Super Duper, Inc. v. Pennsylvania Nat'l Mut. Ins. Co, ___ S.E.2d ___, 2009 WL 2948516 (S.C. 2009)

Posted on November 6, 2009 by David Gauntlett

Answering a certified question from a federal district court, the Supreme Court of South Carolina found that a trademark infringement lawsuit could implicate potential coverage under the offense of “misappropriation of advertising ideas” or “style of doing business” as well as “infringement of copyright, title or slogan,” “use of another’s advertising idea in your ‘advertisement’” and “infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’ ”

Notably, the court found that alleged trademark infringement was only in the first certified question, but not the remaining three.

The court’s discussion of why an advertising idea is implicated is of greatest interest.

[T]he use of another's advertising idea may include trademark infringement because to infringe upon someone's trademark, which is an advertising device, one improperly uses another's advertising idea to draw the consumer's attention to a product. Accordingly, we answer the third certified question, yes.

Id. at *6.

The court found that a trademark may be a product slogan and that trademark infringement potentially relates to the improper use of another slogan.

It finally found that a trademark infringement may occur when a party infringes upon another’s trade dress or slogan in its advertisement because “a trademark may serve as an element to the overall trade dress of a product.” Id. at *6.
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General Casualty Co. of Wisconsin v. Wozniak Travel, Inc., 762 N.W. 2d 572 (Minn. 2009)

Posted on April 3, 2009 by David Gauntlett

Analyzing the ”use of another’s advertising idea in your ‘advertisement’ ” question, the court determined whether in trademark infringement claim for wrongful use of the word “hobbit” by Hobbit Travel triggered a defense on the issue certified by the District Court.

The court found that it did, questioning the contrary line of authority including Callas Enterprises, Inc. v. Travelers Indem. Co., 193 F.3d 952, 956-57 (8th Cir. 1999).

“Misappropriation of advertising ideas” or “style of doing business” offense was implicated by the trademark infringement claim as the certified question queried.

We conclude that the absence of the word “trademark” in the CGL policy does not foreclose the possibility that trademark infringement falls within the scope of the advertising-injury definitions in General Casualty's policy. First, the policy provides coverage for injuries “arising out of” the advertising-injury definitions, which expands the scope of the policy language since this court has defined “arising out of” broadly as “originating from,” “growing out of,” or “flowing from.” Dougherty v. State Farm Mut. Ins. Co., 699 N.W.2d 741, 744 (Minn.2005). Second, the Minnesota rules of insurance policy interpretation require policies to be read in favor of finding coverage, and require courts to look past the legal nomenclature to the underlying allegations. Finally, the duty to defend applies to claims that “arguably” fall within the policy, and if insurance policy language is susceptible of more than one meaning, it must be given the meaning that favors coverage.

Id. at *3.

Noting that the only other supreme court that reached a similar view, it found Acuity v. Bagadia, 750 N.W.2d 817, 827 (Wis. 2008) persuasive. Adopting the broader definition of advertising in accord with the Acuity court’s reasoning, it stated:

[W]e interpret the term “advertising” . . . as: “any oral, written, or graphic statement made by the seller in any manner in connection with the solicitation of business.”

Id. at *6.

This opinion reflects a modern trend broadly construing the term “advertising.” It circumvents misstatements in earlier cases that improperly asserted that the majority of courts (Id. at 26) had narrowly interpreted “advertising” as “widespread promotional activities usually directed to the public at large”. Hameid v. National Fire Ins. Co. of Hartford, 31 Cal. 4th 16, 24 (2003). See The Proper Definition of “Advertising” in an “Advertising Injury” Coverage Case - a Critique of the California Supreme Court’s Decision in Hameid v. National Fire Ins. Of Hartford, 31 Cal. 4th 16, 1 Cal. Rptr. 3d 401, 71 P.3d 761 (2003) [Published in Mealey’s Litigation Report: Intellectual Property Vol. 12, Iss. #1 also published in Mealey’s Emerging Insurance Disputes Vol. 8, Iss. # 20; Mealey’s Litigation Report: California Insurance Vol. 3, Iss. # 5].

The “use of another’s advertising idea in your ‘advertisement’ ” offense was implicated, thus the court found it unnecessary to decide whether there was an infringement of copyright, trade dress or slogan at issue. It reasoned,

Tolkien also alleged that Hobbit Travel used the word “hobbit” in its domain name and on its website to attract the national public's attention to its travel agency, and capitalize on the goodwill surrounding the Tolkien works. These uses of the word “hobbit” by Hobbit Travel were made in connection with the solicitation of travel business within our broad reading of “advertisement”; thus, Tolkien's damages arose out of Hobbit Travel's “use of another's advertising idea in [its] ‘advertisement.’ ”

Id. at *7.

