Covington & Burling LLP on 10th Circuit Rules that Insurers Have a Duty to Defend Patent Infringement Suits under “Advertising Injury” CGL Coverage

A team of lawyers from Covington & Burling's insurance practice group and patent litigation group have issued a commentary on the October 2011 decision of the Tenth Circuit in Dish Network v. Arch Specialty Insurance Company, 2011 U.S. App. LEXIS 20955 [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law]. (The authors of the commentary include David Goodwin, Ben Lenhart, Ben Block and Mitchell Dolin.)

The court held in an opinion by Chief Judge Briscoe that insurers have a duty to defend policyholders in patent infringement suits when those suits potentially trigger the "advertising injury" coverage in commercial general liability (CGL) policies. The authors state "this decision potentially expands on the rationale of the Ninth Circuit in Hyundai Motor America v. National Union Fire Insurance Co., 600 F.3d 1092 (9th Cir. 2010) [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law]and enhances the ability of policyholders to secure defense coverage for some patent infringement claims."

The Dish case involved a lawsuit by Ronald Katz Technology Licensing, LP against Dish Network, the satellite television provider. Katz alleged that Dish had infringed the claims of patents covering various technologies related to automated telephone systems, including systems covering pay-per-view ordering and customer service functions. While some of the patents claimed telephone interface systems "involv[ing] advertising a product for sale," the Katz complaint alleged more specifically that Dish infringed by "allowing its customers to perform pay-per-view ordering and customer service functions."

The district court granted summary judgment for the insurers, holding that although Dish may be thought to have been engaged in "advertising", the complaints did not allege a "misappropriation" of advertising ideas. The Tenth Circuit reversed. The authors find the Tenth Circuit's decision potentially expands upon the rationale of Hyundai, where the underlying patent infringement suit concerned the "build-your-own" feature of Hyundai's website. The Ninth Circuit held that the patent infringement suit triggered coverage under similar "advertising injury" language because (1) the "build-your-own" feature could be considered "advertising"; (2) there was a potential for coverage because Hyundai was using an "advertising idea" (the build-your-own feature) that was patented; and (3) there was a causal connection between the injury and the advertising because the act of advertising infringed the patent. The authors conclude that CGL policyholders facing patent infringement suits should actively investigate the potential for defense coverage for such claims.

Ben Lenhart, David Goodwin, Ben Block, and Mitchell Dolin, are members of Covington & Burling's insurance practice group. Rob Fram and Rod McKelvie of Covington's Patent Litigation group also participated in the commentary.

David Goodwin David Goodwin     Ben Lenhart Benedict Lenhart     Ben Block Benjamin Block subscribers can access the complete commentary further discussing the Tenth Circuit's decision, Covington & Burling LLP on 10th Circuit Rules That Insurers Have a Duty to Defend Patent Infringement Suits Under "Advertising Injury" CGL Coverage. Additional fees may be incurred. (approx. 5 pages)

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