Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry
December 5, 2023 11 mins

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Intellectual Property: An Asset to Protect and Leverage in the Technology, Media & Communications Industry

Often overlooked, intellectual property is an asset in the Technology, Media & Communications industry that must have effective risk management to support an organization’s overall operational resilience strategy.

Key Takeaways
  1. Many organizations continue to overlook the protection of their IP, with only 17 percent of the value of intangible assets insured against potential loss.
  2. As the importance of these intangible assets continues to grow, there is now a clearer picture of how much a company’s IP is worth.
  3. IP insurance can help companies cover litigation costs related to the enforcement or defense of patents, trademarks or copyrights, while also protecting policyholders from patent infringement claims brought against them.

When thinking of the value of a business within the technology, media and communications (TMC) industry, it’s no longer about the bricks and mortar and hard physical assets; the bigger share of a company’s value now resides in their intangible assets, such as intellectual property (IP) — including patents, copyrights and software — and customer goodwill. Although these intangibles now make up 90 percent of the value of the S&P 500, many organizations continue to overlook their protection, with only 17 percent of the value of intangible assets insured against potential loss1 — an oversight that represents a major threat to their operational resilience. 

According to Aon’s 2022 Intangible Assets Financial Statement Impact Comparison Report — conducted and produced by Ponemon Institute LLC2 — more than a third (35 percent) of the companies surveyed say they have experienced a material IP event. The majority of these IP events related to trade secrets (41 percent), with copyright issues at 26 percent. From an insurance perspective, only 29 percent say they have a trade secret theft insurance policy, which highlights the protection gap for many businesses if something were to happen to their IP. This vulnerability emphasizes the need for TMC businesses to adopt a three-phase approach to identifying and successfully managing IP risk as a keystone of their operational resilience strategy: assess, quantify and manage.

Assess the IP Risk

The logical place to start with IP risk is in the assessment phase — working out what IP a business has. For TMC companies, the risk for patents are often considered first. What if a patent is invalidated, or the business is sued for infringement and can no longer sell its products? Other areas of IP might include trade secrets, particularly in the technology space, while in media, copyright is key. The types of liability include third party IP disclosure/release, as well as contractual indemnities of IP risk and any breach of IP licensing agreements. IP ownership risks include loss of IP value due to theft or misappropriation, IP enforcement costs and loss of IP due to legal challenge. 

Quantify the IP Value

Quantifying, or putting a dollar figure against the IP value of a business, has been historically difficult. However, as the importance of these intangible assets grows, there are now options for organizations to gain a clearer picture of how much their IP is worth. Aon, for example, has developed an AI-driven platform that can help more accurately assess the value of a firm’s IP by using big data sets. Results are then vetted by human expertise to arrive at an accurate value. 

Manage and Protect IP

With a clearer picture of the IP and its value in a TMC business, the third phase of the risk management framework relates to IP management and protection. It’s common for employees in the TMC sector to move from business to business, increasing the risk of someone taking trade secrets to a competitor. Businesses therefore need to implement protections within their employment processes to prevent this from happening. Maintaining a trade secret register and documentation system is the key to make it easier to pinpoint and prove the source of the problem.

Quote icon

Reducing the risk of an IP infringement is also vital. Businesses can work with a law firm to understand the patent landscape, where the business operates and where there could be infringements or crossover

Sunneth Lawrence
Client Manager, IP Solutions, United Kingdom

The Importance of IP Insurance 

Insurance additionally plays a key role in the management phase. Intellectual property insurance typically serves two purposes — it helps companies cover litigation costs related to the enforcement or defense of patents, trademarks or copyrights, and it protects policyholders from patent infringement claims brought against them. In the TMC space, for example, there are many cases where businesses will offer contractual indemnities to their customers who could have exposure to IP infringement risk because they are using the TMC business’s products. IP insurance can offer an indemnity to customers if they are sued. This cover has grown in importance in recent years, particularly in technology, as litigation continues to increase. 

The enforcement side is also vital. This is especially true for smaller businesses in the early stages of growth. These companies may have a lot of IP, yet lack the resources to enforce their IP rights and fund litigation if another company infringes. Insurance can help these firms protect themselves from larger companies.

But it’s not just in defending or enforcing IP where insurance can help. IP-backed lending is an innovative lending method that helps companies unlock potential value. It does so by leveraging IP as collateral to obtain new capital from banks who have the confidence to lend, given the protection of an insurance policy that will disburse funds in the event of a default by the borrower. Because there is an insurance wrap and banks can get capital relief — which means the amount of capital they need to hold is reduced given the insurance protection — there is more of an appeal to provide these loans, allowing businesses in the TMC sector to access funding to grow and innovate. 

