Creating a Brand without Doing the Research
A Polish IT service provider created a website for a sports club, including their name and logo. Unfortunately, a fitness studio had already trademarked the name in 2006. The only difference was that the IT service provider separated the two words in the trademark with an “and”, while the fitness studio used “&”.
Legally, this resulted in a violation of competition law due to the risk of confusion between the two company names. This led to the sports club receiving a warning a short time later including a cease-and-desist letter from the fitness studio’s legal team. The client forwarded this warning to the IT service provider, who then made an expensive mistake.
IT Service Provider Negotiates on his Own
Instead of reporting the damage event directly to exali’s customer service team, he decided to negotiate on his own with the other party’s lawyer. A quick and, unfortunately, somewhat hasty reaction, because it involved him directly in the damage event – so he was promptly included in the lawyer’s revised cease-and-desist letter. The first version had only included the sports club.
But it wasn’t just the cease-and-desist letter that was changed – due to the additional expenses of the legal team, the fine increased from originally 900 euros to now almost 2.000 euros. That’s when the IT from Poland service provider remembered his Professional Indemnity Insurance and reported the damage event to one of our insurance experts at exali, who forwarded the case to the insurer.
Professional Indemnity Insurance Covers the Costs for the Original Warning
The insurer’s legal team quickly realised that the written warning had been justified due to the violation of competition law and that further negotiations would only drive up the costs. After the IT service provider had sent a copy of the signed cease-and-desist letter to the insurer, the insurer assumed the costs for the original written warning in the amount of 900 euros (less the deductible).
However, the Professional Indemnity Insurance did not cover the settlement fee of almost 1.000 euros, which resulted from the unauthorised negotiations between the Polish IT service provider and the team of lawyers from the fitness studio. The reason for this is that the cost was not associated with compensation, but was a fee (so-called conciliation fee) that the lawyer charged for the order to modify the cease-and-desist letter.
You’ve Received a Written Warning: This Is how you Respond Correctly
This damage event shows all to well that negotiating on your own after receiving a written warning is not a good idea. Instead, you should ALWAYS have both the warning and the cease-and-desist letter, which is usually attached, checked by a lawyer or, in the best case, your Professional Indemnity Insurance.
In that particular case, for example, it could have been clarified from the outset whether the IT service provider was liable at all. He only received a fee of 200 euros for the job – so the client’s claim to extensive trademark research would not have been justified.
Comprehensively Covered with Professional Indemnity Insurance – in the Event of Errors or Legal Infringements
Regardless of whether a programming error has crept in, installed software isn’t working properly or trademark research isn’t done before creating a website: With Professional Indemnity Insurance, you are comprehensively insured for your own mistakes as well as for legal infringements (e.g. trademark law, copyright law, competition law). If a real damage event occurs, the insurer will check at its own expense whether a claim for damages is justified – unjustified claims will be defended against on your behalf, while justified claims will be settled.
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<span class='visible--desktop'>First-Party Cyber and Data Risks Insurance (FPC)</span>
<span class='visible--tablet'>First-Party Cyber and Data Risks Insurance (FPC)</span>
<span class='visible--mobile'>FIrst-Party Cyber and Data Risks Insurance (FPC)</span>
<span class='visible--desktop'><p><strong>This add-on protects your business from the risk of hacking, DDoS attacks or other internet crime.</strong></p>
<p>Reimbursed/covered:<strong> </strong>for example costs for the <strong>restoration of your IT systems</strong>, the commissioning of professional <strong>computer forensics analysts</strong> or specialised <strong>lawyers</strong> (including criminal defence) as well as for <strong>crisis management & PR</strong>. Additional costs for the quick elimination or avoidance of an interruption to your business are also insured.</p>
<h5>Further Examples of Damages We Insure</h5>
<ul class="liste">
<li>Damage to your own IT systems (from hacking)</li>
<li>First-party data rights claim (in particular spying on personal data)</li>
<li>Expenses for an (imminent) interruption of business (additional cost coverage)</li>
<li>Breach of trust damage (intentional damage to own IT by employees)</li>
<li>Costs for criminal defence (internet criminal legal protection)</li>
</ul>
<h5>Insurer Services</h5>
<p>The special benefit about this add-on is the assumption of your own <strong>costs</strong>, e.g. for the commissioning of:</p>
<ul class="liste">
<li>Computer forensics specialists</li>
<li>Specialised lawyers</li>
<li>Consultants to provide information to data owners</li>
<li>Professionals for PR & crisis management</li>
<li>Credit protection and monitoring services</li>
</ul>
<p>as well as the assumption of <strong>additional costs, e.g. for the use of third-party IT and computer systems.</strong></p>
</span>
<span class='visible--tablet'><p><strong>This add-on protects your business from the risk of hacking, DDoS attacks or other internet crime.</strong></p>
