The U.S. Patent and Trademark Office (USPTO) has issued more than 10 million patents since 1836 (source 2). The number granted has grown exponentially over the last twenty years, with more than 350,000 patents issued in 2019 (source 1). As the number of patents increases, so does the opportunity for infringement. Patent infringement occurs when a patent owner alleges that products or services being manufactured, sold, or distributed by another company infringe on their patent rights. When this happens, litigation often ensues, with the plaintiff seeking an injunction against further sale of the infringing product or service along with payment of royalties or damages. The cost of defending or settling such a claim can be devastating. As of 2017, the average total cost for defending a patent infringement case worth up to $10 million, was $1.7 million.6 While larger companies may be equipped to handle millions of dollars in legal fees and settlements, patent litigation can bleed small to mid-sized companies dry.

A good reputation is valuable but also fragile. As Berkshire Hathaway Inc. Chairman Warren Buffett said, “It takes 20 years to build a reputation, and five minutes to ruin it.” In the headlines every day are incidents that damage the public’s perception of an organization, from social media controversies, to executive misconduct to regulatory violations. Fortunately, a new generation of insurance products is emerging to provide protection for reputational risks.