Cause of Loss – Electronic Publishing Wrongful Act

Media and publishing companies have long been exposed to claims arising out of the gathering and communication of information. Claims for defamation, invasion of privacy, and copyright infringement are commonplace in this profession. Today, however, thanks to the internet and other new technologies, it is not just media and publishing companies that have this exposure. Any company that distributes information to the public via a website or other means of electronic communication (desktop publishing, social media, email etc.) now has the same exposures of a traditional publisher. Consequently, businesses across all industries have been involved in this type of litigation.

Electronic publishing wrongful acts are categorized as any actual or alleged:

1. Libel or slander resulting from the electronic publishing of material that defames a person or organization or disparages a person’s or organization’s good, products or services;
2. Plagiarism, false light or false advertising, resulting from electronic publishing activities:
3. Violation of the right of privacy or seclusion or right of publicity of any person other than an Insured Person resulting from the Electronic Publishing of material that publicly discloses private facts relating to such person or commercially appropriates such person’s name or likeness;
4. Infringement of a copyright, title, slogan, trademark, trade name, trade dress, mark, service mark or service name including, without limitation, infringement of domain name, deep-linking or framing, resulting from the Insured’s Electronic Publishing activities; or
5. Unauthorized use of title, formats, performances, style, characters, plots or other protected material resulting from the Insured’s Electronic Publishing activities.

Some notable cases include: 

• MP3.com: On January 21, 2000, UMG Recordings Inc. filed a lawsuit against MP3.com. The case concerned MP3.com’s unauthorized duplication of music CD’s for the purpose of launching a service that allowed users to access their private music collections online from anywhere in the world. Since consumers could only listen online to their own music collection the company saw this as a great opportunity for revenue. The record company claimed the service constituted unauthorized duplication and promoted copyright infringement. The case settled for $53.4 million.

• Kenmare Resources: In July 2007, the plaintiff filed a lawsuit against his former employer Kenmare Resources claiming he was defamed by a press release issued by the Defendant on July 10, 2007. It said that the Plaintiff was resigning after an incident in Mozambique in which he sleep-walked naked into a female colleague’s bedroom. The jury found that the description falsely inferred that the Plaintiff had made inappropriate advances to the woman, the company secretary. A jury awarded the plaintiff a total of $13,672,560 in damages.

The number of EPWA cases spiked between 2009 and 2011 but have since returned to the pre-spike levels.

At 47 percent, the manufacturing industry makes up the largest proportion of EPWA cases. This is not surprising since Advisen classifies newspapers and publishing under the manufacturing industry.  Although the internet and new technologies expose just about every organization to electronic publishing wrongful acts, media and publishing companies still have the biggest exposure.

This chart gives a time series view of the industry composition illustrated above.

Looking at the relative occurrence rate of EPWA by industry, Manufacturing again takes the top spot among industries in terms , followed by Transportation, Communications, Electric, Gas, and Sanitary Services, which makes sense because the communications sector includes radio and television broadcasting companies. Taken together, these charts suggest that the printing, publishing, and allied industries remain the primary vector of EPWA cases.