Traditionally, tangible assets such as plant and machinery have been value drivers for businesses and they determined competitiveness of a company in the market.
However, in the last few decades intangible assets have become the primary source of competitive advantage.
Intangible assets such as patents, brands and confidential information contributed to 87% of corporate value of S&P 500 companies in 2015, compared to 17% in 1975. Intellectual property (IP) is a crucial subset of intangible assets. IP rights give exclusivity to the inventor over use of the property.
Unfortunately, in spite of their growing significance in business, risk managers adopt a myopic view when it comes to managing risks related to IP. The primary reason behind this neglect is unavailability of an affordable insurance solution.
Delta Insurance is now offering a product designed to fill this gap.
It has been designed to make it easy for Kiwi companies to cover their legal costs in a battle over intangible assets such as trademarks or patents.
Delta Insurance senior underwriter Avani Vyas said dedicated IP coverage had long been out of reach for most Kiwi businesses.
“Elements of IP coverage exist across some current policies, but no single insurance policy in New Zealand has adequately covered intellectual property to date,” she said.
“Until now, this lack of simple, affordable IP cover has made it difficult for Kiwi companies to deal with infringement and enforcement-related issues.”
With research and development expenditure by New Zealand companies rising by 29% since 2014 to reach $1.602 billion in 2016, Kiwi companies have realised that innovation will keep them ahead of the competition.
However, innovators in New Zealand’s knowledge-based economy routinely run into costly IP infringement issues, with most failing to recognise the risks until it’s too late.
Delta Insurance general manager Craig Kirk said in export markets, Kiwi luxury consumables such as manuka honey, chocolate, and wine are commonly devalued by knock-off products and trademark theft — part of a global tide of illegal competition which saw the estimated value of counterfeited goods rise to $US1.7 trillion in 2015.
Similarly, many Kiwi companies have also found themselves extorted or litigated at crippling expense by patent trolls.
Zeacom, a software company which was formerly based in New Zealand, was stung by patent trolls twice. In the first instance, it opted to pay a $350,000 settlement instead of forking out millions to fight the baseless allegations. The second time, the company settled for an undisclosed amount.
“Having an insurance policy that covers legal expenses allows businesses to swiftly respond to these difficult situations,” he said.
“An IP policy helps you unlock the potential of your IP while you commercialise your ideas with confidence and will reassure investors
and other stakeholders that your business is well equipped to face infringement disputes.”
