Intellectual property claims are rarely covered by insurance, but some claims of trademark and copyright infringement may be covered by insurance for advertising injury. In a January 5 decision, though, Magistrate Judge Lauck narrowly interpreted "advertising injury" coverage to exclude the duty to defend a trademark infringement claim. Premier Pet Products LLC v. Travelers Property Casualty Co. of Am., Civil Action No. 3:09CV293 (Jan. 5, 2010).
In Premier Pet Products, Travelers issued an insurance policy to Premier that contained a “Web Xtend Liability” endorsement which provided coverage for “an offense committed in the course of advertising your goods, products or services” and defined advertising injury to include “infringement of copyright, title or slogan.”
Premier was sued for selling dog training collars bearing the plaintiff’s trademarked designations. The suit, however, did not specifically refer to Premier’s advertising. Rather, the plaintiff alleged liability based on Premier’s "sale" of products with plaintiff's trademarks and Premier's “use” of plaintiff’s trademarks and trade dress.
Travelers denied coverage, and Premier sued for breach of contract, seeking defense and indemnity under the policy. Judge Lauck granted summary judgment to Travelers on the duty to defend.
The key issue would appear to be whether the policy language covering “infringement of copyright, title or slogan” includes trademark infringement, and the parties extensively briefed a nationwide split of authority on that issue. Judge Lauck, though, did not reach that issue, holding instead that the Complaint did not allege (1) that Premier’s conduct occurred in the course of advertising its products, as the policy required; or (2) that Premier’s advertising activities caused the plaintiff’s harm.
On the first issue, Premier argued that the policy should be construed broadly, relying on a Fourth Circuit decision applying North Carolina law, State Auto Prop. & Cas. Co. v. Travelers, 343 F.3d 249, 259 (4th Cir. 2003), which held that “the term ‘advertising’ normally refers to ‘[a]ny oral, written, or graphic statement made by the seller in any manner in connection with the solicitation of business.’”
Instead, Judge Lauck relied on an earlier EDVA case, Solers, Inc. v. Hartford, 146 F.Supp.2d 785, 793 (E.D.Va. 2001), which narrowly defined “advertising” under Virginia law to refer “unambiguously to the widespread definition of promotional material to the public at large, or at least to widely disseminated solicitation or promotion” and did not include one-on-one “solicitation.” The Complaint’s allegations of Premier’s “sale” of products and “use” of the plaintiff’s trademarks, the Court held “could not constitute advertising, or ‘widespread promotion’ (as opposed to sale) of goods.”
On the second issue, Judge Lauck held that the Complaint did not clearly allege that Premier’s advertising activities caused injury. Instead, the plaintiff alleged that Premier’s “sale” of products and “use” of infringing designations were the cause of its alleged injuries.
The same day, Judge Lauck issued a follow-up Order noting that she had not ruled on whether Travelers had a duty to indemnify under the policy and giving the parties thirty days to brief that issue. Since the duty to indemnify is typically no broader than the duty to defend, though, there seems little chance that the result will change.
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