Selena Kearvell
Managing Director; UK Food and Beverage Industry Practice Leader
For many companies, a significant portion of their net asset value is represented by intangible assets. Intellectual Property (IP) falls into this category. While protecting physical assets is a given, "creations of the mind" can also be precious. They can drive future growth and financial success.
Food and beverage businesses often invest heavily in brands, product development, recipes and packaging design. Intellectual property disputes can arise where competitors challenge trademarks, branding or proprietary processes.
So, how can you protect them? Intellectual property insurance can help cover the legal costs associated with defending your rights or pursuing action where your intellectual property has been infringed.
What is intellectual property?
Intellectual property (IP) rights are a vital asset in food and beverage manufacturing. They provide you with a competitive advantage, which includes:
- Patents
- Copyrights
- Trademarks
- Design rights
- Trade secrets.
IP is a differentiator. Companies that own IP can monetise it by creating new products and services, licensing it, or selling it. You can create your competitive edge through your:
- Recipes
- Formulations
- Brand names
- Packaging
- Proprietary technology
- Manufacturing know-how.
While legal protections for your IP help to secure these assets, legal rights alone do not eliminate financial risk.
Why food and beverage companies are exposed
The scale of a company’s IP is growing. This means protecting these assets is a concern for those looking to sustain growth, revenue, and business resilience.
Key IP risks in the food and beverage sector include:
- Competitor disputes over recipes, branding, or formulations
- Supplier or partner conflicts on ownership rights
- Allegations of infringement when launching new products
- Contractual disputes over licensing or royalties
- Litigation-funded non-practising entities (NPEs) targeting your business
- Brand damage from disputes or product withdrawals.
Legal costs can be significant. This means it’s essential that you have access to the funds to either defend infringement allegations or enforce your IP rights.
Why intellectual property insurance matters
Traditional insurance typically offers limited or no cover for IP risks. Without insurance, companies may face hard choices when dealing with an IP dispute, they can:
- Fund litigation internally
- Settle unfavourably
- Withdraw products
- Accept revenue loss.
Marsh’s specialist IP team can support you in securing IP insurance. This provides the capital and resilience to vigorously defend or enforce your IP rights when a dispute arises. We’ll help you to achieve the best commercial outcome for the business.
Financial impact of intellectual property disputes
IP disputes can lead to significant costs, damages, or settlement payments. A company may also suffer lost revenue from:
- A product withdrawal
- A delayed launch
- Missed contractual payment
- Reputation and brand damage
- Lost IP rights if it is unable to successfully defend or enforce those rights.
These risks directly affect balance sheets, growth plans, and investor confidence.
Example claim scenario
A UK artisan chocolate maker launched a limited-edition bar. A competitor claimed the product name and branding infringed their trademark. They threatened legal action and a product recall.
Without IP insurance
The loss could cost the business over £500,000 in legal fees, withdrawal costs, lost revenue, and brand damage.
With IP insurance
IP insurance can cover:
- Defence costs and damages
- Product withdrawal costs
- PR and brand advisor costs
- Loss of profits due to an injunction.
With these costs funded, the business can take swift action to defend the claim and manage the reputational impact. This thereby maintains market confidence and protects future product launches.
Intellectual property insurance for the food and beverage sector: what does it cover?
IP insurance helps organisations transfer risk off their balance sheet. This provides financial certainty when defending or enforcing IP rights.
Coverages include:
- Defence costs and damages or settlements cover for alleged infringements of your own or your licensed IP
- Indemnified party cover if you are licensing out your IP
- Pursuit costs to enforce your IP rights against third-party infringers
- Invalidation challenge cover
- Contractual defence and disputes cover for non-payment of royalties, breach of confidentiality, and breach of warranty
- Employment contract breach
- Loss of future profits, if products are withdrawn
- Brand and reputation protection, including PR consultancy costs
- Emergency costs and mitigation costs.
Who is intellectual property insurance for?
- Small, medium, and large food and beverage manufacturers.
- Branded product companies.
- Ingredient and formulation developers.
- Private label producers.
- Companies licensing technology or recipes.
- Businesses expanding into new markets.
If you’d like to discuss intellectual property insurance, contact your Marsh Commercial representative. Or, get in touch with our food and beverage manufacturing team.
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