In today’s highly competitive world, there has been a rise in the consumer-friendly nature of legal environment across India. It makes it necessary for the people working in different areas to pay utmost care towards the manner in which they are discharging their duties otherwise they could be sued.
Key Takeaways
The Internet is Not Public Domain: Just because an image or design is widely available online does not make it public property. Using someone’s “things” without authorization is a violation of the Copyright Act, which can trigger a professional liability claim.
Unintentional vs. Intentional: As highlighted in the case of Suresh Mahajan, the court and the insurer distinguish between a mistake and a crime. If you mistakenly believe your work is a “fair use” or a “parody,” the insurance provides coverage; however, deliberate IP theft is never covered.
A Rising Legal Trend: The legal environment in India is becoming increasingly consumer-friendly and rights-conscious. It is no longer just doctors who are at risk; auditors, engineers, and interior decorators are now frequently sued for professional errors and omissions.
Comprehensive Financial Support: A Professional Indemnity policy provides a two-pronged benefit: it pays for the high cost of defending yourself in court and provides the funds to pay the final monetary compensation awarded to the claimant.
Immediate Reporting is Vital: To ensure the IPR clause is activated, the professional must inform the insurance company the moment a claim is filed. Waiting or attempting to settle privately can lead to a rejection of the claim.
In the recent times, it is not only medical professionals who face such issues where they have been sued by other parties as other professionals like engineers, auditors, interior decorators, etc.; are also facing the similar problem.
To protect such professionals, there is an errors and omission insurance policy, which offers financial coverage in case these professionals are being sued by other party. It is also called professional liability insurance policy and professional indemnity insurance.
There is an IPR infringement clause in errors and omission insurance which offers coverage in case there is a violation of intellectual property. An intellectual property infringement is the infringement or violation of the intellectual property right (IPR).
There are various kinds of intellectual property rights like a trademark, copyright, patents, etc.; and use of any such rights without the permission from its original creator can lead to infringement. Like the use of images, slogan, design work, etc., without the authorisation or taking permission from its creator, can lead to a violation of intellectual property rights.
Just because, some images are widely available in the internet world, doesn’t mean that they are someone’s public property and can be used freely. It’s likely that someone or a company will own it, and that person or company will want to be paid in return for you to use ‘their things’.
Read More: Why is Errors & Omissions Insurance Important?
In case you go ahead with their ‘things’ without taking their permission, it could lead to a violation of copyright act. If such a case arises, the other party can file a case against you, and here, your errors and omission insurance can help you.
Under IPR infringement, you can approach your error & omission insurance company who would come forward to cover your expenses that you would have to incur towards defending yourself in the court. It includes compensation as well that you would have to pay to the third party.
Note, errors & omission insurance company would pay coverage only if there Is an unintentional infringement of intellectual property rights. In case it is found that the policyholder infringes on an intentional basis, the insurance company can reject to settle your claim.
Case:
An ace photographer, Ravi Bhatia filed a case against the other photographer, Suresh Mahajan. Ravi clicked some pictures of an old couple and sold it for use in greeting cards and similar products. The photos were a major hit and helped Ravi in earning lakhs.
However, the other photographer, Suresh used the same photograph for creating a set of statutes based on the similar image. Suresh sold several of these structures and also made a significant profit.
Upon discovering this, Ravi filed a case against Suresh for using pictures without his permission under infringement of the copyright act.
Read More: Who Should Buy Errors & Omissions Insurance?
Summary Table: IPR Infringement Coverage
| Feature | Details | Policy Impact |
| IPR Clause | Specialized coverage for Intellectual Property violations. | Trigger: Activated by claims of unauthorized use of creative work. |
| Covered Assets | Trademarks, Copyrights, Patents, Slogans, and Designs. | Scope: Covers unintentional use without the creator’s permission. |
| Legal Defense | Insurer covers lawyer fees and court-related expenses. | Financial Shield: Protects the professional’s personal savings. |
| Compensation | Monetary awards paid to the original creator/third party. | Indemnity: Restores the claimant’s loss on your behalf. |
| Exclusion | Intentional or deliberate theft of intellectual property. | Hard Stop: Claims are rejected if infringement was a conscious act. |
| Key Requirement | Immediate notification to the insurer upon a claim. | Compliance: Essential for triggering the “Duty to Defend.” |
Outcome
When the case reached the court, Suresh argued that he made a fair use of parody only. However, the court found huge similarities between both the images and rejected Suresh’s claim. Though it was concluded that Suresh used images unintentionally, the court asked Suresh to pay monetary compensation to Ravi on account of the infringement of the copyright issue.
Here, Suresh had errors & omission insurance policy, and he had already informed the insurer as soon as the case was filed against him by Ravi. After analysing the situation, the insurer found that this claim fell under the IPR infringement clause of professional indemnity insurance and therefore, agreed to offer the coverage.
The insurer awarded not only monetary compensation to Ravi on behalf of Suresh but also covered legal costs incurred by Suresh in defending himself in the court. In case, infringement was intentionally; the professional liability insurance could have rejected the claim as well.
Frequently Asked Questions (FAQs)
1. Does “Fair Use” or “Parody” protect me from a copyright claim?
A) While “Fair Use” is a legal defense, it is often a matter of interpretation for the court. As seen in the case study, Suresh’s “parody” defense was rejected because the similarities were too great. Professional Indemnity insurance is essential here because it pays for the legal experts needed to argue these complex defenses in court.
2. What happens if I use a stock photo but accidentally forget to renew the license?
A) This is a classic “Error or Omission.” Since the use was not an intentional act of theft but rather an administrative oversight, your Professional Indemnity insurance should cover the resulting copyright infringement claim.
3. Does this policy cover me if I am sued for using a competitor’s trademark in my marketing?
A) If the use was unintentional—for example, you used a slogan that you didn’t realize was trademarked—the IPR clause will typically cover the legal defense and any damages. However, if you deliberately used a competitor’s logo to confuse customers, the claim would likely be rejected due to “intentionality.”
4. Why was Suresh’s claim accepted even though he lost the court case?
A) Insurance is designed to protect you against your own professional mistakes. Even though the court found Suresh liable for compensation, the insurer covered the cost because they determined his mistake was “unintentional.” The goal of the policy is to prevent a professional error from causing financial ruin.
5. How much does the IPR clause add to my premium?
A) In many comprehensive Professional Indemnity policies, IPR infringement is included as a standard clause. However, for high-risk professions like graphic design or advertising, you might pay a slightly higher premium to ensure the “Limit of Indemnity” for IP claims is high enough to cover modern court awards.
About The Author
Amit
MBA Finance
Amit is an experienced insurance professional with 7 years in the industry, specializing in Errors & Omissions Insurance. Writing for SecureNow, he provides clear and insightful blogs and articles to help professionals understand the importance and nuances of E&O coverage. His expertise ensures that readers receive practical advice on protecting themselves from potential liabilities and professional risks. Dedicated to making complex insurance topics accessible, Amit stays updated on industry developments, delivering valuable content that empowers professionals to make informed decisions about their E&O insurance needs.
