Toffler Assocs., Inc. v. Hartford Fire Ins. Co., No. 08-1167, 2009 WL 2390184 (E.D. Pa. July 29, 2009)
IWP alleged that “Toffler and/or Barnett selected and reproduced articles from [IWPs] Copyrighted works and distributed the articles to many recipients in issues of a series entitled “Morning Brew.”
Prior to April 2007 the publishers of Morning Brew explained that “Published daily, the Morning Brew is a free service presenting open source articles of interest to leaders in national security and related fields. All articles are subject to the copyright protections associated with the original sources.
Articles in the Publication were organized according to titles of books written by Alvin Toffler, co-founder of Toffler Associates. By May 2007, Barnett was sending the Publication to the email addresses of 38 other Toffler employees and about 300 persons in the defense industry, the intelligence community and Corporate America.
The publication did not alert the reader that Toffler was a consulting firm or tell the reader what services Toffler offered.
In concluding that the publication was not advertising, Hartford’s claim representative, Dengler (who did not speak to Barnett or any other Toffler employees) “was directed to 150 specific clients and does not constitute ‘widespread public distribution.’” She also concluded that the Publication “was principally a medium to convey information and was not advertisement.”
The court found no conflict between the law of Pennsylvania, Massachusetts and Virginia as to the pertinent coverage issues and thus applied Pennsylvania law.
The court found a duty to defend Toffler.
IWP's Complaint alleges that Barnett distributed the Publication, which it described as “a serial” containing articles, to “many recipients.” The “many recipients” allegation supports that the Publication had widespread distribution, as required by the Policy's definition of an advertisement.
Id. at *9.
Looking only to the complaint and the policy under Pennsylvania law, the court found that the duty to defend did not expire on October 21, 2007 when Toffler’s answer to the underlying complaint admitted emailing the publication “to a select group of friends and associates.” Id. at *9.
Applying an objective standard, the court found that a reasonable person in Toffler’s position would have understood and expected that the publication would fall within the policy’s description of “information or images” that has the purpose of inducing the sale of goods, products or services.
There are numerous objective indicia that, prior to the alleged copyright infringement, Barnett made changes to the Publication that caused the Toffler name and Toffler themes to appear throughout the Publication-in the title, in the footnote, on the watermark . . . . Barnett sent the Publication to various persons in the industries from which Toffler had sold its services in the past or might sell its services in the future.
Id. at *10.
No indemnity arose, however, because “Barnett's e-mail distribution of the Publication to approximately 300 persons outside of Toffler was not widespread public dissemination, as required by the Policy . . . .” Id. at *13.
No prejudice was proven to bar all defense fee reimbursement.
