Expanding into new markets comes with big opportunities—but also unexpected risks. For a UK tech firm designing interactive displays, breaking into consumer retail meant navigating alleged IP infringement and an invitation to become a licensee of four incredibly costly patents.
With CFC’s IP insurance in place, this is how the policy responded to the incident—from assessing the claim and expert legal counsel to covering the agreed settlement and legal fees.
The incident: A license demand for alleged IP infringement
After years of success in the education sector, a tech firm with £40 million revenues set its sights on consumer retail. The firm had developed its hardware design for interactive displays and software across six years, encountering no IP issues. So when several major retailers demanded IP infringement indemnification in their contracts, the firm was caught off-guard. Initially perceived as an additional cost, considering it hadn’t experienced any IP issues previously, the firm secured IP insurance with CFC, enabling them to fulfil contractual obligations and open up further revenue streams.
Not long after, a large EU multinational reached out with an unexpected demand. The tech firm received a letter inviting them to enter a license agreement for four patents allegedly covering elements of their screen design. The license fees demanded were over £500,000, and without insight into whether they were truly infringing or if the demand was even reasonable, the firm needed expert guidance fast.
How the policy responds: Building a strategic response
As soon as it was received, the alleged infringement triggered CFC’s IP policy. Our in-house claims team immediately stepped in, arranging a call with the insured to assess the situation and help them secure appropriate legal counsel. With CFC, the insured has full freedom to choose their IP lawyer. In this case the tech firm opted for a counsel with extensive experience in IP litigation across the UK and EU.
While the insured focused on running their business, the legal team and CFC’s claims team devised a strategic response. A thorough review revealed only a minor infringement related to the touchscreen capabilities of the interactive board—while the other three patents the EU company asserted were far less clear-cut. Additionally, the proposed licensing fee was found to be excessive. With this in mind, the team built a defense strategy, even considering a counterclaim—fully covered under CFC’s counterclaim provision.
The outcome: A significantly reduced settlement
With a clear strategy in place, the legal counsel, in agreement with the insured and CFC’s claims team, put forward a counteroffer. They proposed a limited license for just one patent—asserting non-infringement on the others—at a significantly reduced fee. The offer also included a five-year covenant preventing the EU company from pursuing further licensing demands or litigation.
Following brief negotiations, the EU multinational accepted the terms. The UK tech firm was able to continue operations without disruption, meet its contractual obligations and gain long-term peace of mind. Best of all, CFC covered the settlement and legal fees, saving the insured from a potential £500,000 financial hit.
Get in touch if you have any questions or would like to learn more about CFC’s comprehensive IP cover.
