Question from an IIABNY member: I was speaking with someone in our office this morning regarding a personal and advertising claim and how it would apply; more of a conceptual meaning I suppose. I insure several beverage manufacturers and am curious to understand how their possible infringement on someone else's trademark, for example, the use of someone else's product name in their own, would apply to personal and advertising injury coverage in the CG 00 01 policy form. All of them are very small and are not aware of how some of their decisions could impact their business.
Any specific or conceptual examples is appreciated.
Answer: The coverage for trademark infringement in the ISO Commercial General Liability Coverage Form is quite limited. Exclusion i in Coverage B states:
This insurance does not apply to:…
i. Infringement Of Copyright, Patent, Trademark Or Trade Secret
"Personal and advertising injury" arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your "advertisement".
However, this exclusion does not apply to infringement, in your "advertisement", of copyright, trade dress or slogan.
Therefore, the form excludes coverage for injuries arising out of trademark infringement, but it gives coverage back for infringement of copyright, trade dress or slogan in the insured’s advertisement. Further, the form has a very specific definition of “advertisement”:
"Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters.
For the purposes of this definition:
a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and
b. Regarding web-sites, only that part of a web-site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.
Under this definition, an advertisement is a specific “notice” published in print or electronic form about the insured’s goods, products or services with the purpose of attracting customers (or supporters, if the insured is non-profit organization.) Some claim examples:
- One of your beverage manufacturers launches a new product that they call “Coca-Lola” (Lola is the name of the CEO’s daughter.) Another beverage manufacturer based in Atlanta, Georgia sues your manufacturer for infringement. I do not believe the CGL will cover this loss. It covers infringement only if it happens in the insured’s advertisement. Here, the insured borrowed liberally from another brand name; that does not appear to fall within the definition of “advertisement.”
- Another manufacturer launches an ad campaign for its new lemonade. The ads, which run in magazines and on the Web, portray a caveman and a lizard sitting at a café table and clinking glasses. This ad attracts the attention of consumers and of the lawyers for an Insurance-Company-Who-Must-Not-Be-Named. The CGL should provide defense and indemnification for this loss because Exclusion i gives coverage back for infringement that happens in an ad, which is a “a notice that is…published to the general public…about your…products…for the purpose of attracting customers or supporters.”