1. Understanding IP Insurance
Presented at:
The
midwest ip institute
september 22 & 23
minneapolis
Presented by:
Alex Fjelstad

2. About Alex
 Senior VP- Twin City Group
 Patent holder- RFID technology
 Patent holder-Insurance processes
 CEO- Insurance company
 CEO-Technology company
 Work exclusively in IP insurance
Alex Fjelstad
Twin City Group
4500 Park Glen Road
Minneapolis, MN 55416
952-924-6910 afjelstad@twincitygroup.com

3. Client’s Comment
“Hi Alex,
Yes, we were very pleased with the insurance
company and their claims agent in the US. Having
the insurance made all the difference. I hope we
can continue the coverage (although our other
competitors are not this aggressive or
unreasonable, I believe, there are still trolls out
there that we will want to protect against).
Because of the insurance, we received a very
favorable settlement.
Thanks for all your help over the years.”

4. Topics to be Covered
 Patent Insurance History
 Basics of Patent Insurance
 Infringement Defense Insurance
 Enforcement Insurance
 Other Coverage
 Typical Clients

5. Patent Insurance History
 Available under insured’s comprehensive general
liability coverage until ‘70’s
 Large global insurer wrote until ‘90’s
 Insurance industry Issues with Insuring IP risk
 Limited specialty insurers today
(Coverage still available under CGL for trademark and copyright infringement)

6. Basics of Patent Insurance
 Reimbursement of covered expenses
 Policy forms unique to each insurer
 Coverage can be modified
 Limits up to $20 million
 Claims-made basis

7. Basics of Patent Insurance
 Self-insurance retention (deductible) will apply
 Co-payment will apply
 Contractual indemnity relationships-very important
 Insurers have right to approve litigation counsel
 Insured’s “pre-knowledge” of potential claim
important

8. Infringement Defense Insurance
To defend products accused of patent infringement
US and worldwide coverage available
Advantages of insurance
 Prevents abandoning market share
 Prevents unexpected cash drain
 Provides litigation funds to optimize favorable outcome
 Deters frivolous suits
 Reduces financial pressure to settle
 Makes company more attractive to investors

9. Infringement Defense
Policy terms applicable to all insurers
 Coverage triggered by a circumstance; verbal, written or filed
litigation
 Products listed on policy. Insured decides what product(s) to cover
 $5,000 minimum self-insured retention. Higher SIR’s available
 Minimum co-payment of 5% of claim paid amount. Higher
percentages available
 Additional insured coverage available
The premium runs 1-3% of the per claim limit
 Example: 2% of a $1 million limit equals $20,000 premium per year
 Premium will vary depending on industry and number of products

10. Infringement Defense
Process to obtain a quote
 NDA signed if appropriate
 General discussion regarding issues and strategy
 Application for coverage completed (one insurer requires a
non-refundable search fee)

11. Additional Insured Coverage
 Required to extend coverage from insured to customer
 Must have written indemnity agreement
 Indemnity clause in contract issues
 Timely reporting of claim issues
 Cost runs 5-15% of premium

12. Enforcement Insurance
Provides funds for patent holder to enforce IP rights
US and world wide coverage available
Advantages of insurance
 Prevents loss of market share by timely response to
infringement
 Prevents unexpected cash drain
 Provides litigation funds to optimize favorable outcome
 Reduces pressure to settle
 Makes company more attractive to investors
 Strengthens the “licensability” of the IP

13. Enforcement Insurance
Policy terms applicable
 Coverage triggered by insured with approval of
insurer
 Patents and/or patent applications covered listed
on policy
 $5,000 minimum self-insured retention. Higher
SIR’s available
 Minimum co-payment of 5%. Higher co-payments
available

14. Enforcement Insurance
Premium runs 1-2% of limit purchased
Process to obtain a quote
 NDA signed if appropriate
 General discussion regarding issues and strategy
 Application completed and submitted for quote

15. Other Coverage
Post Grant Review
 Provides coverage to patent holders for post grant
review expense
 Inter Parties Review cost
 Premium cost-1% of limit

16. Other Coverage
Collateral Loan Insurance
 Guarantees repayment of bank loan up to value of
the IP as collateral
 Must purchase defense and enforcement
coverage
 Premium runs 10-12% of loan amount

17. Typical Clients
 Startup to $500 million revenue
 Technology based (SAAS)
 Vendor required
 Public companies
 Aggressive competitors

18. Questions?