The distinctiveness of your business is probably based on a kernel of intellectual property. This is usually a design or product which took time to develop and hone; a secret recipe or process; a data set built up over years; a unique design feature which sets your products apart.

Numerous aspects of a product or service could be protected by intellectual property rights, which are designed to stop others from simply replicating what you produce. Certain types of intellectual property protection, such as patents and trademarks, must be granted by a central authority. Other rights such as copyright can be reserved by simply claiming them publicly.

The hidden value of intellectual property

Intellectual property (often known as IP) is not an intangible asset; it’s not something you can record in your accounts with a set value. This does not mean it is worthless, however. IP is usually a vital underpinning to your business’ position in the marketplace. If a competitor gets hold of your confidential information or starts to copy one of your designs, it could put you out of business.

While IP is usually something left off the balance sheets, it does attract a fixed price if it’s bought or sold. This is what often happens with tech start-up companies: they are bought by bigger companies who want access to their data sets or code. The IP is often the most valuable asset of the smaller company.

How to protect your IP rights

If you discover another company infringing your IP, you will naturally want to take action at once. Any delay could cause you to lose market share, reduce your brand values if an inferior copycat product is confused with yours, and make your IP a less attractive prospect for investors.

The difficulty is that unless the infringing party ceases their infringement with a strongly-worded letter or two, you may be facing a costly legal battle to assert your property rights. It’s not unusual for there to be a dispute about whether copyright has been infringed, while some companies will simply gamble that your business does not have the funds to uphold your legal rights.

You could opt to bring a claim in the more affordable Patents County Court, but here damages and costs are capped. If you want to seek a higher level of compensation then a claim would be issued in the High Court. However, the cost of bringing a High Court action is usually more than £350,000, out of the reach of most businesses.

If you infringe someone else’s IP

Your business may be accused of infringing someone else’s intellectual properties and ordered to stop doing this. While describing an asset as someone’s intellectual property sounds clear-cut, in reality it can be incredibly confusing to work out what does or does not constitute infringement. You may have thought of a design or another innovation at the same time as someone else, or taken inspiration from them but developed an idea to make it your own. Where does inspiration end and copying begin?

If another party is determined to pursue you for copyright infringement, even if you believe you have a convincing defence, it could prove to be costly to fight the claim. You will almost certainly need legal assistance and there’s always the risk that a court would rule against you; damages and legal costs could run into hundreds of thousands of pounds, not to mention the hours you will lose in preparing your defence.

Intellectual property insurance

Specialist insurance is a great way to protect your IP. Depending on your unique circumstances, you may want to choose a more or less comprehensive type of policy. The most basic policy entitles you to advice only, so you can obtain a legal opinion about what to do if you discover your IP has been infringed, or are accused of infringing another party’s IP.

Alternatively, you might decide to opt for an insurance policy that offers legal advice plus cover for legal fees if you need to bring or defend a claim. Insurance sometimes covers different global jurisdictions and can be adjusted to apply only in particular courts, such as the Patent Courts, if this is applicable to your business.

A fully-comprehensive IP insurance package will also provide cover against the requirement to pay damages to another party if you are found to have infringed their property rights. This provides the ultimate peace of mind, so you know your business will not be dragged into debt if you inadvertently infringe someone else’s IP.