Volume I

Issue : 7: October 2, 2003

• Legg Mason Ordered to Pay $20 Million in E-Newsletter Copyright Action
• The California Court of Appeals Upholds Regulation Requiring Electronic Fingerprinting of Welfare Recipients.
• U.S. Court of Appeals Stays Injunction Against Telemarketing "Do-Not-Call" List
• Parents Sue School District for Use of Wi-Fi
• Court Bars Minnesota from Regulating VoIP Provider
• New York Man Sentenced to Jail for Online Sale of Copyrighted Music
• U. S. Supreme Court Rejects Appeal in the Rambus Patent Standards Interface Fight
• EU Releases Privacy Study
• U.S. Supreme Court to Revisit COPA
• U.S. Court Of Appeals 4th Circuit Finds Insurance Policys Property Damage Provision Does Not Extend To Damage To Or By Software.
• Google France Chastised for Sale of Trademarked Keywords

Home > Volume I > Issue 7: October 2, 2003 > U.S. Court Of Appeals 4th Circuit Finds Insurance Policys Property Damage Provision Does Not Extend To Damage To Or By Software.

U.S. Court Of Appeals 4th Circuit Finds Insurance Policys Property Damage Provision Does Not Extend To Damage To Or By Software.

The U.S. Court of Appeals (4th Circuit) upheld the decision by the District Court that St. Paul Mercury Insurance Company ("St. Paul") had no duty under an insurance contract to defend and indemnify AOL.

This case arose after AOL faced numerous lawsuits because version 5.0 of the AOL Internet access software had substantial bugs and was incompatible with the complainants' computers other software and operating systems, thus causing the computers to be damaged. AOL tendered the defence of these actions to St. Paul, AOL's insurance company but St. Paul denied coverage.

AOL's insurance policy stated that St. Paul will "pay amounts" that AOL "is legally required to pay as damages for covered.property damage." However, the policy also included an "impaired property" exclusion that stated that St. Paul is not obligated to cover "property damage to impaired property, or to property which isn't physically damaged, that results from faulty or dangerous products or completed work, or a delay or failure in fulfilling the terms of a contract or agreement."

The District Court based its finding on the basis that the complainants' claim did not allege physical damage to tangible property within the meaning of the insurance policy, and that any damage from loss of use of tangible property fell within the policy exclusion. The Court of Appeal concurred.

For a copy of the Court of Appeals decision, visit:

http://pacer.ca4.uscourts.gov/opinion.pdf/022018.P.pdf