Ninth Circuit Upholds Prior Publication Exclusion To Bar Coverage for Trademark Infringement Action

In Street Surfing, LLC v. AG MLG Great American E&S Insurance Co. (9th Cir. June 10, 2014), the Ninth Circuit, applying California law, held that the policy’s prior publication exclusion barred coverage for the underlying trademark infringement action.  The court concluded that the extrinsic evidence confirmed that Street Surfing published at least one advertisement using the claimant’s advertising idea, i.e., by affixing an allegedly infringing logo to its skateboard product, prior to the inception of the first Great American policy at issue. As background, Noll, the owner of the trademark, “STREETSURFER,” had sued Street Surfing, LLC, claiming, under California and federal law, trademark infringement, unfair competition, and unfair trade practices.  Street Surfing settled with Noll and sued Great American, which had disclaimed coverage. In evaluating the prior publication exclusion, the court held that any of the subject advertisements that were published during the policy period were “substantially similar to [Street Surfing’s] pre-coverage affixation of its logo to the [skateboard product].”  The court, relying on Kim Seng Co. v. Great American Insurance Co., 101 Cal. Rptr. 3d 537 (Ct. App. 2009), reasoned that the advertisements during the policy period were based on the same alleged wrong as the advertisements prior to the policy period.  The court found persuasive that the underlying complaint failed to allege that the advertisements during the policy period were torts separate and distinct from the torts committed prior to the policy period.  The court concluded, “if Street Surfing’s post-coverage publications were wrongful, that would be so for the same reason its pre-coverage advertisement was allegedly wrongful:  they used Noll’s advertising idea in an advertisement.” The court found immaterial that some of the subject advertisements used the term, “Street Surfing,” and other used the term, “Street Surfer”—they both were a subordinate version of Noll’s “Streetsurfer” mark/advertising idea.  The court also rejected Street Surfing’s argument that there fresh wrongs because the advertising idea was used during the policy period to advertise different products from those advertised prior to the policy period.  Notably, the court did not evaluate Great American’s intellectual property exclusion, which should have precluded coverage, as well. The Ninth Circuit correctly afforded the prior publication exclusion a broad construction in the context of this intellectual property dispute, reinforcing the utility of this exclusion with respect to claims based on improper product advertisements.  Accordingly, insurers should cite this case liberally as a limitation on “personal and advertising injury” coverage, with extra scrutiny afforded to the following categories of claims that are particularly susceptible to the exclusion:  (1) those that satisfy the advertising idea offense, (2) those that satisfy the copyright and trade dress offense, (3) those that satisfy the privacy offense, and/or (4) those that satisfy the defamation/disparagement offense.

Add a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.