Hunton Insurance Recovery Blog

A federal court in Pennsylvania has held that Liberty Mutual must defend its insured, Hershey Creamery Company, in an intellectual property infringement lawsuit because the suit raises claims that potentially implicate coverage under the policies’ personal and advertising injury coverages. The court further found that the alleged wrongful conduct was not subject to the policies’ IP infringement exclusion.

The Second Circuit has ruled a claim alleging an “offer for sale” infringed on a patent constitutes an advertising injury sufficient to trigger a defense under commercial general liability insurance.  In High Point Design LLC v LM Insurance Corporation, the plaintiff High Point brought a declaratory-judgment action against Buyer’s Direct, Inc. after the latter directed High Point to cease-and-desist in the sale of its Fuzzy Babba slippers.  Buyer’s Direct responded with a counterclaim alleging trade dress infringement, claiming that High Point’s offers for sale in retail catalogs infringed on Buyer’s Direct’s own slipper trade dress.  Buyer’s Direct sought discovery of all advertising, marketing and promotional materials related to High Point’s fuzzy footwear to substantiate its claims.

In June, Syed S. Ahmad and Jennifer E. White published an article in Risk Management Magazine about how commercial general liability (CGL) policies may help with trademark infringement litigation, despite common exclusions. A recent federal court opinion out of California conforms with the precedent we described in that article, holding that the insurer, Great Lakes Reinsurance (UK) PLC ("Great Lakes"), is required to defend In and Out Fashion, Inc. ("IOF") in a trademark suit filed by Forever 21, Inc. ("Forever 21"). The fashion giant alleged that IOF essentially sold Forever 21 products as its own by obscuring or removing Forever 21's marks. IOF requested that its CGL insurer, Great Lakes, defend it in the underlying suit. The relevant CGL policies covered damages because of "personal and advertising injury," defined to include "infring[ing] upon another's copyright, trade dress or slogan in your 'advertisement'." The policies excluded damages arising from trademark infringement and, according to the insurer, did not cover copyright, trade dress or slogan infringement in non-"advertisement" mediums. Great Lakes refused to defend IOF, and sued for declaratory relief regarding its obligations under the policies.