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24 Intell. Prop. & Tech. L. J. 1 (2019-2020)

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Cyber-Technology Torts and Insurers'

Ambiguous Obligations to Defend

Professionals and Business Entities

Under Evolving Cyber-Insurance

Contracts: Statistical and Legal

Inferences from Traditional Insurers'

Declaratory Judgments, 1940-2019


                                                                 WILLY  E. RICE*

                                ABSTRACT

      Innovative technologies increased in the 1940s. In the wake, personal injuries and
property losses also grew. Insurers responded-selling liability insurance and promising to
defend manufacturers and sellers against personal injury lawsuits. Today's widely mar-
keted commercial general liabiliy (CGL) insurance contract originated in the 1940s. Like
early-twentieth-century technologies, cyber-technologies are producing injuries and losses.
Again, insurers are responding-marketing modified 1940s-vintage CGL contracts and
promising to defend merchants and professionals against cyber-technology claims. To assess
the veracity of cber insurers' promises, the author conducted an empirical study of courts'
declaratory judgments (N=1840)-focusing  on courts' dispositions of duty-to-defend dis-
putes between 1940-2019.  Legal and statistical analyses uncovered several statistically
significant, newsworthy and surprising findings: 1) Cyber-liability insurers are more likely
to breach their promises-refusing to defend businesspersons and professionals against
cyber-technology claims; 2) Cyber-risk insurers are more likely to engage in bait-and-switch
schemes-promising  only an illusion ofcoverage; 3) Courts are substantialy more likely
to resolve duty-to-defend controversies in favor of insurers; and 4) State and federal courts
are more likely to allow questionable extralegal factors-rather settled legal doctrines-to
influence the dispositions of cyber-related controversies. In recentyears, the American Bar
Association as well as most business, trade and professional associations have established
an additional licensure requirement: Practitioners must assess and defend against the risks
associated with using various office and cyber-related technologies. Certainly, business and
professional associations are encouraging their members to purchase and understand


    *   Professor of Law & Englehardt Research Fellow, St. Mary's University School of Law-San
Antonio. M.A., Ph.D University of North Carolina at Chapel Hill; Postdoctoral Fellow  The Johns
Hopkins University;J.D. The University of Texas at Austin; and an American Bar Foundation Scholar.
Crossing numerous years, Eugene R. Anderson, Hubert M. Blalock,Jr., David R. Heise, Frank A. Bot-
tini,Jr. and, more recently, Robert Ranalli of Patel, Soltis & Cardenas Law Firm shared generously their
expertise or insight with the author. Absolutely, their input helped the author to fashion the legal and
statistical analyses as well as the research methodology in this Article. The author also thanks several other
small-firm practitioners as well as cyber-technology specialists who shared their wisdom at gatherings in
Austin, SanJose and San Antonio. All errors or omissions are the author's alone.


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