N.P. James Insurance Recommends Careful Scrutiny of Software Licensing Agreements

Concord, MA, December 1, 2005 – Most software licensing agreements contain clauses regarding intellectual property infringement, usually indemnifying the licensee for any intellectual property infringement complaints. Rarely are these clauses supported by insurance, which is important to understand should problems occur.
“Contracted indemnification agreements do not obligate the insurer beyond the existing policy terms!” said Nancy P. James, founder and principal of N.P. James Insurance Agency. “Indemnification is a term associated with a financial promise to provide legal defense and damage awards for claims.”
James believes that trademarked or service marked titles or slogans and copyrighted advertising may be covered to some extent by general liability/property policies.
In order to get intellectual property exposures, licensees usually need to purchase an Internet liability policy, which will cover copyright infringement, infringement of title, infringement of trade names, infringement of trademark, and infringement of slogan.
The intellectual property exposures that such a policy will not cover are patent infringement and trade secret infringement. To secure patent infringement offense and/or defense coverage, licensees need to go to specialty markets. These applications require an opinion letter, which can also be secured specifically for insurances purposes.
James also said, “These observations are primarily a benchmark warning to recognize areas that professionals who are alert to risks and exposures should review. Always let the agent and insurer know about those insurance related sections of any contract.”
The N. P. James Insurance Agency of Concord, MA, founded in 1982, specializes in high technology risks, exposure analysis, and insurance. James is a licensed insurance advisor, a member and past president of the Massachusetts Society of Licensed Insurance Advisors, a member of the Concord Chamber of Commerce, and The Boston Club. James also serves on a number of non-profit boards. To learn how to protect intellectual property and to sign up for the firm’s newsletter, please visit www.npjames.com or call 978-369-2771.
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