Do You Have Coverage?
You've been sued for infringement. Or, you've sued and discovered that the defendant has no money. Either way, the labyrinthine world of insurance coverage awaits you. Unfortunately, courts are far from unanimous about coverage for many intellectual property claims, but there are some general principles.
Under a standard Commercial General Liability ("CGL") policy, "advertising injury" coverage is most frequently implicated by a business tort or IP claim. It is "injury arising out of one or more of the following offenses: (a) oral or written publication of material that slanders or libels a person or organization's goods, products, or services; (b) oral or written publication of material that violates a person's right of privacy; (c) misappropriation of advertising ideas or styles of doing business; or (d) infringement of copyright, title or slogan."
While copyright claims are expressly covered by the definition, coverage for other intellectual property claimsótrademark, trade dress, patentóis left to interpretation of the pleadings, arguments about the nature of the claim, and state law. The dialogue seems to center on a few points. The injury must "arise out of" the "advertising." Most courts hold that it is not enough that an injury occurred and that advertising was involved. As one court said, "there must be a nexus between the ground of asserted liability and the insured's advertising activities." A more significant area of dialogue concerns efforts to fit the claim under the policy definition's use of words...
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