A Chubb Ltd. unit does not have to indemnify a software company in an infringement lawsuit under its claims policy because the dispute is related to an earlier settlement, in which the insurer was American International Group Inc., a federal appeals court said Tuesday. to determine a lower court ruling.
East Rutherford, New Jersey-based Gold Type Business Machines Inc. developed and sold a product called Info-Cop that allowed police officers to access motor vehicles and warrant information from multiple law enforcement agencies, according to the ruling by the 11th US Circuit Court of Appeals in Atlanta i Datamaxx Applied Technologies Inc. v. Brown & Brown Inc., Chubb Custom Insurance Co .
GTBM subsequently entered into a development and licensing agreement with Tallahassee, Fla.-based Datamaxx, a law enforcement software vendor, to integrate GTBM̵7;s system into Datamaxx’s existing product suite, Omnixx, to create a jointly developed “enhanced product,” according to the ruling.
However, according to GTBM, rather than marketing the improved product, Datamaxx marketed its own competing product, Omnixx+, in violation of the agreement.
GTBM sued and commenced arbitration against Datamaxx. Datamaxx reported the lawsuit to its then-insurer, AIG, in September 2013. The lawsuit was settled in 2014, with AIG partially indemnifying Datamaxx for the settlement payment and Datamaxx releasing AIG from any future claims.
After the settlement, Datamaxx marketed a separate product that GTBM claimed infringed its patented process.
In 2018, Datamaxx obtained new non-life insurance with Chubb.
Later that year, Datamaxx notified GTBM that they were terminating their development and licensing agreement. GTBM brought another lawsuit against Datamaxx. Datamaxx filed a claim with Chubb, which denied coverage, based on the claim related to the earlier litigation.
In the ensuing trial, the U.S. District Court in Orlando ruled in Chubb’s favor and was affirmed by a three-judge court panel.
Datamaxx’s “second attempt to circumvent and breach (the development and license agreement) necessarily correlates with … the 2014 claims arising from its first attempt” to circumvent and breach it, the ruling said.
The lawyers in the case had no comment.