Sony Computer Entertainment America, Inc. v. American Home Assurance

I. FACTS AND PROCEDURAL HISTORY

A. Sony and the PlayStation

Sony markets, distributes, and supports the PlayStation family of products. The PlayStation 2 is the successor to the 8754 SONY v. AMERICAN HOME ASSURANCE original PlayStation, an advanced computer console. The PlayStation 2 plays video games designed for the system on either CD discs or DVD discs, as well as games designed for the original PlayStation. Unlike the original PlayStation, how- ever, the Playstation 2 was marketed as a home entertainment system, able to play audio and video CDs and DVDs as well as video games.

B. The Insurance Policies

1. American International Specialty Lines Insurance Company Policy

Sony purchased a $10 million media liability insurance pol- icy from American International Specialty Lines Company (AISLIC) for the period of July 1, 2001 to July 1, 2002. The policy, entitled “Multimedia Professional Liability Policy,” provided that AISLIC would indemnify Sony in certain law- suits. AISLIC promised to “pay on [Sony’s] behalf those amounts . . . that [Sony] is legally obligated to pay as dam- ages . . . resulting from any claim . . . during the policy period for…