Birgit Rummel, Transaction Risk Insurance Manager and IP Lead, Tokio Marine HCC
In a world where innovation drives economic value, safeguarding intangible assets has become as critical (or more) as insuring physical infrastructure. As businesses invest in patents, trademarks and copyrights, the threats to these assets grow, making Intellectual Property (IP) insurance a strategic necessity.
Having been active in M&A and the insurance industry for decades, I have seen the importance and the attributed value of intellectual property evolve in parallel with groundbreaking changes in society and business. Looking back at the history of IP insurance, this kind of coverage first started to be offered in the United States in the late 1970s, as a response to numerous IP lawsuits that American companies were caught up in.[1] Back then, approximately 80% of the value of any business was to be found in its tangible assets – the property, the machinery and the products it produced – whereas now, half a century later, that picture has been flipped on its head.
Today, the real value of a business often lies in its intangible assets, estimated to be around 90% of the total value for S&P 500 companies[2]. Of the intangible assets, a varying percentage corresponds to intellectual property (including patents, trademarks and copyrights), which can be protected legally, while the rest is made up of goodwill, brand recognition, software, customer relationships and proprietary processes.
The share that IP represents of a company’s total intangible assets varies by industry: in technology and pharma, this percentage can be quite high due to reliance on patents and software; for consumer brands, this may be slightly lower as brand goodwill takes a larger share of the intangible assets than trademarks and brand value; for manufacturing, IP may be less dominant, with process know-how and customer contracts contributing more.
With the intrinsic value of any given company shifting towards intangible assets, it appears that only some businesses have recognised this shift and responded to protect themselves, while many others have not yet seen the need to address this risk via insurance.
The possible reasons for this are varied, from lack of awareness about the product and how it works to believing that their business does not hold any IP, or that it is not at risk. However, evidence shows that the threats to company IP have never been more pressing.
According to LexMachina’s 2025 Patent Litigation Report[3], more than $3 billion in damages were awarded in patent claims in the U.S. last year – a 20% increase over the prior year. Looking at recent headlines, Apple was ordered to pay $110 million to a Spanish patent owner in a wireless tech patent case[4] and Verizon owes $175 million due to another wireless patent dispute[5].
IP insurance is a specialised form of coverage designed to protect businesses and individuals from the financial consequences of IP-related disputes or infringements. These may include the enforcement of one’s own IP rights or the legal and financial exposure involved in infringing on others’ rights.
The most common type is a defence policy which provides cover for damages, defence and plaintiff costs. On the opposite end we have enforcement cover, which allows policyholders to sue a third party that has breached their IP and pays for the associated legal expenses.
The need for IP insurance is particularly relevant for any industry focused on R&D, such as manufacturing, tech and biotech companies, and creative industries such as media, fashion and entertainment. IP coverage can be particularly valuable for smaller businesses and start-ups that rely heavily on a single patent for their business model.
IP insurance stands out within the non-life insurance market due to the nature of what it protects. While traditional policies cover tangible losses—such as property damage or liability, IP insurance addresses legal complexity, jurisdictional nuances and the evolving interpretation of laws, especially in the context of digital technologies.
Legal defence in IP cases can cost hundreds of thousands of euros, particularly when litigating across borders. This is especially relevant as the risk of getting drawn into litigation is heightened by the so-called ‘patent trolls’.
Patent trolls – more formally known as Non-Practicing Entities (NPEs) or Patent Assertion Entities (PAEs) – are individuals or companies, usually based in the U.S., that acquire patents not to use or develop them, but to enforce them aggressively against others for financial gain, usually through litigation or licensing demands.
Considering that U.S. IP lawyers charge as much as $1,500 or more an hour, the potential costs of falling prey to a patent troll can be prohibitive for any business.
In terms of registered innovation, Europe has seen steady growth in patent filings in recent years[6]. One area of innovation, heavily backed by EU funding and innovation programs, is the rise of sustainable technologies, which are creating demand for insurance products that protect green patents and clean-tech startups’ IP portfolios. Another trend to watch is the increasing deployment of solutions powered by artificial intelligence, which raises the question of who owns the generated IP.
