A nonprofit organization published its monthly newsletter and included a picture from The Associated Press without permission. The AP is now demanding payment for the use of the picture.

The carrier says that there is no coverage for the alleged copyright infringement because of the definition of "advertisement" in the commercial general liability policy. Carrier said "the photo within the newsletter and website did not constitute a notice about your goods, products, or services for the purpose of attracting customers or supporters. Rather, the photo was part of a story that was informational only".

As a nonprofit, the client does not sell anything and is not asking for or making money from the newsletter, but the agent argues that a typical newsletter is used for attracting supporters. 

Q: Is the carrier right in claiming there's no coverage because the newsletter doesn't fall under advertising?

Response 1: This copyright infringement—and these are becoming increasingly prevalent in recent years as Getty and other providers purchase vast storehouses of images—clearly meets the definition of an “advertising injury." As for the definition of advertising in this policy, here it is:

"Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition:

a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and

b. Regarding websites, only that part of a website that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.

Unless someone is simply practicing their writing skills, which I highly doubt, a newsletter for a nonprofit informs “supporters," meaning potential donors, about the activities of the organization. It is clearly promotional in nature, I'd assume, but would have to look at a few of their newsletters to be sure.

Unless I'm missing something here, I think this denial is incorrect. Advertising injury is a very broad coverage for those not in the media business, so I'd suggest going up the chain on this one.

Response 2: If there is any chance of there being coverage, it will be because the client uses the newsletter to attract new supporters. If the newsletter only goes to existing supporters, then I do not believe that the newsletter constitutes advertising.

Separately, is there anything in the newsletter that constitutes an invitation to join or support the nonprofit, such as something that would cause a reader—who is not already a supporter—to contact the nonprofit to become a supporter? It would be helpful to your argument for coverage if it did.

Finally, and without knowing what the demand from AP is, has the client contacted AP to explain the client's likely ignorance of copyright law and asked for the payment to be waived? 

Response 3: This is a question for your legal counsel. The AP owns its copyrighted material and the disclaimer against any use without prior written permission is well known in this realm.

The carrier is correct in its denial because no “specific" injury against the CGL was involved. I suggest the insured reviews copyright laws with legal counsel and requests a mea culpa to the AP. The insured should state it will publish an apology for such action—without using the photo again. It should seek an agreement with the AP and other media publications to use material in the future with prior permission.

Response 4: That definition of "advertisement" was intended by ISO to add clarity from some earlier CGL forms. It's hard to say without reviewing issues of the newsletter to get an idea of whether it's an informational publication or if the main purpose is an advertising vehicle. I lean towards the carrier's opinion unless the insured can make a case otherwise. The insured needs a publisher's liability policy.

Response 5: Did the nonprofit use a professional PR firm to create and or disseminate the newsletter? If so, review the service contract with the PR firm. Consider that it might be the firm's professional obligation to understand the proper and improper usage of AP photos. If you make a claim against that firm, its insurance might pay the claim under the PR media liability or other errors & omissions policy.

Response 6: Even a nonprofit needs supporters, and a newsletter may conceivably be considered as a way to attract and maintain supporters. If it is not to attract or maintain supporters, then why do it? 

The question may hinge on the distribution list. If supporters were sent the newsletter, then there should be no argument that the newsletter was to generate or maintain support. The carrier has a duty to defend this kind of action. The insured will have to plead ignorance of intellectual property considerations and the rules for using copyrighted material.

How much is AP demanding for use of the picture? It could be below the deductible for a CGL policy. For a small nonprofit that doesn't know about intellectual property or copyrights, perhaps an apology and a promise not to do similarly in the future will be sufficient.

Response 7: Without an analysis of AP's demand, it's impossible to know whether coverage exists, but a nonprofit's newsletter would seem to fall squarely within the definition of "advertisement" in your policy. The first step would be an appeal to a higher authority in the claims department. Failing that, your client should engage their attorney. 

AP needs to be zealous in protecting their intellectual property, but they might be willing to let your client off with a stern warning once they understand the nature of your client's operations. At the same time, your client's attorney can flyspeck the demand from AP to confirm that it falls within the definition of "advertising" and "personal and advertising liability."

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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