<p>Reimbursed/covered:<strong> </strong>for example costs for the <strong>restoration of your IT systems</strong>, the commissioning of professional <strong>computer forensics analysts</strong> or specialised <strong>lawyers</strong> (including criminal defence) as well as for <strong>crisis management & PR</strong>. Additional costs for the quick elimination or avoidance of an interruption to your business are also insured.</p>
<h5>Further Examples of Damages We Insure</h5>
<ul class="liste">
<li>Damage to your own IT systems (from hacking)</li>
<li>First-party data rights claim (in particular spying on personal data)</li>
<li>Expenses for an (imminent) interruption of business (additional cost coverage)</li>
<li>Breach of trust damage (intentional damage to own IT by employees)</li>
<li>Costs for criminal defence (internet criminal legal protection)</li>
</ul>
<h5>Insurer Services</h5>
<p>The special benefit about this add-on is the assumption of your own <strong>costs</strong>, e.g. for the commissioning of:</p>
<ul class="liste">
<li>Computer forensics specialists</li>
<li>Specialised lawyers</li>
<li>Consultants to provide information to data owners</li>
<li>Professionals for PR & crisis management</li>
<li>Credit protection and monitoring services</li>
</ul>
<p>as well as the assumption of <strong>additional costs, e.g. for the use of third-party IT and computer systems.</strong></p>
</span>
<span class='visible--mobile'><p>Protection against hacking damage to your own IT systems, DDoS attacks, computer misuse, theft of data carriers and other data rights violations and the majority of the resulting expenses and costs.</p>
</span>
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<span class='visible--desktop'>Engineering Activities (ENG)</span>
<span class='visible--tablet'>Engineering Activities (ENG)</span>
<span class='visible--mobile'>Engineering Activities (ENG)</span>
<span class='visible--desktop'><p><strong>If you provide engineering services exclusively or in addition to IT/telecommunications, you can insure the liability risks with the „Engineering Activities“ endorsement.</strong></p>
<p>The Engineering Activities extension provides <strong>blanket coverage</strong>. This means that all engineering activities are covered without the need for listing each and every activity. Those listed in the engineering endorsement are therefore merely illustrative examples:</p>
<ul class="liste">
<li>Hardware and software development for machinery and plant, embedded software</li>
<li>Machinery and plant testing, commissioning support</li>
<li>Quality management and assurance</li>
<li>Technical drawing, CAD, CAM</li>
<li>Technical management consultancy, in particular purchasing, strategy, process design, activities as expert</li>
</ul>
<h5>Requirements for Engineering Insurance</h5>
<ul class="liste">
<li>You <strong>do not provide engineering services</strong>, plants, machinery or associated parts and/or <strong>planning</strong>.</li>
<li>You provide engineering products <strong>in a supporting and/or advisory capacity</strong> and are not responsible fort he final engineering product.</li>
<li>No machines, systems, engineering products or other parts shall be put into series production directly / <strong>without approval and acceptance</strong> by the principal (keyword: final sign-off).</li>
</ul>
<h5>Deductible</h5>
<p>The deductible for financial loss and property damage is the same as the deductible selected for the financial loss insurance (FLI).</p>
<p>For more information, please refer to <strong>Section A.7 "Engineering Activities (ENG)"</strong> of the Insurance Conditions.</p>
</span>
<span class='visible--tablet'><p><strong>If you provide engineering services exclusively or in addition to IT/telecommunications, you can insure the liability risks with the „Engineering Activities“ endorsement.</strong></p>
<p>The Engineering Activities extension provides <strong>blanket coverage</strong>. This means that all engineering activities are covered without the need for listing each and every activity. Those listed in the engineering endorsement are therefore merely illustrative examples:</p>
<ul class="liste">
<li>Hardware and software development for machinery and plant, embedded software</li>
<li>Machinery and plant testing, commissioning support</li>
<li>Quality management and assurance</li>
<li>Technical drawing, CAD, CAM</li>
<li>Technical management consultancy, in particular purchasing, strategy, process design, activities as expert</li>
</ul>
<h5>Requirements for Engineering Insurance</h5>
<ul class="liste">
<li>You <strong>do not provide engineering services</strong>, plants, machinery or associated parts and/or <strong>planning</strong>.</li>
<li>You provide engineering products <strong>in a supporting and/or advisory capacity</strong> and are not responsible fort he final engineering product.</li>
<li>No machines, systems, engineering products or other parts shall be put into series production directly / <strong>without approval and acceptance</strong> by the principal (keyword: final sign-off).</li>
</ul>
<h5>Deductible</h5>
<p>The deductible for financial loss and property damage is the same as the deductible selected for the financial loss insurance (FLI).</p>
<p>For more information, please refer to <strong>Section A.7 "Engineering Activities (ENG)"</strong> of the Insurance Conditions.</p>
</span>
<span class='visible--mobile'><p>The Engineering Activities extension provides <strong>blanket coverage</strong>.</p>
<h5>Requirements for Engineering Insurance</h5>
<ul class="liste">
<li>You <strong>do not provide engineering services</strong>, plants, machinery or associated parts.</li>
<li>You provide engineering products <strong>in a supporting and/or advisory capacity</strong>.</li>
<li>No machines, systems, engineering products or other parts shall be put into series production directly/<strong>without the client's approval</strong> (final sign-off).</li>
</ul>
<h5>Deductible</h5>
<p>Same as the deductible selected for the financial loss insurance (FLI).</p>
</span>
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