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Intellectual Property Coverage Under CGL Policies
It is well known that intellectual property litigation is expensive, time-consuming, and complicated to defend. It frequently involves numerous experts with specialized scientific knowledge, damages experts, and market surveys of potential customers. Although some insurers offer specialty intellectual property insurance policies, in practice, such insurance is rare amongst most businesses, which often do not consider the need for such insurance until after they have been sued. Moreover, insurers often limit coverage under these types of policies to intellectual property assets that can be proven to have first been thoroughly researched and cleared through intellectual property counsel. Without an intellectual property insurance policy, many businesses that find themselves sued for intellectual property infringement will instead turn to their Commercial General Liability (“CGL”) insurers for possible coverage ' often with mixed results.
Most standard CGL policies cover “bodily injury,” “property damage,” or “personal and advertising injury,” as those terms are defined in the policies. Intellectual property claims, to the extent they are covered at all, typically fall under the “advertising injury” provision of such policies. Once triggered, the insurer will owe a duty to defend and indemnify the insured in lawsuits arising from the advertisement of the policyholder's products and services. The insurer's duty to defend involves hiring competent intellectual property counsel, as the policyholder is likely to have a strong argument that its insurer has failed to satisfy its duty to defend if the insurer hires counsel with no intellectual property experience.
This article discusses the applicability of standard CGL policies to the most common types of intellectual property claims, namely, patent, trademark, trade dress, and copyright infringement.
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