Intellectual property agreements are personal contracts

Insurance law – Errors and omissions policies – Duty to defend – Named insured – Employee – Interpretation of policy – Contra proferentum rule – Defamation – Damages – Punitive damages

Brown v. Sovereign General Insurance Co., [2021] O.J. No. 297, 2021 ONSC 511, Ontario Superior Court of Justice, January 21, 2021, P.M. Perell J.

The applicant signed an agreement with the publishing company pursuant to which the publisher agreed to publish a work of non-fiction to be written by the applicant with the assistance of a ghost writer that had been retained by the publisher. The book was subsequently published. The applicant was then sued for defamation in relation to statements made in the book and sought indemnification for defence costs under the publisher’s errors and omission’s policy. The insured denied it had a duty to defend the applicant on the basis that the applicant was not an insured.

The insureds under the policy included “any individuals… who from time to time have been retained under personal service contracts”. The policy also insured independent contractors of the publisher in contracts where the publisher expressly agreed to provide the independent contractor with insurance.

The insurer argued that the applicant had not established that he was an insured under the policy because the publishing agreement was not a personal service contract. Perell J. rejected this submission, finding that it was an intellectual property agreement and qualified as a personal service contract. The court also held that the applicant was an insured because he was an independent contractor and the publisher agreed in writing to provide him with insurance.

This case was digested by Kora V. Paciorek, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Kora V. Paciorek at [email protected].

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