Kiwi businesses can now afford to protect themselves against intellectual property (IP) risks, thanks to an audacious move by Delta Insurance.
Filling a serious gap in New Zealand’s insurance market, Delta’s IP offering 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.
New Zealand examples of IP are the trademarks of Marmite, Whittaker’s, Wattie’s or patents such as Gallagher’s electric fence systems or Sealegs’ amphibious watercraft.
Delta Insurance senior underwriter Avani Vyas says dedicated IP coverage has 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 says.
“Until now, this lack of simple, affordable IP cover has made it difficult for Kiwi companies to deal with infringement and enforcement-related issues.”
Intangible assets such as patents and trademarks, which made up almost 87 percent of the corporate value of the Standard and Poor’s 500 companies in 2015, are a key source of competitive advantage for many companies in New Zealand.
With research and development expenditure by New Zealand companies rising by 29 percent since 2014 to reach $1,602 million in 2016, Kiwi companies have realised that innovation will keep them ahead of the competition.
“Our companies are coming up with disruptive ideas, revolutionising day-to-day commodities, and introducing advanced technology to the world. 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,” Vyas says.
Delta Insurance general manager Craig Kirk says in export markets, Kiwi luxury consumables like 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,” Kirk says.
“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.”
To help Kiwi companies come to grips with the many risks facing their IP assets, Delta Insurance plans to release a comprehensive white paper in coming weeks.