Let’s say you’ve been sued for copyright or trademark infringement or violation of trade secrets. Where do you turn first? Your lawyer, of course. But the second place you should turn to is your insurance policy. Many business owners and even their lawyers are not aware that a commercial insurance policy may have coverage for intellectual property (IP) claims. If you have insurance coverage, the insurer should cover both the cost of defending the lawsuit and any amounts you are required to pay.
The typical Comprehensive or Commercial General Liability (CGL) policy provides coverage for four types of claims: (1) bodily injury, (2) property damage, (3) personal injury, and (4) advertising injury. A claim for IP infringement may trigger coverage for “advertising injury.”
Advertising injury is usually defined to cover the following claims, if committed by the insured in the course of advertising:
- Slander, libel or disparagement;
- Violation of the right of privacy;
- Misappropriation of advertising ideas or style of doing business;
- Infringement of copyright, title or slogan.
The insured can, therefore, obtain coverage for copyright infringement and certain trademark infringement claims if the insured’s advertising was involved. Even trade secrets claims may trigger coverage if the trade secrets are related to marketing or advertising.
The broad reach of the internet can expand what is considered “advertising.” The contents of your website may suffice to trigger “advertising injury” coverage. Almost every business today has an internet presence. You should consult with counsel to determine whether a claim relating to your internet content is considered “advertising.”
Even some patent claims occasionally may be covered by insurance. There are specialized patent insurers that will cover patent infringement claims. Some insurers offer insurance policies to provide funding for plaintiffs’ litigation against patent infringers.
If you are facing an IP claim, you should immediately check your insurance policy and consult a lawyer familiar with IP coverage issues. Insurance coverage can save you hundreds of thousands, if not millions, of dollars. Do not delay in reviewing your policy because you must promptly notify the insurer of the existence of a claim. A failure to notify could result in a denial or limitation of coverage. ____________