By Kimberly L. Buffington, Partner, Pillsbury Winthrop Shaw Pittman LLP
In Oglio Entertainment Group, Inc. v. Hartford Casualty Insurance Company, 200 Cal. App. 4th 573 (2011), the California Court of Appeal concluded that an entertainment company's insurance policy covering "personal and advertising injuries" did not cover a claim for trading on the celebrity and goodwill associated with a musician's name or using the musician's name as the domain name for a website selling similar music.
In Oglio, the coverage clause at issue provided that the carrier would indemnify the insured for any damages incurred by the insured "because of ... 'personal and advertising injury' to which the insurance applies." The policy's coverage provisions required the carrier to defend the insured in actions seeking such damages. Oglio, 200 Cal. App. at 582-83.
The policy defined an "advertising injury" as an injury stemming from "[c]opying, in your 'advertisement,' a person's or organization's 'advertising idea' or style of 'advertisement.'" The policy defined "advertisement" as "the widespread public dissemination of information or images that has the purpose of inducing the sale of goods, products or services through" radio, television, billboard, magazine, or newspaper, as well as "[t]he Internet, but only that part of a web site that is about goods, products or services for the purpose of inducing the sale of goods, products or services," and "[a]ny other publication that is given widespread public distribution." The policy further provided that "'advertisement' did not include the design, printed material, or any images or information contained in or on the packaging or labeling of any goods or products, or an interactive conversation through a computer network." In addition, the policy defined the term "advertising idea." Under the policy, an "advertising idea" constituted "any idea for an 'advertisement.'" Oglio, 200 Cal. App. at 582-83.
The Court of Appeal concluded that the underlying claim did not fall within the policy's definition of an "advertising injury." Specifically, the Court reasoned that the underlying claim did not allege that the insured used an advertisement that copied an advertisement or that the insured copied an idea or style of advertisement in an advertisement. Further, because the Court concluded that the underlying claim was not covered by the policy language, the Court of Appeal declined to address whether exclusions in the policy were applicable. Thus, the Court never reached the issue of whether the exclusions for advertising injuries arising out of violations of intellectual property rights or out of "the unauthorized use of another's name or product in your e-mail address, domain name or metatag, or any other similar tactics to mislead another's potential customers" precluded coverage. Oglio, 200 Cal. App. at 582, 584-85.
Although the Court ultimately concluded that the Oglio policy did not provide for this particular claim, the Court recognized that other policies would provide coverage, including an earlier version of the policy at issue. Oglio, 200 Cal. App. at 585, n. 7. The Oglio decision highlights the importance of performing a careful comparison of available policies when purchasing insurance. Further, to avoid risking a loss of coverage, businesses should always promptly notify their insurance carriers of an advertising injury claim. Businesses should not be deterred by an initial coverage denial. In our experience, although insurance carriers frequently initially deny coverage, insurance coverage may still be available.
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