IP due diligence and IP-related risk assessment for insurers
At first glance the worlds of insurance and IP may not appear to have a great deal of overlap. However, both are inextricably linked to risk or, more accurately, the management and mitigation of risk. However, to tackle risk you need to know exactly what you need to mitigate against.
Investing in an innovative business is laden with risk, particularly from an IP perspective. This is the reason why insurance companies must understand the IP held by the business seeking insurance. The principal way of achieving this understanding is to undertake IP due diligence before covering the risk.
The results of IP due diligence are pivotal to allowing insurers to assess and adapt to risk.
From a risk management perspective, IP due diligence helps insurance companies better understand the potential risks and liabilities associated with their insureds’ IP assets. This includes obtaining insight on any ongoing or potential IP infringements that could impact the value and stability of the insured company.
Similarly, a greater understanding of the IP portfolio, its scope of coverage and the associated risks allows insurers to make more informed decisions regarding their own coverage decisions.
IP expertise can also be invaluable in the context of claims handling. Working with experienced IP professionals provides insurers with an expert opinion on the merits of any claims made against insured IP assets. If required, across our offices we also have the expertise to defend infringement claims and invalidity actions in forums including the English Courts, the European Patent Office, the European Union Intellectual Property Office, the UK Intellectual Property Office and the Unified Patents Court.
There intellectual property due diligence offers insurers an additional commercial benefit. The results will give you a greater understanding of your key markets. You can use this insight to establish your position as the go to insurer for these types of clients and cement your market position by building new and innovative products and solutions.
IP DUE DILIGENCE AND M&A INSURANCE
IP is becoming increasingly important in many M&A transactions. However, it is also the case that investors and purchasers are more cautious about apparent risks flagged by due diligence.
There is an increasing trend towards seeking financial protections in transactions over and above the scope of traditional warranties and indemnities levied against the sellers or pre-transaction shareholders. We work with insurers in this growing area to assist them with understanding the details of IP portfolios which become the subject matter of specific policies intended to protect the purchaser or investor in an acquisition against IP risks.
Please click the link here to find out more about the IP due diligence support we offer insurers offering M&A policies.
HOW DOES POTTER CLARKSON DELIVER IP DUE DILIGENCE FOR INSURERS?
At Potter Clarkson we believe the traditional approach to IP due diligence tends to be a predictable exercise delivered within very narrow parameters. It is also an exercise that can quickly become far too detailed and far too expensive delivering little more than a long list of IP rights and scant insight as to the actual relevance of these rights to the business’ commercial activities.
In an insurance context, we ensure that our specialist analysis focusses on the specific issues most relevant to you. For example, there is a clear contrast between the review of an entire portfolio requiring coverage against invalidity challenges and the analysis of an infringement claim made against a single patent asset that an investor would like coverage for.
In the context of a broader review, our IP due diligence will generally incorporate:
- A detailed review of the company’s portfolio of IP in the context of its business plan (including, where relevant, their technology roadmap).
- An independent assessment as to whether the IP strategy the target has in place aligns with its business plan.
- A review of the licenses and other commercial contracts the business has entered into and identification of potential IP and confidentiality issues arising from these.
- An assessment of whether there are any apparent issues in respect of the legal ownership of their IP.
- Reporting on the legal status of the declared rights and an assessment of oppositions and challenges brought in the registration process.
- Confirmation of the way the target works with third parties and the impact this could have on their plans for the business and likely IP strategy moving forward (including confirmation that the required agreements are in place to define/support these relationships).
- The assessment of any notified (or threatened) IP claims or litigation in respect of those IP rights.
- An assessment of the company’s approach to IP-related risks, including – most critically - their approach to freedom to operate (FTO).
Having worked on both contentious and non-contentious projects for insurers, we understand the broader range of IP support we can provide for insurance companies.
We can also undertake FTO searching and analysis, a detailed and expert evaluation to determine potential risks to a company’s IP portfolio or business activities. We can either undertake FTO as an individual piece of work or in combination with any of the due diligence analysis discussed above.
If you would like to find out more about how we support insurers in relation to IP matters, please contact us today.
