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What If Your Big Idea Isn’t Yours? Intellectual Property Risks

By November 25, 2025Personal Insurance

What If Your Big Idea Isn’t Yours? Intellectual Property Risks

Your business is chugging right along, creating products and efficiencies, offering services and deploying marketing strategies that separate you from competitors. Everything is working flawlessly.

And then it happens. You receive notice that something about your business has drawn the attention of an intellectual property (IP) owner and she’s not pleased. She demands that you cease and desist any activity involving her IP and informs you of her intent to follow up with a formal allegation of financial damages.

Hear that sound? It’s your business crashing into a brick wall.

“You took something of mine without permission, so now I’ll take your money and future.”

— Angry person who thought of your idea first

Such a claim, even if proven groundless, can force your business to make abrupt changes to workflows and incur substantial legal defense costs. At best, the claim is a crushing blow. At worst, it could mean the end of your business.

To protect yourself and your business, you need to understand the various types of intellectual property, examples of IP-related risks to your business and how to prepare financially for such a risk with insurance.

Slow Down … What Is ‘Intellectual Property’?

The World Intellectual Property Organization (WIPO) defines “intellectual property” as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”

Four common types of IP are patents, trademarks, copyrights and trade secrets:

  • Patent: An exclusive right granted for an invention that is registered with the United States Patent and Trademark Office (USPTO).

  • Trademark: A sign that distinguishes the goods or services of one enterprise from those of another that is registered with the USPTO.

  • Copyright: Describes the rights that creators have over their literary and artistic works. Registration is optional, but may be done with the United States Copyright Office.

  • Trade Secret: Information used in a business to gain a competitive advantage. Trade secrets are not required to be registered.

How Big of a Deal Is Intellectual Property?

It’s big. Really, really big. In June of 2018, the USPTO issued patent number 10 million. The first patent, granted in 1790 and signed by George Washington, was for “improvements in the making of pot ash and pearl ash.”

The internet age brought a surge in IP registrations in the late 1990s that continues today. IP rights can range from specific software code to broader concepts. For example, one patent owner, Personal Audio, sued podcasters over a claim to the concept of podcasting. U.S. Patent Officials invalidated some claims, and the courts upheld the decision, protecting podcasters—at least for now.

Is My Business at Risk?

The range of IP ownership is vast. The best way to identify exposure is by consulting an IP law firm. However, because that’s cost-prohibitive for many businesses, the responsibility of due diligence often falls on the business owner.

Examples of technology-related IP risks include:

  • Building an app using patented code or functionality.

  • Using third-party software to improve business processes.

  • Copying content from another website without permission.

  • Including a copyrighted video in marketing emails.

Examples of non-technology-related IP risks include:

  • Using trademarked slogans, songs, or logos in any medium (TV, radio, print, etc.).

  • Manufacturing products with protected designs, molds, or formulas.

  • Serving a patented recipe in a restaurant.

Pretty Please? Must I Always Pay to Use Someone’s IP?

Permission from the IP owner is essential, though in some cases, it may be free. Some companies publish terms of use for their IP on their websites. In some situations, fair use laws may apply and allow use without permission.

In many cases, owners require a licensing fee. Failure to pay can result in allegations of financial or reputational damages. Many businesses settle quickly to avoid high legal costs—even when they might have prevailed in court.

According to the American Intellectual Property Law Association’s 2017 Economic Survey:

  • The average legal cost of IP litigation involving $1M–$10M was $1.7M.

  • Cases with less than $1M at stake still averaged $800,000 in legal costs.

Insurance for IP Claims

Standard business liability insurance typically covers:

  1. Bodily injury

  2. Property damage

  3. Personal and advertising injury

The only IP-related coverage you might have is under personal and advertising injury, and even that is often limited. For example, coverage might only apply if the infringement is directly tied to an advertisement.

Specialty insurance policies are available to cover specific IP exposures. For example:

  • Patent insurance can protect against lawsuits for patent infringement.

  • Other IP policies vary and may start at coverage limits of $1 million.

Bonus: Some policies help cover your legal costs if you need to sue to protect your IP rights.

This IP stuff is confusing and scary!

— An overwhelmed business owner

Yes, IP rights have become easier to violate, and owners can be aggressive in enforcing them. But technology has also made protecting your IP easier.

You don’t have to navigate this alone. A Trusted Choice® Independent Insurance Agent can help you identify your risks and the IP coverage options best suited for your business. Contact your Trusted Choice® agent today.