Prior Publication Exclusion Bars Coverage For Trademark Infringement Action Because The Insured Published The Advertisement Before Policy Incepted
Street Surfing, LLC v. Great Am. E&S Ins. Co., 752 F.3d 853 (9th Cir. 2014)
In Street Surfing, the Ninth Circuit, applying California law, affirmed the district court’s grant of summary judgment in favor of the general liability insurer on the basis that a prior publication exclusion eliminated coverage for an underlying trademark infringement action. The Court found that, although it was unclear from the underlying complaint whether the insured’s alleged wrongful conduct occurred before the policy incepted, extrinsic evidence established that the alleged advertising injury occurred before coverage began.
In June 2008, the claimant, who owned the trademark “Streetsurfer,” sued the insured, claiming trademark infringement, unfair competition and unfair trade practices under federal and California law. The insured had known that the third-party claimant owned the “Streetsurfer” trademark since early 2005, and had unsuccessfully attempted to purchase the trademark around that time.
The insured tendered the underlying action to its general liability carrier, which issued the insured policies with policy periods beginning in August 2005. The policies covered, among other things, personal and advertising injury liability. That coverage was limited by several exclusions, including a prior publication exclusion, which barred coverage for “‘[p]ersonal and advertising injury’ arising out of oral or written publication of material whose first publication took place before the beginning of the policy period.” The insurer subsequently denied coverage for the underlying action on several grounds, including the prior publication exclusion. Thereafter, the insured settled the underlying action and sued the insurer, seeking a declaration that the insurer was obligated to defend it in the underlying action and pay for the settlement of that action.
In considering the parties’ cross-motions for summary judgment, the district court concluded that the prior publication exclusion relieved the carrier of any duty to defend or indemnify the insured. The insured appealed.
On appeal, the Ninth Circuit held that the district court correctly concluded that the prior publication exclusion applied. The court explained that, in the context of advertising injury coverage, an allegedly wrongful advertisement published before the coverage period triggers application of the prior publication exclusion. The court further explained that when this threshold showing is made, the exclusion bars coverage of injuries arising out of republication of that advertisement, or any substantially similar advertising, during the policy period, because such later publications are part of a single, continuing wrong that began before the insurance policy went into effect. While the court found that the underlying complaint itself did not establish that the insured used the claimant’s trademark in advertisements that were published before coverage began in August 2005, before the policies were issued the insured certified in its insurance application that “[a]ll products display the Street Surfing Logo[.]” The court held that such displays qualified as advertisements. The court held that because the logo advertisement predating coverage used the term “Street Surfing,” which the underlying complaint alleged was a wrongful use of the claimant’s advertising idea, the prior publication exclusion applied to any injuries arising from affixing the logo on the insured’s product during the coverage period. Accordingly, the Ninth Circuit concluded that the prior publication exclusion relieved the insurer of its duty to defend and, as such, affirmed the district court’s grant of summary judgment in favor of the insurer.
© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result.