Firms Fail to Grasp Intellectual Property Risks: Marsh/LIU Report

Global businesses do not understand the intellectual property risks facing their organizations or the value of their intangible assets, a new report says.

Three-quarters of organizations are unable to identify the proportion of their firms’ value that could be attributed to intangible assets or goodwill, despite almost 70 percent of them identifying the protection of intellectual property (IP) as a “crucial incentive to innovation” in their firms, according to the 2001 Intellectual Property Survey Report published by Marsh and Liberty International Underwriters (LIU).

In addition, the majority of firms said that IP was not specifically included in their risk management programs and only 16 percent of respondents bought insurance coverage for the main types of IP risks.

“Intellectual property is often the critical asset for firms to protect. Our survey shows there is a real need for organizations to take a more proactive risk management approach to the protection of vital assets,” said Fredrik Motzfeldt, Marsh’s Communications, Media and Technology Leader for Europe, the Middle East and Africa.

“Failure to provide adequate protection for IP has the potential to threaten an organization’s survival,” said Matthew Hogg, vice president, Strategic Assets, at Liberty International Underwriters. “The survey makes clear that firms in the U.S. are taking this threat more seriously than their European counterparts; this could impact global competitiveness.”

The report also highlights several differences between the U.S. and Europe as follows:

• Over 70 percent of respondents in the U.S. stated that patents were of high or medium importance, compared to just 56 percent of European companies
• 75 percent of European companies perceived the risk of patent invalidity proceedings to be low, against only 37 percent of U.S. companies
• European respondents perceived the risk of IP litigation in the U.S. to be higher than their actual U.S. counterparts, with 33.3 percent of Europeans seeing it as high risk, against only 15.8 percent of U.S. respondents.

Source: Marsh