Category Firm News, Regulatory Compliance

NJ Court: Infringement Suit Covered By General Liability Policy

 

A recent decision from the New Jersey Appellate Division confirms that general liability policies provide broad coverage for certain types of intellectual property claims. This often-overlooked coverage — for “advertising injury” — is included in standard form, general liability insurance policies.

In Superior Integrated Solutions, Inc. v.  Mercer Insurance Company of New Jersey, 2020 WL 3885953 (N.J.Super. App. Div., July 10, 2020), the underlying lawsuit against the policyholder involved allegations of infringement of another company’s copyrighted computer program. Importantly, the plaintiff alleged that the policyholder used the infringing program in its attempt to solicit customers and persuade them to use the policyholder’s services. This allegation of a connection to advertising activities allowed the court to find that the claim was covered, and distinguished the case from Information Spectrum Inc. v. Hartford, 182 N.J. 34 (2004). Notably, the court held that it was not necessary for the policyholder to show that the infringement occurred in the advertising itself. Rather, to be covered under the policy, all that is needed is a causal connection between the advertisement and the injury. 

In addition, the court found that an exclusion for intentional injuries did not apply because intent was not an element of the copyright infringement claim that was asserted against the policyholder.

This decision is a useful reminder to corporate America of the existence of this potentially important coverage in their policies — and that they should consult experienced policyholder counsel when lawsuits are filed against them. The decision also may assist New Jersey policyholders that seek to enforce their rights to coverage for similar claims.  

Understanding how this affects the small business economy is part of our job here at Santomassimo Davis LLP, as we primarily focus in providing expert Outside General Counsel for a variety of law firms and legal issues related to Corporate and Business Law in New Jersey, New York and Pennsylvania.

Thanks for reading our latest blog talking about topical legal issues facing small businesses. Learn more from our Outside General Counsel Blogs.

 

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