Court Rejects Insured’s Argument that Suit Sought Damages for Slogan Infringement Rather than Trademark Infringement

January 31, 2014 | Insurance Coverage

A federal district court in Minnesota has ruled that a policy’s trademark infringement exclusion barred coverage for an action against the insured, rejecting the insured’s argument that the suit was one for covered “slogan infringement.”  

The Case 

The insured company was sued for (1) unfair competition under the Lanham Act, (2) unfair business practices under New York law, (3) unfair competition under New York law, and (4) false or fraudulent registration for selling products bearing the trademark, corporate name, and trade name “Smart Candle” and for using the domain name “smartcandle.com.” 

The insured tendered the action to its insurance carrier, which sought a declaration that it had no duty to defend or indemnify the insured. The insurer moved for summary judgment. 

The Court’s Decision 

The court granted the insurer’s motion. 

In its decision, the court rejected the insured’s contention that the underlying action alleged “slogan infringement” because it alleged that the insured had used the “trademark for its products and to promote and sell products using the Smart Candle trademark and name.” (Emphasis added.) 

The court explained that the underlying plaintiff had “based its complaint on the improper use of ‘Smart Candle’ as a mark, trademark, trade name and name, and the improper use of ‘smartcandle.com’ as a domain name.” The court ruled that “no reasonable jury” could find that such “oblique references” to promotion and marketing – without more – were sufficient to arguably state a claim for slogan infringement. 

Accordingly, the court concluded that the policy’s trademark and domain name infringement exclusions barred coverage. 

The case is Selective Ins. Co. of America v. Smart Candle, LLC, No. 13-878 (DSD/JSM) (D. Minn. Jan. 14, 2014).

 

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