|Infringement of Product Design Is Not Advertising Injury Covered by Policy|
|Description||Appeals court held that an insurer had no obligation to indemnify a company sued for product infringement. The policy covered misappropriation suits that arose from advertising; the sale of a product that violates a patent is not an advertising injury.|
|Key Words||General Commercial Liability; Advertising; Indemnity; Infringement|
|C A S E S U M M A R Y|
|Facts||EKCO markets kitchen products, including metal tea kettles. It was sued by Chantal, a cookware company, which claimed that a particular tea kettle EKCO sold was a copy of Chantal's tea kettle that was protected by a design patent. Chantel claimed trade dress infringement and unfair competition in violation of the Lanham Act.. EKCO had a general commercial liability (GCL) policy with Travelers. EKCO contended that Travelers was obligated to defend and indemnify EKCO because a clause in the policy stated that it covered claims based upon "advertising injury caused by an offense committed in the course of advertising your goods, products or services." Travelers refused to defend, so EKCO sued. The trial court held that the suit was caused by advertising injury, so Travelers was responsible. Travelers appealed.|
Reversed. The advertising injury provision is unclear. The law favors the insured where a policy is ambiguous. However, in this case, a reasonable reading favors the insurer. The policy states that there is coverage if 1) there is injury "arising out of" a defined offense and 2) the offense "must be committed in the course of advertising your goods." The defined injury pointed to by EKCO in the policy is "misappropriation of advertising ideas or style of doing business." This does not cover infringement of a design patent; that is not common law misappropriation but a violation of a statute. It is not reasonable to believe that the policy covered all misappropriations of patents, copyrights and trademarks. Further, selling a tea kettle is not "advertising," even if there is advertising in the process of selling the product.
|Citation||EKCO Group, Inc. v. Travelers Indemnity Company of Illinois, 273 F.3d 409 (1st Cir., 2001)|
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