Pushing the Envelope of an Insurance Policy

Most auto manufacturers allow prospective customers to ‘build-your-own' virtual car on their websites using combinations of models, options, and prices.  The virtual car may be your idea, but the interactive process of building it may be subject to a method patent.

When a ‘build-your-own' method patent holder sued multiple car manufacturers for patent infringement, all settled, except Hyundai.  Hyundai wanted its insurers to cover litigation costs so it could fight the suit.  The insurers claimed this specific type of case was not covered in Hyundai's policies.  Sparked by a footnote in a 9th Circuit decision, we theorized that the advertising injury section of Hyundai's insurance policy should cover liability for infringement of method patents used to advertise Hyundai's products.  Hyundai filed suit against its insurer in federal court.

While the trial court found against us, the Ninth Circuit Court of Appeals agreed with our analysis and found that the insurers were obligated to defend Hyundai.  Hyundai now stands to recover more than $10 million for costs and attorneys' fees incurred in defending the underlying patent infringement lawsuit.  As an added bonus, the verdict in the underlying patent infringement suit was reversed in Hyundai's favor, so both the policy and the fight paid off.