Why Evaluating Coverage for Intellectual Property Is Challenging
Courts analyzing CGL policies have wrestled with how to discern whether coverage under these policies may extend to IP claims. The vast majority of these cases address when coverage may be triggered under the CGL policy’s “personal and advertising injury” coverage. At the inception of that coverage in 1976, it was initially an add-on element to the standard form policy, offering coverage for the offenses of “piracy” and “unfair competition.” In 1986, the “personal and advertising injury” coverage was integrated into the policy as a whole. It included the offense “misappropriation of an advertising ideas or style of doing business.” In 1998, that offense was replaced by “use of another’s advertising ideas in your ‘advertisement’” with the term “advertisement” broadly defined.
All those offenses under the progressive CGL policies are notable for a common failure—they fail to use terms that have any clear or definable limits in contrast to traditional torts that have legally defined parameters established by case law. Thus, courts have had to assess the scope of these no-singular torts labeled offenses when analyzing what intellectual property torts be covered.
Directors & Officers Coverage for Government Investigations
The availability of insurance coverage for investigation defense costs is unclear leading to apparent inconsistent decisions. The policyholder, however, that actually pursues coverage for those claims often succeed. The failure to notify the insurers of the claims will deprive insured of any potential coverage where the investigation proceeds to a “Claim.” At minimum, these interactions should be reported to the present D&O carrier as a potential claim under the policy provisions allowing the report of a “notice of circumstance.”
Settlement May Be Recoverable Against a Non-Defending Insured Without a Trial
If the underlying case settles before judgment is issued, the court assessing the insurer’s duty to indemnify monies paid in settlement may not have the benefit of adjudication for liability or damages in the underlying action. Such an insurer, therefore, must assess the its obligation to compensate the insured for amounts it paid in settlement based on the insured's potential for liability in the underlying action. This determination is made based on the facts established in the case at the point of settlement, including the facts that were assumed by the parties and formed the basis for the settlement.
Do Not Accept No for an Answer If Insurers Deny Coverage for IP Claims
Commercial General Liability policies (“CGL”) have wrestled with articulating limits for coverage triggered under its “advertising injury” coverage since its inception in 1976 as an add-on element to the standard form CGL policy. As such, courts have had to assess their scope when analyzing what intellectual property torts might fall within their ambit. Especially where facts, not labels, are causes for actions that control and the duty to defend is adjudged from the layman’s perspective in reading policy language, this has led to inconsistent decisions, reversals upon further review of the nature of the torts claims asserted and their intersection with the insured’s coverage law, and uncertainty.
Coverage for Patent Infringement Lawsuits under CGL Policies
Most Commercial General Liability (“CGL”) policies do not explicitly include patent infringement as a covered offense. Also, many policies expressly exclude patent infringement coverage in an Intellectual Property (“IP”) exclusion. Based thereon, insurers will often deny coverage for patent infringement claims because they fall outside the coverage scope of its CGL policy. Patent infringement claims, however, can still secure coverage under various pathways.
Battling for Equity-Securing Appropriate Fee Rates in C. C. §2860 Disputes
The rates insurers pay their appointed counsel to defend similar actions in similar communities sets the benchmark when California Civil Code § 2860 is applied. To pay a rate less than the reasonable rate virtually every other forum requires strict and complete compliance with California Civil Code § 2860.
Arbitrator Rules Delay in Paying Defense Fees Constitutes Bad Faith
Where an insurer withholds policy payments on grounds that are unreasonable or without proper cause, the insurer tortuously breached the implied covenant of good faith and fair dealings. A recent arbitration decision – Independent Physicians Associates Medical Group, Inc. dba AllCare IPA v. Ironshore Specialty Insurance Co. – clarifies why delaying defense fees payments while pursuing another insurer for contribution, or negotiating a settlement of defense fees due, breached of the insurer’s duty of good faith and fair dealing.
Insurance Coverage for Antitrust Disputes
Express coverage for antitrust lawsuits arise under a variety of policy forms that do not expressly reference antitrust tort. Potentially applicable policies include: Directors and Officers (“D&O”), Errors and Omissions (“E&O”), Commercial General Liability (“CGL”), and, on occasion, Media[1] policies as well as sublimited antitrust policies or endorsements.
Unpresented Arguments Should Not Be Alternative Grounds for Decision
In the recent Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., No. 20-915, 2022 U.S. LEXIS 1226 (Feb. 24, 2022), Supreme Court case, Unicolors failed to comply with a copyright registration technicality. The argument that prompted certiorari review was that joint mistakes of both law and fact secured a safe harbor protection for the registrant. The Court determined that section 411(b)(1)(A) was satisfied so long as the copyright holder lacked “knowledge that it was inaccurate.” In so ruling, the Court did not follow any prior precedent.
