Page 1 of 4 © Michael A. Shimokaji, 2015 The contents of this article represent the opinions of the author and not those of the author’s law firm or clients.

DOES YOUR INSURANCE COVER YOU FOR INFRINGEMENT OF TRADEMARK AND SLOGANS?

The number of trademarks and slogans is staggering and ever growing.

For those unfamiliar (and familiar) with trademark law, the selection of a new

trademark or slogan often starts with looking at competitors’ trademarks or

slogans for a “new” idea. That can be a deadly first step to receiving a cease

and desist letter. Worse yet, it can lead to a lawsuit for infringement.

Your commercial general liability (CGL) insurance policy may provide

coverage for the cease and desist letter or lawsuit. Or maybe not.

Whether your CGL policy covers you for claims of trademark

infringement or slogan infringement - or whether you, as an insurance carrier,

are obligated to provide coverage - will depend on the particular policy

language in your policy. There can be a lot of “standard” language used in

policies from different insurance carriers. However, there can also be subtle

differences, even in policies from the same insurance carrier, over time.

One area of the policy in which coverage might exist is in the definition

of an “advertising injury”. However, care should be taken to understand what

exceptions likely exist for advertising injury coverage.

Michael Shimokaji www.shimokaji.com

949-788-9968

Page 2 of 4 © Michael A. Shimokaji, 2015 The contents of this article represent the opinions of the author and not those of the author’s law firm or clients.

The following case decisions illustrate what can be important to

determine the existence of insurance coverage.

In North Coast v. Hartford, the policy defined advertising injury as

“[i]nfringement of copyright, slogan, or title of any literary or artistic work in

your ‘advertisement.’” However, an Intellectual Property Exclusion excluded

coverage for “infringement or violation of any intellectual property right, such

as . . . trademark, trade name . . . [or] service mark. . . .” But the policy also

said the “exclusion does not apply if the only allegation in the claim or suit

involving any intellectual property right is limited to . . . infringement, in your

‘advertisement’ of ‘slogan’”.

The underlying lawsuit was for trademark infringement, false

designation of origin, unfair competition and consumer fraud. The name at

issue was “THERA-PUTTY”.

The insurance coverage lawsuit centered on whether the underlying

lawsuit was for infringement of a trademark or infringement of a slogan. The

court explained that, in California, a slogan is a “brief attention getting phrase

used in advertising or promotion or a phrase used repeatedly, as in

promotion.” Further, “the infringing use of a trademark this is merely a word

in a phrase used as a slogan is not the same as the infringing use of a slogan.”

The court found that “THERA-PUTTY” was a “single word” and thus not a

slogan. Not being a slogan, the court found that the Intellectual Property

Exclusion applied; thus no coverage.

In another California case, actress Reese Witherspoon initiated an

underlying lawsuit against Marketing Advantage for using her name and

image in advertisements. Her claims were for violation of right of privacy,

trademark/trade name infringement, trade dress infringement, and slogan

Page 3 of 4 © Michael A. Shimokaji, 2015 The contents of this article represent the opinions of the author and not those of the author’s law firm or clients.

infringement. The insurance carrier for Marketing Advantage initiated the

coverage lawsuit in Maryland Casualty v. Witherspoon.

An Intellectual Property Exclusion excluded coverage for advertising

injury arising from the “infringement of copyright, patent, trademark, trade

secret or other intellectual property rights.” However, the exclusion did not

apply to “infringement, in your ‘advertisement’ of copyright, trade dress, or

slogan.”

The court pointed out that the underlying lawsuit was for trade dress

and slogan infringement – at least arguably within the language of what is

covered. However, the court found that the issue of coverage would require it

to decide whether the underlying lawsuit asserted damages that are potentially

covered under the insurance policy. Therefore, the court determined that it

should not decide the coverage issue because doing so “entangles” the court

with the underlying state court lawsuit.

In a trade dress context, the policy in West Trend v. AMCO contained

an Intellectual Property Exclusion that excluded coverage for injury arising

from the “infringement of copyright, patent, trademark, trade secret or other

intellectual property rights.” However, the exclusion did not apply to

“infringement in [the] advertisement of copyright, trade dress or slogan.”

The policy also included a Printers Errors and Omissions Liability

endorsement that excluded coverage for “infringement of copyright,

trademark, service mark or trade name (other than titles or slogans).”

The court explained that in California infringement in an advertisement

is determined by a two-part test. One, the promotion of the product or service

must be an “advertisement”. Two, the advertisement must have caused the

advertising injury.

Page 4 of 4 © Michael A. Shimokaji, 2015 The contents of this article represent the opinions of the author and not those of the author’s law firm or clients.

Using the above test, the court found that the underlying lawsuit alleged

advertising by reference to allegations of “marketing and advertising” and

“market its goods.” The prayer for relief in the underlying complaint also

sought an injunction for “advertising.” The court rejected AMCO’s argument

that the advertising merely exposed the infringing conduct and did not cause

it.

Finally, the court found that coverage existed because the underlying

lawsuit alleged facts that could support a claim for trade dress infringement.

COMMENT:

Allegations and claims based on the improper use of a “name” can

potentially raise issues of trademark infringement, trade name infringement,

slogan infringement, product disparagement, and others. While identical

and/or similar language exists in CGL policies that may provide coverage or

may exclude coverage, one should not assume that all policies have the same

coverage result.