Yes, a professional indemnity insurance policy can give protection against copyright infringement lawsuits. The professional liability insurance, which is also called, errors & omissions insurance policy, offers coverage against professional risks and related legal expenditure.
The errors and omissions insurance has an IPR infringement clause which offers coverage in case there is a violation of intellectual property. The policy includes third-party claims, which may arise from the violation of copyright rules with regards to images, slogans, design work, etc.; without the permission of the creator.
Just because, some images are available on the internet, it doesn’t mean that they can be used freely. It’s like that some other person or company has its copyright and thus, would likely to be paid in return for using these things.
In case, the person goes ahead with such ‘things’ without the permission of the creator; it could term as a violation of copyright act. If the other party files a case against you, the errors and omissions insurance policy will offer you coverage.
It is interesting to note that businesses can benefit from professional indemnity insurance policy in two ways: the insurer’s duty to defend and the insurer’s duty to indemnify.
As per the duty to defend, the insurer is required to pay for the defence of a policyholder against all those claims which fall under professional liability insurance policy. The insurer also pays legal expenses incurred by the policyholder in defending itself in the court. Along with this, the insurer is required to indemnify the third-party for those losses which are actually covered by the insurance policy contract.
If a claim of infringement has been filed against your company, it is essential to inform the insurance company as soon as the claim arises.
It is important to note that in those cases, where the insurer finds out that the policyholder infringes on copyright intentionally, it can refuse to settle your claim. Another reason when the insurer can refuse to settle the claim is when there is a breach of contract which says that the insurer will not cover those damages which the policyholder is obligated to pay due to the policy contract.
An ace designer, Jayant Singh filed a case against K.S Creative. Jayant prepared his design portfolio which he used to send to his prospective clients. He sent the same portfolio to K.S Creative to take up some freelancing projects from it. Though K.S Creative rejected Jayant’s portfolio; its creative head unintentionally used some of Jayant’s design works in its latest project. The creative head thought that the company had hired Jayant as a freelancer and mistakenly used his work.
When K.S Creative launched that project on the internet, Jayant found out similarities in his work and the company’s project. The further investigation revealed that the company had used his design works.
Now Jayant filed a case against K.S Creative for using his designs without his permission. He filed a case for copyright infringement.
When the case reached the court, K.S Creative argued that the similarly was mere coincidence, and it was unintentional. However, the court concluded that though the company used Jayant’s design work unintentionally, the company was liable to pay monetary compensation to Jayant on account of the infringement of the copyright.
Here, K.S Creative had errors & omission insurance policy, and the company had already informed the insurer as soon as the case was filed against it by Jayant. After carefully scrutinising the situation, the insurer found that the claim fell under the professional indemnity insurance cover and therefore, agreed to give the coverage.
In this case, the insurer not only awarded the monetary compensation to Jayant on behalf of K.S Creative but also covered the legal expenses which were incurred by the company in defending itself in the court.
In case, the copyright infringement was intentional; the insurer would have rejected the claim.