8.2.1.1 Infringement of Copyright, Title or Slogan

• Jurisdiction: Arizona

The Arizona courts have not yet addressed whether trademark infringement constitutes "misappropriation of advertising ideas or style of doing business" or "infringement of copyright, title, or slogan." However, there are several recent cases from other jurisdictions that have interpreted and applied that language. A majority of these courts have held that a trademark is both an advertising idea and a style of doing business, and its misappropriation is an advertising injury offense.^[103]

These courts have concluded that an action for infringement of a trademark is properly called an action for misappropriation, both of advertising ideas and one's style of doing business, and that in the ordinary sense of these terms, misappropriation of an "advertising idea" means the wrongful taking of the manner by which another advertises its goods or services.^[104] This would include the misuse of another's trademark or trade name.^[105]

As discussed by these courts, a trademark is defined under the relevant federal statute as:

. . . any word, name, symbol or device or any combination thereof -

(1) used by a person, or

(2) which a person has a bona fide intention to use in commerce and applies to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.^[106]

An infringement of a trademark is defined as an act committed by any person who, without the consent of the registrant, shall:

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or

(b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive . . .^[107]

A trademark serves three separate and distinct purposes. It identifies a product's origin, (2) guarantees the product's unchanged quality, and (3) advertises the product. "Injury to the trademark in any of its offices as an identifying, guaranteeing or advertising device should suffice to constitute an infringement thereof."^[108] As stated by the California Court of Appeals:

Contrary to cases involving patent infringement, where the infringing activity usually involves the making, using or selling of the patented invention, and thus may not occur in the course of the insured's advertising activities . . . a trademark infringement by the insured will frequently, if not necessarily, occur in the course of the insured's act of advertising its products.^[109]

One of the basic functions of a trademark is to advertise the product or services of the registrant.^[110] A trademark could reasonably be considered an integral part of an entity's style of doing business.^[111] As stated by an Arkansas district court:

. . . [I]n the ordinary sense of these terms, misappropriation of an "advertising idea" would mean the wrongful taking of the manner by which another advertises its goods or services. This would include the misuse of another's trademark or trade name. . . . Similarly, one's mark and name is an integral part of an entity's "style of doing business." Such misappropriation of "style of doing business" would include trademark, trade name or service mark infringement.^[112]

In P.J. Noyes Co. v. American Motorists Insurance Co.,^[113] for example, the third party's complaint alleged that Noyes had infringed upon its trademark by use of the name "Dustfree Precision Pellets" in the advertising, literature, and packaging of food pellets for laboratory animals. Interpreting the 1986 CGL language at issue here, the court held that the underlying suit came within the policy's coverage. The court reasoned: "But for the use of the term in the packaging, literature and advertisements, there would have been no trademark infringement."^[114]

Although finding that patent infringement alone did not reach the requisite pervasive similarity necessary to prove misappropriation of a style of doing business, the court in St. Paul & Mariners Insurance Co. v. Advanced Interventional Systems, Inc.,^[115] noted that trade dress infringement "expresses essentially the same concept" as the term "style of doing business."^[116]

In Ross v. Briggs & Morgan,^[117] the court held that a former employee's use of a name similar to that under which his former employer was doing business was enough to show the possibility of infringement of title under the employee's CGL policy. In that case, a dermatologist worked for a business known as "Skin Diseases, P.A." The practice was advertised as the "Institute of Cosmetic Surgery and Hair Transplants." The dermatologist then set up shop under the name "Skin Physicians, P.A.," and advertised the opening of his new business using the name "Institute of Cosmetic and Laser Surgery." When the dermatologist was sued by his former employer for, among other things, deceptive trade practices, his attorneys failed to make a claim to his CGL insurer. In the subsequent legal malpractice suit, the appellate court pointed out that the use of the names "Skin Physicians" and "Institute of Cosmetic and Laser Surgery" meant the claim was within the infringement of title coverage. Relying on J.A. Brundage Plumbing's^[118] "distinctive appellation" language, the court concluded that the "similarity" in the names, i.e., "titles" between those used by the dermatologist's former employer and the ones under which he began to do business, "arguably constituted an infringement of [the employer's] titles or slogans that was covered by the insurance policy."^[119]

In Advance Watch Co. v. Kemper National Insurance,^[120] the underlying complaint involved a pen manufacturer's claims that the insured had infringed its trademark and trade dress through the manufacture, sale, and advertising of pens designed to pass off their products as those of another well-known pen company.^[121] The court concluded that the term "misappropriation of style of doing business" is broad enough to encompass claims that the insured copied a design explicitly protected by trademark.^[122]

A Wisconsin appellate court recently held that misappropriation of customer information and market strategy through the luring of a competitor's agent in order to obtain its customers was not a covered advertising injury.^[123] However, the court was careful not to preclude all trade dress claims. First, the court noted that style of doing business may be covered if it qualifies for protection under the criteria set forth in Two Pesos, Inc. v. Gulf Insurance Co.,^[124] i.e., if it is inherently distinctive, has acquired distinctiveness, or if there is a likelihood of confusion.^[125]

Several courts have also concluded that an action for trademark infringement can be described as an action for "infringement of a copyright, title or slogan," as those terms are used in the policy.^[126]

A minority of courts have held that trademark infringement does not constitute misappropriation of advertising ideas or style of doing business. In analyzing policy language essentially identical to that involved here, the court in American Economy Insurance Co. v. Reboans, Inc.,^[127] concluded that:

misappropriation should be limited to its narrow, common law meaning [i.e., excluding trademark or trade dress infringement]. Although some courts have frequently used the term in its more general sense "to take wrongfully," the phrase "misappropriation of advertising ideas" committed in the course of advertising the insured's products, as it is used in the CGL insurance policy, has an objective meaning which is not ambiguous.^[128]

Upon reconsideration, however, the court ordered the insurer to defend Reboans because it was objectively reasonable for Reboans to expect that the definition of advertising injury would include a claim for trade dress infringement in light of numerous courts' conclusions that misappropriation of style of doing business encompasses trade dress infringement. Therefore, allegations that the insured misappropriated the third party's trade dress and identifiable logo in its advertising to "pass off" its products as those of the third party were within the policy's coverage.^[129]

The determination that an enumerated offense has been alleged does not alone bring the underlying suit within the coverage of the policy. Another required component is a causal element between the advertising activities and the harm alleged, i.e., the infringement. As indicated above, in order to be covered, the advertising injury must have been caused by an offense committed by Guardian in the course of advertising its products. Courts have held that allegations of trademark and trade dress infringement inherently involve advertising activity.^[130] In other...