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Two entrepreneurs who came up with a novel mechanism for purchasing life insurance won a $118 million jury verdict in a suit against The Hartford Life Insurance Co. and Corporate Marketing Group Inc., a Hartford subsidiary. The jury verdict, issued on March 15 in the U.S. District Court for the Eastern District of Missouri, found CMGI liable for $100 million for breach of contract and CMGI and Hartford jointly liable for $17.9 million for misappropriation of trade secrets. “This is a case that involved lots of complex terms but at the bottom of it all it is a very simple case,” said Charles Verhoeven, a partner in the San Francisco office of Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges. “Two entrepreneurs came up with an idea of a lifetime, and they knew they had to protect it.” Verhoeven, who represented the entrepreneurs, said they developed a concept to allow the purchaser of a life insurance policy to place his or her money in a separate account that could give a higher rate of return. To avoid the high market volatility of short-term investments, they came up with a mechanism to enable purchasers to report book value rather than market value. Specifically, they proposed that a third party guarantee the difference between market value and book value of the securities invested in. Under their system purchasers also would agree to restrictions on when they could request their money back. In Bancorp Services LLC v. Hartford Life Insurance Co., 00-70, the entrepreneurs claimed they shared their idea with CMGI after CMGI signed a confidentiality agreement. Verhoeven said that after his clients taught CMGI the system, they broke off communication, and Hartford subsequently “sold a huge amount of policy using the idea.” “Hartford’s and CMGI’s conduct in this matter was appropriate,” said Hartford spokesman David Potter. “We will continue to pursue our legal options in the federal district court and, if necessary, vigorously defend ourselves on appeal.” Verhoeven said the breach of contract award was based on a clause in the contract between his clients and CMGI, which laid out a formula for the amount that would be owed if the confidentiality was broken. Verhoeven’s litigation team included partner Susan Wines and associates David Perlson and Rachel Herrick. R. Laurence Macon, a partner in the San Antonio office of Akin, Gump, Strauss, Hauer & Feld, was lead counsel for Hartford Life Insurance and CMGI.

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