When Do CGL Policies Cover Trademark Infringement Claims?

When Do CGL Policies Cover Trademark Infringement Claims?

02.09.2015

“Never” might be the answer of some insurers.  After all, CGL personal and advertising injury liability coverage forms now commonly have an exclusion from the 2001 ISO form for “Infringement Of Copyright, Patent, Trademark or Trade Secret” that bars coverage for:  “Personal and advertising injury arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. . . .”  (Emphasis added.)

For many years, the ISO coverage forms have tried to narrow, if not eliminate, coverage for trademark claims, and the forms have never specifically covered trademark infringement in advertising activities as such.  The dispute has been over whether a trademark infringement claim could be deemed to trigger coverage for some other offense, such as the “misappropriation of advertising ideas.”

Now, however, the explicit exclusion of coverage for trademark infringement claims might seem to answer the question.  That arguably is true despite the exception to the exclusion for “infringement in your ‘advertisement,’ of copyright, trade dress or slogan.”  Unlike copyright infringement, which (oddly enough) is both excluded and then excepted from the exclusion, there is no “reinstatement” of coverage for trademark infringement per se.

But what if the trademark in issue is a slogan?  The insurer response would be that “a trademark is a trademark” and trademark infringement is specifically excluded from coverage.  Insureds are sued for trademark infringement, not slogan infringement.  If coverage were intended for trademark infringement, it certainly would not be excluded and then picked up in the guise of another name.  However, the courts so far have not accepted that argument.  Instead, in many cases, the courts, insureds and insurers have been left to grapple with the question of whether a particular trademark can be considered a “slogan.”

A slogan certainly can be a trademark, but not all trademarks are slogans.  The policy forms do not define “slogan” (strike one against the insurers), and that leaves the courts to supply the definition and consider whether the term is ambiguous.  This must also be considered in connection with the insured’s advertising activities, not simply the infringement of a trademark.  Again, there is no trademark infringement coverage as such in the CGL policy. 

The California Supreme Court’s definition of “slogan” in this context is often cited.  In Palmer v. Truck Ins. Exchange, 21 Cal.4th 1109 (1999), the Court looked to dictionaries to define slogan as “a brief attention-getting phrase used in advertising or promotion.”  The Court also noted that there may be cases in which the name of a business, product or service, by itself, may be used as a slogan.  That seems at odds with the emphasis of a slogan as a phrase.  Indeed, a New Jersey Court subsequently noted the “conundrum” the Palmer court created by finding potential coverage for the infringement of “trade name titles and slogans.”  Villa Enterprises Management, Ltd. v. Federal Ins. Co., 360 N.J.Super. 166, 184, fn. 10 (2002).  Actually, the conundrum here is the result of the confusion the ISO created by not specifically addressing when, if ever, trademark infringement actually is covered.

Using the Palmer definition, the Ninth Circuit held in Hudson Ins. Co. v. Colony Ins. Co., 624 F.3d 1264 (9th Cir. 2010) that the words “Steel Curtain,” in reference to the Pittsburg Steelers, could be deemed a slogan.  By contrast, the same Court recently held in Street Surfing, LLC v. Great American E&S Ins. Co., 752 F.3d 852 (9th 2014) that the use of the term “Streetsurfer” in advertisement did not constitute slogan infringement.  The Court ruled that “Streetsurfer” could be used as a slogan, but the Court found there was no evidence that insured actually did that.  The Court cited another case in which the Eighth Circuit held that it was conceivable that “Nature’s Own” could serve as a slogan, but there was no evidence it actually was used as such.  Interstate Bakeries Corp. v. One Beacon, Inc., Co., 686 F.3d 539 (8th Cir. 2012).

In determining whether trademark is a slogan, other courts have concluded that a slogan must be different from the company name or a product name.  For example, in Hugo Boss Fashion, Inc. v. Federal Ins. Co., 252 F.3d 608 (2d Cir. 2001), the Court held that “BOSS” was not a slogan.  That is also the lesson of James River Ins. Co. v. Bodywell Nutrition, LLC, 847 F.Supp. 1351 (S.D. Fla. 2012), in which the Court held that allegations involving trademarked terms such as “TIGHT,” “TIGHT!  HARDCORE” and “TIGHT EXTREME” did not “explicitly or implicitly” involve slogan infringement.  The Court cited the law that a slogan involves a combination of words that remind the consumer of the brand, not simply a reference to the brand itself.

Could a single word ever constitute a slogan?  The Palmer ruling would appear to leave open that possibility, but it seems unlikely that could ever actually be the case, at least not without some catchy punctuation, such as a question mark or exclamation point.  Rather, the touchstone for determining whether a trademark may constitute a slogan seems to be whether the trademark in question involves a catchphrase designed to cause the consumer to remember the product.

This confusion involving the sub silencio coverage for trademark infringement claims is likely to continue until the insurance forms change.  Meanwhile, in reviewing this advertising injury coverage question and deciding whether a trademark is a slogan, remember that you can “have it your way”TM because “life’s good”TM and “quality never goes out of style.”TM  “Just do it.”TM[1]

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 [1]  These are trademarks of Burger King, LG, Levi’s and Nike, respectively.

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