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Volume 5, Issue 5
Editors Cherie W. Blackburn Robert W. Pearce, Jr. John C. McElwaine
1-800-237-2000 Nelson Mullins has more than 275 attorneys firm-wide, with over 25 attorneys having significant representation of e-commerce clients in areas including patent, copyright and trademark protection; business planning, securities and venture capital; and licensing, distribution and contract preparation. Atlanta Contacts Neil Grayson neil.grayson@nelsonmullins.com Cherie
Blackburn
cherie.blackburn@nelsonmullins.com Robert
Pearce
bobby.pearce@nelsonmullins.com John
McElwaine john.mcelwaine@nelsonmullins.com Charlotte Contact Larry Scott Myrtle Beach Contact Franklin
Daniels
franklin.daniels@nelsonmullins.com Columbia Contact Mark Dukes Greenville Contact Marvin
Quattlebaum
marvin.quattlebaum@nelsonmullins.com CyberWatch is a Technology Industry Group news digest published as a service to Nelson Mullins’ clients and friends. The articles are summaries of particular developments in the law and are not intended to be a solicitation or to render legal advice. This publication can be considered advertising under applicable laws.
CyberWatch
is a trademark of Nelson Mullins Riley & Scarborough, L.L.P. |
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VENTURE CAPITAL COMING OUT OF HIBERNATION? After several years of hibernation following the dotcom crash some venture capital firms are beginning to venture forth and look around for new investment opportunities. According to a recent MoneyTree Survey by PricewaterhouseCoopers, Thompson Venture Economics and the National Venture Capital Association, venture investments for the first quarter of 2004 rose 22 percent to $5.8 billion from $4.7 billion for the same period in 2003. The time to close new deals has dropped for some venture firms from 6-8 months to 2-3 months and venture firms are making more investments in early-stage companies. Some industry analysts have predicted that 2004 venture investment could increase to $20 billion for 2004 as opposed to $18 billion for 2003. Continued beneficiaries of the increased venture activity appear to be life-sciences companies, including biotechnology and medical-device companies. According to the MoneyTree survey about 25 percent of current venture investment is going to those areas. Another continuing trend is that the venture firms continue to look for strong fundamentals in markets and management before investing money. Management with previous small-company experience in the relevant industry, whether successful or not, is a big plus for any current entrepreneurial group. (nytimes.com 9/02/04) LOSSES CAUSED BY COMPUTER VIRUS OR HACKER’S ATTACK MAY BE COVERED UNDER BUSINESS INSURANCE POLICIES Lost revenue, lost profits, computer-system recovery costs and even information system replacement costs can result from a computer virus or hacker’s attack on critical business information systems. Courts are beginning to hold these losses can be covered under business insurance policies if the act in question was an “accident” from the insured’s point of view. The fact that the hacker’s attack is intentional does not keep the loss from being an accident from the point of view of the insured company. In Lambrecht & Assocs. v. State Farm Lloyds, 2003 WL 21078083 (Tex.App. – Tyler 2003) the Texas court held that policy language covering “accidental direct physical loss to electronic media and records” encompassed a hacker’s attack in which an implanted virus totally disabled Lambrecht’s computer network. This reading of the policy language is in accordance with that of the North Carolina Court of Appeals in Edwards v. Akion, 52 N.C. App. 688, 692, 279 S.E.2d 894, 896 (N.C. App. 1981), aff’d, 304 N.C. 585, 248 S.E.2d 518 (N.C. 1981), in which the court found that, in the context of an assault and battery committed by the insured city’s employee, the employee’s intentional act fell within the meaning of “occurrence” under the city’s insurance policy where “occurrence” was defined as “an accident ... which results in bodily injury ... neither expected nor intended from the standpoint of the insured.” Companies renewing their business policies should take care to ensure their policy language will cover losses arising from computer viruses and other illegal entries into their computer systems. APPLE’S ITUNES PASSES 100 MILLIONTH DOWNLOAD
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