Follow-on derivative litigation

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One of the much-discussed concerns in the insurance industry about artificial intelligence (AI) is the risk of “silent AI” – that is, the seepage of AI-related matters into various insurance coverages that were not intended (at least not consciously) to provide coverage for these kinds of exposures. A new shareholder derivative lawsuit filed against the board of Microsoft provides an illustration of these kinds of concerns in operation. The new derivative suit is a follow-on to prior underlying litigation in which copyright holders allege Microsoft used the holders’ copyright materials to develop its AI products. The new derivative lawsuit alleges that Microsoft’s directors violated their duties to the company by knowingly allowing copyright infringement, causing harm to the company.

The new lawsuit, discussed below, shows how a matter that would not typically be covered under a D&O policy (copyright infringement) can translate into a potentially covered matter (a breach of fiduciary duty lawsuit), and it also shows how AI-related exposures can seep into D&O insurance coverage, as well. A copy of the June 30, 2026, lawsuit filed against certain of Microsoft’s directors and officers can be found here.

Continue Reading New Microsoft Derivative Lawsuit: “Silent AI” and D&O Exposure

In recent months, securities class action litigation patterns involving AI-related disclosures have emerged and developed, as has been documented on this site (most recently, for example, here). There has of course been a great deal of other kinds of AI-related litigation, including lawsuits involving intellectual property issues, privacy and data-collection concerns, discrimination and bias claims, and a variety of different kinds of tort allegations.

In a shareholder derivative lawsuit recently filed against the board of software firm Adobe, these two lines of AI-related litigation crossed; the plaintiff shareholder alleges that the defendants violated their board duties by knowingly permitting the company to train its artificial intelligence tools using material copyrighted by others and in a way that subjected the company to IP-related litigation. As discussed below, the new lawsuit illustrates how the broader range of AI-related litigation can translate into follow-on D&O claims, representing yet another area of AI-related D&O risk.

Continue Reading AI-Related IP Litigation Triggers Follow-On D&O Lawsuit

In my annual roundup of the issues to watch in the world of D&O that I posted early in the fall, I included in my list of topics the possibility of an increase in antitrust-related enforcement activity. I raised this concern in part because of fears arising from the emerging make-up of the Biden Administration’s antitrust regulatory team. For some readers, it may not have been apparent how these antitrust regulatory concerns might translate into D&O claims activity. Anyone looking for an example of how antitrust enforcement activity can lead to D&O claims will want to review the two shareholder derivative actions filed late last week against certain directors and officers of Alphabet, the parent of Google, as well as against directors and officers of Google itself. The complaints assert breach of fiduciary duty claims against the defendants relating to antitrust enforcement actions that have been filed against Alphabet and against Google by federal and state regulators.
Continue Reading Alphabet’s Board Hit with Antitrust Enforcement Follow-On D&O Lawsuits