Advertisement Definition at Issue in Personal and Advertising Injury Claim
July 24, 2012
Feldman Law Group (FLG) brought an action as the assignee of the Hyman Companies against its insurer. FLG had represented Hyman in the defense of a lawsuit brought by Van Cleef in which Van Cleef alleged that Hyman had violated Van Cleef's copyright and trade dress. Liberty rejected Hyman's defense, denying that the conduct alleged in the complaint was covered under the terms of the insurance policy. FLG then initiated this action against Liberty, seeking to recover the costs incurred in Hyman's defense. The district court granted the motion to dismiss made by Liberty and this appeal followed.
This case is Feldman Law Group, P.C. v. Liberty Mutual Insurance Company, 2012 WL 1323966. Note that this case was not selected for publication in the Federal Reporter.
The Court of Appeals noted that Hyman's policy requires Liberty to defend against any suit seeking damages for personal and advertising injury. Advertising injury includes infringing upon another's copyright, trade dress, or slogan in an advertisement. The policy defines advertisement as a paid announcement that is broadcast or published in the print, broadcast, or electronic media to the general public or specific market segments about the named insured's goods, products, or services for the purpose of attracting customers or supporters.
Thus, the court said, for the Van Cleef complaint to trigger a duty to defend, the complaint must allege that Hyman potentially placed a paid announcement broadcast or published to the general public and that this injured Van Cleef. The Van Cleef complaint contained no such allegation.
The complaint alleged that Hyman reproduced, copied and imitated Van Cleef's jewelry design, resulting in damages to Van Cleef. However, at no point did the complaint allege that any advertisement published by Hyman infringed on Van Cleef's copyright or trade dress; indeed, the court found, the complaint did not allege that Hyman placed any advertisements at all.
FLG contended that the complaint could be construed as referring to the kind of advertising injuries that the policy covers. The complaint did aver that Hyman manufactured, sold, offered for sale, and/or distributed copies of the protected intellectual property, and FLG said that the reference to reproduction and distribution by sale and other means could refer to the placement of a paid announcement in the public media. The court said that such references are far too general to support the conclusion that Van Cleef's complaint encompassed an injury resulting from any paid advertisement by Hyman. The factual allegations of the complaint specifically invoke Hyman's design, manufacture, and sale of infringing goods, but nowhere discuss, allege, or allude to any advertisement of those goods.
The court found that neither the substantive allegations nor the demands for relief suggest that any advertisement itself infringed on Van Cleef's intellectual property rights. Therefore, the ruling of the district court was affirmed.
Editor's Note: The U.S. Court of Appeals, Second Circuit, emphasizes the point that the personal and advertising injury liability coverage in the CGL form can apply to infringing upon another's copyright, trade dress or slogan, but this infringing has to be done in an advertisement. The policy clearly defines an advertisement as a notice broadcast or published to the general public. In this instance, there was no such advertisement as defined.
It may be that the complaint could have been rewritten to allege an injurious advertisement, but the court could base its opinion only on the language of the complaint against the insured compared to the language in the insurance policy—the four corners rule. That rule made the case for the insurer.