Insurance IP Exclusion without IP Claim

Many insurance policies include “intellectual property” exclusions. 

Hammond v. TCA, arose out of a failed business relationship in which Hammond (a software developer) had been cut-out as the middle-man.  In the case, TCA alleged that it owned the software and Hammond counterclaimed.  That underlying case eventually settled. 

Meanwhile, Hammond’s insurance company USLI had refused to indemnify Hammond based in-part upon the intellectual property exclusion found in the policy that specifically excluded coverage for any “loss, cost, or expense . . . [a]rising out of any infringement of copyright, patent, trademark, trade secret or other intellectual property rights.”  Agreeing, the court particularly found that the basis for TCA’s attorney fee requests stemmed from the Pennsylvania Uniform Trade Secrets Act as well as the Copyright Act – even though no intellectual property infringement claim had been asserted in the underlying case.   On appeal, the Third Circuit affirmed this ruling:

[T]he intellectual property exception to the Policy precluded coverage. To repeat, that exception bars coverage for “personal and advertising injury” “[a]rising out of any infringement of copyright, patent, trademark, trade secret or other intellectual property rights.” The basis for the claim of attorney’s fees here was under 12 Pa.C.S. § 5305 (PA UTSA) and 17 U.S.C. § 505, which allow shifting of attorney’s fees in cases of bad faith trademark [sic] and copyright claims, respectively. Though no intellectual property claim was filed against Hammond, the basis of the request for attorney’s fees was an alleged infringement by him of TCA and LanTEK’s intellectual property rights. Hence the intellectual property exception precludes coverage.

[Read the 3rd Circuit Non-Precedential Decision].

Of course, the oddity of this result is that attorney fees under both the UTCA and Copyright Act are generally thought to require first an underlying claim of trade secret or copyright infringement.  Hammond has petitioned for writ of certiorari, but the petition appears to have little chance of success.


14 thoughts on “Insurance IP Exclusion without IP Claim

  1. 2

    OT but it’s pretty amusing watching the super serious hand-wringers out there work themselves up over Justice Ginsberg’s comments regarding Donald the Massive Failure.

    Here’s an idea: if you don’t want people in every sphere of our society mocking your Presidential candidate, then pick a better one.

    What would be truly amusing is to watch the Supreme Court step in and decide another Presidential election, but this time for the Democrats. Can you imagine how the “liberal media” would react to that? Too. Much. Fun. Sadly, there’s no chance of that happening this time around. Ah, well.

    1. 2.1

      Here’s an idea: if you don’t want people in every sphere of our society mocking your Presidential candidate, then pick a better one.

      No doubt.

      (and this goes for both parties)

      just write in Bernie…

      1. 2.1.1

        just write in Bernie…

        Yes, “anon”! Please tell all your like-minded friends* to do that! It’ll make a huge difference! LOL

        *your stuffed animals and Star Wars figures can’t vote, just fyi


          Stuffed animals from the guy who has his head buried in the “gee, Big Banks are contributing just to be nice” hole….

          Typical Malcolm


          …Clinton has the same type of backers

          Ohmygoodness! The two candidates are virtually identical! “anon” says so!



            As far as who is putting up the gobs of money…

            You betcha.

            Your lack of consistency on G-g-g-grifters when it comes to Big Banks is rather telling.


          gushing over Hilary

          I’m just totally gushing!

          ]]]] Gush! Gush! [[[ <—- see?


          Keep the laughs coming, "anon"! You're a very serious person! I've never run into anybody like you before, will all your deep insights and super suprises.



            The laughs are not what you think that they are, oh-self-appointed-fields-of-rye-protector.

    2. 2.2

      The thing is that it’s entirely possible, given the current state of the GOP and the stone-ign0rant racist paranoiacs who run the party, for a candidate far worse than Trump to prop himself up. Heck, someone could get easily great traction with the gun clutching rural white m0uthbreathers simply by promising to pack the Supreme Court with avowed white supremacists. Are the current Justices supposed to just sit there quietly and wait for that to happen? Because … the Constitution? Seriously?

      Like I said: it’s amusing to watch the hand-wringers express their grave “concern” over Ruth’s comments. Maybe all the hubbub is because no other Justice ever expressed his or her opinions about anything before? LOL

    3. 2.3

      Were these the “super serious hand wringers” you were talking about…?

      link to

      Or is this just more of the same “rules don’t apply to Malcolm’s ideals”…

      The irony being that Malcolm is the anti-patent Left version of Trump – but just cannot see it.

  2. 1

    A good portion of the patent abuse problem is the mystifying pass that insurers gave themselves to not cover IP claims, esp. non-willful claims, as general liabilities.

      1. 1.1.1

        Health insurance can hardly be thought of as less than random/arbitrary since everyone will get sick and die except those who die of accidents. Errors and omissions are random too…..

Comments are closed.