Eyeblaster, Inc. v. Federal Insurance Company
United States Court of Appeals for the Eighth Circuit
613 F.3d 797 (2010)
Eyeblaster (plaintiff), an online advertising company, held a general-liability policy from Federal Insurance Company (FIC) (defendant) covering property damage, including loss of use of tangible property, while excluding software from that definition. David Sefton sued Eyeblaster, alleging its ads infected his computer with spyware, initially disabling it and later causing pop-ups, slowdowns, and a hijacked browser. FIC denied coverage and refused to defend Eyeblaster, reasoning that Sefton's complaint alleged only software damage, which the policy excluded. Eyeblaster sued FIC for a declaration that it owed a duty to defend, and the district court granted FIC summary judgment.
Whether a general-liability policy that covers loss of use of tangible property includes coverage for loss of use of a computer due to software issues, even if software is excluded from the policy's definition of tangible property.