Did you say patent insurance?

India Inc does not seem to be very familiar with patent insurance, which provides protection against infringement of patents and associated costs.

That is because none of the insurance companies in India sell such a product. In fact, according to C S Rao, chairman of Insurance Regulatory and Development Authority of India (Irda), no insurance company in the country has even applied for such a product till today.

Patent insurance can be of two types "� patent infringement defence insurance and patent enforcement insurance. M Qaiser, chief IPR strategist and chief executive officer of iPrex Intellectual Property Solutions, says: "While the former helps the insured fight an infringement lawsuit filed by a competing company, the latter helps the insured fight against a patent infringing company."

"Lloyd's, American International Specialty Lines Insurance Company (part of the AIG Group), Chubb, and Intellectual Property Insurance Services Corporation are some of the entities that offer such products," he added.

iPrex Intellectual Property Solutions provides services like registration, patent drafting, valuation, enforcement and portfolio management for intellectual property.

The awareness and acceptance level of the insurance product is low even in other countries, according to Pryor Garnett, assistant general counsel, intellectual property law, IBM World Trade Asia Corporation.

P Mohan Chandran, senior research associate with iPrex Intellectual Property Solutions, concurs. "According to a January 2003 report by CJA Consultants on patent litigation insurance, only 750 such policies were issued in a 25-year period in the EU. This was because of factors like high premium rates, low indemnity, lack of awareness and low understanding of the product among brokers."

The premium rates and indemnity offered are determined by factors like geographical extent of patent, past records of the insured and the country where it is being offered. For instance, Intellectual Property Insurance Services Corporation, which has been into underwriting intellectual property insurance risks for over a decade, provides policies with limits of liability that range between $100,000-$3,000,000 per claim with premium starting from $1,300 for a $100,000 claim limit.

Insurance companies in India, however, are not very gung-ho about the product. According to Arun Agarwal, head of Cholamandalam MS General Insurance, there are too many legal implications involved with the product. "Besides, insurers would require huge financial capacity to provide such a product because of unpredictable litigation costs," he added.

Garnett, however, says that Indian insurance companies should start offering such products for better protection of intellectual property. Ramesh B Vishwanath, advocate and registered patent and trademarks attorney, explains that financially sound entities can bear the costs of their legal cases, but small companies that do not have the financial strength for patent litigations can benefit from such a product.