Two Distinct Court Decisions Find Coverage for Trademark Infringement Lawsuits Bolstering a National Trend
Two cases looked at the 1986 ISO policy provision offering “advertising injury” coverage for misappropriation of “advertising ideas or style of doing business”, the later, the 1998 ISO CGL “advertising injury” provision for “use of another’s advertising idea in your advertisement.” Each found a defense in a series of distinct scenarios.
General Cas Co. of Wisconsin v. Wozniak Travel, Inc. No. 07-3515 RHK/AJB, 2008 WL 440747 (D. Minn. Feb. 14, 2008)
The court determined there was a split of authority between an unpublished court of appeal decision – Williamson v. N. Star Cos., No. C3-96-1139, 1997 WL 53029 (Minn. Ct. App. Feb. 11, 1997), review denied (Apr. 15, 1997), and the Eighth Circuit Court of Appeal applying Minnesota law in Callas Enters., Inc. v. Travelers Indem. Co. of Am., 193 F.3d 952 (8th Cir. (Minn.) 1999). The court certified to the Minnesota Supreme Court the issues of: 1) Does trademark infringement fall within the scope of “misappropriation of advertising ideas or style of doing business” or constitute “infringement of copyright, title or slogan” as set forth in the CGL policy?
2) Is a trademark an “advertising idea” or does trademark infringement constitute “infringing upon another’s copyright, trade dress or slogan” as set forth in the CUL Policy?
Id. at *6.
The court noted that the Supreme Court might re-formulate questions of law as stated. See Minn. Stat. § 480.065, subd. 6(a)(3).
The court noted that a number of decisions had failed to follow the approach of the Sixth Circuit, including state court opinions in Michigan, and was not disposed to reach an opinion inconsistent with Sixth Circuit authority absent published Minnesota state case law to support such an approach.
Capitol Indem. Corp. v. Elston Self Service Wholesale Groceries, Inc.
No. 04 C 6536, 2008 WL 696919 (N.D. Ill. March 13, 2008)
At issue were allegations of trademark infringement and fraud asserted against Elston Self Service Wholesale Groceries, Inc. by Lorillard Tobacco Company. It is alleged that Elston advertised cigarettes purporting to be genuine Newport brand cigarettes when they were in fact knock-offs.
The court found that under out-of-state precedent consistent with Illinois law, title infringement could include trademark infringement, also noting an unpublished Illinois case, First State Ins. Co. v. Alpha Delta Phi Fraternity, No. 1-94-1050, 1995 WL 901452, at *12 (Ill. Ct. App. (1st Dist.) Nov. 3, 1995) (“infringement of title or slogan can include trademark ... infringement, and as such, is well suited for advertising liability coverage”) (unpublished opinion). Id. at *5.
It also found persuasive Charter Oak Fire Ins. Co. v. Hedeen & Cos., 280 F.3d 730, 736 (7th Cir. 2002), applying Wisconsin law. The court suggested that the use of the term “infringement of title” in this context was at minimum ambiguous. The court reached an equivalent result in analyzing the “misappropriation of advertising ideas” coverage. It concluded:
Lorillard’s Amended Complaint alleges that advertising and sale of falsely-labeled counterfeit cigarettes deprived Lorillard of sales, tarnished the Lorillard marks, and otherwise harmed Lorillard. In other words, the advertising itself was the wrongful and harmful conduct at issue in the underlying litigation.
Id. at *7.
It joined the chorus of authority characterizing the Advance Watch case as an anomaly, noting “Peterson Tractor Co. v. Travelers Indem. Co., 156 Fed. Appx. 21, 23 (9th Cir.2005) (district court correctly found that insurer had a duty to defend trademark infringement claim because ‘[t]his claim stated an advertising injury, either as a misappropriation of Peterson’s advertising ideas ... or as an infringement of title’) . . . .” Id. at *9.
The mere labeling of the cigarettes with the Newport mark was advertising, which need only involve actual, affirmative self-promotion of the actor’s goods or services. Erie Ins. Group v. Sear Corp., 102 F.3d 889, 894 (7th Cir. 1996). Id. at *9. The court reasoned:
Lorillard’s contention that Elston and the Dukums traded on Lorillard’s reputation, history, sales advantage, and goodwill, corresponds to the allegations found to describe an advertising injury in Native American Arts.
