and seeks to provide insight on IP insurance and intellectual property rights in Canada. We’ll get into intellectual property insurance coverage and pertinent topics like how to protect intellectual property in Canada, how much does intellectual property insurance cost, and more.
As an insurance professional, this guide can expand your horizons and offer coverage for this rapidly changing sector. You can also share this with your clients, especially startups and SMEs that create and trade in intellectual property for their earnings.
Generally, IP insurance is coverage for companies’ legal costs associated with pursuing intellectual property infringement claims or IP theft. This type of insurance also covers legal defense costs for policyholders accused of IP infringement or theft themselves. There are three basic types of intellectual property insurance:
While most countries have similar definitions of intellectual property, there may be some slight but very important differences. In Canada, intellectual property is defined as what one creates, invents, or develops as a result of their intellectual activity. Intellectual property or IP is something valuable, and as with other forms of property you own, has its own set of legal rights.
Here’s a short video from the Canadian Intellectual Property Office (CIPO) to give you a clearer picture of what is intellectual property:
Intellectual property protection aims to protect the original authors or creators of an IP from others who would wrongly seek to profit from their inventions or creations. Creators like inventors, designers, and authors can protect their ideas by using the most common protections: copyrights, patents, or trademarks.
This protects the expression of an idea in creative work and is governed by the Canadian Copyright Act. Copyrights are concerned with the protection for IPs like music or sound performances, sound recordings, art, photographs, and software programs. However, copyrights do not protect the idea itself.
These IP protections grant the inventor exclusive rights to their creation, but only for a set period of time. Patent protections in Canada are governed by the Patent Act, which not only oversees privately owned patents but government patents as well.
Typically, in Canada, a patent lasts for about 20 years from the date of filing the patent. Also, the patent lasts only if the inventor pays for its annual maintenance fees. And once a patent expires, it becomes part of the public domain and anyone can use the IP without the original patent owner’s permission.
This type of IP protection is meant to set apart a business’s goods and services from others in the same field. Over time, a trademark can become the symbol or representation of a business’s brand and reputation.
In Canada, it’s possible if not encouraged for businesses to trademark a wide range of things that can be symbolic of a brand. Trademarks are also protected by the Canadian Trademarks Act. If you run a business that offers a product or service and you want to stand out from others in your category, here’s a partial list of what you can trademark:
As strange as it sounds, seemingly ordinary items or objects can become trademarks of a business’ product or service, because over time, these become associated with the business and its brand. For a clearer idea of what a trademark is and how it works, consider some of the world’s most famous and most valuable trademarks:
Trademarks, patents, and copyrights are the three most used forms of IP protections. But due to advances in technology and the rise of many different businesses or industries, several new IP protection mechanisms have been created, including:
This IP protection mechanism covers a business’ proprietary systems, formulae, strategies, or other confidential information that cannot be used by other people or businesses without authorization. These are protected by the Criminal Code and the Civil Code of Québec.
These IP mechanisms protect and identify goods that were made from a specific location and have distinctive characteristics linked to that location. A good example of this is “Canadian maple syrup” -- a product that Canada proudly stands by and no other syrup maker in any other country can use nor claim. Even the Canadian government issues guidelines on the use of the words “maple syrup” and other words associated with the product and its origins.
The Federation of Maple Syrup Producers (FPAQ) of Québec also hold trademarks to words associated with their products, such as “Maple from Canada”, “Incredible Maple”, and “Siropcool”.
Due to the advances in agriculture, businesses can create new plants or strains of plants via genetic mutation, breeding, or biotechnological processes. These plant varieties uniquely created by businesses will need IP protection and insurance. The Canadian Food Inspection Agency’s (CFIA) Plant Breeders Rights (PBR) Act of 1990 governs these protections.
The Industrial Design Act (IDA) mainly protects the aesthetic features of a finished article, and includes its colour, shape, configuration, pattern, and ornaments. Protecting industrial designs in Canada is handled by the Canadian Intellectual Property Office (CIPO) supported by Industrial Design Regulations (SOR/2018-120). The protections last up to 15 years.
