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Hacker Attack: Data Loss Considered Covered Property Under First-Party Policy
The U.S. Court of Appeals for the 4th Circuit has recently weighed in on the applicability of standard-form, first-party property policies to the loss of computer data, finding such data loss resulting from a hacker attack by a former employee of the insured to be covered property damage. NMS Services, Inc. v. The Hartford, No. 01-2491, 2003 WL 1904413 (4th Cir., April 21, 2003)
The insured, a software development company selling computer programs to the telemarketing industry, suffered considerable damage to vital computer files and databases necessary for the operation of its manufacturing, sales, and administrative systems as a result of the hacker attack, which had been perpetrated by a former technical systems administrator for the insured (who had been fired 21 days earlier). It was later determined that, while still an employee, the perpetrator had surreptitiously installed two hacking programs on the network that permitted him to gain access to the system and carry out the attack after his termination.
After reviewing the policy ' which provided basic property coverage under a 'Special Property Form' and also provided optional computer coverage under a 'Computer and Media Endorsement,' the court found that the attack was a 'Covered Cause of Loss' and also held that the erasure of data from the computer system constituted 'direct physical loss or damage' to the insured's property. See, 2003 WL 1904413 at *3 (Widener, J. concurring). Accordingly, the court found there to be coverage for the insured's lost income (under the 'Business Income' coverage provision), expenses incurred by the insured as a result of the attack (under the 'Extra Expense' coverage provision), and the cost of restoring the erased files and data (under the 'valuable papers and records' coverage extension).
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
The Cost of Making Partner
Making partner isn't cheap, and the cost is more than just the years of hard work and stress that associates put in as they reach for the brass ring.