In today’s innovation-driven economy, your intellectual property is one of your most valuable and most vulnerable assets. Intellectual property insurance can give your business financial strength to defend its original ideas, be it code, content, a product or a brand.
With decades of experience advising technology and disruptive companies on insurance and risk management, Aliya Daya, Senior Client Executive, brings trusted insights that you can rely on. Read on to learn how intellectual property insurance defends ideas, protects revenue and boosts growth.
Protect innovation with intellectual property insurance
Let’s be clear, innovation is currency in 2025 – and intellectual property (IP) is often one of the most valuable assets a business possesses.
Whether it’s a cutting-edge technology, a unique brand or a proprietary business process, protecting and defending intellectual property is critical to maintaining a competitive advantage.
As innovation accelerates and global markets shift, adjust and expand, more businesses are facing IP disputes.
The risks associated with IP infringement, misappropriation and defence are also accelerating as the marketplace grows more litigious, digitally connected and globally competitive.
According to the Marcum 2024 Patent Litigation Study, the median damages awarded in US patent cases between 2018 and 2023 was $5.9 million USD (about $8 million CAD). Complex technology cases often far exceeded that amount.
Canadian IP litigation awards tend to be smaller but legal costs alone can still run into the millions. This is a financial hit that can cripple a business long before any damages are awarded.
This is where intellectual property insurance comes into play.
This specialized form of insurance provides businesses with financial protection in the event they:
Are accused of infringing on another company’s intellectual property.
Face litigation for intellectual property disputes (legal fees, damages, settlements).
Have a third-party company infringe on their intellectual property.
As IP infringement cases become more frequent and complex, this type of insurance is becoming a critical component of risk management for companies in various industries.
How much do intellectual property disputes really cost businesses?
Legal fees, settlements and operational fallout can stack up quickly in an IP dispute.
Intellectual property insurance helps you navigate what’s at stake:
- Sky-high legal costs. Patent, copyright or trademark disputes commonly exceed six figures. That’s just legal fees. Settlements, fines or operational losses come at an extra expense.
- Damages and settlements. Courts can award millions in damages, especially in the US or international forums. In Canada, IP cases are typically resolved through settlements, which still strain cash flow.
- Operational disruption. IP lawsuits can halt product launches, disrupt supply chains or force a pivot in branding and marketing.
- Reputational fallout. No matter if you’re the offender or the victim, being involved in a legal battle can damage relationships with investors, partners and customers.
- Investor confidence. Intellectual property coverage is a trust signal. It shows that a business is forward-thinking and managing critical risks. This is a big tick for VCs, PE firms and strategic buyers.
Intellectual property trends and lawsuits in Canada
Canada may not have the same volume of IP litigation as the US, but the stakes are still high. Recent trends include:
- Rise in federal court IP filings: Trademark and patent cases in Canada have increased year-over-year since 2020 (Source: Canadian Intellectual Property Office).
- Increased IP litigation from US entities: Many Canadian startups face litigation from US patent holders, especially “non-practicing entities” (a.k.a. patent trolls).
- Stronger IP enforcement environment: CUSMA (NAFTA’s successor) has enhanced enforcement mechanisms, impacting how IP claims are pursued in North America.
6 business sectors that need IP insurance
Who needs intellectual property insurance? Almost everyone!
While any business that creates or uses intellectual property may face IP risks, certain sectors are walking IP minefields due to their business models.
Here’s a look at the industries and types of businesses that benefit the most from intellectual property insurance:
1. Technology and software
The technology sector is one of the most IP-intensive industries.
Tech companies face IP disputes over software, hardware and IT services that are often protected by patents, copyrights and trade secrets.
Patent litigation is especially prevalent in the tech sector. Even minor similarities in functionality or design can lead to multi-million-dollar lawsuits.
Example: A software company could face a lawsuit if a competitor claims its code infringes on a patented algorithm or process.
2. Pharmaceutical and biotechnology
Pharmaceutical and biotech companies rely heavily on patents to protect their innovations. This includes new drug formulas, medical devices and biotechnology processes.
As a result, patent infringement claims are common in this sector.
A single lawsuit can delay the release of a new drug or medical device, costing millions in lost revenue.
Example: A pharmaceutical company may be accused of infringing on a competitor’s drug patent. This could lead to costly legal battles over patent validity and scope.
3. Media and entertainment
Content creators in the media, film, music and publishing industries often face IP disputes.
Copyright lawsuits can arise from the smallest of oversights, such as the unauthorized use of music, imagery or written content.
The rise of digital content and streaming platforms has only increased the risk of accidental copyright infringement.
Example: A film production company could be sued if it uses a copyrighted song or image without the necessary licensing. This could lead to a legal dispute over damages.
4. Consumer products and manufacturing
Companies that design and manufacture products often face claims of trademark and patent infringement.
From designs and packaging to branding, companies must ensure their products don’t violate existing patents or trademarks.
The risk is especially high for consumer goods that are widely distributed. Competitors closely monitor new products for potential IP violations.
Example: A fashion brand may face trademark infringement claims if a competitor believes the new logo or design is too similar to their own.
5. Retail and e-commerce
Trademark disputes are common in the retail and e-commerce sectors.
Businesses must carefully manage their brands, logos and marketing materials to avoid violating trademarks.
With the rise of online retail, companies face additional risks related to the use of third-party content. This includes product images, descriptions and digital assets.
Example: An e-commerce company may be accused of infringing on another company’s trademark if it uses a similar brand name or logo for its online store.
6. Startups and small businesses
Startups, particularly in the technology and innovation-driven sectors, often face intellectual property risks from the moment they launch.
These businesses may unknowingly step on someone else’s patents or trademarks when developing new products, which could lead to a costly lawsuit.
