Academic journal article Defense Counsel Journal

Why Neither Side Has Won Yet: Recent Trends in Advertising Injury Coverage

Academic journal article Defense Counsel Journal

Why Neither Side Has Won Yet: Recent Trends in Advertising Injury Coverage

Article excerpt

Insureds have won trademark cases, but in other intellectual property cases, the results have been less clear cut

BY NOW, the phrase "information superhighway" has become a cliche. Yet, no one can dispute that we live in an age of high technology in which ideas have both power and value. Because they have value, people will sue over who owns them. Lawsuits, in turn, cost money to defend, and if the defense doesn't succeed, require more money to pay the judgment. When litigation and money come together, you soon have a demand, if not a desperate hunt, for insurance.

That search turns to advertising injury coverage, which most general liability policies (or CGLs) now provide. Insurers and insureds disagree over the scope of this coverage, and coverage litigation is the inevitable result. Recent advertising injury cases have produced conflicting results. Counsel for policyholders see a proinsured trend in the case law:(1) counsel for insurers believe the trend favors the insurance industry.(2)

The truth lies between the two extremes. Cases dealing with trademark and trade secrets issues have favored coverage. Once beyond these two areas, however, courts have sided with insurers. Two themes emerge from these conflicting trends. First. when the liability action arises from a dispute between competitors, judges were inclined to find coverage. Insureds who sought coverage for liability claims brought by consumers had no luck. Second, if the insured can show a strong causal connection between its advertising and injury to the plaintiff, it has a far greater chance of obtaining coverage.

TRADEMARK AND TRADE SECRETS CASES

A. An Overview

Insureds attempt to invoke coverage for intellectual property claims by looking to the "advertising injury" protection of their CGL policies. These policies typically were based on forms developed by the Insurance Services Office (ISO).(3) The latest version is the 1986 edition of the CGL, which provides that the carrier

will pay those sums that the insured becomes

legally obligated to pay as damages because of

"personal injury" or "advertising injury " to which

this coverage part applies.

...

The action of the trial court, the brief argues, deprived the defendants of the due process protections to which they were entitled under both the Alabama and federal constitutions, and it also violated Alabama Rule of Civil Procedure 23, which has been held by the Alabama Supreme Court to require that classes may be certified only after the plaintiffs come forward with evidence sufficient to satisfy the requirements of Rule 23.

Others Joining the amicus brief are the Chamber of Commerce of the United States of America, the National Association of Manufacturers, and Lawyers for Civil Justice, as well as several corporations. The brief was filed by Howrey & Simon of Washington, D.C.

U.S. Postal Service Statement of Ownership, Management and Circulation

1. Publication title: Defense Counsel Journal. 2. Publication number: 0895-0016. 3. Filing date: Oct. 1, 1997. 4. Issue frequency: Quarterly (January. April, July. October). 5. Number of issues published annually: four. 6. Annual subscription rate: $55.00. 7. Complete mailing address: Suite 2400, One North Franklin, Chicago, IL 60606. Contact person: Richard B. Allen. Telephone 312/368-1494. 8. Complete mailing address of headquarters or general business office of publisher (not printer): Same as above.

9. Publisher: International Association of Defense Counsel, Suite 2400, One North Franklin, Chicago, IL 60606. Editor: Richard L. Neumeier, 73 Tremont St., Boston. MA 02108. Managing Editor: Richard B. Allen, Suite 2400, One North Franklin. Chicago, IL 60606.

10. Owner: International Association of Defense Counsel, Suite 2400, One North Franklin, Chicago, IL 60606. 11. Known bondholders: None. …

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