"Insurance Coverage for Intellectual Property and Cybersecurity Risks."

   By Scott Godes, Counsel, Dickstein Shapiro LLP.

Can you think of many, or, in fact, any, companies that are risk free when it comes to the areas of intellectual property or cybersecurity?  If you represent companies with risks relating to intellectual property and cybersecurity, what insurance coverage would apply if those risks turned into claims and potential liabilities?  Are you familiar with the developing body of insurance coverage law in those areas? 

I'm the author of a forthcoming treatise chapter that answers those exact questions.  It's the "Insurance Coverage for Intellectual Property and Cybersecurity Risks" chapter of the New Appleman Law of Liability Insurance, Second Edition, to be released in June 2010.  Here's the chapter's introduction:

Two developing areas of insurance coverage law are the issues of insurance coverage for intellectual property-based claims and cybersecurity-based claims.  This chapter describes coverages available for such claims.  The chapter first analyzes and details the development of coverage for intellectual property claims through advertising injury found in general liability insurance policies, as well as other coverages.  The chapter then analyzes coverage for cybersecurity claims.  The area of coverage for cybersecurity claims is, relative to most insurance coverage topics, quite nascent, and the chapter considers decisions that should be seen as analogous to this developing topic.  The chapter discusses coverage for cybersecurity claims under general liability, first-party, and other policies, as well as new policies being marketed as specific to cybersecurity risks and claims.

The intellectual property section of the chapter provides a basic overview of various types of intellectual property risks and provides a detailed discussion of how insurance policies apply to those risks.  The chapter explains the legal principles at issue when seeking insurance coverage for such risks and potential liabilities.  The chapter discusses the majority and minority rules for various issues and provides an analysis of the various exclusions that insurance companies have cited when trying to deny coverage for intellectual property claims.

The cybersecurity section of the chapter provides an overview of the new and growing cybersecurity risks faced today and details what insurance policies apply to those risks.  The chapter details how courts have ruled on coverage questions for cybersecurity and computer-related risks and liabilities.  For those areas of the law that are not as well-developed, in light of the relatively new nature of cybersecurity risks, the chapter notes analogous caselaw and how those holdings should apply to cybersecurity claims.  The section also notes issues to consider for companies in the market for new and specialized cybersecurity insurance policies.

Access Chapter 18, "Insurance Coverage for Intellectual Property and Cybersecurity Risks", on lexis.com.

Scott Godes is counsel with Dickstein Shapiro's Insurance Coverage Practice in the firm's Washington, D.C. office. Mr. Godes is the co-head of the firm's Cyber Security Insurance Coverage Initiative and co-chair of the American Bar Association Computer Technology Subcommittee of the Insurance Coverage Committee of the Section of Litigation. He frequently represents corporate policyholders in insurance coverage disputes. He is the author of the forthcoming chapter Insurance Coverage for Intellectual Property and Cybersecurity Risks in the second edition of New Appleman Law of Liability Insurance. See Mr. Godes blog at http://corporateinsuranceblog.com.

Listen to Mr. Godes' podcast, LexisNexis Insurance Law Community Podcast featuring Scott Godes of Dickstein Shapiro LLP on Cyber Liability Insurance Coverage.

Scott Godes will be one of the Speakers at HB Litigation's NetDiligence Cyber Risk and Privacy Liability Forum Audiocast on August 4, 2010 from 11:45 A.M. - 5:05 P.M. ET.