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BUSINESS BASICS CHANNELS 
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Copyrights: What if You're Sued? Jill Ebersole recently received a letter from an attorney telling her that her best selling product, Jill's Jiffy Closet Organizer, was infringing on a patent held by All Things Closets. The letter told her to immediately stop selling the product and that legal remedies would be sought by ATC for all previous sales of the product. Shocked, Jill sat there and stared at the letter while all sorts of things raced through her mind. Her closet organizer idea had come to her several years ago. Unable to afford high priced, custom closet organizers, she'd invented her own system. Friends and visitors saw it, liked it and asked where they could get one. They asked for other, related solutions to their storage problems. Jill had patented the system and started the business. Orders were arriving daily and she was starting to consider hiring a sales manager. Sales were on target to exceed $1,000,000 this year. Alarmed, Jill called Jim Englund, the attorney who had handled her patent work. He told her not to panic, that he would be able to handle the problem. She sent him the cease-and-desist letter. One week later, Jim called her back. There was good news, he said. Jill's patent had actually been filed before All Things Closets applied for theirs. The products were similar. The bad news was that All Things Closets was a big corporation, with a lot of money to hire legal representation. It was going to cost Jill at least $20,000 to defend her business. ATC had offered to drop the case if Jill would pay them $5,000 and license the right to sell the system for a royalty fee of $2.25 per unit. "That's not right!" Jill thought. It was her idea and her product. Jim said that the issue could drag on for years, even though Jill could likely prevail if she committed the resources to enforce her rights. Jill's decision could have been easier if she had purchased Patent Infringement Defense Cost Reimbursement Insurance. Premiums start at $2,500 minimum for $250,000 of coverage with a $2,500 deductible from Intellectual Property Insurance Services Corporation. (Not trying to say that they're the best, just that their information is publicly available.) There are some considerations, though, before reimbursement starts. The company must get an opinion that they aren't infringing on a particular patent under claim. There will be no coverage for deliberate violation of patent rights. Insurance doesn't cover liability or fines, just the costs of defending the suit. You cannot assign the policy to another company, although purchase of your entire business may enable your policy to transfer. The policy will not cover expenses for infringement before the policy became effective, for criminal acts or for deliberate infringement of intellectual property rights. Intellectual Property Insurance Services
Corp. -Cynthia Nemeth-Johannes |
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