Time to Check Whether Your Insurance Policies Cover Lawsuits Alleging Misuse of Advertising Software and Cookies

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In the past six months approximately 6 class action lawsuits have been filed in Los Angeles federal district court against various companies for violations of the Computer Fraud and Abuse Act (“CFAA”), Title 18 U.S. C. § 1030, based on advertising technology that tracks a computer’s web surfing practices. Unlike traditional cookies, the type of technology alleged in these complaints supposedly cannot be deleted from a computer. The corporate defendants in these cases, including CNN, Fox News, News Corp. and the Wall Street Journal, are certain to be checking whether their insurance policies cover the attorney’s costs to defend these lawsuits.

Having defended a number of similar cases myself, the cost of a legal defense can be costly. A recent case decided by the 8th Circuit Court of Appeals, Eyeblaster, Inc. v. Federal Insurance Co., 613 F.3d 797 (2010), addressed whether two insurance policies covered defense costs for a lawsuit based on on-line advertising practices and held that an insurer improperly refused to provide defense cost coverage. This is an important case for companies that advertise on the Internet.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Nick Akerman, Dorsey & Whitney LLP | Attorney Advertising

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