Infringing on another company’s intellectual property can result in long, arduous and expensive lawsuits. But is signing for IT insurance worth the cost?
According to a couple of Canadian lawyers, more often than not, experience tells them companies are reluctant to shell out for insurance to safeguard them from intellectual property lawsuits.
“I’ve looked into it for at least a dozen clients and none of them have taken it because it was too expensive,” said Sarah Dale-Harris, a Toronto-based associate with
Davis LLP specializing in intellectual property law.
“I’ve had similar experience,” echoed Euan Taylor, a Vancouver-based lawyer who heads up Davis LLP’s Patent Practice Group. “I’ve looked into patent insurance, patent infringement insurance and validity insurance for a handful of clients and I’m not aware any of them have ultimately taken it out.… The premiums were quite substantial. They were enough that most clients would look at it and say, ‘This will make a huge difference to the bottom line. We’re not going to do it.’”
With a large intellectual property lawsuit brewing in the U.S. between
Microsoft Corp. and
i4i Inc., a Toronto-based technology company, the legal risks of unknowingly (or not) stomping on someone else’s technology has become a hot topic. At stake is US$290 million that i4i said Microsoft owes in damages to the firm for infringing on technology used in its popular Word program.
A $290 million settlement for Microsoft may not be much for a company that brought in $13.65 billion in revenue for its third fiscal quarter (albeit its net income fell 32 per cent compared to last year in the same period), but for smaller companies it can mean the difference between keeping the shop doors open or shuttering down.