Id. at *11.
The court readily disposed of the first publication of knowledge of falsity exclusions because neither was implicated by liability to establish trademark infringement.
General Cas Co. of Wisconsin v. Wozniak Travel, Inc. No. 07-3515 RHK/AJB, 2008 WL 440747 (D. Minn. Feb. 14, 2008)
The court determined there was a split of authority between an unpublished court of appeal decision – Williamson v. N. Star Cos., No. C3-96-1139, 1997 WL 53029 (Minn. Ct. App. Feb. 11, 1997), review denied (Apr. 15, 1997), and the Eighth Circuit Court of Appeal applying Minnesota law in Callas Enters., Inc. v. Travelers Indem. Co. of Am., 193 F.3d 952 (8th Cir. (Minn.) 1999). The court certified to the Minnesota Supreme Court the issues of: 1) Does trademark infringement fall within the scope of “misappropriation of advertising ideas or style of doing business” or constitute “infringement of copyright, title or slogan” as set forth in the CGL policy?
2) Is a trademark an “advertising idea” or does trademark infringement constitute “infringing upon another’s copyright, trade dress or slogan” as set forth in the CUL Policy?
Id. at *6.
The court noted that the Supreme Court might re-formulate questions of law as stated. See Minn. Stat. § 480.065, subd. 6(a)(3).
The court noted that a number of decisions had failed to follow the approach of the Sixth Circuit, including state court opinions in Michigan, and was not disposed to reach an opinion inconsistent with Sixth Circuit authority absent published Minnesota state case law to support such an approach.
Capitol Indem. Corp. v. Elston Self Service Wholesale Groceries, Inc.
No. 04 C 6536, 2008 WL 696919 (N.D. Ill. March 13, 2008)
At issue were allegations of trademark infringement and fraud asserted against Elston Self Service Wholesale Groceries, Inc. by Lorillard Tobacco Company. It is alleged that Elston advertised cigarettes purporting to be genuine Newport brand cigarettes when they were in fact knock-offs.
The court found that under out-of-state precedent consistent with Illinois law, title infringement could include trademark infringement, also noting an unpublished Illinois case, First State Ins. Co. v. Alpha Delta Phi Fraternity, No. 1-94-1050, 1995 WL 901452, at *12 (Ill. Ct. App. (1st Dist.) Nov. 3, 1995) (“infringement of title or slogan can include trademark ... infringement, and as such, is well suited for advertising liability coverage”) (unpublished opinion). Id. at *5.
It also found persuasive Charter Oak Fire Ins. Co. v. Hedeen & Cos., 280 F.3d 730, 736 (7th Cir. 2002), applying Wisconsin law. The court suggested that the use of the term “infringement of title” in this context was at minimum ambiguous. The court reached an equivalent result in analyzing the “misappropriation of advertising ideas” coverage. It concluded:
Lorillard’s Amended Complaint alleges that advertising and sale of falsely-labeled counterfeit cigarettes deprived Lorillard of sales, tarnished the Lorillard marks, and otherwise harmed Lorillard. In other words, the advertising itself was the wrongful and harmful conduct at issue in the underlying litigation.
Id. at *7.
It joined the chorus of authority characterizing the Advance Watch case as an anomaly, noting “Peterson Tractor Co. v. Travelers Indem. Co., 156 Fed. Appx. 21, 23 (9th Cir.2005) (district court correctly found that insurer had a duty to defend trademark infringement claim because ‘[t]his claim stated an advertising injury, either as a misappropriation of Peterson’s advertising ideas ... or as an infringement of title’) . . . .” Id. at *9.
The mere labeling of the cigarettes with the Newport mark was advertising, which need only involve actual, affirmative self-promotion of the actor’s goods or services. Erie Ins. Group v. Sear Corp., 102 F.3d 889, 894 (7th Cir. 1996). Id. at *9. The court reasoned:
Lorillard’s contention that Elston and the Dukums traded on Lorillard’s reputation, history, sales advantage, and goodwill, corresponds to the allegations found to describe an advertising injury in Native American Arts.
Id. at *11.
The court readily disposed of the first publication of knowledge of falsity exclusions because neither was implicated by liability to establish trademark infringement.
