No indemnity for $30 million copyright infringement award
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A Montgomery County judge has ruled that an insurance broker and its employee are not entitled to indemnity under their "advertising injury" coverage for a $30 million judgment levied against them in a federal copyright infringement suit. The suit alleged they copied from a rival broker's documents and used it for their own.
Montgomery County Common Pleas Court Judge Stanley Ott ruled that a group of 17 insurers has no duty to indemnify USI MidAtlantic Inc. and Thomas P. Haughey, the defendants.
Judge Ott said the activities alleged in the complaint involve client proposals, rather than materials related to what could traditionally be defined as "advertising."
In the underlying litigation, William A. Graham Co., an insurance broker, filed a suit in the U.S. District Court for the Eastern District of Pennsylvania alleging that USI infringed on its copyrighted material after Mr. Haughey, a former Graham employee, brought copyrighted documents from Graham to USI, according to Judge Ott.
Graham alleged that Mr. Haughey and USI used standardized language from those documents in their own client-specific proposals from 1991 to 2005, Judge Ott said.
In June 2006, a federal jury found that USI and Haughey had committed copyright infringement and awarded Graham over $16.5 million from USI and over $2.2 million from Mr. Haughey. With pre-judgment and post-judgment interest, according to the judge, the combined award rose to about $30 million.
In a related case, Judge Ott said, OneBeacon Insurance Co. filed a complaint seeking declaratory judgment that it had no duty to indemnify Mr. Haughey and USI in the federal copyright suit.
USI and Mr. Haughey then filed complaints against several additional defendant insurance companies, all of which had, along with OneBeacon, issued policies that covered "advertising injury" stemming from "an offense committed in the course of advertising your goods, products or services."
First Published January 2, 2012 12:00 am