Coverage for Copyright Infringement and Why You Should Buy It

In a recent posting I discussed the value to insureds of purchasing an endorsement adding advertising injury coverage to their commercial liability policies when they acquire or renew them because it can grant coverage of at least defense costs in some intellectual property cases, at a minimum copyright infringement claims; this is discussed at http://www.bostonerisalaw.com/archives/cat-advertising-injury.html.

It is most valuable to smaller businesses who cannot carry the tens and hundreds of thousands of dollars that it can take to litigate even the most reasonably sized copyright infringement dispute. Bruce MacEwan, on his blog Adam Smith, Esq, http://www.adamsmithesq.com/blog/, wrote a series of postings recently concerning copyright infringement claims being threatened against him by a major media company for information posted on his website. Of interest to me is one in which he describes being advised that

One motivation for doing this is the remark of an IP practitioner and friend who, unsolicited, volunteered the opinion that "There are entire in-house law departments devoted to sending out legally unjustified cease and desist letters." And the truly bad news is not that dismaying commentary on the paucity of ethics, but his additional observation that far more than half the time, threats work.
http://www.bmacewen.com/blog/archives/2006/05/copyright_law_fair_use_an_1.html#more

We can presume that most of the times that this threat works it is because the recipient cannot afford to defend itself against a copyright infringement lawsuit, or at least the calculus is that the profits from the allegedly - but possibly not - infringing activity is less than the cost of defending against that claim. Being insured against such a claim, and knowing that at a minimum the insurer will provide a defense against the copyright infringement lawsuit that will be filed if the cease and desist letter is not complied with, changes the calculus immeasurably. Suddenly, the only real issue for the recipient is whether it is, in fact, infringing on someone else's copyright, not whether it is too expensive to litigate the question and find out.

Once again, insurance to the rescue. More importantly, once again, companies and their counsel simply should not overlook the value of paying a little more for add ons, such as advertising injury coverage, that are typically available.