Regarding regulation, the introduction of the Unified Patent Court (UPC) in 2023, which allows a single legal proceeding for patent litigation across multiple EU countries, marks a regulatory turning point for anyone owning or using IP. While the court streamlines enforcement, it also means the risk exposure spans a broader geography, making cross-border IP insurance more essential.
Finally, the convergence of cyber risk and IP theft is creating new hybrid risk profiles, as IP can be stolen through cyber breaches, to which some insurers are responding with bundled cyber-IP policies. However, while cyber insurance is also essential to most businesses, bundled offerings can fall short of coverage as important areas of risk may be excluded.
In addition to its reputation as a financial hub, Luxembourg is increasingly known for tech and innovation, particularly in fintech, space mining and green energy solutions. With strong government support for innovation (e.g. Luxinnovation) and EU-level funding mechanisms, Luxembourg startups are rich in IP but underinsured in terms of IP protection.
10%
only 10% of European SMEs had registered any IP rights
A 2022 survey by the European Union Intellectual Property Office (EUIPO) revealed that only 10% of European SMEs had registered any IP rights[7]. The report also states that 15% of owners of registered IP rights had experienced IP rights infringements, most commonly with trademarks: 14% of SMEs with registered IP rights reported an infringement with this IP type. This underlines an opportunity and a risk: businesses are building value on unprotected or under-defended IP.
Becoming an IP insurance underwriter requires a combination of technical, legal and insurance-specific knowledge, as well as industry experience. As with any young product, there is still considerable lack of awareness about the importance of IP insurance in protecting IP as any other property. Therefore, good commercial capabilities would round up the profile.
Europe’s future economy hinges on creativity, innovation and technology, all of which depend on intellectual property. Yet the insurance market is still catching up with the speed and scale of intangible risk. IP litigation is increasing and anyone whose business relies on intangible assets should address the risks and opportunities this entails. For Luxembourg, positioned at the intersection of finance and tech, the benefits of embedding IP insurance into startup ecosystems, investment portfolios and legal frameworks are significant.
[1] Aizhen Li, “Research and Enlightenment of Intellectual Property Insurance” in Open Journal of Social Sciences, Vol. 6 No. 11, Nov 2018; https://www.scirp.org/journal/paperinformation?paperid=88338
[2] Chor Meng Tan “Driving Innovation Through Intangible Assets And Intellectual Property Rights” in Forbes, 01.06.2021; https://www.forbes.com/councils/forbesbusinessdevelopmentcouncil/2021/06/01/driving-innovation-through-intangible-assets-and-intellectual-property-rights/
[3] Globe Newswire “Lex Machina releases 2025 Patent Litigation Report”, 3 Jun 2025; https://uk.finance.yahoo.com/news/lex-machina-releases-2025-patent-190000581.html
[4] Blake Brittain “Apple owes $110 million in Wireless tech patent case” in Reuters, 1 Jul 2025; https://www.reuters.com/legal/litigation/apple-owes-110-million-wireless-tech-patent-case-us-jury-says-2025-07-01/
[5] Blake Brittain “Verizon owes $175 million in patent infringement case, Texas jury says” in Reuters, 24 Jul 2025; https://www.reuters.com/legal/litigation/verizon-owes-175-million-patent-infringement-case-texas-jury-says-2025-07-24/
[6] EPO press release “Patent Index 2024: European innovation remains robust amid global economic uncertainties”, 25.03.2025; https://www.epo.org/en/news-events/press-centre/press-release/2025/1352247
[7] EUIPO “2022 Intellectual Property SME Scoreboard”, Sep 2022; https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/IP_sme_scoreboard_study_2022/IP_sme_scoreboard_study_2022_en.pdf
The information presented in this article is for informational purposes only. It should not be considered as legal, regulatory or financial advice, nor as an exhaustive description of the products or services mentioned.
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