IP: The Backbone of Every TMC Business

IP is core to every TMC business; without it, there is no business. In order to retain operational resilience, the same level of investment that might be made in protecting physical assets, like property and equipment, therefore needs to also apply to a company’s IP. 

With a structured risk management framework focused on assessment, quantification and management, organizations can understand how to best protect their IP, while also taking advantage of innovative IP-based opportunities, like IP-backed lending. 

Quote icon

Intellectual property is key for most businesses operating in the TMC Industry — whether it’s a startup or a multinational — business leaders should be aware of all the risk mitigation tools available to them.

Zamani Ngidi
Technology, Media and Communications Industry Co-Leader, EMEA

1 https://oceantomo.com/intangible-asset-market-value-study 
2 https://www.aon.com/insights/reports/2022/2022-aon-ponemon-global-report 

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

Terms of Use

The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. To use information contained herein, please write to our team.

Aon's Better Being Podcast

Our Better Being podcast series, hosted by Aon Chief Wellbeing Officer Rachel Fellowes, explores wellbeing strategies and resilience. This season we cover human sustainability, kindness in the workplace, how to measure wellbeing, managing grief and more.

Cyber Labs

Stay in the loop on today's most pressing cyber security matters.

Cyber Resilience

Our Cyber Resilience collection gives you access to Aon’s latest insights on the evolving landscape of cyber threats and risk mitigation measures. Reach out to our experts to discuss how to make the right decisions to strengthen your organization’s cyber resilience.

Employee Wellbeing

Our Employee Wellbeing collection gives you access to the latest insights from Aon's human capital team. You can also reach out to the team at any time for assistance with your employee wellbeing needs.

Environmental, Social and Governance Insights

Explore Aon's latest environmental social and governance (ESG) insights.

Q4 2023 Global Insurance Market Insights

Our Global Insurance Market Insights highlight insurance market trends across pricing, capacity, underwriting, limits, deductibles and coverages.

Regional Results

How do the top risks on business leaders’ minds differ by region and how can these risks be mitigated? Explore the regional results to learn more.

Human Capital Analytics

Our Human Capital Analytics collection gives you access to the latest insights from Aon's human capital team. Contact us to learn how Aon’s analytics capabilities helps organizations make better workforce decisions.

Insights for HR

Explore our hand-picked insights for human resources professionals.

Workforce

Our Workforce Collection provides access to the latest insights from Aon’s Human Capital team on topics ranging from health and benefits, retirement and talent practices. You can reach out to our team at any time to learn how we can help address emerging workforce challenges.

Mergers and Acquisitions

Our Mergers and Acquisitions (M&A) collection gives you access to the latest insights from Aon's thought leaders to help dealmakers make better decisions. Explore our latest insights and reach out to the team at any time for assistance with transaction challenges and opportunities.

Navigating Volatility

How do businesses navigate their way through new forms of volatility and make decisions that protect and grow their organizations?

Parametric Insurance

Our Parametric Insurance Collection provides ways your organization can benefit from this simple, straightforward and fast-paying risk transfer solution. Reach out to learn how we can help you make better decisions to manage your catastrophe exposures and near-term volatility.

Property Risk Management

Our Property Risk Management collection gives you access to the latest insights from Aon's thought leaders to help organizations make better decisions. Explore our latest insights to learn how your organization can benefit from property risk management.

Technology

Our Technology Collection provides access to the latest insights from Aon's thought leaders on navigating the evolving risks and opportunities of technology. Reach out to the team to learn how we can help you use technology to make better decisions for the future.

Top 10 Global Risks

Trade, technology, weather and workforce stability are the central forces in today’s risk landscape.

Trade

Our Trade Collection gives you access to the latest insights from Aon's thought leaders on navigating the evolving risks and opportunities for international business. Reach out to our team to understand how to make better decisions around macro trends and why they matter to businesses.

Weather

With a changing climate, organizations in all sectors will need to protect their people and physical assets, reduce their carbon footprint, and invest in new solutions to thrive. Our Weather Collection provides you with critical insights to be prepared.

Workforce Resilience

Our Workforce Resilience collection gives you access to the latest insights from Aon's Human Capital team. You can reach out to the team at any time for questions about how we can assess gaps and help build a more resilience workforce.

More Like This

View All
View All
Subscribe CTA Banner