Online Seller Insurance
Online sellers face a rash of problems. It is easy to set up an online store and begin selling, but there are plenty of risks. Thankfully, some of the most damaging risks can be covered by IP.Insure’s Online Seller IP Insurance.
Intellectual Property Insurance for Amazon Sellers
IP.Insure’s Online Seller Insurance Policy is designed specifically for online sellers. Whether you are a reseller of someone else’s products, or whether you sell products custom made for you, IP.Insure’s Amazon seller insurance policy is for you.
For smaller Amazon sellers, the policy includes $250,000 of coverage split between IP enforcement and defense. This can be used for trademark enforcement, patent enforcement (if you have patents – utility or design – on your product), as well as defense when you get sued by a troll or a competitor.
A $250,000 policy is appropriate for online sellers doing less than $500,000 annual revenue. A policy of this size might cost $300-500/mo.
For oneline retailers doing $500,000 to $2,000,000 per year, an Amazon seller insurance policy of $500,000 or $1,000,000 might be more appropriate. These policies might cost $600-1500/mo, depending on the coverage.
The problem with General Liability Insurance.
General liability insurance covers you for many of the day to day problems that can occur.
But General Liability Insurance does NOT pay for any intellectual property issues, such as trademark infringement, patent infringement, and the like.
When a competitor, such as an overseas competitor, copies your product, your branding, your messaging – they are taking advantage of your hard-earned equity in the marketplace.
General Liability Insurance does not pay for any enforcement when your product is stolen in this manner. But a competitor riding on your coattails is theft, plain and simple.
IP Insurance for Amazon Sellers
Amazon sellers (and all online sellers such as eBay, Etsy, and the like) face immense competition. It is far easier for a competitor to copy your branding, your written copy, and even your product than it is for them to start from scratch.
IP.Insure’s Online Seller Insurance Policy covers the hardest part of your business: your reputation. This is coverage that general liability insurance does not cover, nor does conventional Amazon seller insurance or even regular business insurance.
Your ‘intellectual property’ is the essence of your online business: it is your reputation.
Every Amazon Seller Has Intellectual Property – and it should be insured.
No matter what you sell on Amazon, eBay, or Etsy, your business has intellectual property.
The first thing your business has is a name. Your name is the way customers come to know and respect you. Your name spreads from one product to another, so that customers come to expect a certain level of quality and value from your brand.
Your name is really two elements: the name itself and the graphic design of your logo.
The next thing your business has is a brand, which is more than just the name. It is the colors, fonts, icons – the look and feel of your website, your products, your packaging.
The more distinctive and unique your naming, logo, and overall branding, the more customers will associate it with you and your company. And the more vulnerable you will be to a competitor who has a ‘look-alike’ name, logo, or other branding elements.
IP.Insure’s Online Seller Insurance Policy is a specialized intellectual property insurance policy that keeps competitors from riding on your hard-won coattails when they copy your branding. Your Amazion seller insurance policy lets you hunt down the infringers and have them cease and desist.
This type of problem is something that few insurance companies cover and is never included in product liability insurance, general liability insurance, or excess liability insurance coverage.
IP Insurance is Not Just For Big Retailers
Any time you sell on line and get a smidgen of success, other online sellers take notice. Competitors notice your success and try to imitate it wherever they can.
Amazon sellers with less than $100,000 of sales a year can be copied.
One of the easiest ways to copy your success is to mimic your branding and naming. The competitor might use a very close copy of your name, or may use your ‘trade dress,’ which means the packaging, color schemes, fonts, and other elements that project your unique brand.
I have seen companies with merely $10,000 of sales be completely ripped off by overseas companies who copy entire websites. In one case, the overseas copier forgot to take my client’s email address off of one of the pages that they copied. Thankfully, I was able to get that copier shut down and now my client has grown her business to $500,000 a year!
Everybody Can Get Sued By a Patent Troll
Even the smallest online seller can get sued by a patent troll. And none of your other insurance policies will help you.
Over the years, patent trolls have become very sophisticated. They rarely sue the big companies first – they like to start at the bottom and work their way up.
The common strategy is for a patent troll to sue the smallest companies first, collect a little bit of money from each one, then amass a war chest to fight the biggest companies.
