Most intellectual property (IP) insurance policies — whether defensive or enforcement — assume the policyholder can independently prove what they own, when they created it, and what form it existed in before the dispute began. Most policyholders cannot. The IP insurance evidence gap is structural — and it is widest where the IP is unregistered.
IP insurance divides into two fundamentally different products, and the evidence each requires at the point of claim is not the same.
A defence policy reimburses the cost of defending against infringement claims brought by others. It protects the policyholder when someone alleges that the policyholder's product or process infringes their IP. The evidence burden here runs in a specific direction: the policyholder must demonstrate that their use of the contested IP is independent — that they developed their product or method without reference to the claimant's protected work. In practice, that means producing evidence of independent creation: development records, design histories, prior art searches, and documentation showing the timeline of the policyholder's own work.
An enforcement policy funds the cost of pursuing infringers who are using the policyholder's IP without authorisation. As the International Risk Management Institute (IRMI) describes in its 2024 analysis of IP enforcement insurance, obtaining coverage requires the applicant to "disclose its revenues, any IP assets it owns and uses, and any initiated or expected IP disputes or threats." The evidence burden here is the opposite of defence: the policyholder must prove they own the IP being infringed, that it existed in the form they are asserting before the infringement began, and that the infringer's use is unauthorised.
The IP Insurance Services Corporation (IPISC), one of the longest-established specialist IP insurers in the United States, goes further. Before issuing enforcement coverage, IPISC conducts what it describes as a rigorous review of the quality of the policyholder's IP — particularly patents. The insurer is not just confirming ownership. It is assessing whether the IP will survive challenge, because an enforcement claim that triggers a successful invalidity counterclaim costs the insurer more than it recovers. The underwriting process is an evidential audit before the policy is even written.
Premiums reflect the distinction. According to industry data cited by UpCounsel, defence-only policies typically range from $2,500 to $50,000 annually, with deductibles between $10,000 and $100,000. Combined defence and enforcement packages cost substantially more, reflecting the higher risk the insurer assumes when the policyholder is the claimant rather than the defendant.
Most intellectual property (IP) insurance policies are written on a claims-made basis — they cover claims first made during the policy period, not losses that occurred during the policy period. This structure creates a specific trap that most policyholders do not anticipate until a claim arises.
Nearly all claims-made IP policies contain a prior knowledge exclusion. The exclusion bars coverage for claims arising from facts, circumstances, or incidents the policyholder knew about — or should reasonably have known about — before the policy commenced. As the Anderson Kill analysis of prior knowledge exclusions notes, the standard language requires the applicant to state whether they know of "any act, omission, error, or circumstance that might be expected to be the basis of a claim."
The practical consequence is significant. If a technology company discovers that a competitor appears to be using its proprietary methodology, and the company then purchases or renews an enforcement policy without disclosing that suspicion, the insurer may deny the subsequent claim on prior knowledge grounds — regardless of whether the infringement is genuine. The Hunton Andrews Kurth 2025 analysis of prior knowledge claims warns that "coverage missteps can occur long before a claim arises" and that "the time to assess disclosure obligations is before the policy is procured or renewed."
In the United States, 1,203 federal trade secret cases were filed in 2023, according to the Lex Machina 2024 Trade Secret Litigation Report. In many of those cases, suspicions of infringement existed before formal proceedings began — precisely the situation the prior knowledge exclusion is designed to address. The prior knowledge exclusion creates a paradox for IP insurance policyholders in exactly this position.
The policyholder must disclose known risks to the insurer at the point of underwriting, but having a documented, independently anchored record of what they owned and when they created it is precisely what makes that disclosure credible. Without an independent record, the policyholder's disclosure is based on assertion rather than documented fact — and the insurer's assessment of the risk is based on an assertion it cannot independently verify.
When an IP insurance claim is triggered, the insurer does not begin by evaluating the merits of the underlying dispute. It begins by evaluating the evidence.
For an enforcement claim, the insurer's first questions are: what is the IP asset being asserted? When was it created or registered? Does the policyholder have documentary evidence of the asset in the form they are asserting, dated before the alleged infringement began? The insurer is applying the same standard a court would apply — because the claim the insurer is funding will be assessed by a court, and a claim that cannot be evidentially sustained in court cannot be evidentially sustained in an insurance context.
For registered IP — patents, trademarks, registered designs — the evidence question is largely answered by the public register. A patent number, a filing date, and a grant date provide an independently verifiable record of what was protected and when. The AIPLA Report of the Economic Survey 2023 shows that median patent litigation costs through trial range from $600,000 per patent when less than $1 million is at risk to $3.625 million when more than $25 million is at risk. Those are the costs the enforcement policy is designed to fund — and the public register provides the evidential foundation.
For unregistered IP — trade secrets, confidential business information, proprietary methodologies, software code, creative works, unregistered designs — there is no public register. The policyholder's evidence of ownership is whatever record they happened to make at the time. The WIPO Guide to Trade Secrets and Innovation confirms that the burden of proof in trade secret cases falls on the party asserting the claim. In trade secret cases specifically, the claimant must prove that the information qualifies as a trade secret, that it existed in the form being asserted, and that the alleged misappropriator acquired it improperly.