Deadline Looms for Business Interruption Insurance Coverage COVID-19 Claims
Counsel who seek to benefit from any coverage recognition by their property insurer to secure business interruption loss reimbursement arising from COVID-19 events must make a critical decision soon. Drafting a complaint in an appropriate forum is critical before the deadline. For most property policies, that is 3/19/2022 — two years from civil authority shut down.
Coverage for Restitutionary Relief Based on Disgorgement
While many insurance policies define “Loss” to include settlements, judgments, damages, and litigation expenses, restitutionary awards for disgorgement are on occasion expressly excluded from the definition of “Loss” where it is deemed “uninsurable” under the statutes and laws of the controlling jurisdiction of the lawsuit. Where no policy provisions address this issue, jurisdictions vary on the rules that govern insurance coverage for restitutionary relief. Insurer’s argument that disgorgement claims are overbroad especially where the intuition monies secured were not obtained illegally.
Are Insurance Policy Applications Traps for the Unwary?
When applying for insurance coverage, the policyholder must complete a policy application. Completing the policy application can be a tedious process containing a number of questions that, to the average person, can seem convoluted and confusing. This is especially the case as policyholders face questions that do not have objective answers. The complicated nature of policy applications raises serious issues where insurers have the ability to rescind the policy contract if the policyholder misrepresents information provided in their policy application.
Delaware Superior Court Rules Pursuit of Affirmative Claims Was Strategically Defensive
On February 8, 2022, the Delaware Commercial Court, in Legion Partners Asset Management, LLC v. Underwriters at Lloyds of London, ordered payment of the principal amount of $1, 186, 946.08 plus prejudgment interest for defense fees at the legal rate of 5.25% pursuant to Delaware statute, 6 Del. C. sec. 2301(a) for a total sum of $1, 249, 260.75 accruing from the date of presentment of the fees to Underwriters.
In so ruling, it brought to a conclusion a coverage dispute addressing claims for wrongful conduct by an ex-employee held compensable after a counterclaim in the employment arbitration dispute incorporated mirror image fact allegations to those addressed in a stayed state court action for “breach of fiduciary” duty by an ex-employee.
Why Securing Broad Crime Coverage is the Best Protection Against Cyber-Threats
Our prior blogs have addressed Cyber/Media policies as well as aspects of “social engineering fraud,” one of the most prevalent, problematic, and challenging theft plagues sweeping the country. The best resource against such incidents of Loss is a comprehensive separately secured Crime policy. A recent decision from the Ninth Circuit reversing the district court’s ruling in favor of the policyholder clarified why Crime Policy may be the best to address this risk in Ernst & Haas Management Co. v. Hiscox Inc.
WHAT A CEO NEEDS TO KNOW ABOUT INSURANCE
When is the last time you thought about your company’s insurance coverage? How broad is its scope? How might it address litigation which could arise out of the company’s operations?
Insurance concerns are rarely a priority for CEOs. But, a CEO brings a unique perspective to the oversight of insurance acquisition and use. CEO involvement is inescapable where a Lawsuit becomes an “existential” concern for the Company.
Requiring Insurers to Protect Policyholders in "Mixed Action" Cases as They Head to Trial
Allocation issues involving “mixed actions” have emerged as a potent source of controversy. A developing body of case law addressing allocation limits the right of insurers to prorate their defense payment where the policies don’t allocate 100% of defense fees to the insurers.
BUSINESS OWNER’S GUIDE TO INSURANCE COVERAGE
Business owners are often confronted by the need to explore insurance coverage to evaluate whether claims or problematic events arose requiring insurer involvement and subsequently, insurance coverage expertise. Policyholders need to be mindful and may need to seek counsel expertise to properly clarify and structure their claim submission to avoid traps posed by policy exclusions and conditions in their insurance policy.
Insurance Recovery for Restitutionary Intellectual Property Claims
Insurance recovery in intellectual property lawsuits is often not limited to “compensatory damages”. Claimants who suffer a Loss in an intellectual property dispute may secure recovery that is not limited to “compensatory damages”. Licensing revenue is commonly recoverable in the successful pursuit of trademark infringement lawsuits.
Insurance Coverage for Vehicular Accidents
Plaintiff’s lawyers often seek damages beyond those available under Defendant’s individual automobile policies. Where Defendants are working for an employer at the time of an accident, separate coverage under the Commercial General Liability (“CGL”) policy of the Defendant’s employer, which include Commercial Automotive coverage may be implicated.
Preferred Pathways to Secure Trade Secret Coverage
Many trade secret litigators presume that insurance coverage for trade secret lawsuits is not readily available. But, this overstates the viability of the insurer’s arguments against coverage. Trade secret disputes often include fact allegations that address an array of different liability theories often articulated under counts such as tortious interference as well as misappropriation offering coverage that trade secret litigators should explore.