Timothy Law and Jeremy Heinnickel of Reed Smith: Tenth Circuit Finds Duty to Defend Patent Infringement Allegations under Advertising Liability Coverage

Timothy Law and Jeremy Heinnickel   By Timothy P. Law and Jeremy F. Heinnickel, Attorneys, Reed Smith LLP

"In Dish Network Corp. v. Arch Specialty Ins. Co., -- F.3d --, 2011 U.S. App. LEXIS 20955 (10th Cir. Oct. 17, 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], the Tenth Circuit held that allegations of patent infringement can fall within the advertising liability coverage section of commercial general liability (CGL) insurance policies," writes Timothy P. Law and Jeremy F. Heinnickel. "In doing so, the Tenth Circuit joined an emerging consensus of courts finding insurance coverage under CGL policies when a claimant asserts patent infringement of an advertising technique or technology."

"Between 2001 and 2004, Dish Network purchased primary and excess CGL policies from five insurance companies," explain the authors. "The insurance policies contained a duty to defend Dish Network against claims involving 'advertising injury.' Four of the policies provided coverage for offenses arising out of '[m]isappropriation of advertising ideas or style of doing business.' One policy contained a slightly different provision, granting coverage for claims arising out of the 'use of another's advertising idea in your advertisement.' A patent infringement action was brought against Dish Network by Ronald A. Katz Technology Licensing, L.P. (RAKTL) alleging infringement of automated telephone service patents. The technology allegedly allowed Dish Network's customers to 'perform pay-per-view ordering and customer service functions over the telephone.' Dish Network requested a defense from its insurance companies for the RAKTL litigation, but its request was denied. Consequently, Dish Network filed an action in Colorado federal court seeking a declaration that the insurance companies had a duty to defend and indemnify."

"The district court in DISH Network Corp. v. Arch Specialty Ins. Co., 734 F. Supp. 2d 1173 (D. Colo. 2010) entered summary judgment in favor of the insurance companies," report Law and Heinnickel. "Although the district court found that RAKTL alleged that Dish Network engaged in advertising, the district court ruled that Dish Network's activities did not constitute 'misappropriation of advertising ideas or style of doing business' because RAKTL's allegations focused on Dish Network's use of the patented technologies to convey content, rather than the incorporation of patented technologies into Dish Network's advertising. The Tenth Circuit reversed the district court's ruling."

Tim Law is a partner and Jeremy Heinnickel is an associate at Reed Smith LLP in Philadelphia, Pennsylvania. Both are members of the firm's Insurance Recovery Practice Group. Mr. Law and Mr. Heinnickel represent policyholders in disputes with their insurance companies.

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