Sixth Circuit Rejects Policyholder’s Implicit Disparagement Argument For Advertising Injury Coverage
04.28.17
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(Article from Insurance Law Alert, April 2017)
For more information, please visit the Insurance Law Alert Resource Center. The Sixth Circuit ruled that an insurer had no duty to defend or indemnify infringement and false advertising claims because they did not allege disparagement within the scope of advertising injury coverage. Vitamin Health, Inc. v. Hartford Cas. Ins. Co., 2017 WL 1325263 (6th Cir. Apr. 11, 2017).
Bausch & Lomb sued Vitamin Health alleging patent infringement and false advertising based on Vitamin Health’s advertisements for vision-related supplements. Vitamin Health’s insurer, Hartford, refused to defend or indemnify, arguing that the underlying complaint did not allege product disparagement. A Michigan federal district court agreed and granted Hartford’s summary judgment motion. See May 2016 Alert. This month, the Sixth Circuit affirmed.
The Sixth Circuit ruled that the underlying complaint could not be read to allege that Vitamin Health disparaged Bausch & Lomb’s products. The complaint alleged that Vitamin Health misrepresented the content of its own products, not its competitors’ products. Additionally, the court rejected the notion that Vitamin Health “implicitly disparaged” Bausch & Lomb’s products by creating a false comparison between the two companies’ products. The court expressed uncertainty as to whether Michigan law recognizes claims of disparagement by implication, but held that even assuming it does, Vitamin Health failed to allege such a claim. The underlying complaint did not allege that Vitamin Health made assertions of product superiority, thereby implying that competitors’ products were inferior. As such, Hartford had no duty to defend or indemnify the claims.