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Since 1986, nearly all comprehensive general liability insurance policies sold in the United States have included a standard coverage for “advertising injury.” The 1986 ISO form, used with only minor variations by every major carrier until very recently, provided defense and indemnity for claims arising from certain covered “offenses” committed in the course of advertising goods, products or services. The covered offenses were:
Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; Oral or written publication of material that violates a person’s rights of privacy; Misappropriation of advertising ideas or styles of doing business; or Infringement of copyright, title or slogan.

Although they were not specifically enumerated offenses, policyholders quickly recognized the potential for obtaining coverage for claims of trademark and trade dress infringement as a form of “misappropriation of advertising ideas or style of doing business” or “infringement of … title or slogan.” POLICYHOLDERS WIN Largely because of the insurance industry’s failure to proffer a persuasive theory of what cognizable legal claims those offenses correspond to, if not to trademark or trade dress infringement, the vast majority of state and federal courts that have confronted the issue have ruled for the policyholders under the “plain and ordinary meaning” or “reasonable expectations of the insured” standards. Well-publicized decisions of the 6th U.S. Circuit Court of Appeals to the contrary, Advance Watch Co. v. Kemper National Ins. Co., 99 F.3d 795 (6th Cir. 1996), and Sholodge Inc. v. Travelers Indemnity Co., 168 F.3d 256 (6th Cir. 1998), have gained almost no following in state or federal courts, and indeed have been “sharply criticized for ignoring the real contours of intellectual property litigation.” Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 747 (3d Cir. 1999). Moreover, the 1986 ISO form did not include a definition of advertising. Courts generally adopted a broad definition of advertising, as exemplified in Black’s Law Dictionary: Any oral, written or graphic statement made by the seller in any manner in connection with the solicitation of business and includes … statements … printed on or contained in any notice, handbill, sign, catalog, or letter, or printed on or contained in any tag or label attached to or accompanying any merchandise. On the basis of this broad definition of advertising, most courts have held that trademark and trade dress claims inherently arise out of advertising, since any actionable use of a trademark or trade dress “requires the use of the infringing mark in the identification of goods and services to the public.” American Employers’ Ins. v. DeLorme Publishing Co., 39 F. Supp.2d 64 (D. Me. 1999). As a result, defendants in garden-variety trademark and trade dress cases have, in recent years, routinely tendered the defense to their CGL carriers, who have generally conceded that these are covered offenses. The past several years, however, have seen a marked increase in CGL policies which depart from the 1986 ISO form of advertising injury coverage, as carriers have adopted a wide variety of tacks, involving new definitions of “advertising,” re-definition of the covered offenses and coverage exclusions, to limit if not eliminate coverage for trademark and trade dress infringement. Undoubtedly these new policies will soon be the subject of another generation of coverage litigation, but their remarkable lack of uniformity, with each carrier using its own policy form and sometimes more than one, ensures that the coverage issue will never again seem as settled or predictable as it has in the recent past. So-called “intellectual property exclusions” would seem to offer the most direct route to limiting coverage, and such exclusions are becoming commonplace. In at least one recent policy we have seen, the exclusion is so comprehensive and clear as to appear bulletproof: “This insurance does not apply to any actual or alleged … infringement of any copyright, patent, trademark, trade name or trade dress.” Even here, however, there may be room for a coverage argument, particularly if the exclusion is inconspicuous or was a material change in coverage that was not brought to the policyholder’s attention at renewal time. Another avenue to challenge of such a broad exclusion, if it is not accompanied by corresponding changes to the enumerated offenses (see below), is that to give it effect would render the coverages for “misappropriation of advertising ideas or style of doing business” or “infringement of … title or slogan” wholly ineffectual. In Summit Bancorp v. TIG Ins. Co., No. 99-5424 (D.N.J. 2001), the court refused to apply a broad “unfair competition” exclusion to claims of trademark and trade dress infringement for precisely that reason. Perhaps because a straight-forward exclusion of trademark and trade dress claims would undoubtedly be viewed as a concession that the 1986 ISO form (which will continue to be triggered for years to come) covered such claims, most “intellectual property exclusions” we have seen are far less clear, and may contain qualifiers that will prove to be self-defeating. Some examples: “We won’t cover injury or damage that results from any actual or alleged infringement or violation of any of the following rights or laws: copyright, patent, trade dress, trade name, trade secrets, trademarks, other intellectual property rights or laws. … “But we won’t … apply this exclusion to advertising injury that results from the unauthorized use of any copyrighted or trademarked material, slogan or title of others in your advertising.” Query whether the proviso does not swallow the exclusion, at least as far as trademark and trade dress claims are concerned. LIMITING COVERAGE A number of carriers have added definitions of “advertising” to their policies which may significantly limit coverage for trademark and trade dress claims: “Advertisement” means a dissemination of information or images that has the purpose of inducing the sale of goods, products or services. … However, “advertisement” does not include the design, printed material, information or images contained in, on or upon the packaging or labeling of any goods or products. “Advertising injury means injury arising out of paid announcements in the print or broadcast media.” Other recent policies, however, introduce definitions of “advertisement” that seem unlikely to work any limitation on coverage, such as the circular: ” ‘advertising’ means any paid advertisement, publicity, broadcast or telecast.” Without doubt, it is the enumerated offenses of misappropriation of advertising ideas or style of doing business that have received the most editorial attention, in some cases disappearing entirely, as in this policy which goes on to, for the first time, make trademark infringement an enumerated offense:

