David Bloom

David Bloom, founder of Safeguard IP

Taking on the trolls

David Bloom launched Safeguard IP to help businesses meet the cost of defending their intellectual property in court. Now, his company is helping its clients in the fight against threats from China, Japan and the United States.

Trolls sadly no longer only live under bridges. Whether it’s hate-filled remarks on Twitter or lies told about stocks and shares in online chatrooms, trolls have invaded many aspects of our daily lives. Intellectual property (IP) hasn’t escaped the onslaught either and British companies doing business in the United States have found out the hard way that trolls can be nasty wee creatures.

“IP trolling began becoming a big problem in the United States around 15 years ago,” explains David Bloom, the founder of Safeguard IP, the UK’s only dedicated IP insurance broker. “Trolls would raise money from investors and then go around buying patents from businesses and inventors.

David Bloom 02“Trolls would then approach companies and accuse them of infringing the technology covered by those patents. In the US, even if you successfully defend your IP in court then you must still pay your own court costs.

“That means that if a troll is demanding 100,000US$ not to take you to court then that will be a lot cheaper than the 2mUS$ it may cost you to defend your IP in front of a judge. It’s like a modern-day version of the mafia – companies are being shaken-down to get money out of them.

“Fortunately, changes in legislation have reduced the power of the trolls. But it’s a serious threat that British companies still need to be aware of though if they’re doing business in the US.”

Bloom knows all about the importance of defending IP. After studying management science at the University of Manchester, he trained as a lawyer with the College of Law before later gaining a postgraduate diploma in intellectual property at the University of Bristol.  He spent 15 years as an IP litigator with Roiter Zucker Solicitors, Pinsent Masons, and Olswang. His entrepreneurial streak then came to the fore and he set up Safeguard IP in 2014.

“I used to hear a lot of companies complain about the cost of defending and enforcing their IP,” Bloom explains. “It always struck me as a fundamental flaw in the IP system – if a company had spent all their time and effort in capturing and registering their IP but needed deep pockets to enforce their rights then that seemed wrong to me.

“IP litigation can cost a lot of money because it is a specialised area of the law and claims tend to be labour intensive with significant amounts of evidence needed to sway the judge.”

“That’s where the idea came from to offer insurance to small and medium-sized businesses (SMEs) to help them meet the cost of defending their IP in court. When I started out, both the challenge and the excitement was educating the market about IP insurance – even many patent attorneys and IP lawyers didn’t know it existed.”

When Bloom launched Safeguard IP, only a tiny number of IP insurance policies were being written in the UK each year. That figure is now growing and Bloom has continued to innovate in the field.

In September, he assisted in the launch of the Opus 100 plan, a comprehensive IP insurance cover for businesses with turnover of less than £5m. The policy provides worldwide enforcement, defence, damages and agreement cover and protects the insured’s entire IP portfolio and all its declared products.

The premiums are also innovative – £500,000 of annual cover costs £3,500, plus insurance premium tax, while £1m of cover costs £5,000 plus tax. “Before we launched Opus 100, that level of cover would have cost between £10,0000 and £15,000,” Bloom points out. “It also speeds up the time it takes to get cover. Previously, it would have taken a month or so to get a quote, but now the process is conducted online and is virtually instantaneous – it’s almost like buying car insurance. The policies are underwritten by Lloyd’s of London.”

Bloom specialises in advising SMEs about the benefits of IP insurance and, in December, Safeguard IP became the latest partner for the IP100 intellectual property league.

Trolls aren’t the only threat facing UK businesses from overseas. IP insurance is now readily available to Chinese companies operating overseas. “If a British company spots a Chinese firm infringing its IP then it could well face an opponent with deep pockets,” Bloom warns. “This could be a big threat to British companies.

“There’s a similar issue in Japan, where the government is now subsidising IP insurance premiums for Japanese companies that are trading abroad. Again, this means British companies could be up against opponents with lots of financial backing behind them.”

Safeguard IP is working with the UK Intellectual Property Office (IPO) to promote insurance to British companies. “The UK IPO is very concerned about the developments in China and Japan,” Bloom says.

“It’s also very concerned about the number of small businesses not bothering to obtain patents because of the cost of enforcement. A line they often hear is that ‘There’s no point in getting patents because if someone infringes us then we don’t have the £200,000 we need to enforce it’. That is why it is raising awareness about the benefits of IP insurance.”

Bloom 03Threats don’t just come from abroad either. Closer to home, the increasing number of companies being created means IP is a hot topic.

“We’re living in an entrepreneurial age,” says Bloom. “Around 500,000 companies are being incorporated each year and each one is creating its own IP, whether a brand, innovative product or design or creative content. This inevitably leads to companies bumping up against each other either intentionally or otherwise.

“Figures from the Federation of Small Businesses (FSB) show that about one quarter of small businesses have experienced IP infringement over the past five years. That shows the scale of the problem.”

The FSB’s IP report also demonstrated just how important IP is to small businesses. One third of firms reported that more than 75% of their revenues depended on their IP, with 26% of companies holding at least one IP right, such as a patent or trade mark.

“Most businesses will insure their physical assets against harm – such as buildings, cars or employees – but many don’t insure their IP, even though it’s the most important asset in their business,” Bloom says. “And with the risks to IP growing, both in the UK and abroad that is a serious oversight.”

Efforts are being made to make it easier – and cheaper – for entrepreneurs to protect their IP. In 2010, the Patents County Court was transformed into what is now the Intellectual Property Enterprise Court (IPEC).

The reforms that created the IPEC were designed to lower the cost of IP litigation for SMEs’. The IPEC hears cases in England and Wales, while in Scotland the Court of Session deals with most IP cases, except for a small number of copyright and trade mark disputes, which are handled by the Sheriff Courts.

IP actions in the High Court can cost from £500k up to many millions” Bloom explains, ”now, the costs in IPEC are around £100k to £200k, which is a lot better but still a lot of money for small businesses.

“That’s why SMEs are increasingly interested in IP insurance to help meet those costs. It’s not just about having the confidence that you can defend your rights if you’re accused of infringing someone else’s IP – it’s also about being able to assert your rights too if you spot someone else copying your products or services.”