INSURING THE INTANGIBLE: DEVELOPING INTELLECTUAL PROPERTY INSURANCE IN ZIMBABWE
HARARE, Intellectual property (IP) is an intangible asset that is created or acquired by a company. Unlike tangible assets, such as plant equipment and goods; IP assets are not physical in nature. The difference between tangible and intangible assets does not end there, as tangible assets are vigorously identified, valued and reported in the balance sheet of companies or institutions, whilst IP assets generally are not. However, like tangible assets, IP assets should be systematically identified, protected and maintained to maximise their intrinsic value and strategic advantage, and minimize the risks of third-party abuse or inadvertent loss.
In its Intangible Capital in Global Value Chains report of 2017, the World Intellectual Property Organisation (WIPO) revealed that nearly one-third of the value of manufactured products sold around the world derived from “intangible capital” including brands, designs and technology. While sometimes misunderstood, the value of intellectual property (IP) assets should never be underestimated.
In Zimbabwe most companies have insurance coverage in place for tangible property interests, but insurance for IP continues to be a rarity even though IP assets are extremely valuable, and very difficult-if not impossible-to replace. It is devastating for a business to lose a valuable IP right to a competitor or other third party because of financial inability to post a vigorous defense or offense. The reality is that everyone’s business faces an IP risk. If you make; use, sell, offer for sale, distribute, supply or import a product or service that has features that give you a competitive edge, you have a potential IP exposure.
IP Insurance coverage is an Insurance solution designed to protect an institution’s most precious assets – IP. This type of insurance describes those coverages that protect an organization against a threat to its own IP (generally known as abatement or enforcement coverage)—or an allegation that it infringed upon the rights of another. The Zimbabwean Insurance industry is yet to come up with policies specifically designed to protect IP rights.
However, before according insurance protection to IP rights, certain caution needs to be undertaken. First the issue of IP knowledge has to be addressed, in that awareness has to be driven towards increasing knowledge on IP. Secondly, insurance companies would need to come forward with specialised training in underwriting skills and effective assessment to avoid the challenges faced with processes involving IP valuation to accord protection, which ordinarily is a mammoth task in terms of acquiring expertise and suitable skills.
While there may be a lot of potential for IP insurance, the question is whether the Zimbabwean Insurers are equipped enough to respond to this potential IP insurance market. These policies are not stereotypical, but are specialised and dynamic. Some of the challenges include the ability to assess risk, vis-à-vis, design of the policy terms and conditions relating to pricing of the product. Another challenge relates to the volatility of IP as intangible property. The rapid change in exposures and technology can render IP value obsolete making it difficult to measure its loss. The value of IP should never be under estimated and with preventive measures of insurance policies, IP can be efficiently protected. By Nobert Musa Phiri: Partner Muvingi & Mugadza Legal Practitioners