|Insurer Must Defend Misuse of Trademark on Company Website|
|Description||Appeals court held that misuse of a famous trademark on a website would constitute an “advertising injury.” Hence, the liability insurer of the company that misused the trademark must defend the suit brought by the trademark owner for misappropriation.|
|Key Words||Advertising Injury; Website; Misappropriation; Coverage|
|C A S E S U M M A R Y|
|Facts||Nissan Computer Corp. (NCC) was sued by Nissan, the car company, for wrongful use of the Nissan trademark by registering the domain name, www.nissan.com, which resulted in NCC receiving up to 200,000 website hits per month. NCC sold advertising space on its website to automobile merchandising companies using a logo that closely resembled the Nissan logo. Initially, NCC was insured by State Auto; later it was insured by Travelers. The policy covered “advertising injury caused by an offense committed in the course of advertising [NCC’s] goods … or services.” This included “misappropriation of advertising ideas or style of doing business.” Travelers refused to defend NCC, but State Auto agreed to defend NCC. State Auto then sued Travelers, seeking a declaration that Travelers is obligated to participate in the defense. The trial court held for Travelers. State Auto appealed.|
Vacated and remanded. When terms in an insurance policy are not clearly defined, the court will define the term in a manner consistent with the context in which it is used and the meaning accorded it in ordinary speech. The injuries alleged by Nissan from the wrongful use of its trademark by NCC constitute an “advertising injury” within the meaning of the liability policy.
|Citation||State Auto Property & Casualty v. Travelers Indemnity Co. of Am., 343 F.3d 249 (4th Cir., 2003)|
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