The scope of coverage for IP claims provided by CGL policies is frequently litigated. Two 2017 federal appellate court rulings broadly construed CGL policy language, finding that the insurers were obligated to defend their policyholders on the basis that the complaints potentially covered advertising injuries within the policy terms. Several older cases involving insurance coverage of IP claims are also of interest.
2017: Uretek (USA), Inc. v. Cont'l Cas. Co.
In Uretek (USA), Inc. v. Cont'l Cas. Co., 701 Fed. Appx. 343 (5th Cir. July 28, 2017), the insured sued a competitor for alleged patent infringements and the competitor counterclaimed. The Court found that the insured was entitled to a defense from its CGL insurer in connection with the counterclaim. The Court stated that the injuries asserted in the counterclaim arose out of “disparagement;” accordingly, the counterclaim fell within the scope of policy coverage for suits alleging “personal and advertising injury arising out of” several offenses, including the publication of material that “disparages a person's or organization's goods, products or services.” Additionally, the Court found that because the complaint alleged both intentional and negligent conduct, no policy exclusions applied.
2017: Crum & Forster Specialty Insurance Company v. Willowood USA, LLC
In Crum & Forster Specialty Insurance Company v. Willowood USA, LLC, 696 Fed. Appx. 276 (9th Cir. Aug. 17, 2017), the underlying suit involved the trademark of a distributor of agricultural pesticides, Repar Corporation, and the alleged unauthorized use of that trademark by Willowood USA, LLC. After the claims were settled, Willowood sought coverage for its defense and settlement costs under three CGL policies that covered advertising injury “arising out of … [t]he use of another's advertising idea in your ‘advertisement.’” The resulting trial court decision was appealed to the U.S. Court of Appeals for the Ninth Circuit, which found that the trial court had adopted an unduly narrow construction of the phrase “arising out of” in holding that the harm Repar suffered was caused by Willowood’s alleged misuse of the trademarked name, not by actual advertising. The appellate court, however, gave the “arising out of” policy term a broad interpretation, holding that Repar’s complaint specifically alleged injury from Willowood’s unauthorized use of Repar’s idea to include the name of Repar’s tebuconazole product -- “TEBUCON” -- in the advertising. The appellate court found that the complaint’s allegations were enough to put the insurers on notice of the possibility of a covered liability or advertising injury that would trigger a duty to defend. The Ninth Circuit remanded the case to resolve the question of the insurer’s indemnity obligations for settlement costs because there was an issue of fact as to whether the settlement had been made for a claim that was covered.
2009: General Cas. Co. v. Wozniak Travel, Inc.
In General Cas. Co. v. Wozniak Travel, Inc., 762 N.W.2d 572 (Minn. Sup. Ct. 2009), the issue was whether “trademark infringement” claims could be covered under the “advertising injury” clause of the CGL policy as “infringement of title.” The insured travel agency had used the trademarked term “Hobbit” in its business in connection with its agency name and special travel offers. The travel agency was sued by the owner of several trademarks relating to the term “Hobbit” as used in the well-known novels. The court found that the alleged trademark infringement fell within the plain meaning of “infringement of title” and thus, was covered under the CGL policy as “advertising injury.”
2008: Australia Unlimited, Inc. v. Hartford Casualty Insurance Co.
In Australia Unlimited, Inc. v. Hartford Casualty Insurance Co., 198 P.3d 514 (Wash. Ct. App. 2008), the parties disputed whether a CGL policy provided coverage for trade dress as “advertising injury.” The defendant-insured sold a particular type of shoes through its website. A competitor shoe manufacturer made general allegations of trade dress infringement against the defendant, and specifically included in its trade dress description its “‘marketing and sales materials’ that ‘share an overall unique look and feel’ that served to identify [the competitor’s shoes] as the origin.” It was noted that “trade dress” is a technical term that refers to the total image of a product and might include particulars such as texture, graphics, colors, product shape or even specific sales processes. The court, in ruling that coverage was potentially available under the CGL policy, observed that “[w]hile the classic trade dress infringement action involves the packaging or labeling of goods, it may extend to marketing techniques and can include certain sales techniques designed to make the product readily identifiable to consumers and unique in the marketplace."