New Opportunities for Coverage of Intellectual Property Torts

Many professionals with Errors & Omissions Coverage may find that their insurance includes no “advertising injury” coverage despite their widespread use of digital marketing to reach potential new clients. One solution is to secure express coverage for intellectual property (“IP”) infringement claims through an insurer, such as the Intellectual Property Insurance Services Company (“IPISC”).

Another, more cost-effective approach is to secure insurance coverage for intellectual property torts under standard form Commercial General Liability (“CGL”) policies. Although that coverage has been shrinking for years, the 2014 Insurance Service Office (“ISO”) policy form still offers coverage for (f) “use of another’s advertising idea in your ‘advertisement’”; and (g) “infringement of copyright, title or slogan in your ‘advertisement’” with “advertisement” broadly defined.

Opportunities arise for savvy insurance policyholders to secure greater IP insurance coverage beyond that available in ISO CGL “personal and advertising injury” coverage. More robust IP insurance coverage, however, can be secured to fill gaps left for professionals who do not have any “advertising injury” coverage in their Errors & Omissions policies.

Nova Casualty Company (a subsidiary of Hanover), based in Buffalo, New York, offers a Business Owners Policy [Form ABPO119114]. It includes standard ISO coverage for “personal and advertising injury,” including offenses (f) and (g) above (labeled as paragraphs 6 and 7 in the Nova Policy). Nova’s “Expanded Personal and Advertising Injury Endorsement” extends coverage to encompass “(8) infringement of trademark, copyright, title, trade secret or slogan”; and “(9) misappropriation of advertising ideas or style of doing business.” While Nova’s policy was written for veterinarians, its Errors & Omissions coverage is broadly written, suitable for addressing claims by other professions.

Hiscox, a major participant in the provision of business insurance coverage for start-up companies, offers a Professional Liability Policy for software development policyholders. [Policy Form DPLP001CW (05/13)] It includes a $1M policy with a $200,000 sublimit for defense fees/damages in a software copyright or trademark infringement lawsuit with a $500 deductible.

Insurance coverage consultants (working with knowledgeable insurance brokers) can access coverage for a number of IP claims. Media liability policies, like that from Hiscox, offer potential coverage for a range of IP claims except suits for trade secret misappropriation and patent infringement. Another option is to work from policy forms pioneered by innovative insurers like Nova and Hiscox. Proposals can be presented to underwriters to secure the best fit between the risks posed from IP suits and insurer risk profiles for professionals.

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