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January 23, 2014
Insurance Coverage for “Advertising Injury” Liability

Designers, advertisers, and other creatives, as well as their clients need to think about potential trademark infringement liability each time a new tagline or logo is created and used to market goods or services. Potential liability is generally addressed by conducting trademark searches before launching the new mark in the public domain. But what if the company hired to create a new logo fails to do a thorough search, or confirm the artistic originality of a subcontractor? Some insurers answer with products which are designed to provide protection against the liability that can follow. Because infringement lawsuits can cost thousands in attorneys’ fees and take months to resolve, it is worth your time to closely review your insurance policy.

Trademark infringement liability is known broadly in the insurance industry as a kind of “advertising injury.” These “injuries,” along with other intellectual property liability, have been confusingly and variously defined as arising out of the use of another’s “advertising idea in your advertisement,” infringing upon another’s “copyright, trade dress or slogan in your advertisement,” and the “infringement of copyright, title or slogan.” If you are a creative company or a company with a significant brand portfolio, which includes companies from ad agencies to design firms to consumer brand companies, reviewing your insurance coverage is essential.

Minnesota law dictates that insurance policies should be read in favor of finding coverage and requires courts to look past the legalese contained in the policy or endorsement. [1] However, it is not always clear whether coverage exists under common insurance policy language, because “trademark infringement” is typically not included in the definition of an advertising injury. Instead, coverage may only exist if the injury falls within infringement of a “copyright, title, or slogan.”

In 2009 the Minnesota Supreme Court [2] issued a decision disagreeing with a federal court’s [3] earlier interpretation of insurance contract provisions similar to the above definitions of “advertising injury.” Unlike the prior court decision, the Minnesota court compared the definitions of “title” and “trademark” and found that they have several overlaps in terminology. [4] In addition, the Minnesota Supreme Court determined that the prior court’s reliance on another non-Minnesota court’s decision was misplaced, and in reviewing the decisions of other courts, determined that the decisions of the other non-Minnesota court take the minority position. [5] As a result, the Minnesota Supreme Court found that an insurance policy or endorsement that provides protection against infringement of “title,” now likely protects against trademark infringement actions.

To determine whether your policy provides this kind of protection, and to get other advice about your insurance coverage and intellectual property, please contact Barb Ross (612-341-9722) or David Schelzel (612-341-9719) of the Intellectual Property Group at Best & Flanagan.

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[1] General Casualty Company of Wisconsin v. Wozniak Travel, Inc., 762 N.W.2d 572 (Minn. 2009) (discussing infringement of a name mark, but citing to case law in which infringement of a logo mark follow the reasoning discussed in this case).

[2] Id.

[3] Callas Enters., Inc. v. Travelers Indem. Co., 193 F.3d 952 (8th Cir. 1999).

[4] Id. at 577; see also 750 N.W.2d 817 (Wis. 2008) (finding that the majority of decisions from other courts that have “construed the advertising injury definitions in CGL policies to include trademark infringement”).

[5] Id. (analyzing Callas Enterprises, Inc. v. Travelers Indemnity Company of America, 193 F.3d 952 (8th Cir. 1999)). Other courts analyzing the non-Minnesota court decision relied upon by Callas Enters., Inc. v. Travelers Indem. Co. have found that it is “stand[ing] literally alone in a sea of case law.” Amco Ins. Co. v. Lauren Spencer, Inc., 500 F. Supp. 2d 721, 750 (S.D. Ohio 2007).

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