One of my patent clients is an Amazon seller who got sued by a patent troll. My client had developed a new product that was interchangeable with other products on the market. One company – the patent troll – had built a small patent portfolio that captured specific features that made these products interchangeable. If my client’s product could not be interchangeable, it would be worthless.
Because patent lawsuits can collect damages over the past six years, the patent troll sat on the sidelines for several years and let my client sell more and more products. Nearing the end of the sixth year, the patent troll struck – demanding royalties for all the previous six year’s worth of sales.
Our Amazon seller insurance policy has IP protection coverage that pays for this situation. Even if you settle with the patent troll for some amount of money, that settlement cost is paid for by the insurance policy (up to the policy limits, of course).
Why IP.Insure?
IP.Insure is the only insurance broker in the US that specializes in intellectual property insurance.
Our founder, Russ Krajec, is a nationally recognized patent attorney and author of “Investing In Patents.” He has written nearly 1000 patent applications for clients ranging from startup companies to the largest Fortune 500 companies.
Because we specialize in IP insurance, we know it inside and out. We have relationships with the top insurers in this space, and know whose policies give the best coverage in each situation.
Our other benefit is that we come from an IP background, not an insurance background. Our sister company, BlueIron, finances patents for startup companies as well as loans using IP as collateral.
We know IP. And we know IP insurance.
Trademark enforcement as part of your IP.Insure intellectual property insurance policy gets you the ability to go after people who ride on your branding coattails.
This includes sending letters to infringers, Amazon/eBay/Etsy take down actions, DMCA take down notices, and appropriate lawsuits in state and/or federal court.
Many times, small companies have a trademark on their product but larger companies will merely start using it without doing a clearance search. For example, the Cleveland Indians baseball team changed their name to the “Guardians” – only to recognize afterward that the Guardians already existed as a local roller derby team.
IP enforcement insurance gives you the financial horsepower to go after infringers and preserve your investment in your brand.
Registered trademarks are far more powerful to enforce than unregistered trademarks, and we encourage you to register your trademarks whenever possible.
The registration process guarantees that you have the full rights to your branding. In addition, the laws are very powerful for owners of registered trademarks to enforce their rights.
Trademarks represent your investment in your business. Your reputation takes a long time to build, and your logos, marketing phrases, color palette, font choices, graphics, packaging, and other elements represent your company’s ‘look and feel’ as well as the instantly-recognized elements of your brand.
Your brand takes a tremendous amount of work to create and maintain, and being able to keep other companies from copying you preserves your investment.
IP enforcement insurance for your trademarks will give you the power to keep others from copying you – and preserve that investment you have in your reputation.
One way to know if you might infringe someone else’s patent is through a “Freedom to Operate” search, which is sometimes called a “clearance search” or “right to use search.”
An FTO search is performed for each of your *products* (not your patents) and searches for existing patents that might be used to sue you.
A defensive intellectual property insurance policy will use a freedom to operate search as part of the underwriting. If you have an attorney do a clearance search or freedom to operate search, the insurance underwriters will use that search to help them identify the risk.
Freedom to operate searches are done on each of your products or each product family, and once you have an initial search done, periodic updates to the search should be done whenever you modify or update your product/product family.
No. The standard forms for General Business Liability were changed in the late 1990’s to *remove* any coverage for intellectual property damages.
This means that trademark infringement (where another company starts using your brand’s likeness) is not covered.
This means that patent infringement (where another company copies your patented product) is not covered.
This means that copyright infringement (where someone copies your images, your website, your blog, your content) is not covered.
It also means that inbound lawsuits (when someone accuses *you* of infringing) is not covered.
The only way to get coverage for IP-related risks is through IP-specific insurance policies.
In the same way you cannot buy fire insurance while your house is burning, most insurers will not cover you for IP infringement that you know about – or should have known about.
Underwriters will often do patent searches, litigation searches, and competitive analysis to uncover the risks of your IP – either the risk that you will need to enforce your IP or the risk that you might be sued by someone else. Some industries are more litigious than others, and so insurance costs more.
Some insurance policies may have a delay, such as 90 days, where they will not pay a claim for litigation. They make that up by extending the policy period for 90 days on the back end.
The pre-existing conditions limitation is an incentive for you to get insurance early – well before you run into trouble. Not only can you sleep better, you will have the resources there when you need it.
