When Australian company Lucas Mills discovered a Chinese manufacturer had cloned its patented portable sawmill design and was selling it online, it took the case all the way to the High Court of Shandong. Lucas Mills won the case, but as its owner noted, even a successful outcome may not cover the cost of the fight. For smaller businesses, enforcing IP rights across borders can be financially crippling.
According to the American Intellectual Property Law Association, the average cost of a contested infringement suit amounts, for each party, to $US3.9m across discovery and trial. Even at the lower end of the scale (suits with potential damages of up to US$1m), parties should count on paying an average of US$250,000 for discovery and US$700,000 in trial costs. In other words, the cost of fighting a claim can dwarf the damages at stake. And for Australian businesses operating across borders, the exposure is no longer hypothetical.
IP infringement is an international issue
In Australia, a total of 133 new IP proceedings were commenced in the Federal Court in 20251 , a figure that, while significant domestically, understates the broader exposure facing Australian businesses. The international picture is far more relevant, as Australian companies increasingly confront risks both at home and abroad, often arising from unintended overlaps between well-known international rights and local usage.
The chart below shows the number of patent case filings in US Federal Courts, which is substantially higher than in Australia.
One example of an Australian company’s involvement in a US-domiciled case was when US fashion label Deckers successfully enforced its rights in the term “UGG” against Australian manufacturers, a dispute that highlighted how trademark protections can differ significantly across jurisdictions.
The Chinese market is also becoming increasingly important: it is one of the largest global markets for Australian companies, but also one of the world’s most active when it comes to IP disputes. Lucas Mills is not alone in having successfully enforced its rights there. Wine producer Penfolds, for example, prevailed against “copycat” labels that misled consumers about origin – another reminder that Australian brands operating internationally will find their IP tested, contested, and copied, often in jurisdictions where the rules and costs are unfamiliar.
These examples highlight the global nature of IP risk. As Australian businesses export more, sell online, and embed themselves into international supply chains, products and designs increasingly cross borders and legal systems. Each additional market or distribution partner amplifies the likelihood of a dispute – and potential contractual indemnities – if rights are not clearly understood and protected from the outset.
Mitigating risk through insurance
For many organisations, the financial and operational burden of defending or enforcing IP rights is significant. This has driven interest in IP insurance, a specialised form of cover that helps manage the cost, uncertainty and business impact of IP claims. Such policies can provide cover for infringement liability, enforcement and defence costs, adverse costs orders, and counterclaims, and may extend to trademark, patent, design, copyright and trade secret risks. Depending on the policy, cover can be regional or global and may include contractual partners, distributors and other third parties.
Who should consider IP Insurance
Businesses most exposed to IP risk are those operating across digital and international channels, including companies selling online under prominent brands, exporting through global distributors, manufacturing offshore, or commercialising products protected by pending rights. Complex, multi-jurisdictional supply chains and foreign-language trademark systems further increase the risk of inadvertent infringement or ownership disputes.
What to look for in a policy
A well-constructed IP insurance policy should provide worldwide coverage, allow the insured to retain their preferred legal advisers, and cover costs upfront so businesses are not required to fund litigation before reimbursement. Policies should also extend to contractual partners where appropriate, recognising the realities of international distribution and licensing arrangements. Finally, policies are most effective when structured and underwritten by specialists with genuine IP expertise.
The takeaway
The financial exposure associated with IP disputes is material, often running into millions of dollars and extending over several years.
At the same time, the cost of IP insurance has reduced significantly, with entry-level enforcement and defence policies now available from approximately A$5,000 per annum, placing cover within reach of startups and growth-stage businesses.
While still relatively new in Australia, IP insurance is increasingly recognised as a practical tool for managing litigation risk, protecting IP value, and supporting confident commercial expansion.
Matt Yeats
Global IP strategist (IAM Strategy 300, 2021 to 2026) and co founder of Integrated IP.
Rob Burnside
Specialist in IP valuation for mergers and acquisitions, tax and licensing, with expertise in deep tech, life sciences and advanced manufacturing.
About Integrated IP’s IP Valuation & Risk Advisory team
Value quantified. Risk neutralised. Integrated IP (IIP) is redefining how organisations understand, protect and leverage their intangible assets. As Australia and New Zealand’s first dedicated IP Valuation and Risk Assurance service, we help clients quantify intangible value, identify where it is at risk, and put in place the frameworks, governance and insurance solutions needed to protect it.