ABATEMENT COVERAGE
The Abatement policy, also known as a Pursuit policy, reimburses litigation expenses to enforce intellectual property against alleged infringers.
If the IP lawsuit won with a recognized award, the organization keeps recoveries remaining after reimbursing insurer-paid funds. Invalid counterclaims are covered under the abatement suit, should the insured initiate a claim and the defendant contends they are not infringing and insists the insured’s IP is invalid.
This important insurance also empowers companies to stand their ground when threatened by lawsuits. This eases the temptation to settle cases and/or succumb to licensing agreements or royalties that can harm a company’s competitive advantage. The policy also covers invalid counter claims and helps protect market share.
The Abatement policy is based on claim expenses. Policy terms can range from 1 to 3 years with limits ranging form $250,000 to $10 million or higher. The policyholder’s co-payment is 20 percent of the minimum self-insured retentions (SIR) at 2.5 percent of claim limits. It may not matter if the activity was known or unknown at the time of purchase of the policy
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Case Study: Abatement Coverage: Software Development |
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A software developer created a management process program featuring dashboards, graphical interfaces and collaborative access. The product is shown to a potential customer who signs a confidentiality agreement.
Instead of buying the product, the potential customer hires another developer to create software that mimics the initial developer’s product by using different colors but similar graphics for a different industry. Upon discovery, the original developer uses Abatement coverage to stop the potential customer from marketing the similar product. |
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Case Study: Abatement Coverage: Career Placement Firm |
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A career placement firm fired an employee for unethical conduct. The former employee started his own career placement firm and notified his former employer’s contacts to offer his services.
He also notified a business reporter about his new company hoping to gain publicity. The business reporter immediately noticed that the business cards not only looked nearly identical, but the company name was almost the same and its website had quite similar typestyle, layout and design elements. The employer was able to successfully sue the former employee, who not only had to close down but pay damages for causing market confusion. |
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