Feeds

Source code loss excluded from insurance, says court

Run of bad luck plagues Tektrol

  • alert
  • submit to reddit

Providing a secure and efficient Helpdesk

A company that lost critical software after it had the misfortune to be hit by both a computer virus and a burglary has been unable to recover its losses after the High Court ruled that exclusions in the firm's insurance policy applied to the claim.

The case concerned Tektrol Limited, a provider of energy saving control devices for industrial motors, and the source code for the software upon which these devices relied.

Tektrol had taken precautions to protect its code. It was held at its business premises on two computers and also as a hard copy that was stored in a pilot case; it was held at a remote site operated by an independent company, Compwise Systems; and it was also stored on the laptop of its Managing Director, Mr Shlaimoun.

But in December 2001, disaster struck. Mr Shlaimoun opened a Christmas ecard and triggered a mass-mailing computer virus. The virus wiped the source code from his laptop. Believing the remote site's computer to be secure, Shlaimoun loaded its backup source code onto his laptop.

A few weeks later, burglars entered Tektrol's business premises and stole the two computers and the hard copy of the source code. Only then was it discovered that the virus had also corrupted the remote site's computer - meaning all copies of the source code were lost.

Tektrol claimed on its insurance for the business interruption caused by the losses. However, the policy excluded, among other things, consequential losses resulting from the erasure, loss, distortion or corruption of information on computer systems. It also excluded consequential loss for theft. And the Honourable Mr Justice Langley found that the exclusions applied to Tektrol's claim.

"In my judgment," he wrote, "whether as a matter of 'instinct' or on the basis of an increased risk of loss, in the context of this policy both the virus and the burglary are properly to be described as causes of the consequential loss (business interruption) claimed by Tektrol."

Copyright © 2004, OUT-LAW.com

OUT-LAW.COM is part of international law firm Masons.

Related stories

Redbus suffers another power cut
Wells Fargo in ID theft flap (again)
UK.biz at ease with data protection

Secure remote control for conventional and virtual desktops

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.