Weekly IP Takeaways

Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.

1. In an insurance coverage decision related to intellectual property by the appellate division of the Superior Court of New Jersey, the Court affirmed the finding of a duty to defend under the advertising injury provision of a policy where the covered claim was for copyright infringement related to software made for car dealerships. The Court also affirmed the lower court’s finding that no exclusions applied. Under the language of the policy, the Court noted that the insured had established a sufficient nexus between the alleged infringement and advertising injury. Thus, the finding of coverage was affirmed.

2. In another insurance coverage decision related to intellectual property from the Superior Court of Delaware a letter opinion addressed the parties’ cross-motions on whether or not there was a duty to defend under the advertising injury provision of the applicable insurance policy. The underlying case was a patent infringement and false advertising case. The patent infringement claim was expressly uncovered. The insurance carrier denied coverage, asserting the absence of coverage, as well as the applicability of two exclusions. The Court concluded that the allegations of the complaint included activities that fell within the disparagement provision of the advertising injury coverage, and further determined that the two exclusions relied upon by the insurance carrier were not met. Thus, the Court believed coverage existed.

3. In still another insurance coverage decision related to an underlying IP case from the Northern District of Illinois, the underlying case included allegations of trademark infringement and defamation against the insured. In the coverage action, the insurer moved for summary judgment that it did not have a duty to defend or indemnify the trademark or defamation claims. The Court upheld the duty to defend finding that the defamation claim was covered, and were not subject to the prior publication exclusion. While the Court also found that there were allegations of trade dress infringement as part of the trademark claim, and that the trade dress allegations were within the scope of coverage it found that the trade dress infringement injuries were barred from coverage by the prior publication exclusion. Even so, a single covered claim requires a defense for the entire case. The takeaway here is that insurance coverage for even a single claim can result in a defense of an entire action for the insured, which is valuable.

4. The upshot of the previous Takeaways on insurance coverage is that companies in IP-intensive fields, particularly trademarks and copyrights, need to take a serious look at their commercial general liability policies, and the advertising injury coverage (and related exclusions) therein. While commercial policies serve many purposes, in my experience, companies that need robust advertising injury coverage do not always have it, or their coverage is subject to exclusions that swallow up the coverage. At times, this may be because there has not been a discussion with one’s insurance broker about this specific issue. While have stronger advertising injury coverage would cost more, it may be worth it for some companies, and that is a discussion worth having with one’s insurance broker, and perhaps knowledgeable IP/insurance coverage counsel, as well.

5. With that, IP Takeaways is signing off until early 2021. We hope that our Takeaways have been helpful to you all, and we plan to continue them going forward. 2020 has obviously been a very challenging year for most, if not all, of us. We hope that we all can be purposeful about seeing positives and “silver lining” from 2020 as well. Happy Holidays! Be well, and thank you.