For startups and small businesses with limited resources, a single IP lawsuit can threaten the survival of the company.
Example: A startup developing a new mobile app could face patent infringement claims if the app’s functionality is similar to an existing patented product.
Protect the intellectual property that powers your business
In the current fast-paced, innovation-fueled economy, intellectual property isn’t just part of your business – it is your business! But with great ideas come great risks: Lawsuits, delays, reputational bruises and legal bills.
Intellectual property insurance is the unsung hero in your risk strategy, quietly stepping in to protect your brand, inventions and creative assets when things get litigious.
For startups, scale-ups and enterprise giants alike, this coverage is no longer a luxury. It’s essential protection in a world where IP disputes are just a click (or a launch) away.
Bottom line? If innovation is your engine, IP insurance is the seatbelt. Buckle up – it’s a fast ride out there.
Answers to common questions about intellectual property insurance
Acera Insurance’s Aliya Daya answers four questions about intellectual property insurance.
Intellectual property insurance helps protect businesses if someone accuses them of IP infringement. These claims may include accusations that a company has violated another party’s patents, trademarks, copyrights or trade secrets.
The insurance typically covers the costs of legal defence, settlements or damages awarded in court, which can be very expensive in these kinds of cases.
In some cases, intellectual property insurance can also include enforcement (abatement or pursuit) coverage, which helps fund legal action when a business needs to actively protect its own IP. For example, pursuing a competitor for infringement. This is not standard coverage and only available through a handful of specialty underwriters. So, they scrutinize these risks closely because the insured is driving the action.
This type of coverage supports costs related to enforcing patents, trademarks or copyrights, including litigation, cease-and-desist actions and related legal expenses. It’s especially valuable for IP-rich companies that depend on exclusivity and brand protection to maintain their competitive edge.
There are several types of intellectual property.
IP insurance can provide coverage across these areas:
- Patent infringement. IP insurance can provide coverage for claims that a company’s product or service infringes on another entity’s existing patent.
- Trademark infringement. IP insurance can offer protection against claims that a business has unlawfully used a trademark – a logo or brand name – that another party owns.
- Copyright infringement. IP insurance can provide coverage for accusations that a company has copied or used copyrighted content, such as software code, literature or artwork.
- Trade secret misappropriation. IP insurance can offer protection against claims that a company has wrongly obtained or revealed proprietary business information that belongs to another party.
Intellectual property insurance plays a critical role in protecting the value behind your ideas. It helps cover costly legal battles, settlements and business interruptions.
Here’s how this coverage protects your innovations, defends your rights and maintains business continuity in a highly competitive, fast-moving market:
Protection against high litigation costs
Intellectual property lawsuits are notoriously expensive. Legal fees alone can reach into the millions for complex cases. Intellectual property insurance covers these legal defence costs, ensuring that a business is not financially crippled by a lawsuit. This protection is particularly important for smaller businesses and startups that may not have the resources to fund lengthy litigation.
Mitigation of financial damages
In addition to covering legal defence costs, intellectual property insurance can cover damages awarded in a lawsuit or settlements negotiated with the plaintiff. Without this coverage, businesses could be forced to pay large sums out-of-pocket, which could severely impact cash flow and financial stability.
Protection for innovation
Intellectual property is often the backbone of innovation, driving growth and competitive advantage. By protecting against IP risks, businesses can continue to innovate without fear of devastating financial losses from litigation. This protection is especially critical for companies that rely on research and development (R&D) to create new products, services or technologies.
Ensures business continuity
Intellectual property disputes can disrupt business operations. This can lead to delayed product launches, halted production or damaged brand reputation. Having IP insurance in place ensures that businesses can respond swiftly to intellectual property disputes and continue operating without significant interruption.
Boosts investor confidence
For startups and growing companies, having intellectual property insurance can increase investor confidence. Investors understand the value of IP and the risks associated with intellectual property lawsuits. By securing intellectual property insurance, businesses demonstrate that they are proactively managing these risks, making them more attractive to potential investors.
Global market protection
As businesses expand globally, they face an increasingly complex web of IP laws across different jurisdictions. Intellectual property insurance can help companies navigate these challenges by providing protection against IP claims in international markets. This is particularly important for companies entering new regions where IP regulations may differ from those in their home country.
When a business faces an intellectual property infringement claim, the IP insurance policy activates to provide the necessary legal resources and financial support. This includes:
Immediate access to legal experts
In most cases, insurers will provide access to specialized legal teams with deep expertise in intellectual property law. These teams can help a company navigate the often complex and nuanced landscape of IP disputes, ensuring a robust defence strategy.
Coverage of all legal expenses
The legal costs associated with defending an intellectual property claim can quickly escalate. Many businesses, particularly small and mid-sized firms, simply do not have the resources to finance a prolonged legal battle. Intellectual property insurance covers these costs, allowing companies to focus on their core operations rather than legal fees.
Settlement negotiation
In some cases, settling a claim out of court is the most sensible course of action. Intellectual property insurance can provide financial and strategic support in negotiating settlements. This can help businesses minimize both the time and financial burden of an IP dispute.
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Aliya Daya, Senior Client Executive, specializes in risk management strategies and insurance solutions for the technology sector, as well as disruptive and emerging industries. With more than 25 years of experience in the insurance industry, Aliya serves as a Cyber Technical Specialist and National Mixed Practice Team Lead at Acera Insurance. She specializes in innovation, technology, cyber insurance and privacy breach, political risk, manufacturing/fabrication/wholesale/distribution, hospitality, non-profit and faith-based organizations.
You can reach Aliya at 403.717.5895 or aliya.daya@acera.ca.
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At Acera Insurance, we help innovative businesses stay protected and competitive with expert risk solutions. Contact us to discuss solutions for your organization.
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