Insurance Law

Prior Publication Exclusion Eliminates Coverage Under a General Liability Policy’s Advertising Injury Coverage for Trademark Infringement Claim

Street Surfing, LLC v. Great American E&S Ins. Co., 2014 U.S. App. LEXIS 21804 (9th Cir. Nov. 14, 2014), [enhanced version available to lexis.com subscribers].

In Street Surfing, the Ninth Circuit affirmed the District Court’s ruling that a prior publication exclusion in a general liability policy eliminated coverage for a trademark infringement claim, where the uncontroverted evidence established that the insured had published an infringing website prior to the issuance of the carrier’s policy.

Street Surfing LLC purchased two consecutive general liability policies from Great American E&S Insurance Company (“Great American”). As part of its purchase, Street Surfing stated in its application that, prior to the purchase of its first policy with Great American, it had published its website “http://www.streetsurfing.com/” and that its website displayed its company logo. Great American printed a copy of that logo and included it in its underwriting file. Street Surfing was subsequently sued for trademark infringement by the owner of a company known as “Streetsurfer.” Street Surfing tendered its defense to Great American, which denied coverage. Street Surfing settled the underlying action and sued Great American for breach of contract and bad faith based on its failure to defend and indemnify. The district court ruled in favor of Great American based on the prior publication exclusion in its policies, which eliminated coverage for claims based on “oral or written publication of material whose first publication took place before the beginning of the policy period.” 2014 U.S. App. LEXIS 21804, at *11-12. Street Surfing appealed and argued that the prior publication exclusion did not apply because Street Surfing was being sued, at least in part, for advertising first published during the policy period of Great American’s policies.

The Ninth Circuit affirmed the District Court’s ruling. In reaching its ruling, the Ninth Circuit examined each of Street Surfing’s advertisements and held that each was “substantially similar” to the logo found in Great American’s underwriting file, and that this substantial similarity was sufficient to eliminate coverage as to all advertising that formed the basis for the underlying action.

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