It is useful to distinguish between Property and Intellectual Property (IP) for the purposes of insurance, explains Mark Boon. Insuring artwork, recordings and film falls under the heading Property, not IP. They should be covered under your general business policy. This is about protecting your creation from physical damage or loss such as theft or fire.
As opposed to Property (your creation), IP exists outside of the tangible medium. It is a collection of rights such as trademarks, copyrights, design rights, database rights, moral rights (the original owner?s rights to protect the work?s integrity and ensure acknowledgement for the author). As the foundations of our economy move away from traditional manufacturing industries, IP represents a new source of wealth, and forms the backbone of the new knowledge-based economy.
Some businesses invest major resource into registering trademarks etc. - but copyright simply starts in the act of creation and needn?t be registered. As an arts organisation, you may have a lot of copyright material, and you may already be generating income through licensing it. If copyright infringement or loss of royalties could hit hard, or if your organisation is strongly reliant on a brand (Coca Cola and McDonald?s brands account for some 60% of the companies? values), IP insurance may be the answer.
There are three types of IP insurance, all litigation based.
? Defence: This covers legal fees and expenses for defending yourself in court if you inadvertently infringe someone else?s IP (e.g. plagiarism, passing off).A good IP solicitor may cost upwards of £250 per hour, and developments in communications technology such as the Internet mean that your infringement may be more easily identified. This cover is often included in a standard Professional Indemnity policy. e.g. you discover you have come up with the same sales slogan as Unilever, who have gone to the expense of registering it; or that your new play has already been written, in the US!
? Pursuit: This covers your legal expenses for pursuing people who infringe your own IP. It?s a ?fighting fund?, and is a separate purchase to be added to your insurance portfolio. e.g. someone imitates your domain name and deflects your Internet traffic to themselves
? Agreements: This covers the costs of pursuing or defending a case in which an existing IP exploitation agreement starts to go wrong. e.g. your record distributor or licensee breaches the contract.
If your involvement with IP is largely Internet-based, you can also buy protection in a Cyber-liability package. As well as data corruption/loss etc, this covers all your IP exposures online, including damage to your website, and infringement by you or your employees of intellectual property or copyright material from the Internet.
So if you?re thinking about getting yourself covered, my advice is:
? Essential - Make sure your property is covered ? in the event of under-insurance, you simply won?t get a full claim settlement
? Essential - get a proper Professional Indemnity policy to cover your various liabilities as a functioning business ? society is becoming increasingly litigious
? Essential for Internet-based organisations - buy IP cover as part of a Cyber-liability package
? Optional - if you are heavily reliant on your brand or on generating income from licensing, get a full IP policy. A word of warning: rates and excess are fairly high, due to the legal costs involved
Mark Boon is Managing Director of La Playa, which provides specialist insurance services for arts organisations t: 01223 393601 e: mark.boon@laplaya.co.uk