Insurance 101—Insights for Young Lawyers: Advertising Injury Coverage for Claims of Intellectual Property Infringement and Related Unfair Competition

   By Richard Porotsky, Partner, Dinsmore & Shohl LLP

In his article appearing in the November/December 2010 issue of Coverage, Insurance 101—Insights for Young Lawyers:  Advertising Injury Coverage for Claims of Intellectual Property Infringement and Related Unfair Competition, author Richard Porotsky, a partner at Dinsmore & Shohl LLP, notes that some claims involving intellectual property rights may be covered under the personal and advertising injury provisions of commercial general liability policies. Specifically, most courts have held that there is coverage available for IP claims involving infringement of trademark or trade dress, if certain specific criteria are met. On the other hand, courts have generally refused to find coverage for IP claims involving patent infringement and for many violations of trade secret claims. The article traces the evolution of standard policy terms concerning advertising injury from the 1981 ISO endorsement for advertising injury through the 2001 ISO form provisions for advertising injury. The article then analyzes a number of cases addressing coverage for IP claims, including two Ohio cases  which applied a four-part test centered on whether the underlying complaint: (1) enumerated a claim covered under the advertising injury provisions of the policy; (2) alleged that the policyholder’s activity constituted an “advertisement” as defined in the policy; (3) alleged a causal connection between the injury and the policyholder’s “advertisement”; and (4) involved a claim to which any exclusions in the policy applied. Westfield Ins. Co. v. Factfinder Marketing Research, Inc., 860 N.E.2d 145 (Ohio Ct. App. 2006); Westfield Companies v. OKL Can Line, 804 N.E.2d 45 (Ohio Ct. App. 2003).  The article states that under this four-part test, copyright or slogan infringement will meet the initial enumeration requirement and that the decision will turn on the other three factors of nexus, causation and application of policy exclusions.   It then discusses a recent case decided in favor of the insurer where the court found insufficient nexus and causation for the claim to be considered an advertising injury.  Premier Pet Products LLC, v, Travelers Property Cas. Co. of America, 678 F.Supp. 2d 409 (E.D. Va. 2010).   The article concludes by advising that the law in this area does not always appear “clear or consistent,” despite the noted patterns in the decisions, and therefore, careful consideration should be given to the possibility of coverage for all types of IP claims under the advertising injury provisions of applicable CGL policies.  

 

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