America's Recommended Mailers, Inc. v. Maryland Cas. Co., No. 08-41106, 2009 WL 2391523 (5th Cir. (Tex.) Aug. 4. 2009)
Affirming the district court’s denial of coverage, the Fifth Circuit, analyzing a 1998 ISO policy, found that a suit by the AARP against Mailers alleging a fraudulent scheme to sell financial services to older America’s that falsely claimed endorsement by the AARP did not fall within the policy’s potential coverage. The key to the decision was a regressive application of the eight-corners rule under Texas law. GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W. 3d 305, 307 (Tex. 2006). The insured urged that the false advertising claims alleging misrepresentation should be characterized as trade dress claims specifically falling within the offense “infringing upon another’s . . . trade dress. . . injury in ‘your advertisement.’”
The court rejected this argument stating:
While the AARP has alleged that Mailers inappropriately used the AARP's trademark in a deceptive manner, the AARP is not challenging the shape, design, color scheme, or any other aesthetic aspect of the cards or the similarity of Mailers's cards to any other advertisements for financial products. The AARP is only challenging the fact that Mailers used the AARP name on its cards. This is not a trade dress claim.
Id. at *2.
The court did not analyze whether the use of the words American Association of Retired Persons instead of the abbreviation AARP which changed the result since the eight corners rule did not permit such a speculative analysis of the allegations of the complaint.
The trademark infringement claims could not fall within the misappropriation of advertising ideas or style of doing business offense uncharacteristically maintained in this policy form as it is part of the 1986 standard policy form because of the Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 464-65 (5th Cir. 2003) case concluding that “trademark infringement claims do not involve misappropriation of advertising ideas.”
This decision has been criticized by other decisions including that in State Auto Prop. & Cas. Ins. Co. v. Travelers Indem. Co. of America, 343 F.3d 249 (4th Cir. (N.C.) 2003) (“Finally, the term ‘misappropriation’ is necessarily ambiguous: Although it could refer specifically to the common law tort of misappropriation, it also could refer more generally to the wrongful acquisition of property. Significantly, the courts in other jurisdictions are unable to agree on how to interpret the term “misappropriation.” (emphasis added)).
It asked the wrong question, not what is the nature of the trademark claim but whether the fact allegations in a trademark claim may constitute a “misappropriation of advertising ideas,” this ambiguous string of non-tort terminology that can encompass within its ambit a number of fact scenarios including many articulating relief trademark infringement.
See also Lebas Fashion Imports of USA, Inc. v. ITT Hartford Ins. Group, 50 Cal. App. 4th 548, 565 (Cal. Ct. App. 1996) (“There is nothing about the terms “misappropriation of an advertising idea” or “misappropriation of a style of doing business,” neither of which constitutes a recognized tort, which compels us to conclude one way or the other as to just how broadly or narrowly they should be read. Nor is there anything about the statutory offense of trademark infringement which necessarily precludes its inclusion as a part of either.”).
Curiously, the policy form had it included “use of another’s advertising idea in your advertisement” as in a standard 1988 ISO form would, would have escaped the Support Supply argument. It would also have fallen within case authority finding trademark claims fall within the ambit of such an allegation. Ohio Cas. Ins. Co. v. Albers Medical, Inc., No. 03-1037-CV-W-ODS, 2005 WL 2319820 (W.D. Mo. Sept. 22, 2005).
