For most SMEs facing infringement, the legal question is straightforward. The financial one is not.
They can see what is happening. They have taken legal advice and know they have a reasonable case. But the cost of pursuing it is difficult to justify against short-term revenue, particularly if the other side decides to defend. So nothing happens. The infringement continues. And over time the brand is diluted, market position is eroded and other potential infringers draw their own conclusions.
This is how that played out differently for one of our clients.
The business
A UK-based consumer products company with turnover of approximately £3 million. The business had developed a distinctive product supported by registered design rights and trade marks and was gaining traction through online and retail channels.
The trigger
The company identified a competitor selling a product with a clear overlap in both design and branding. Legal advice confirmed there was a reasonable basis for taking action. The concern was not just lost sales but longer-term dilution of the brand and, if left unchallenged, an open invitation to others.
The estimated cost of pursuing the matter was significant, particularly if defended. Without insurance the most likely outcome was inaction, or at best a letter before action with limited follow-through.
How insurance changed the position
The business had an IP insurance policy in place with enforcement cover. Legal advice confirming reasonable prospects of success was obtained as required, a budget was agreed with insurers and specialist solicitors were instructed to pursue the claim.
This allowed the business to act from a position of strength rather than sending a letter it could not back up. The other side knew from the outset that the claimant had the financial backing to see the matter through.
The outcome
The matter was resolved following formal engagement with the infringing party without the need for full proceedings.
The resolution protected the brand, reinforced market position and sent a clear signal to other potential infringers. None of that would have happened without the means to pursue it.
The broader point
IP only has value if it can be enforced. A registered right that cannot be backed up is worth considerably less than the registration suggests, and a well-funded infringer who calculates that the rights holder cannot afford to fight is making a rational commercial decision.
Insurance changes that calculation. Not just for the specific dispute, but for how the business is perceived by anyone who might consider copying it in future.
For many SMEs, the real risk is not losing a case. It is never bringing one.
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This article is provided for general information purposes only and does not constitute legal advice. Readers should seek independent legal advice on their specific circumstances before taking any action.
