Trade Secret Disclosure Qualifies As A "Privacy Event" Under Professional Liability Policy

The Delaware Superior Court, applying Delaware law, has held that an insured adequately stated a claim for breach of contract because a trade secret constitutes "non-public information," thereby implicating coverage for a "Privacy Event" under its primary and excess professional liability insurance policies. Precision Med. Grp. Holdings, Inc. v. Endurance Amer. Spec. Ins. Co., 2025 WL 2490593 (Del. Super. Ct. Aug. 27, 2025).

The policyholder was accused by a customer of wrongfully using confidential information and trade secrets. It settled with the customer and sought coverage for the settlement under its primary and excess professional liability insurance policies, which provided coverage for "Loss on behalf of an Insured on account of a Claim first made against such Insured during the Policy Period . . . for a Privacy Event." The primary policy, to which the excess policy followed form, defined "Privacy Event" to mean the "[a]ctual or suspected unauthorized disclosure, loss, or theft of . . . information of a third party that is not available to the general public, the Insured is legally responsible to maintain the confidentiality of, and that is in the care, custody, or control of any Insured or third-party service provider." Both insurers denied coverage. The insured sued for breach of contract and declaratory judgment. The insurers filed a motion to dismiss under Rule 12(b)(6). The insured moved for summary judgment.

The court denied the insurers' motion to dismiss the breach of contract claim, rejecting the insurers' argument that the insured's divulgence of confidential information did not constitute a "Privacy Event." The insurers unsuccessfully argued that the doctrine of ejusdem generis compelled the court to construe the term "information" to mean "Personal Information" because it fell within a list of definitions that generally referred to "Personal Information." "Personal Information" was defined by the primary policy so that it did not encompass trade secrets. The court rejected the insurers' argument because a separate intellectual property exclusion stated that it did not apply to "the disclosure, loss or theft of a trade secret or idea resulting from a Privacy Event," thus suggesting that a Privacy Event can lead to the disclosure of a trade secret and "information" as used in the Privacy Event definition "must include non-Personal Information (like trade secrets)." Because the insurers' interpretation of "Privacy Event" would render a portion of the intellectual property exclusion meaningless, the court declined to adopt the insurers' interpretation. The court also determined that the term "theft" could apply to the insured's use of the trade secrets even though they were already in the insured's care, custody, or control. At the same time, the court denied the insured's motion for summary judgment, ruling that the record was inadequate to find that all prerequisites to coverage, such as the assertion of a Claim against the insured during the policy period, were satisfied.

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