A Video Explaining Patent & Copyright Infringement Coverage

Advertising Injury and the CGL Policy

Patent Infringement Coverage

Insureds accused of infringing patents that are incorporated into the structure of a product will often make claim on their CGL policy for defense and indemnity claiming that patent infringement is an “advertising injury” covered under the Personal Injury Coverage of the CGL. As a subset of the Personal Injury Coverage for “advertising injury,” patent infringement claims are presented with greater frequency since the decline of “dot com” industries and the growth of consumer electronics and computer industries. Because defending against a claim of patent infringement requires a specialized team of attorneys, designers, and engineers, the cost of defense is extensive and the infringer is highly motivated to find a way to gain coverage for the loss.

In Green Machine Corporation v. Zurich-American Insurance Group, 313 F.3d 837 (3d Cir. 12/20/2002) the Third Circuit found no duty to defend a patent infringement claim where it was alleged that the insured made a concrete cutting machine in violation of another manufacturer’s patent.

Copyright Infringement Coverage

The CGL agrees to defend and indemnify an insured if the insured is accused of infringing a copyright as long as the infringement is tied to the advertising of the insured. When a symbol, word, or series of words that are protected by a copyright the person who uses the protected symbol, word, or series of words is subject to a suit for damages for copyright infringement.

When a person uses a symbol, word, or series of words that are protected by copyright the person who infringes the copyright is subject to a suit by the holder of the copyright for damages. The CGL will defend and indemnify an insured for copyright infringement if tied to the advertising actions of the insured. For example, an advertising agency that purchased specific coverage for copyright infringement and then prepared advertising for a client that infringed another’s copyright was sued by its client for breach of contract and professional negligence, not for copyright infringement. This choice of grounds on which to sue effectively deprived the agency of coverage. If the client had sued the insured for copyright infringement, coverage would have been available.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and Read last two issues of ZIFL here.