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When it comes to IP not only fairy stories are Grimm…

July 21, 2011

Once upon a time, in a far away forest, an elf and his wife, Gregory and Julie, wanted to extend their home.  They had just had their fourth child and their cottage only had two bedrooms.  Although Gregory worked very hard – he cut down trees – they could not afford it.  Julie said why don’t you go into the woods ask the trolls.  They have lots of gold they could lend us.  So he did.  The trolls said yes they might be able to lend them money but they would need to have a meeting among themselves first.

These trolls were very devious.  I know said one, why not lend them the money and charge them 40% interest on top of their monthly repayments?  They wouldn’t buy that said another.  The elves might ask around and someone else might make them a better offer.  What happens if they cannot make the payments.  Suppose the husband falls out of a tree and injures himself.  I know said one, we can sell them an insurance policy which will cover them if that happens – and if you add the charges together it comes to the 40% we want.  Not so fast said the most devious one.  At the end of the day we can take their house if they don’t pay so let’s sell them the policy but add a load of conditions so they will never get their money – and we don’t need to tell them that.  So they get their loan.  We get our 40% and we take their house if they don’t pay.  Excellent they said.  So how can we make the insurance policy do this.

Quick as a flash the most devious troll said let’s say he falls out of a tree but he can still hold a pen.  We say he can still work.  Or we can exclude injuries caused by falling out of trees?  What about checking if he has fallen out of a tree before?  I bet he has.  We can then say we don’t cover things that have happened before.  Wait a minute – his dad died when he fell out of a tree.  So we can say he had a family history.  Also we could tell him he is covered but not actually cover him until the renovations are finished and if he falls out of a tree in the meantime we can refuse to pay him.

But what if he does fall out of a tree and ends up in a coma?  We might have to pay out.  We could pay him less than he expects based on a proportion of his actual income.  That way we can charge him even more – bringing us to 50%.  He pays more and even if he can claim he can never get the full benefit.

So they called the Gregory back and said.  Good news you can have the gold.  One thing, we are really worried what would happen if your business failed.  Suppose you fell out of a tree and couldn’t work?  Now you wouldn’t want us to be forced to take away your home. So we will insure you in case you cannot work.  Gregory agreed.

Five years later Gregory did fall out of a tree and the trolls came round for their money.  Gregory said – I don’t have to pay you because I cannot do my job.  Oh but you can work – you can hold a pen.  But I cannot write.  Julie tried to earn money but did not earn enough to make the payments.  So they went to see the Tony, the head elf.  What can we do?  Tony said you could have got a much better deal from the orcs and I have heard that the trolls have been doing this a lot.  With that Tony raised an army of elves.  They took all the trolls’ gold and stopped them selling insurance.

All fantasy?  Well not really.  On 21 May the Times carried an expose of IP sold with ADLs headed “If you are well enough to hold a pen, don’t bother claiming on this cover”.  That’s why we need a quality standard for IP.
Written by Richard Walsh, Director and Fellow, SAMI Consulting

Published by Cover Magazine, June 2011, Click here to view published article

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