The EUIPO's 2023 Trade Secrets Litigation Trends report found that success rates for trade secret infringement claims across the EU stand at approximately 27 per cent. That figure reflects, in substantial part, the evidentiary burden on claimants who must prove what existed and when without an independent record made at the time.
This is where IP insurance claims stall. The policy is in force. The premium has been paid. The infringement may be genuine. But the policyholder cannot produce evidence of prior ownership that meets the independence standard a court or the insurer's own loss adjuster will require. An email thread, a file timestamp, a version history on a company server — each of these is produced by the party asserting the claim. None carries an independent legal presumption of accuracy. None can be verified without reference to the party that produced the record.
According to the Ocean Tomo 2025 Intangible Asset Market Value Study, intangible assets now constitute approximately 92 per cent of S&P 500 market capitalisation, up from 17 per cent in 1975. The overwhelming majority of those intangible assets are not registered. They are trade secrets, proprietary processes, customer relationships, brand equity, software architectures, and business methodologies — none of which appears on a public register, and all of which depend on the holder's own records for proof of ownership.
From an underwriting perspective, the distinction between registered and unregistered IP is the distinction between a verifiable risk and an asserted risk. A policyholder with a patent portfolio presents a risk the underwriter can assess against a public record. A policyholder whose principal IP is a proprietary methodology or a body of trade secrets presents a risk the underwriter must take substantially on trust — because the policyholder's evidence of what they own is their own documentation.
The CFC Underwriting guide to IP insurance recommends standalone IP policies rather than relying on combined coverage under general liability policies, noting that combined policies "may be limited, likely excluding patents or trade secrets, and having restricted regional cover." That recommendation implicitly acknowledges the underwriting challenge: unregistered IP is harder to assess, harder to defend at the claim stage, and harder for the insurer to validate against an independent record.
For underwriters, a policyholder who can produce a cryptographic deposit certificate for each IP asset — a SHA-256 fingerprint proving the file has not changed, an RFC 3161 timestamp from an accredited Trust Service Provider establishing the exact moment, an eIDAS Article 41 qualification giving the record legal presumption across EU member states and strong evidential standing in the UK and admissibility under Federal Rule of Evidence 901 in the US, and a Bitcoin blockchain anchor via OpenTimestamps ensuring the record persists independently and permanently — presents a fundamentally different risk profile.
A free timestamping service does not carry that qualification. A free RFC 3161 timestamp carries no legal presumption — only an assertion the policyholder would still have to establish in court. The evidence exists. It can be independently verified. It does not depend on the policyholder's own assertion.
The question for any business holding IP insurance is not whether the policy covers the right risks. It is whether the business holds the evidence the policy will require at the point of claim.
For registered rights, the public register provides that evidence. For unregistered rights — which constitute the majority of IP held by most businesses — the evidence is whatever was documented at the time of creation or acquisition. If that documentation consists of internal files, email threads, and platform timestamps, it does not meet the independence standard. It will be challenged by the opposing party's lawyers and may be questioned by the insurer's own loss adjuster.
The time to make the record is before the claim. An IP insurance policy purchased without a documented, independently verifiable record of the IP it covers is a policy built on an assumption. That assumption holds for patents and registered trademarks. For everything else, it is an assumption that will be tested at the worst possible moment — when a claim arises, when the evidence is needed, and when the record can no longer be created retrospectively.
The practical step is specific: for every unregistered IP asset the business relies on — every proprietary methodology, every body of trade secret documentation, every creative work, every piece of software code — make a simultaneous deposit at the point of creation or acquisition. That deposit becomes the record the insurer will ask for when a claim arises, the record the court will assess when the dispute is heard, and the record the opposing party cannot challenge as self-serving. The cost of making each record is negligible. The cost of not having made the record is measured in claims that cannot be substantiated and policies that cannot perform.
The IP insurance market exists because litigation costs make self-funding IP disputes prohibitive for most businesses — the AIPLA figures show median costs reaching $3.625 million per patent at trial when more than $25 million is at risk. A policy that funds those costs but cannot pay out because the underlying ownership evidence does not meet the standard is a policy that has failed at the one moment it was needed. That failure is not the insurer’s fault. It is a failure of preparation that occurred long before the claim arose.
This post provides general information about the role of cryptographic evidence in IP insurance claims. It is not legal advice or insurance advice. For advice on a specific matter, consult a qualified lawyer or insurance professional in your jurisdiction.
Related Reading
Enforcement Insurance for Intellectual Property Assets — IRMI Expert Commentary
Defense Insurance for Intellectual Property Risks — IRMI Expert Commentary
NDA Breaches and the Evidence Problem: Proving What Was Disclosed Under an NDA
James Snell is the founder of Provlyn, a platform providing cryptographic prior proof of IP ownership. provlyn.com