The 2011 Intellectual Property Survey Report, produced by Liberty International Underwriters and Marsh, provides valuable insight into how business leaders approach intellectual property (IP) and, specifically, how they view IP as a source of risk.
The survey found that IP is important to businesses regardless of their size. There were obvious differences of opinion among small and medium enterprises and larger companies.
A clear majority of companies surveyed deemed protecting IP rights important and viewed IP as an incentive to innovation.
While overall the survey found that trade secrets were rated as the most important IP, followed by trademark and patents, the survey found several differences of opinion among U.S. and European companies.
For example, U.S. companies value patents greater than their European counterparts. Trademarks, though, are much more highly valued in Europe than in the United States.
And small and medium size companies value patents more than larger companies. While the perceived power of brand was important among all companies surveyed, larger companies found brand to be more important than their smaller counterparts as well as private businesses.
When asked the question about the value of intangible assets to the company, a high number of risk management and insurance professionals could not ascertain the rough percentage contribution of intangible assets to their businesses. This raises a question: Are intangible assets not insured or risk managed to the same degree as tangible assets?
Overall, the topic of IP and intangible assets is becoming increasingly important to businesses around the globe. Whether companies move toward more active management of IP risk remains to be seen though.
Much discussion has been held in recent years over the value of IP to the modern day business. Many feel strongly that certain intangible assets are more valuable than others and that not all IP is of tremendous value. While IP is arguably becoming a currency for the modern business, there is a significant volume of IP that lies wasted or economically stagnant.
For example, a director of the U.S. Patent & Trademark Office has estimated that only about 2% of patents have any commercial value.
This section of our 2011 Intellectual Property Survey Report covers:
- the extent to which IP is viewed as an incentive to innovation;
- IP’s role in protecting revenue;
- the importance of brand; and
- the perceived value of intangible assets and goodwill.
When asked about whether IP litigation is frequent in their industry, nearly 30% of respondents said that IP lawsuits occur very frequently. And IP litigation was viewed as more frequent in Europe than in the United States. While only about 22% of U.S. respondents said IP lawsuits were very frequent or frequent, nearly 31% of European companies report at least frequent IP litigation.
This section of the 2011 Intellectual Property Survey Report covers not only differences in the perceived frequency of lawsuits, but also the differences among small and mid-size companies’ perception of litigation frequency versus their larger counterparts.
In addition, this section of the report covers:
- the frequency of licensing disputes among individual companies;
- costs of defending against infringement actions;
- the perceived risk of IP litigation compared to true experience;
- indemnification of licensees: perception versus reality;
- IP infringement by third parties and the likelihood of legal actions; and
- the effects of the globalization of sales, supply chain, new business models and product lines on IP infringement.
This section of our 2011 Intellectual Property Survey Report explored the use of insurance as a means of managing IP risks. Slightly more than half of all respondents (51%) reported that IP was not specifically included in their companies’ risk management programs.
The report also attempted to gauge how important respondents viewed the significance of IP risk over the next 18 months. There were clearly split opinions about the significance of IP in this period. Although 74% of respondents believed that IP would have some significance to the business, this was pretty equally split between those who deemed it very significant, fairly significant and not very significant.
This section also explored the long-term future of IP insurance. Respondents were asked, “If you have never purchased IP insurance to transfer the financial risk of having to defend the company from IP infringement litigation, enforce your IP rights or protect its value, would you consider purchasing it in the future?” A significant 54.5% stated that they would consider purchasing the cover in the future.