A vigorous dissent by Chief Justice Magnuson found that the court had too broadly stretched the meaning of “arguably” bring into question the previous views expressed in Franklin v. W. National Mut. Ins. Co., 574 N.W. 2d 405, 407 (Minn. 1998) (citing Ross v. Briggs and Morgan, 540 N.W. 2d 843, 847 (Minn. 1995)). Id. at *9.
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Trademark Infringement Insurance Coverage

Posted on June 18, 2008 by David Gauntlett
Two recent trademark cases analyzing trademark infringement coverage properly found a duty to defend.

Capitol Indem. Corp. v. Elston Self Service Wholesale Groceries, Inc., No. 04 C 6536, 2008 WL 696919 (N.D. Ill. March 13, 2008)

Analyzing the meaning of “infringement of title” under Illinios law, the court found that “infringement of title” can include improper use of a business name, citing Charter Oak Fire Ins. Co. v. Hedeen & Cos., 280 F.3d 730, 736 (7th Cir. 2002). At issue were allegations of advertising falsely labeled counterfeit cigarettes under the Newport brand. The court found that affirmative self-promotion of the actor’s goods or services was implicated by labeling of the cigarettes with the Newport mark characterizing earlier Michigan precedent from the 6th Circuit in the Advanced Watch case as anomalous. See Peterson Tractor Co. v. Travelers Indem. Co., 156 Fed. Appx. 21, 23 (9th Cir.2005). Id. at *9. It also rejected application of two exclusions, the first for “knowledge of falsity” which it mixed characterized as an intentional conduct exclusion noting that Trademark Infringement claims did not depend on either intentional or knowingly false conduct. Indeed a defendant could be liable for trademark infringement without proof that it engaged in an intentional or willful conduct to prevail. See Utica Mut. Ins. Co. v. David Agency Ins., Inc., 327 F.Supp.2d 922, 927 (N.D.Ill.2004). The court’s “knowledge of falsity” analysis properly applying Illinois law which an earlier Seventh Circuit decision misapplied.

In Del Monte Fresh Produce N.A., Inc. v. Transportation Ins. Co., 500 F.3d 640, 646 (7th Cir. (Ill.) 2007) the panel held that the “knowledge of falsity” exclusion was implicated because the allegations against Del Monte are not grounded in any theory of relief except fraud, transforming the exclusion into a more “intentional acts” exclusion.

The court also found the “first publication” inapplicable. The absence of any fact allegations asserting when the alleged counterfeit cigarette bearing the Newport® trademark were used, or when fliers of the insured allegedly advertises cigarettes and circulated them led the court to find the exclusion is inapplicable because it was unclear whether the claimant asserts that the infringing and fraudulent activity began. It reasoned:
While advertising may be cumulative, the court doubts that advertisements circulated before Capitol Indemnity began insuring Elston in 1993 had a discernable impact in 2003. Thus, the court will not invoke the first-publication exclusion simply because Elston’s advertising remained the same between 1983 and 2003.

Id. at *14.

Manzarek v. St. Paul Fire & Marine Ins. Co., ___ F.3d ___, 2008 WL 763385 (9th Cir. (Cal.) March 25, 2008)

Analyzing a “field of entertainment limitation endorsement” (“FELE”) the court found it did not exclude otherwise available coverage for “advertising injury” for alleged wrongful use of The Doors name, trademark and logo in connection with the planned national and international tour.

The court noted that coverage could well exist even outside the scope of the field entertainment limitation endorsement if The Doors own line of salad dressing, T-shirts or electric cars were promoted. There was no evidence that the specific content of The Doors memorabilia was identified in the complaint and absent same, the court did not discern that there was coverage necessary falling within the pertinent exclusion.

Also intriguing, the court found that bodily injury coverage was implicated because an alleged loss to a Doors’ band member “reputation and stature by causing people to believe that he was not, and is not, an integral and respected part of The Doors band, or is one member who easily can be replaced by another drummer.” Id. at *7.

“Bodily injury” coverage included emotional distress as part of its definitional perimeter. Mere economic loss arising from reputational harm is certainly been easily flowed within “personal injury” coverage for liable/slander/defamation and related offenses. The courts have often been more restrictive in looking at bodily injury coverage. This case suggests that a different approach is appropriate here.
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