Tech Company Advertising Injury Coverage

Why it’s necessary

The standard General Liability policy covers personal injury and advertising injury unless the insured is in the business of advertising, broadcasting, publishing, or telecasting. For this reason, there is no coverage for IT firms that are in the business of designing websites, determining content, providing content, or providing internet access.

Advertising InjuryWhy do tech firms need personal injury coverage? Coverage may be needed to against an allegation of slander, libel, or oral or written publication that violates a person’s right of privacy. It is not too difficult to see how a tech firm could get sued under these circumstances. Coverage may also be needed for advertisement injury to protect against allegation of infringement of copyright, trade dress, or slogan in your advertisement. The key word is advertisement. There is no coverage for infringement of copyright, trade mark, trade dress, or slogan unless they occur in an advertisement.

What’s not covered

An exclusion in the policy form eliminates coverage for injury arising out of electronic chat rooms or bulletin boards that the insured hosts, owns, or exercises control over. In addition, there is an exclusion arising out of the unauthorized use of another’s name or product in your email address, domain name, meta tag, or similar tactic used to mislead the someone else’s potential customers.

It is obvious that the standard General Liability form does not adequately protect tech companies or IT professionals against these important exposures. As a result, coverage can be sought as part of a Professional Liability or Errors & Omissions policy form. These policies can add essential coverages for tech firms in the business of advertising or publishing and violation of a person’s right of privacy or undue publicity, intellectual property infringements, etc.

It is strongly recommended that tech companies or IT professionals deal with a tech insurance specialist to make sure that their coverage needs are addressed.

 

3.00 avg. rating (67% score) - 1 vote
Categories: Advertising Injury, Errors & Ommissions, Personal / Advertising Injury, Professional Liability, Technology
Crime Insurance

Keeping your trade secrets a secret

Protecting your information and preventing leaks

If your company’s unique formula, recipe, or manufacturing process sets you apart from everyone else on the market, you have a trade secret. Unfortunately, secrets are hard to keep.

We’re not talking intellectual property protected by patents and copyrights. Trade secrets are technical information that gives you an economic edge, or the potential for one, over the competition. These can be techniques, processes or formulas. Most companies take steps to protect themselves from patent and copyright infringement, but many mid-sized firms neglect to take steps to secure confidential and sensitive information, such as trade secrets, business strategies, financial records, customer data, and employee contracts terms.

All of these are valuable assets to your company and need to be safeguarded.

Where leaks occur

Sadly, research shows that employees are the biggest source of confidential information misappropriation. Attorneys at O’Melveny & Myers say 78 percent of cases between 1995 and 2009 involved defendants who were either employees or former employees. Third-party contractors and service providers were involved in 20 percent of thos??e cases.

Ownership of trade secrets aren’t protected by law the same way patents and other intellectual property are. However, individuals and competitors can be sued in civil court under federal laws , such as the Economic Espionage and Computer Fraud and Abuse Acts.

 The rise in trade secret litigation surpassed that of other trademark and other intellectual property infringement cases by double-digits in 2013, according to American Intellectual Property Law Association.

 Taking steps toward protection

Chances of successfully proving legal ownership of confidential information and trade secrets improves drastically if you have taken reasonable steps of protection.

Protection begins at home.  All employee and contractor agreements should include policies on non disclosure clauses for proprietary, secure, sensitive information. The best security is maintaining a strict need-to-know policy, sharing sensitive information only with those who have signed a nondisclosure agreement. All employees should be given intellectual property security training upon hire. It doesn’t hurt to update and review that training annually.

We encourage you to call one of our Sadler insurance experts at 800-622-7370 if you have questions about intellectual property and trade secrets. They’ll be happy to provide answers and discuss the insurance needs of your unique business.

Source: Matt Dunning, “Trade Secrets,” Business Insurance. 16 Mar. 2014

1.00 avg. rating (47% score) - 1 vote
Categories: Advertising Injury, Breach Of Security, Intellectual Property Infringement, Theft

Social media marketing

Be aware of media-related risks

Social media marketing and posting content online have proved to be effective and cheap advertising tools, particularly for small and mid-sized businesses.  But there are risks in all that posting that could prove quite costly in terms of money and integrity.

Copy_PasteNot all web content is free for the taking

Reposting, copying and pasting, and embedding of video, audio, and digital creations found on the web can result in copyright, trademark and intellectual property infringement claims. Most people think copyright laws and regulations are associated only with the world of publishing and broadcasting. However, any type of business can be exposed to liabilities that most people usually associate with the print media, music, and advertising industries.

“Oftentimes, companies assume that whatever they find on the Internet is free for use, and that’s simply not the case,” said Adam Bialek of the Wilson Elser Moskowitz Edelman & Dicker LLP intellectual property group of New York.

