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A California federal district court ruled that a liability insurer properly denied coverage of claims alleging use of another company’s trademarked logo.  The court agreed with the insurer that such conduct did not constitute covered advertising activity.  Infinity Micro Computer, Inc. v. Continental Cas. Co., 2016 WL 5661755 (C.D. Cal. Sept. 29, 2016).

Cisco Systems alleged that the policyholder wrongfully displayed Cisco’s trademarked “Premiere Certified Partner” logo on the policyholder’s website.  Cisco further alleged that the policyholder was selling counterfeit Cisco goods, and demanded over $1.5 million in damages.  When the policyholder tendered the demand to Continental, it denied coverage, arguing that the claim did not allege covered advertising injury and that several exclusions applied.  In ensuing litigation, the court granted Continental’s summary judgment motion.

The policy covered “personal and advertising injury,” defined as injuries arising out of “the use of another’s advertising idea in your ‘advertisement.’”  Although the policy did not define “advertising idea,” the court concluded that the Cisco logo could not reasonably be construed as an “advertising idea.”  The court stated: 

To read the term “advertising idea” so broadly as to cover any act taken in the course of marketing, including the use of a logo, would render the term meaningless.  It remains unclear to the court how Plaintiff’s decision to say that it was an authorized Cisco reseller, when in fact it was not, is a “marketing idea” and not simply a misrepresentation.

The court further reasoned that its holding was supported by a policy exclusion for injuries arising out of trademark infringement, explaining that any expectation of coverage for the use of another company’s trademarked logo would be unreasonable.  Finally, the court held that provisions covering injuries arising out of “slogan infringement” or “trade dress” were inapplicable.