iPrex, a Hyderabad based Intellectual Property Solutions firm is planning an awareness campaign for 'Patent Insurance' among the pharmaceutical companies in the country. The concept of patent insurance has been popular in west for over a decade now, but is yet to be widely known in India, says Rajendra Kumar Byri, general manager, iPrex. The company is in communication with Insurance Regulatory and Development Authority (IRDA), ING Vysya and a few other leading insurance companies in the country aiming to pioneer patent insurance in the country.
"More than 6000 people who suffered physical damages on account of Vioxx intake have moved against the New Jersey-based drug giant and each of this case is being closely watched to determine how much financial liability the company ultimately will have to pay. When such infringement cases are filed, company's shares tumble and its image and business prospects are questioned, as the confidence of customers and investors is shaken. Obtaining patent insurance ensures the long-term survival of the company and builds investor confidence. For small and medium scale pharma company's patent insurance is a must, as a single infringement case could cause a major setback to the company. With patent insurance, the insurance company bears the financial crisis," opines Kumar.
The company can get an insurance protection for any number of calamities like accident, fire, earthquakes, floods and death or even from losses due to theft, riots etc. Now, insurance has entered the domain of intellectual property (IP).
There have been several cases in last few years wherein Indian pharma cos. have been embroiled in patent litigation. The Mumbai-based Sun Pharma was sued in 2004 by the US-based Medimmune Oncology for alleged patent infringement of a generic version of its cancer-related drug, Ethyol. In 2005, AstraZeneca sued Ranbaxy for 'wilful infringement' of its patent for Nexium, a drug that treats acidity and heartburn. India's largest domestic pharma company, Ranbaxy has had a poor record with patent litigations against MNCs. It hasn't won a major lawsuit since 2002.
'In such a scenario, patent insurance can give a boost to the Indian pharma industry. Yet, no insurance company in India offers patent insurance that could provide global protection or at least protection across national boundaries,' says Kumar.
Explaining the concept of patent insurance, Kumar said that though patent itself is a kind of insurance, patent insurance is a protection against infringement of patents and the costs associated with it. There are two types of patent insurance, 'patent liability insurance' and 'patent pursuance insurance'.
Patent liability insurance is a defensive instrument, which helps the insured party to fight an infringement lawsuit filed by a rival company. It is also called 'patent infringement defense insurance,' or 'defense cost reimbursement insurance'. In case there is litigation, the insurance company pays a part of the legal expenses incurred and / or the damages to be paid.
Patent pursuance insurance on the other hand, is an offensive instrument, which aids the insured party to fight against a patent infringing company. This is also called 'patent enforcement insurance' or 'offensive patent insurance'. In this case, the insurer pays a portion of the legal expenses incurred by the insured company.
Most companies, including well established ones, may not want to spend their resources to fight IP litigation as filing or fighting a legal suit is an extremely expensive affair.
For small and medium enterprises as well as firms entering a new business, this could be a question of life and death as a single infringement case can impair their entire portfolio of products and services. Therefore, patent insurance can reinvigorate the companies in the litigation cases, concludes Rajendra Kumar
Most companies, including well established ones, may not want to spend their resources to fight IP litigation as filing or fighting a legal suit is an extremely expensive affair.
For small and medium enterprises as well as firms entering a new business, this could be a question of life and death as a single infringement case can impair their entire portfolio of products and services. Therefore, patent insurance can reinvigorate the companies in the litigation cases, concludes Rajendra Kumar.