Ensure you Insure

Not every day is sunny, PII is there for the thunderstorm you hoped to avoid

IPReg have issued a couple of new decisions, both on the theme of compulsory professional indemnity insurance (“PII”). Our Code of Conduct requires that we have PII, that it is “commensurate with the risks at large arising from the extent and size” of our practice, and that it is from one of the named insurers who have signed an agreement with IPReg.

The first two requirements seem reasonable. In respect of the last, there is a small problem in that there are (currently) only two insurers in this category – Allianz Global Corporate & Specialty SE, and PAMIA – a mutual insurer set up by the profession specifically to provide PII to the IP profession. PAMIA appear to have the bulk of the market share.

Both Dr Breen and Mr Brothers appear to have tripped up. Based on the IPReg decision in each case, it seems that they accidentally let their PII lapse and were then unable to renew via PAMIA – it is not clear why they were unable but the presumption would be that PAMIA were unwilling to renew. Perhaps PAMIA were concerned that a patent attorney who could not manage to comply with the renewal deadline for their PII might be prone to missing other deadlines too. I am speculating, there, though; the decision does not shed any light. All we know is that they asked to renew via PAMIA, were refused, tried to secure PII via a different insurer, and were (eventually) unsuccessful. Dr Breen managed to secure PII via China Re for a time, but they dropped off the approved list after declining to sign a further agreement with IPReg.

That creates a quandary. Without PII from a participating insurer, we are not permitted to practice. To his credit, Dr Breen therefore stopped holding himself out as a UK patent attorney, trading as a European patent attorney instead (the epi does not have a corresponding PII rule). However, what does one do if one cannot secure PII from anyone on the list?

The answer seems to be clear; if neither of the insurers on the list are willing to insure you, you cannot practice. You need to find an alternative line of business. Suggestions please, for an alternative use for the skills of a patent attorney…?

Both Dr Breen and Mr Brothers were critical of IPReg, taking the view that the list should be longer and that IPReg should help us find suitable insurers. I have a degree of sympathy for this; if we are to be limited to a specific list of providers, then that list needs to be long enough to provide real and effective competition between them. Two is a little short. Indeed, the decision notes that Mr Brothers has referred the matter to the Competition & Markets Authority; it will be interesting to see if anything results from that.

On the other hand, PII is pretty essential to what we do. The downside risk if we fail can be out of all proportion to the value of the work we do; I recently did a back-of-the-envelope guesstimate of the Patent Box claim that was resting on a UK application that I am prosecuting, and it is roughly four or five times my entire net worth. I’m obviously never going to be in a position to compensate the client out of my own funds if I err on that case. Which leads to two obvious lessons; take care not to err, and have PII.

In the end, the argument in both cases was that IPReg’s rule on PII seemed too restrictive. That might have been more convincing if either party had shown that they had in fact secured PII cover which was adequate to meet the needs of their clients, albeit from an unlisted provider. Then, it would be arguable that the basic requirement (to ensure that clients can safely place their work with you) was met and there would be a good argument to be had as to whether IPReg’s rule that a PII provider must be on their list was a reasonable one. As it stands, it appears from the two decisions that neither attorney had any PII in place at all, which does rather take the wind out the sails of that discussion.

So, based on these decisions, there’s no clear message (apart from PII being essential, obviously). Both decisions were absolutely right; we need to have PII and neither attorney had it, therefore they were in breach of the Code. IPReg’s rule seems to have the potential to create difficulties, but neither case really turned on the problematic point. I’m left wondering what exactly IPReg’s agreement with a PII provider requires, and why only two insurers are willing to sign it, but my knowledge of the insurance market is woefully inadequate to comment sagely on that subject.

(Photo by Craig Whitehead on Unsplash, thank you Craig)

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