For many emerging technology, medical device, and life sciences companies, signing a licensing agreement with a large, well-known company is a major milestone. But many companies overlook a significant risk often included in these agreements: intellectual property indemnification.
Here’s the scenario:
Your company licenses its technology to a major organization. The licensee begins marketing the product under its brand name and soon receives an intellectual property infringement claim from a competitor. The licensee then turns to your company and demands indemnification under the licensing agreement.
The question becomes:
Is Your Company Financially Prepared to Respond?
Even if the claim lacks merit, defending intellectual property litigation can be extremely expensive. Legal costs alone can quickly reach hundreds of thousands—or even millions—of dollars.
Many emerging companies are not prepared for:
- Intellectual property defense costs
- Contractual indemnification obligations
- Operational disruption
- Investor and fundraising pressure
- Insurance coverage limitations
Licensing agreements often shift more risk to the technology owner than companies realize.
Protect Your Company Before Signing the Agreement
Before entering into licensing agreements involving technology, medical devices, diagnostics, software, or AI-driven products, companies should carefully review:
- Indemnification obligations
- Intellectual property exposure
- Insurance coverage gaps
- Litigation preparedness
- Contractual risk transfer provisions
Understanding these risks before signing an agreement can help prevent costly surprises later.
If your company is entering into licensing agreements, I’d be happy to discuss ways to strengthen your insurance and risk management strategy and help you better protect your business as it grows.