Each patent insurance company has its own suite of services. In general, insurance companies want to minimize their risk exposure, so it makes sense for them to help you in many different ways.
Some companies will – for free, as part of your enforcement policy – send letters to possible infringers. These letters are from the insurance company, which signals that you have muscle behind you. Patent infringement lawsuits are often a big game of “chicken” where both sides threaten to “go the distance.” Once the infringer knows you are protected by insurance and your expenses are already covered, they are much more likely to settle sooner.
Many insurance companies will reimburse your attorney’s fees, but they want to make sure the attorneys have experience. They will not reimburse for any attorney who is willing to take your case, but will reimburse for experienced attorneys with former first-chair experience in Federal Court for your type of litigation. The insurance companies want you to win.
BlueIron will always help you with patent strategy and with evaluating the IP you already have. We invest in IP, so we look at your IP from the standpoint of value. We are always here to help you get the best value out of your IP.
An independent insurance broker does not work for any insurance company.
We work for you.
Our job is to negotiate a policy that fits your needs, not sell you a policy that benefits the insurance company.
Each of the dozen or so providers for IP-related insurance has a particular interest. Some companies like semiconductor IP, while other companies prefer medical devices. (Nobody seems to like pharmaceutical patents, by the way.)
Also, each policy has different sets of triggers which pay for your loss, different amounts they will pay in certain circumstances, and so forth. Our job – as independent brokers – is to negotiate with the underwriters to address your specific needs.
For very simple situations, there are policies that are, more or less “off the rack.” These policies have standardized pricing and can be issued very quickly.
Other times, your risk exposure might not fit a cookie-cutter approach, so there is room to tailor the coverage.
Note that custom-designed insurance policies do *not* mean expensive. In many cases, a broker can tailor-make your policy so that you eliminate coverage for things you don’t need.
Yes! BlueIron is a licensed insurance agent, and acts as an insurance wholesaler for many brokers and agents. Please have your insurance agent contact us.
If you do not have an agent, you can purchase insurance directly through BlueIron.
BlueIron does not provide any other insurance other than Intellectual Property related insurance.
We offer IP-related insurance from over a dozen different insurance companies. One of the benefits of being an independent broker is that we can pick from many providers so you get the coverage that works best for you.
For example in patent insurance, some carriers prefer troll-only insurance, while other carriers prefer competitor-only insurance without troll coverage. Each carrier has a different sweet spot of the risks they want to insure – and the risks they want to avoid insuring.
BlueIron has relationships with over a dozen different providers, and we know which insurance company would be the best fit for you. When we quote a policy, we can have several different insurers competing for your business.
In general, IP insurance is a specialty insurance where several different companies compete. The underlying insurance carrier is usually a group of Lloyd’s of London syndicates that focus on intellectual property insurance.
Absolutely. We know you have good relationships with your attorneys, and we are happy that you want to use them.
Our only requirement is that the attorneys have prior first-chair experience in intellectual property litigation in federal court. If your attorney does not have this experience, we are happy to recommend attorneys who do.
We do offer a discount if you use attorneys who we have previously vetted, but you are not required to use them.
With our patent enforcement insurance policies YOU control all aspects of how to enforce your patent.
Sometimes you may wish to strongly enforce their patent to prevent a specific competitor from operating in your space. Other times, you may want to obtain a license agreement from a competitor. Still other times, you may want to cross license your patent for a technology a competitor may have.
In every case, YOU control how the enforcement proceeds.
This is why patent insurance is so important.
Without insurance, you have to use contingency fee attorneys. Contingency fee attorneys usually get the power to settle the lawsuit, so they determine when to quit, not you. In so many cases, a contingency fee attorney might settle for exactly what their fees were – and you get nothing.
Patent insurance comes in two basic forms: patent enforcement and patent defense. Enforcement is where someone infringes your patent and you need to enforce your rights. Defense is when someone else accuses you of infringing their patents. This can be a competitor or a patent troll.
Enforcement insurance typically costs about 1-1.5% per year of the total amount of insurance. For example, $1,000,000 of patent enforcement insurance will cost about $10,000/year.
Defense insurance typically costs about 1.5% per year. $1,000,000 of patent defense insurance will cost about $15,000/year.
These amounts are guidelines, and your actual premiums will only be determined after due diligence and underwriting.