Published by LawTechie - November 29, 2010 - LawTechie

The Eastern District of New York denied summary judgment to an insurance company which had attempted to evade its duty to defend by claiming that the policy’s defense/indemnification clause did not include trademark infringement. CGS Industries, Inc. v. The Charter Oak Fire Insurance Company, 10-CV-3186 (EDNY November 16, 2010).

The plaintiff insured party was sued by a third-party trademark owner on a slew of Federal and common law trademark infringement claims arising out of plaintiff’s use of the third-party’s intellectual property in advertising material. Plaintiff’s insurance contract with defendant insurer provided, among other things, that defendant would defend and/or indemnify plaintiff from IP claims arising out of plaintiff’s advertising work.

Once plaintiff got sued and filed its insurance claim to help pay for defense in the infringement litigation, defendant refused to provide coverage on the basis that the policy provided for infringement of “slogan” or “title,” which does not include trademark infringement. Defendant argued that “title” was meant to encompass visual and artistic works rather than trademarks. The Court did what any court would do: it read through the contract for a definition of the word “title.” Finding no specific definition in the contract, the Court ruled that “title” would be interpreted by its common usage in the English language, citing Black’s Law Dictionary: “A mark, style or designation; a distinctive appellation; the name by which anything is known.” Thus “title” could have meant trademark and, therefore, the duty to defend must be honored.

While it is impossible to tell whether plaintiff would have ever bought coverage that specifically disclaimed trademark infringement, this case, nevertheless, illustrates the importance of specifically defining all contract terms.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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