Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry
December 5, 2023 6 mins

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Often overlooked, intellectual property is an asset in the Technology, Media & Communications industry that must have effective risk management to support an organization’s overall operational resilience strategy.

Key Takeaways
  1. Many organizations continue to overlook the protection of their IP, with only 17 percent of the value of intangible assets insured against potential loss.
  2. As the importance of these intangible assets continues to grow, there is now a clearer picture of how much a company’s IP is worth.
  3. IP insurance can help companies cover litigation costs related to the enforcement or defense of patents, trademarks or copyrights, while also protecting policyholders from patent infringement claims brought against them.

When thinking of the value of a business within the technology, media and communications (TMC) industry, it’s no longer about the bricks and mortar and hard physical assets; the bigger share of a company’s value now resides in their intangible assets, such as intellectual property (IP) — including patents, copyrights and software — and customer goodwill. Although these intangibles now make up 90 percent of the value of the S&P 500, many organizations continue to overlook their protection, with only 17 percent of the value of intangible assets insured against potential loss1 — an oversight that represents a major threat to their operational resilience. 

According to Aon’s 2022 Intangible Assets Financial Statement Impact Comparison Report — conducted and produced by Ponemon Institute LLC2 — more than a third (35 percent) of the companies surveyed say they have experienced a material IP event. The majority of these IP events related to trade secrets (41 percent), with copyright issues at 26 percent. From an insurance perspective, only 29 percent say they have a trade secret theft insurance policy, which highlights the protection gap for many businesses if something were to happen to their IP. This vulnerability emphasizes the need for TMC businesses to adopt a three-phase approach to identifying and successfully managing IP risk as a keystone of their operational resilience strategy: assess, quantify and manage.

Assess the IP Risk

The logical place to start with IP risk is in the assessment phase — working out what IP a business has. For TMC companies, the risk for patents are often considered first. What if a patent is invalidated, or the business is sued for infringement and can no longer sell its products? Other areas of IP might include trade secrets, particularly in the technology space, while in media, copyright is key. The types of liability include third party IP disclosure/release, as well as contractual indemnities of IP risk and any breach of IP licensing agreements. IP ownership risks include loss of IP value due to theft or misappropriation, IP enforcement costs and loss of IP due to legal challenge. 

Quantify the IP Value

Quantifying, or putting a dollar figure against the IP value of a business, has been historically difficult. However, as the importance of these intangible assets grows, there are now options for organizations to gain a clearer picture of how much their IP is worth. Aon, for example, has developed an AI-driven platform that can help more accurately assess the value of a firm’s IP by using big data sets. Results are then vetted by human expertise to arrive at an accurate value. 

Manage and Protect IP

With a clearer picture of the IP and its value in a TMC business, the third phase of the risk management framework relates to IP management and protection. It’s common for employees in the TMC sector to move from business to business, increasing the risk of someone taking trade secrets to a competitor. Businesses therefore need to implement protections within their employment processes to prevent this from happening. Maintaining a trade secret register and documentation system is the key to make it easier to pinpoint and prove the source of the problem.

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Reducing the risk of an IP infringement is also vital. Businesses can work with a law firm to understand the patent landscape, where the business operates and where there could be infringements or crossover

Sunneth Lawrence
Client Manager, IP Solutions, United Kingdom

The Importance of IP Insurance 

Insurance additionally plays a key role in the management phase. Intellectual property insurance typically serves two purposes — it helps companies cover litigation costs related to the enforcement or defense of patents, trademarks or copyrights, and it protects policyholders from patent infringement claims brought against them. In the TMC space, for example, there are many cases where businesses will offer contractual indemnities to their customers who could have exposure to IP infringement risk because they are using the TMC business’s products. IP insurance can offer an indemnity to customers if they are sued. This cover has grown in importance in recent years, particularly in technology, as litigation continues to increase. 

The enforcement side is also vital. This is especially true for smaller businesses in the early stages of growth. These companies may have a lot of IP, yet lack the resources to enforce their IP rights and fund litigation if another company infringes. Insurance can help these firms protect themselves from larger companies.

But it’s not just in defending or enforcing IP where insurance can help. IP-backed lending is an innovative lending method that helps companies unlock potential value. It does so by leveraging IP as collateral to obtain new capital from banks who have the confidence to lend, given the protection of an insurance policy that will disburse funds in the event of a default by the borrower. Because there is an insurance wrap and banks can get capital relief — which means the amount of capital they need to hold is reduced given the insurance protection — there is more of an appeal to provide these loans, allowing businesses in the TMC sector to access funding to grow and innovate. 

IP: The Backbone of Every TMC Business

IP is core to every TMC business; without it, there is no business. In order to retain operational resilience, the same level of investment that might be made in protecting physical assets, like property and equipment, therefore needs to also apply to a company’s IP. 

With a structured risk management framework focused on assessment, quantification and management, organizations can understand how to best protect their IP, while also taking advantage of innovative IP-based opportunities, like IP-backed lending. 

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Intellectual property is key for most businesses operating in the TMC Industry — whether it’s a startup or a multinational — business leaders should be aware of all the risk mitigation tools available to them.

Zamani Ngidi
Technology, Media and Communications Industry Co-Leader, EMEA

1 https://oceantomo.com/intangible-asset-market-value-study 
2 https://www.aon.com/insights/reports/2022/2022-aon-ponemon-global-report 

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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