First Party Intellectual Property Insurance

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First Party Intellectual Property Insurance

Sometimes called Multi-Peril Intellectual Property Insurance, First Party Patent Insurance actually protects you from losses you suffer – losses in the value of your Intellectual Property. As an example, this would occur if an important trade secret industrial process were misappropriated and your competitive advantage were destroyed as a result.

First party (multi-peril) coverage can be an extremely valuable addition to a defensive program. Particularly interesting is a form of business interruption insurance. It reimburses you for lost revenue in the middle of litigation in the event a court grants your opponent a preliminary injunction barring you from from selling your product.The resultant loss of cash flow in the midst of litigation could force you to capitulate. With business interruption coverage in place, you are better able to sustain litigation defending your IPRs.


In A Hurry And Need A Quote?

Go to our Get An Intellectual Property Insurance Quote Page for information on starting the process.

Advanced First Party Intellectual Property Insurance Coverage Provisions

For a more thorough discussion of Intellectual Property Insurance coverage, see Eric Weibel’s 2011 article published in New Matter which is reproduced here. Or for a quick rundown, read on here.

Some key points to focus on when looking at First Party Intellectual Property Insurance are:

  • Underlying Policy Generally Required
  • Perils Insured Against
  • Underwriting
  • Enforcement and Defense
  • Reimbursement

It is important to note that this is distinct from legal costs needed to defend or enforce rights. And it also distinct from indemnity – actual damages that need to be paid to someone alleging client infringement.

Underlying Policy Generally Required

First party (multi-peril) coverage is generally only available as an addition to an underlying defensive and/or offensive (abatement) policy.

Perils Insured Against

A party may insure against many different perils. As previously mentioned, business interruption insurance can be provided in the event of a preliminary injunction in the course of litigation. Coverage is also available for the loss of royalties or license fees as a result of a final ruling. IP portfolios can also be insured on an agreed-value basis, where the insurance applicant and the Company agree on a value during the application process. Remediation and redesign costs can also be covered.


In order to obtain this coverage, you must generally produce an opinion from a qualified attorney that the covered IP is not infringing.

Enforcement and Defense

The insured must take adequate measures to protect its IP by defending itself in lawsuits and bringing actions against infringing parties. Furthermore, the insurance company has the right, but not the duty, to assume the defense in those instances. In the event the insurance company does not do so, it may effectively associate with the insured in those actions.

Typically, the underlying defensive or offensive (abatement) policy will support the underlying enforcement or defense, either indirectly, with financing, or directly, by allowing the insurance company to assume control of the litigation. However, there could be instances where the insurance company denies the claim on the underlying policy, but the previously mentioned duties of the insured and the rights of the insurance company still exist under the multi-peril policy. So, is order to maintain its rights under the multi-peril policy, the insured would have to exert these efforts on its own while it disputes the adverse offensive/defensive coverage decision under the underlying policy.


In the event that litigation ultimately yields proceeds to the insured, the insurance company generally can recover part or all of its costs from those proceeds. For instance, if business interruption coverage is triggered as a result of a preliminary injunction, and the client is later successful in the litigation and actually receives damages from the opponent, the insurance company may well be entitled to recovery of its earlier outlay of business interruption costs.

Get A 1st Party Intellectual Property Insurance Indication

Alta is focused on this line of business. Contact us today if you are interested in applying for Multi-Peril Patent Insurance. You may visit our Get A Intellectual Property Insurance Quote Page for details on how to apply and to obtain application forms.

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