The Research Of The Patent Insurance Base On The Perspective Of Risk Management

Intellectual Property(IP)insurance serves as a system to guarantee the rights and interests of an IP holder and it's authorized users.Due to the intangibility and exclusiveness of IP,the role of IP insurance is becoming increasingly important,especially on a market where competition between high-tech businesses is extremely keen.The four stages associated with patent commercialization include,creation,use,management and protection.Transformation risk could arise at any point between such stages.Patent transformation risk is a key factor which determines whether commercialization of a patent can be achieved smoothly and successfully.In order to control the risks involved during the process,insurance comes in and plays its part as a powerful risk management tool.IP Insurance provides risk management and financial aid to the IP holder when their IP become involved in litigation.In China,IP insurance is considered as a relatively new product.Introducing IP insurance to the Chinese market not only controls enterprises' operational risk but also offers protection to the patented assets.Through insurance,risk is being shifted and shared by insurance company.Thus,the risk of operating the business can be minimized and allows enterprise to increase its economic efficiency and overall competitiveness.The application of insurance ensures the long term development and growth of an enterprise.A wide range of factors,such as talent,technology,market,business operation and maintenance are involved in patent transformation.The sophistication of patent transformation implies that it is bound to be a high-risk process,and the risk associated with patent rights appears to be more unpredictable in the process of commercialization.Hence the chances of patent risk occurrence is even higher.In order to avoid patent risk from occurring during the 4 stages associated with commercialization of a patent,most of the enterprises utilizes risk management tools along with applying internal control principles to manage and control inherent risk in business operation.Apart from inherent risk,there are also external risks associated with patent due to its nature.For instance,patent disputes,patent infringement,patent imitation and other events associated with patent rights.Nevertheless,the use of patent insurance allows enterprises to manage their external risk more effectively.Based on the research of patent insurance and risk management,this paper analyses patent transformation risk by conducting a series of literature research,risk analysis and case study through both qualitative and quantitative methods.From the research result of current situation of patent insurance in China,the author interpreted the sources of transformation risk and further looked at the risks of patent research and development,market risk and operational risk,as well as their implications during the four stages of patent commercialization.By analyzing the factors of patent transformation risk from the aspect of risk management,the author constructed patent risk models and interpreted the recognition and mechanism of patent insurance in further detail.Through research and analysis,patent insurance can,in a large extent,help enterprises to avoid risk during commercialization of a patent.Risk management is enhanced by combining the application of patent insurance and risk management principles.In summary,in the process of patent commercialization,such combination functions in a way for which risk management serves as a tool for internal control whereas patent insurance covers the financial loss caused by external risk.