I think one of the most complex questions I could be asked by a client is whether its potential trademark litigation was covered under the Advertising Injury clause of its commercial general liability policy. The problem is that, for reasons unknown to me, these policies continue to define the scope of ‘advertising injury’ and exclusions from such coverage, in standard language using terms foreign to the Lanham Act. The resulting ambiguity allows the insurance companies to put forward an interpretation of advertising injury coverage which reminds me of the Monty Python skit where Mr. Devious tells the Vicar: “It states quite clearly that no claim you make will be paid.”
Hyman v. Nationwide, a recent Eleventh Circuit opinion, is now the first case to read when tackling the advertising injury question. The insured had been found liable for trade dress infringement. It sought indemnity under its standard CGL policy which covered advertising injury, defined as injury arising out of, among other things, misappropriation of advertising ideas or style of doing business. The circuit court does a nice artistic job of holding that that trade dress infringement is sort of like the misappropriation of advertising ideas or style of doing business. I like it when policy holders who pay premiums for years and years, get covered.
However, instead of circuit court judges saying that advertising ideas are somehow protectable when one of the first thing you taught to chant in copyright class is that ideas are not protectable, I would rather have clearer policies. It is not fun advising your client that your estimate of its litigation expenses may be off by a couple of hundred thousand because you can’t advise with certainty whether insurance will cover. It’s too late at that point to suggest trademark infringement insurance.
Before you accuse of a hidden agenda in encouraging trademark litigation insurance, you should know that the one time a client of mine was sued and had appropriate coverage, the insurance company took over the case and sent it to an “approved provider,” who, in my professional opinion, was not so great.