Media-related injury claims

Defamation, invasion of privacy, unfair trade practices and emotional distress are claims that most people associate with the press, too. However, in that regard, web marketing is no different than print advertising. Any kind of company using licensed content can be exposed to media-related claims.

A company licensed to use materials for one purpose might be exceeding the scope of that license if used for another purpose.

Protecting yourself and your business

Most large companies are conscious of media laws, but small and mid-sized organizations need to become more aware of marketing practices that expose them to media liability claims.

Smaller organizations often neglect training their employees in risk management because they lack sufficient income or resources. This can be compounded when the tasks associated with social media are delegated to lower level employees or interns. Many companies don’t even have a formal social media policy.

It’s widely assumed that media-related injury and copyright infringement claims would be covered under a general liability policy. However, the Insurance Services Office, Inc. general liability policy forms have limitations on media and publishing liability coverage, and more exclusions for personal injury and advertising continue to be added.

Any company using social media marketing tools is encouraged to increase coverage by adding separate, stand-alone media liability policies. Cyber risk insurance is the policy of choice for non-media firms with online content exposures. Be sure to check out our cyber risk page to get a quick quote indication by answering just eight questions.

 

Sources:

  • Matt Dunning, “Social Media Marketing Efforts,” Business Insurance, 19 Jan., 2014.
  • Matt Dunning, “Non-media Companies Face Arcane Risks,” Business Insurance, 20 Jan 2014
4.00 avg. rating (77% score) - 1 vote
Categories: Advertising Injury, Cyber Liability, Intellectual Property Infringement

Advertising Injury Coverage Gaps Can Affect Non-Media Firms

Cyber Liability insurance is required for intellectual infringement protection

The 1986 ISO General Liability policy form provided broad coverage for advertising injury for non-media companies. However, due to recent restrictions on advertising injury coverage under a General Liability policy, many non-media companies should  Cyber Liability coverageconsider purchasing of a Media Liability (offline) or Cyber Liability (online) policy in order to close certain coverage gaps.

The 2001 ISO version of the General Liability form includes a new exclusion that eliminates coverage for “injury arising out of the infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.” However, the new exclusion excepts “ infringement in your advertisement of copyright, trade dress, or slogan.” Therefore, coverage is now specifically excluded for all trademark and trade secret claims. In addition, coverage for the three remaining types of intellectual property claims (copyright, trade dress, or slogan) is dependent upon such offenses arising out of an advertisement.

Breaking the exclusion down

Within the definition of advertisement, only infringements that occur in the advertisement itself are covered. The new 2001 edition includes the following new restrictions on Internet activity:

  • Advertisement with respect to a website means only that part of the website that is about “your products, goods or services for the purposes of attracting customers or supporters.”
  • Coverage is eliminated for claims “rising out of an electronic chat room or bulletin board that the (insured) hosts, owns, or over which the (insured) exercises control.” It is likely that the use of blogs, Facebook, Twitter, and other social media fall under this exclusion.
  • Coverage is also eliminated for “unauthorized use of another’s name or product in the [insured’s] e-mail address, domain name or meta-tag, or any other similar tactics to mislead another’s potential customers.” One area of concern that has not yet been clarified by the courts is use of trademarked terms in meta-tags.

How this can affect your company

Below are some common situations where the above-mentioned restrictions can eliminate coverage for non-media companies:

  • Claims for copyright infringement arising out of text, photographs or other content that are not part of an online advertisement. The use generic photos in areas that are not actually part of a specific product advertisement on company  websites  is a common source of litigation. Providers of stock photos are using watermarking technology to search the Internet for instances of the unauthorized use of their photographs and many law firms are specializing in providing representation in this area.
  • Trade dress claims arising out the look and feel of a website, blog, social media, etc. that is not part of an online advertisement. These involve navigation (ex: buttons, bars), color schemes, hyper links, menus, etc.
  • Online comparative advertising where your product is represented as being bigger, better, faster, etc. as compared to the competition. These representations may result in claims for false or misleading advertising and unfair competition under the Lanham Act or various state statutes. However, if these representations are directed at a specific competitor, they may be covered under advertising injury.
  • Product packaging that too closely resembles a competitor’s may result in liability for trade dress infringement. These claims may be excluded because the courts may not consider the product packaging to be part of an advertisement.

If any of these instances of potential uncovered claims are a concern, a business should strongly consider adding Media Liability  or Cyber Liability policies.

Source: Elizabeth C. Kock and Jay Ward Brown, Levine Sullivan Koch & Shultz, LLP; Risk & Insurance; December 2011.

4.00 avg. rating (78% score) - 2 votes
Categories: Advertising Injury, Cyber Liability, General Liability