Does Trademark Infringement (Alone) Trigger Advertising Injury Coverage?

To curtail the potential of insuring trademark and intellectual property battles, most CGL insurers clipped the bushy wording of Personal and Advertising Injury coverage, making it clear that coverage was triggered only when the infringement (copyright, trademark, trade dress) involved hijacking the concept for use in the insured’s own advertisements.  To bolster this limitation, most CGL insurers added an exclusion to make plain that claims arising out of copyright, patent, trademark, trade secret or other intellectual property rights were not covered.

But a fight in Federal Court in Texas challenges the limitations afforded by the revamped Advertising Injury wording and the relatively new Intellectual Property exclusion.

Baja Auto Insurance, Inc., a California company sued Shanze Enterprises, Inc., d/b/a Baja Auto Insurance, a Texas Company, claiming that Shanze has violated its registered trademark.  American Casualty refused to defend Shanze, contending:  (a) a trademark alone is not an advertising idea; (b) the IP exclusion barred coverage in any event; and, (c) the complaint did not charge the mark was used in “advertising.”  But Shanze contends that the complaint, fairly read, alleges that Shanze used “Baja Insurance” as a slogan to promote itself in the Hispanic community, and thus constituted a form of covered advertising injury.

This coverage battle must be watched carefully; a decision for Shanze will call into question the jurisprudence upholding the limitations in the current Advertising Injury wording and the parallel IP exclusion.

This case is Shanze Enterprises, Inc. v. American Casualty Company of Reading, Pa., case number 3:15-cv-00756, in the U.S. District Court for the Northern District of Texas.

For more information, please email Dennis Wade at .