What is Software Copyright Infringement?

July 18, 2012

As an IT consultant it’s important to make sure your small business insurance protects you against software copyright infringement.

Imagine this...

For several months you have been a contractor in the IT department at a regional chain of retail stores. The chain has been analyzing their operations and determined that they are not managing inventory effectively. You were hired to write a software program that could measure first in, first out inventory (FIFO) more efficiently. You have experience with FIFO methods from your last client, a competing regional retail chain, and prior to taking on this new client you consulted with your former colleague to determine if the program you wrote is still running with positive results. Your colleague confirms that it is and you proceed to use methodologies based on twenty years of professional experience to write a new software program for your new client.

After your new program is implemented, your current client immediately begins to see an increase in their profits. They decide to use some of this income towards a new marketing campaign which helps to increase their market share and consequently reduces your previous client’s sales. Your previous client gets upset and accuses you of stealing code that was proprietary and protected by copyright, which they own. You don’t believe that your work infringes upon any agreed upon copyright and you can prove your new code is different, but it will be expensive to do so.

By purchasing a Hiscox IT insurance policy with professional liability coverage you will be protected from claims alleging software copyright infringement. A professional liability insurance policy will pay for an attorney to defend your intellectual property rights and your reputation and work, regardless of whether or not you actually made an error or omission. If your work is found to be in violation of an existing copyright, we will pay to defend you and indemnify the party who brought the lawsuit against you for up to $200,000. All payments are subject to the policy’s terms and conditions and a licensed insurance agent can help you select the policy that provides the best protection for you and your work.