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Unlicensed Use of Product Trademarks is not Personal and Advertising Injury

August 10, 2017

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The Fifth Circuit recently ruled that the duty to defend “personal and advertising injury” did not extend to the unlicensed use of a product and trademarks.
In <a href="http://blog.wcmlaw.com/wp-content/uploads/2017/08/Laney-Chiropractic-v.-Nationwide.pdf">Laney Chiropractic v. Nationwide</a><em>,</em> Laney sued its insurer for a declaration of coverage after Nationwide refused to defend Laney against allegations of federal trademark infringement, false advertising, deceptive business practice, breach of contract and unfair competition arising out of Laney’s use of soft tissue massage techniques.  Nationwide had determined that the lawsuit lacked an advertising, trade dress or slogan claim and refused to cover the defense.
The Fifth Circuit reached its conclusion by reasoning that “[w]hen an insured is accused of using another’s product, they are generally not using another’s ‘advertising idea … because without more, taking and then advertising another’s product is different from taking another’s ‘advertising idea’. The court also did not accept that the false-advertising allegation that Laney’s website mimicked underlying plaintiff’s style of doing business constituted a trade dress claim. The court said trade dress protection is not designed for “patent-like rights” in innovative product designs, and “protects the distinctive look of the product, not the functional product itself.”
As creative an insured can be in seeking coverage, the underlying claim governs an insurer’s duty to defend.
Thanks to Hillary Ladov for her contribution to this post.

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