Infringement of copyrighted advertising materials or infringement of trademarked or service marked titles or slogans.

For those of us who have explained to clients over the years that “trademark” is not a verb, the referenced to “trademarked or service marked titles or slogans” is somewhat obscure. Carriers may well argue that the coverage is limited to infringement of registered trademarks. Also begging for judicial construction is the term “title,” which the insurance industry has consistently argued is limited to titles of literary works, as made explicit in this variation on the enumerated offenses:

Copying, in your “advertisement” a person’s or organization’s “advertising idea” or style of “advertisement;” or Infringement of copyright, slogan or title of any literary or artistic work, in your “advertisement.”

One of the few decisions to date dealing with the new policy forms considered an umbrella policy that contained yet another variation on the enumerated offenses:

“Infringement of copyrighted titles, slogans or other advertising materials.”

Together with the omission of any misappropriation of advertising ideas or style of doing business offense, this variation seems to hold little hope for coverage for trademark or trade dress infringement. (Much more promising would be another variation recently seen: “Unauthorized use of any advertising material, slogan or title of others in your advertising.”) The court, however, held that the word “copyrighted” did not modify the term “advertising materials.” This is also jarring to an intellectual property lawyer’s sensibilities, since titles and slogans are generally not eligible for copyright protection, while advertising materials certainly may be. The court then went on to hold that although the policy in question defined “advertising” as “any paid advertisement, publicity article, broadcast or telecast,” the term “advertising material” could be reasonably construed to include a trademark. Accordingly, the court — citing cases decided under the 1986 ISO form as additional support — held that there was coverage for the underlying trademark infringement claim. Platinum Tech. Inc. v. Fed. Ins. Co., 2000 U.S. Dist. LEXIS 9509 (N.D. Ill. 2000). This proliferation of new policy language should not change the cardinal rule of “tender early and tender often” in trademark and trade dress cases. Attorneys representing policyholders cannot, however, simply rely upon the analyses and arguments that have become routine since the mid-1990s. Each policy and each complaint must be reviewed de novo, and careful attention must be paid to the applicable state law rules of insurance policy construction: Corporate risk managers should be alert to these material variations in policy language at the time of placing or renewing coverage — do not assume that renewal policies or competing bids offer comparable protection in this area of increasingly high exposure. Gary A. Rosen is a partner in the Philadelphia office of Akin Gump Strauss Hauer & Feld. He specializes in patent, trademark and copyright litigation, and is a registered patent attorney.

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