Imbrie v. State Farm Fire & Cas. Co., No. CV-08-888-ST, 2008 WL 4737950 (D. Or. Oct. 24, 2008) (Stewart)
The underlying lawsuit asserted claims for relief for unfair competition under California Bus. & Prof. Code § 17200, as well as intentional interference with contractual relationships and other counts. The court, analyzing a 1986 ISO CGL policy, found no duty to defend the alleged allegations of trade secret misappropriation implicated by these fact assertions. No analysis of invasion of privacy was proffered.
The alleged wrongful acts by the Imbries, who were
former employees of the claimant as independent contractor real estate salespersons assisting clients in the purchase and sale of investment properties throughout the U.S., asserted various acts of unfair competition, to wit:
(1) stealing M & M's customers by persuading them to abandon their listing agreements with M & M and sign one with plaintiffs; and (2) misappropriating M & M's confidential, proprietary business forms, in particular its form representation agreement and purchase agreement, for use in plaintiffs' day-to-day business operations.
Id. at *5.
Applying Oregon law, Magistrate Stewart formulated a meaning for “advertising idea” in the phrase “misappropriation of advertising ideas” as “misappropriat[ing] a plan, conception, or design aimed at calling M & M's services to the attention of the public.” Id. at *6.
Adopting this definition, the court claimed it was similar to that found by other courts:
Other courts have similarly defined “advertising idea.” See Atl. Mut. Ins. Co. v. Badger Med. Supply Co., 191 Wis 2d 229, 239, 528 NW2d 486, 490 (1994) (consulting dictionary definitions, including Webster's, to determine that “[a]n advertising idea ... is an idea for calling public attention to a product or business, especially by proclaiming desirable qualities so as to increase sales or patronage”); Am. Econ. Ins. Co. v. Reboans, Inc., 852 F Supp 875, 879 (ND Cal 1994) (“ ‘advertising ideas or style of doing business' refers to the mode of presenting a product to the public”).
Id. at *6 n.1.
The court found no potential coverage. It reasoned:
The M & M Complaint contains no such allegation. While it does allege that plaintiffs stole M & M's form documents and that these form documents are “material” to M & M's success, the M & M Complaint does not tie these forms to any advertising idea conceived or employed by M & M. According to the M & M Complaint, the major advantage M & M receives from these forms is that they “clearly define the obligations and liabilities of the parties with particular care to the interests of M & M.” This does not pertain to “advertising ideas.”
Id. at *6.
Looking to dictionary definitions, the court deduced that “misappropriation of a style of doing business” is the misappropriation of M&M’s “peculiarly distinctive technique or methods or characteristics” of “commercial or mercantile activity.” Id. at *6.
The court found that, so defined, “style of doing business” was akin to trade dress and that misappropriation must not be of just one minute facet of a business. It reasoned, “[A] style of business is what sets one company apart from its competitors in the same industry.” Id. at *7.
The court also explained that “style of business” in context refers to “a company’s comprehensive manner of operating its business.” Atlantic Mutual, 191 Wis. 2d at 239, 528 N.W.2d at 490, quoting St. Paul Fire & Marine Ins. Co. v. Advanced Interventional Sys., Inc., 824 F. Supp. 583, 585 (E.D. Va. 1993). Id. at *7.
Since the misappropriation focused on customers and proprietary forms, the court found this provision not implicated.
Had M&M claimed to be an industry leader in the use of prepared-form documents and that it gained a competitive advantage distinctly from such use, the court intimated a different result might attend. While there was a gain in efficiency of operations, it was not sufficient to transform the conduct into “misappropriation of style of doing business.”
