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Third Circuit Finds Broad Duty To Defend In Trademark Suit (PA)

January 14, 2022

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<p style="text-align: justify;">In <em><a href="">Vitamin Energy, LLC v. Evanston Insurance Company</a></em>, the United States Court of Appeals for The Third Circuit held the defendant insurer had a duty to defend its insured from a trademark suit. It broadly interpreted Pennsylvania law in favor of insureds.</p>
<p style="text-align: justify;">The case stemmed from an underlying lawsuit filed by 5-hour Energy against Vitamin Energy for trademark infringement, among other claims. In addition to other wrongs allegedly committed by Vitamin Energy, 5-hour asserted that Vitamin Energy committed false and misleading advertising about the benefits of 5-hour’s products.</p>
<p style="text-align: justify;">Vitamin Energy sought defense in the suit from its insurer, Evanston. However, Evanston did not provide a defense, claiming that there was no coverage based on an exclusion. Specifically, Evanston argued that the “incorrect description” exclusion barred coverage for any claim arising out of an incorrect description of a product. The court disagreed with Evanston. The court reasoned that an insured’s burden to establish a duty to defend is light, and that Vitamin Energy had carried it. Read liberally in favor of coverage—as is required under Pennsylvania law—there was at least a possibility that the exclusion did not apply to every element of the case. Therefore, Evanston had a duty to defend. Vitamin Energy argued that the policy exclusion Evanston relied on only pertained to incorrect descriptions of its own products—not competitors’ products. The Court found this sufficient to conclude Evanston had a duty to defend.</p>
<p style="text-align: justify;">Thanks to John Lang for his contribution to this post.  Should you have any questions, please feel free to contact <a href="">Thomas Bracken</a>.</p>


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