Team Marvel Sourajit Sahoo 8420147451

14th July 2019 Contact: Sourajit Sahoo, Suraj Verma
Mobile No. : +918420147451; +919717879869

Email: [email protected]; [email protected];
Patent insurance, white space in emerging markets

Patent Insurance would target the Small and Medium Enterprises(SMEs) and Start-
Ups
Patent insurance in an emerging market like India could boost the bottom line of
ICICI Lombard GIC by approximately 2-3%. The insurance policy aims to provide
legal attorney fees, judgement and settlement fines in the short run which could
be expanded to incorporate damages costs and lost royalties and profits in the
long run. Process level modifications using AI and ML would help in automation of
the steps leading to the faster and efficient transfer of resources.
Patent insurance could be of 2 types:
Defensive Insurance: Patent Liability insurance which is a third party coverage
enables the insured to fight against an infringement lawsuit filed by a rival
company.
Offensive Insurance: Patent pursuance insurance a first party coverage that
enables the insured to fight against a patent infringing company.
The premium would be around 0.2% of the sum insured. Discounted Cash flow is
used to find the total premium at the beginning of patent registration (Financials)
and there should be an AOA/AOY limit on the amount of damages/litigation costs
to be paid.
Patents growth in India. 9.49% growth observed in the Intellectual Properties in India from FY08 to FY16
Patents in force
70000
60777
60000
49272 49575
50000 47224 45103 47113
41361 42991
40000 37334
30000
20000
10000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: WIPO
Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

GDP adjusted for PPP and R&D Spending as a portion of it. Increase in R&D spending is a direct positive
correction with the increase in the number of patents, hence an increase in a patent infringement case
10000 in $ Billions
8606
9000 8072
7536
8000 6968
7000 6487
6098
5782
6000 5422
4918
5000
4000
3000
2000
1000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: GDP data India, WIPO, IBER Global data( $ Billions)
R&D Spending in FY 15-17

74 $ Billions
71.59
72
70
68 66.49
66
64
61.85
62
60
58
56
2015 2016 2017
Source: GDP Data
Patenting also has a positive correlation with FDI, because most of the patenting in India is done by foreign
research institutes and MNCs etc. So increase in FDI would mean a spurt in Patenting hence opportunity
increases
in $ Billion
FDI
332
350
289
300
249
250
183
200
146
150 125
100
100 56
38
50 21
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Government websites

Number of start-ups added every year increases the total pool of start-ups. Indian Start-up ecosystem is
booming
1600 1400
1400 1200 1200
1200 1000
1000
800
600
400
200
0
2015 2016 2017 2018
Source: NASSCOM
SME Industry: Market Attractiveness and High contribution

The number of SME Industries is expected to be 42.50 million, approximately 95%
of the total number of industries in India. They cumulatively contribute 6.11% of
the manufacturing GDP and 24.63 % of the service GDP. Their current fixed assets
are approximately $ 210 billion
Problems Patent Insurance could solve:
• Average litigation cost for a process infringement would cost anywhere

between $22000 to $47000 and consume around 3-4 years in various levels
of the judiciary. In India, out of around 60000-70000 patented products,
about 0.20% of them are subject to infringement cases. In such cases, out
of cost settlements is also a possibility to reduce the time of litigation in court
through compromise settlement, hence reducing the financing costs
• Proposal placing of the claim as well as delivery of service are the
bottlenecks in the entire process. The benefit of patent insurance is that it
would be intangible and expected litigation costs would be known, hence
saving claim processing time, unlike motor/fire insurance cases
• It would discourage patent infringements, hence prevent a decline in market
share of a defendant firm
Need for the proposal:

Our idea focuses on using minimising hassle for the customer.
Only a non-technical risk assessment should be done at the commencement of

policy while the technical risk assessment should be done only at the time a

specific risk arises.
Non-
Actuarial Coverage
Propasal Technical
Scientists and time Premium
Placing Analysis
value the period is Paid
using ML done by
patent predefined
company
In case of patent infringement, a receipt is generated detailed claim intimidation.

Surveyor is appointed who would
(i) Take cognizance of the legal costs during the entire litigation process.
(ii) Take note of the monetary value of the damage caused
The end step of surveying could be out-sourced for gaining economies of scale.
A fairly high-risk policy could be hedged against risk by clauses in contract
statement, taking a cautious stance during initial years and then moving to include
the coverage for damages would be good entry strategy
Enablers:
Enablers include a partnership with artificial intelligence firms to provide chat-box
facilities. Actuarial Professionals, underwriters, attorneys could be partnered with
to provide a valuation of each patent. Apart from that, surveyors could be either
automated or outsourced to agencies who are experts in that domain to reduce
costs.
Partnerships with government officials would be necessary to develop a proposal
for a compulsory scheme for patent insurance, as in case of motor insurance.
In the case of high-risk insurance, as in the case of pharma and IT patents, re-
insurance could help to mitigate risk.
A Quote from customer
“ Due to the patenting of my technology products, I am able to survive the rat-race
for seed investments”
A Quote from senior management
“Our entry strategy should be Market development because is the first time
something of this scale is going to be targeted. Further, the power of new entrant
is large, hence we need to take the full advantage of the first mover, and block
resources in the market by providing customer friendly and timely service. We
already have a 15.6% market share in General Insurance. Patent Insurance could
further add 20-30 Cr to our bottom-line”

Porter’s 5 forces
Buyer’s Power Patent holders Low

Supplier’s Power Reinsurance companies, High
actuarial professionals,
underwriters
New Entrant Other GIC Companies High
Substitute None Low
Competitors Currently, no one in India Medium to High
Ansoff’s Matrix
New Market Market Development Diversification
Market Penetration Product Development

Existing Market
Existing Service New Service
Competitor analysis:
In India, the company can get the first mover advantage
Competitive Advantage
Lower Cost Differentiation
Broad
Target Competitive
Cost Leadership Differentiation
Scope
Narrow Differentiation
Cost Focus
Target Focus
This is a cost focus strategy as the company will be focusing on lower cost and
narrow target. This will provide a competitive advantage to the company because
it will be focusing on the needs of those customers who were never addressed
before( new market) through market development.
An estimate of size impacted due to the new offering :
financials.xlsx
Conclusion: This 24.03 Cr could affect the P&L bottom-line by at least 2-3%

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14th July 2019 Contact: Sourajit Sahoo, Suraj Verma

Mobile No. : +918420147451; +919717879869

Patent insurance, white space in emerging markets

Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

R&D Spending in FY 15-17

Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

SME Industry: Market Attractiveness and High contribution

Problems Patent Insurance could solve:

• Average litigation cost for a process infringement would cost anywhere

Need for the proposal:

Only a non-technical risk assessment should be done at the commencement of

Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

In case of patent infringement, a receipt is generated detailed claim intimidation.

Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

Buyer’s Power Patent holders Low

New Market Market Development Diversification

Market Penetration Product Development

Existing Service New Service

Lower Cost Differentiation

Team Marvel Sourajit Sahoo |8420147451|IIMK|MBA(2nd Year)

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