Don't Risk IT

Court: General Liability Policy Must Cover Online Advertising Theft

Advertising theft insurance coverage is mandated by a Wisconsin court.

Monday, March 24, 2014/Categories: errors-and-omissions

A Wisconsin appeals court has issued a ruling that could affect the types of intellectual property claims your insurance provider defends you against in the event of a legal challenge. Here’s an outline of the case:

  • Two employees at the engineering firm Air Engineering left to work for its competitor, Industrial Air Power.
  • Air Engineering alleged in a lawsuit that the two employees improperly used advertising techniques from its arsenal in work for their new employer.
  • Initially, Industrial Air Power’s insurance provider refused to cover the costs of the legal defense associated with the case. A lower court agreed with the insurance provider that it did not need to provide coverage.
  • An appeals court overturned the initial decision, ruling that the insurance provider had to provide a legal defense for Industrial Air Power.

According to sources, Industrial Air Power’s general liability insurance policy includes an “advertising injury” section. The appeals court apparently believes that the charges brought by Air Engineering fall neatly into that category and, as such, are well within the bounds of the company’s insurance protection.

Does Your Insurance Policy Cover Intellectual Property?

If you run a small tech firm, this case provides a few useful lessons - even if you’re not located in Wisconsin. As you plan your risk management strategies for future projects, take the following into consideration.

  •  Intellectual property coverage options. In many cases, intellectual property coverage can be included in errors and omissions policies for technology firms. If you’re not sure whether your current e & o insurance policy protects various types of intellectual property, give your insurance agent a call.
  •  Non-insurance risk management. Obviously, sharing valuable information with your team is essential to many of your business endeavors. If you want to make sure they don’t run away with that information to the highest bidder, give them good reasons to stay on your team. This might involve offering competitive benefits, a pleasant work environment, a flexible schedule, or any other perks that motivate your employees. Remember: these measures will probably cost less than losing your competitive edge or fighting an intellectual property case in court.
  •  Requirements for establishing copyright, trademark, and trade secret designations. While certain information may be invaluable to your business, it’s not considered a “trade secret” unless it is used to get an advantage over competitors. Your insurance provider will only provide coverage if you can demonstrate that your information meets official criteria. The U.S. government’s Patent and Trademark Office offers details.


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