USI Holdings Corp. said it will contest and if necessary appeal Tuesday's federal verdict requiring the company to pay $16.6 million for its use of proposal documents that were copyrighted material from a rival insurance brokerage.
The civil case in U.S. District Court in Philadelphia involved USI subsidiary USI MidAtlantic Inc. and the Graham Company in Philadelphia.
Graham Company attorneys charged that the company's former employee, Thomas Haughey, took Graham's copyrighted insurance materials to MidAtlantic after leaving Graham in 1991.
In addition to ordering USI MidAtlantic Inc. to pay Graham Company more than $16.56 million, the jury found that Mr. Haughey should pay $2.3 million for violating an employer's agreement not to use the copyrighted material.
The suit sought award for commission and profit both parties received from the use of material in addition to damages, costs and attorneys' fees.
According to the complaint, Mr. Haughey signed an employment agreement in 1989 promising not to use the company's materials elsewhere.
Mr. Haughey joined the insurance firm of Flanigan, O'Hara & Gentry in 1991, and became a vice president at USI MidAtlantic in 1995. At both firms, the complaint alleges, he used copies of Graham Company's manuals as the basis for the standard proposals.
Graham Company learned Mr. Haughey was allegedly using its copyrighted material in 2003 when it received a copy of a USI MidAtlantic proposal from an account it was pursuing.
"We could not disagree more strongly with the jury's conclusion that our subsidiary USIM, or Thomas Haughey, infringed Graham's copyright, or that the commissions we received were attributable to the use of Graham's materials," said David L. Eslick, USI president and chief executive.
USI, based in Briarcliff Manor, N.Y., said its insurers had been notified of the case and that some denied coverage, while others were evaluating their positions. One carrier was providing some coverage.
"We intend to pursue vigorously avenues for post-trial relief from the judgment and will continue to pursue aggressively USIM and Tom Haughey's coverage under applicable insurance policies," said Mr. Eslick.
USI will seek to have the verdict set aside or the award reduced. Failing that, it will appeal, the company said.
"In some ways it's flattering that someone wants to copy [our manual]," said William A. Graham IV, CEO of the Graham Company, in a statement. "But the bottom line is, the information is extremely unique and valuable for us and for our clients, and that's why we fought to protect it."
"The decision is noteworthy in a couple of respects," said David J. Wolfsohn, with the law firm Woodcock Washburn in Philadelphia, and lead attorney for the plaintiff Graham Company. "It shows that even in a complicated copyright case involving fairly sophisticated materials, such as these involving insurance, that the jury understood what was going on and was able to digest all the complexities of the case and reach, what I think, is a fair result."
USI said it has not reserved a contingency amount for this case, but it would increase its contingency if necessary. That increase could be material and negatively impact the company's second-quarter financial results.
Mr. Wolfsohn said an appeal could take as long as a year, and while USI would not have to pay the award during that period, it would have to post a bond equal to the amount of the award during the course of the appeal, provided the judge does not throw out the verdict or reduce the award.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.