Insurance agencies get into Net act

Civil libertarians haven't finished bemoaning the introduction of lawyers to the Net, and the insurance companies are already on the way.

A Salt Lake City agency, Poulton Associates, has begun offering liability insurance to Web developers to protect them against the kinds of lawsuits that traditionally have been brought against print publishers but are now increasingly targeted at online content providers.

Internet access provider Netcom became the best-known example of this syndrome when the Church of Scientology sued the company for allowing a former church member to publish copyrighted Scientologist material online without permission.

If the company had talked to Poulton, however, it could have signed up for errors and omissions coverage--which, in insurance industry parlance, includes liability for publishers and malpractice for lawyers and doctors--and therefore been protected against legal costs incurred by libel suits or copyright, patent, and trademark infringement.

The company started offering the coverage "primarily [because] there are a greater number of cases being brought," said Rachel Tueller, a risk management associate with Poulton.

Some intellectual property lawyers agree that Web-based litigation is on the rise and that the policy will attract content publishers pushing technological and legal boundaries ever further.

"It's a timely idea and would be interesting to a lot of people," said Robert Barr, a partner at Weil, Gotshal, & Manges in Menlo Park, California, and a specialist in intellectual property law. "There clearly are a lot of concerns with content providers--the potential damages could be huge. Take copyright, for example: the electronic distribution of thousands of copies of [a copyrighted document] is a major risk."

At the Poulton Web site, Internet service providers, Web page designers, bulletin board operators, and others in the online world can fill out and submit an electronic application for a free policy estimate. The minimum fee of $2,500 a year is set by two insurance companies that underwrite the coverage. That amount increases with the size of a company, its security measures, and the type of content handled.