Hershey’s general liability policy excluded coverage for injuries stemming from intellectual property infringement, but included exceptions (and thus expressly provides coverage for) injury from infringement of another’s “advertising idea” or “copyright, trade dress or slogan” in Hershey’s “advertisement”. The parties disputed whether the signage on the purportedly infringing kiosks was an “advertisement”, which the policy defined as “a paid announcement that is broadcast or published in the print, broadcast or electronic media.” Hershey argued that the phrase “published in the print media” is broad enough to include slogans published on in-store advertising signage—or at least is ambiguous and should be construed in Hershey’s favor. The court agreed. The allegations made clear that f’real believed Hershey infringed on its advertising ideas and slogans and specifically did so in the context of advertising for competing blending machines and milkshakes located in convenience stores.
The court found a sufficient nexus between advertising and injury to trigger a duty to defend. The court also determined that the insurer violated its obligations under the policy because it wrongfully withdrew from defending Hershey. Interestingly, the court noted that Hershey pled that it suffered injury from the insurer’s withdrawal and refusal to defend, but did not prove any damages.
The takeaway good faith practice tips for insurers assessing personal or advertising injury claims are threefold. First, understand the policy’s definition of “advertisement.” Second, recognize that a defense is owed if, resolving all doubts in favor of the insured, it is possible that a claim as alleged falls within the policy’s definition of “advertisement.” And finally, consider filing a declaratory judgment suit where defense obligations are unclear.