No ‘Advertising Injury’ Where Copyrighted Materials Were Not Used to Draw Public’s Attention to Broker’s Proposals

October 31, 2012 | Insurance Coverage

An appellate court in Pennsylvania has rejected two insureds’ contentions that “advertising” included solicitation or marketing presented to an individual or group for the purpose of gaining their business, adopting the arguments presented by Rivkin Radler on behalf of the insurance carriers.

In this case, an insurance broker brought suit against a former employee and a competing broker, alleging that they had wrongfully copied and used portions of copyrighted documents the employee had wrongfully retained in insurance proposal documents that they presented to their insurance clients. A jury ruled in favor of the insurance broker on its copyright claim and judgment was entered in favor of the insurance broker for about $30 million. The insureds contended that the award was covered as an “advertising injury” by their insurance policies. After litigation ensued, the trial court granted summary judgment in favor of the insurance carriers, and the insureds appealed.

The Decision

The appellate court affirmed. The appellate court observed that the policies did not defined “advertising” as that word was used in the phrase “advertising injury.” The appellate court then rejected the insureds’ argument that “advertising” included “marketing and sales solicitations done to gain customers, regardless of whether the marketing and solicitation were performed publicly or in a one-on-one sales pitch.” Instead, it concluded, “advertising” required the infringement of the insurance broker’s copyright while the insureds “were in the course of drawing the public’s attention to their goods, products, or services.” Because that had not occurred in this case, there was no insurance coverage for the judgment against the insureds. [OneBeacon Ins. Co. v. William A. Graham Co., No. 33 EDA 2012 (Penn. Sup. Ct. Aug. 31, 2012).

Rivkin Rule

As the firm argued and as this decision makes clear, advertising injury requires advertising. The plain meaning of that term does not mean solicitation or marketing presented to an individual or group in an effort to gain their business. Rather, there is a public component to the term. When that is absent, as in this case, there is no advertising injury coverage.

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  • Alan S. Rutkin





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