AOL v. St. Paul Mercury Insurance

Citation: America OnLine, Inc. v. St. Paul Mercury Insurance Co., 207 F.Supp.2d 459 (E.D. Va. 2002).

Factual Background
AOL was sued by a group of disgruntled users who claimed that AOL 5.0 damaged their computer systems. AOL brought suit against its insurer to force it to defend AOL under their insurance policy. The insurance policy required St. Paul to defend claims for “property damage,” which was defined as:


 * physical damage to tangible property of others, including all resulting loss of use of that property; or loss of use of tangible property of others that isn’t physically damaged.

The complaint alleged that AOL 5.0, inter alia, “damaged their [consumers’] software, damaged their data, damaged their computers’ operating system, and caused the loss of data and the loss of use of the computers.”

AOL contended that computer data, software and system were tangible property, since they are “capable of being realized.” St. Paul argued that computer data and the like are not tangible property because “they constitute property that one cannot touch.”

District Court Decision
The court agreed with the insurance company, holding that


 * the plain and ordinary meaning of the word tangible is something that is capable of being touched or perceptible to the senses. Computer data, software and systems do not have or possess physical form and are therefore not tangible property as understood by the Policy.