C.A. Finds No Duty to Defend “Advertising Injury” Claim

We are especially pleased to bring you today’s Update. Minutes ago, the Court of Appeal released its decision in PrairieFyre Software v. St. Paul Fire and Marine, in which our firm acted for St. Paul.

The case dealt with the duty to defend under “advertising injury” coverage in a CGL. The court found that although that coverage includes “copyright infringement” as a covered “offence” and even though the statement of claim in the underlying action did allege “copyright infringement” against the insured, there was no coverage for the claim. The reason was the absence of the requisite causal connection between the alleged copyright infringement and the insured’s advertising activities.

Claims based on “advertising injury” coverage have been rare in Canada so far, but numerous in the United States, particularly in the high tech business. Today’s decision will, we think, assist in keeping that coverage from being extended beyond its intended purpose.

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