Patent Law

Are You Certain You Don't Have Coverage for the IP Dispute?

By Les Weinstein, Michael Young, John Leo Wagner, Eric van Ginkel, and Victoria Pynchon

Once, a long, long time ago in a legal practice far, far away, I represented, for a brief time, the interests of Guess? in litigation against Jordache.  Many years after I'd left the firm for which I was an associate at the time, I learned that both companies had "gone behind their lawyers backs" and settled the long-running, acrimonious litigation, and proceeded to sue their attorneys for malpractice.

One such lawsuit for legal malpractice against former Jordache counsel -- the now defunct firm of Brobeck, Phleger & Harrison -- was based upon Brobeck's years-long failure to tender the defense of the Guess (or Marciano) action to Jordache's insurance carriers.

Although Brobeck prevailed in its statute of limitations defense, the damage to Brobeck's reputation at the time, not to mention the cost of litigation up to the Supreme Court and back to the trial court again, cannot be calculated. 

I practiced commercial litigation for a decade before I began representing insurance carriers against so-called long-tail claims for environmental liabilities in the 1990s and early 2000's.  As soon as I learned enough to know my way around a coverage action, I realized I'd never truly understood coverage in the way I should have for the benefit of my (largely) corporate clients.

It is for this reason that the first thing I want to know as a mediator of an IP dispute is whether there's coverage.  It's also the reason I'm excepting here and giving you a link to an article discussing the Jordache case and emphasizing the importance to IP litigators of a thorough understanding of the law of insurance coverage.  The article, entitled Insurance Coverage for Lawsuits: Allocate Responsibility and Avoid Malpractice Claims, was written by Deidra D. Gold and Kenneth S. Ulrich in  ACCA Docket 21, no. 4 (April 2003): 58–68.

Recent years have seen a proliferation of lawsuits involving intellectual property and other issues for which it is uncertain whether insurance coverage will be available. Because the possibility for insurance coverage, which may provide for a defense and indemnification of a portion or all of a settlement or judgment, is not obvious, it is often overlooked at the early stages of litigation. If the possibility for coverage is identified later, it may be too late to successfully tender defense to the insurance carrier. In several instances when this situation has happened, finger-pointing unfortunately has ensued, in some cases resulting in malpractice claims against outside counsel.

Indeed, in several recent reported decisions, courts have wrestled with the issue of whether, in the absence of a clear agreement regarding who should be responsible for seeking insurance coverage, it is malpractice for outside counsel to fail to do so. Likely many other such claims have not resulted in reported decisions. It is not a coincidence that many of these cases arise out of intellectual property lawsuits.

Copyright and trademark lawsuits often are defended by general commercial litigators or by intellectual property specialists who may be unaware of the existence of insurance coverage under the advertising injury sections of general liability policies. See the sidebar on page 62 regarding personal and advertising injury coverage.

The purpose of this article is not to debate the merits of such malpractice claims. Rather, we suggest ways to avoid having to consider a malpractice claim in the first place.

Continue reading here (.pdf)  Thanks to the law firm of Goldberg Kohn for featuring this useful article on its Policyholder Insurance Practice Group page here.

And if you're looking for dynamite policy holder insurance coverage advice from one of the best insurance recovery lawyers in the country, check out Dickstein Shapriro partner Stephen N. Goldberg's new Catastrophic Insurance Coverage blog here.  Yes, he is my husband but he was my incredibly difficult opponent first so I know full well whereof I speak when I say he's best in policy holder coverage counsel breed.  Put his new blog in your newsreader.  It's an easy way to stay up to date on insurance matters that perplex even the most sophisticated litigators.

Full post as published by IP ADR Blog on August 08, 2009 (boomark / email).