To qualify for the protections under the regulations and rules provided by the CIPO, the design must be novel. This means that it was never exposed to the public in Canada or anywhere else. Design owners who wish to protect their industrial designs are given a 12-month grace period after public disclosure to file an application.
This involves layouts in circuit boards and microchip architecture layouts. The Integrated Circuit Topographies Act (ICTA) governs the protection of these industrial designs. This act protects the design of the circuit topographies, regardless of where they are placed on an integrated circuit product.
These protections last for a maximum of 10 years after the application is filed. However, filing should begin within two years of its creator receiving the first commercial offer to sell or lease the topography.
No one has a monopoly on good ideas. Innovation is essential to progress in virtually every industry, and IP lies at the heart of innovation. Surprisingly though, many large businesses in recent days placed less value on their IP assets than they should. Novel ideas, designs, inventions, and creative works all have the potential to spawn entire industries that create more jobs and increase economic productivity.
Protecting intellectual property from infringement or theft not only preserves the fruits of the labours of their creators but also ensures that the competitiveness of dynamic markets persists.
Creators obtain the legal protection for their IP by applying for the applicable patents, trademarks, and copyrights with the appropriate agencies like the CIPO. Meanwhile, IP insurance protects the creators from legal costs arising from IP infringement or theft. Intellectual property insurance in Canada can also cover the costs of losing IP rights or profits.
IP insurance mainly helps individuals and businesses manage the financial impact of IP risk by providing cover for:
IP litigation can be both complex and expensive, often requiring the expertise of expert IP attorneys. IP Insurance can cover the costs of hiring legal counsel to defend against infringement claims, so businesses can access the necessary expertise to mount a robust defense.
Apart from attorney’s fees, costs of IP litigation include various expenses like expert witness fees, court costs, and expenses related to discovery and evidence gathering. Intellectual property insurance covers these costs, so businesses can allocate resources more effectively and navigate the litigation process without having significant financial burdens.
Should an infringement case go to trial or result in a settlement, IP insurance provides coverage for the costs of settlements or judgments. This can include damages awarded to the plaintiff. Intellectual property insurance coverage of this sort helps cushion the financial impact of adverse outcomes. It also provides businesses with the financial resources needed to effectively resolve IP disputes.
Presenting your potential or existing clients who have IP to insure with actual figures here is not practical, since there are several crucial factors that can determine the cost of IP insurance, including:
For instance, businesses that have a high risk of IP litigation or valuable IP assets can pay higher premiums due to increased exposure to IP infringement. The scope of coverage and policy limits can likewise affect the cost of insurance. Insurance professionals should keep in mind that obtaining a quote entails a thorough evaluation of these variables. This ensures that coverage aligns with the business’s specific needs and risk profile.
And although the cost of IP insurance can end up as a significant investment for some businesses, the potential cost savings from avoiding IP litigation and protecting valuable IP assets can often justify the expense.
IP insurance is crucial for business, as it provides protection against a slew of IP-related risks. Some insurers even claim that IP is a business’s most valuable asset, even in an economic slump. From infringement claims to contractual obligations, businesses that thrive on IP need IP insurance as their safety net to ensure their innovation and growth remain undisturbed.
While Canadian laws offer valuable protections to intellectual property, the appropriate liability insurance like IP insurance, is the responsibility of the business. In today’s highly competitive, high-tech, fast-paced business environment, the risk of IP infringement is higher than ever. Intellectual property insurance is even more necessary to prevent businesses from balking in the face of IP infringement and other risks.
If you’d like to find someone to get you or your client the IP insurance they need, you can find some of the Best Insurance Brokers in Canada in this special report. Don’t forget to bookmark our Best in Insurance Special Reports section and get familiar with industry bigwigs.
Will you be handling any clients who will need coverage for their intellectual property assets? Let us know your situation in the comments.
