Friday, February 04, 2005

11th Circuit Certifies "Advertising Injury" Insurance Issue in Lanham Act Case to Florida Supreme Court

Most trademark litigators know that, where possible, a plaintiff should plead that the alleged infringer's acts were willful and intentional. It helps in the likelihood of confusion inquiry and any secondary meaning debate, and, in most circuits, it also triggers the plaintiff's ability to seek "big gun" relief, such as treble damages, attorneys' fees, and disgorgement of the infringer's profits.

And if you've defended such cases in situations where there may be insurance coverage for "advertising injury," you might have heard the insurer squawk about how the allegation of intentional or willful infringement triggered a common exclusion in such policies for intentional acts.

The issue of whether an insurance policy covers the particular claims is an issue of state law, and federal courts usually put on their Erie hats and decide them. In Vector Products, Inc. v. Hartford Fire Insurance Co., No. 04-10975 (Jan. 26, 2005), however, the allegation of willful conduct complicated things. One of Vector's competitors claimed that Vector was engaged in false advertising, and brought a Lanham Act claim against it. Probably to try to qualify for additional remedies, the competitor claimed that Vector's acts were intentional. The insurer then refused to defend because of that allegation. Realizing that allegations of willfulness might trigger the exclusion against the insurer's duty to defend, yet wasn't required for Lanham Act liability, the 11th Circuit thought the issue of coverage was sufficiently subtle and unsettled under Florida law to require a punt to the Florida Supreme Court.

Insurers and trademark litigators will be watching the runback on this one.

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