Federal Insurance Victory Overturned In Spyware Case

Law360, New York (July 27, 2010, 3:54 PM EDT) -- A federal appeals court has reversed a decision that let Federal Insurance Co. avoid covering the defense costs of advertising company Eyeblaster Inc. in an underlying suit that alleged the company corrupted a man's computer over the Internet.

Though Eyeblaster's general liability policy with Federal only covers Eyeblaster when it damages “tangible property,” not software, the U.S. Court of Appeals for the Eighth Circuit ruled Friday that the specific allegations against the company meant Federal had to defend it.

The underlying suit specifically alleged that Eyeblaster...
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