The Superior Court of Delaware, applying Delaware law, has held that professional liability insurers had a duty to defend their insured against copyright infringement claims, finding that a "Deliberate Acts" exclusion did not apply and that the insured's late notice barred coverage for some, but not all, of the underlying claims. Frontier Commc'ns Holdings, Inc. v. Indian Harbor Ins. Co., 2025 WL 2530543 (Del. Super. Ct. Aug. 14, 2025).
The insured internet service provider purchased professional liability policies for the 2019-20 policy period and the 2020-21 policy period. In March 2020, during the 2019-20 policy period, the provider received a cease-and-desist letter on behalf of several movie studios alleging that the provider's customers had used the provider's internet services to violate the movie studios' copyrights. Later, during the 2020-21 policy period, various record companies asserted similar claims against the provider for alleged copyright infringement. The provider notified its professional liability insurers of both the movie studios' claims and the record companies' claims for the first time in April 2021, seeking coverage for both sets of claims only under the 2020-21 policies. The insurers denied coverage for the claims based on certain policy exclusions, and the provider's failure to provide timely notice.
The parties filed cross-motions for summary judgment in the ensuing coverage action. The insurers first argued that a "Deliberate Acts" exclusion—which barred coverage for "intentional or knowing wrongful . . . acts, errors, or omissions"—applied. They asserted that, because the elements of the underlying contributory infringement claims require "knowledge and material contribution," the exclusion necessarily precluded coverage. The court rejected this argument, finding that the term "knowing" in the "Deliberate Acts" exclusion was not defined in the policy, and that at least one court had held that the knowledge element of a contributory infringement claim could be satisfied by "reckless disregard" rather than actual knowledge. The court further noted that if the insurers wanted to expressly preclude copyright infringement claims, they could have done so (as they did for claims asserting other intellectual property rights).
Next, the court addressed the parties' arguments on relatedness and late notice. The court agreed with the insurers that the movie studios' claims did not trigger coverage under the 2020-21 policies because those claims were first made before the policies incepted. But the court rejected the insurers' argument that the record companies' claims were related claims first made at the time of the movie studios' claims during the prior policy period. The court cited to the policies' provision that "[a] claim resulting from a related matter will be treated as a single claim first made against the Insured at the time the first such related matter occurred." The court concluded that, under the insurers' interpretation of this language, a "claim" would be deemed first made when the first related wrongdoing occurred, rather than when the provider first received notice of a claim, which would lead to the "absurd result" of requiring the provider to give notice of wrongdoing that it may not even be aware of. The court also emphasized that the claim aggregation language was found in the policies' limitation of liability section, and that the policies' notice section made no mention of aggregation. Accordingly, the court held the insurers had a duty to defend the record companies' claims.
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