A recent decision by the U.S. District Court for the Northern District of California created a significant precedent for policyholders pursuing coverage for alleged breaches of an intellectual property (IP) license agreement. In St. Paul Mercury Insurance Co. v. Tessera, Inc., Case No. 5:12-cv-01827 (N.D. Cal.), the court addressed the following issues: first, whether a breach-of-contract suit can also be interpreted as triggering coverage for “libel” or “slander” under a CGL policy’s “Personal Injury Liability” coverage, and second, the scope of the policy’s intellectual property exclusion (IP Exclusion). The underlying dispute arose from a license agreement between the policyholder, Tessera, Inc. (Tessera), and its licensee, Powertech Technology, Inc. (PTI), and was later tendered to Tessera’s insurer, St. Paul Mercury Insurance Company (St. Paul), for a defense and indemnity. The relevant policy covered certain categories of “Personal Injury Liability,” including “libel” and “slander” in connection with another company’s products, but also contained an “Intellectual Property” exclusion for “injury or damage . . . that result from any actual or alleged infringement or violation of” a specified set of “rights or laws,” including “Copyright,” “Patent,” “Trade dress,” “Trade name,” “Trade secret,” “Trademark,” or “[o]ther intellectual property rights or laws.” On summary judgment, Tessera argued that it was alleged to have falsely represented PTI-packaged products as unlicensed, and these allegations constituted “libel” or “slander” within the policy’s “Personal Injury Liability” coverages. The District Court disagreed and ruled that the coverage was not triggered. St. Paul Mercury Ins. Co. v. Tessera, Inc., 908 F. Supp. 2d 1054, 1062 (N.D. Cal. 2012). On appeal, however, the Ninth Circuit reversed and remanded, holding that the District Court had impermissibly considered the merits of the unasserted “libel” or “slander” claim when deciding whether the insurer had a duty to defend. St. Paul Mercury Ins. Co. v. Tessera, Inc., 624 F. App’x 535, 536 (9th Cir. 2015). On remand, Tessera brought another motion for summary judgment, arguing that the IP Exclusion does not apply because the alleged “breach” arises under state contract law, not intellectual property law, whether the breach is construed as (i) the breach of the licensor’s promise not to sue, or (ii) the breach of the licensee’s promise to satisfy certain conditions for avoiding a suit. See Tessera, No. 5:12-cv-01827, Dkt. 78, at pp. 6-9. Tessera further argued that the alleged “patent misuse” is focused on the patent holder’s alleged anticompetitive conduct—not a violation of patent law—and thus, does not trigger the IP Exclusion. Id. at pp. 9–10. On June 21, 2016, the District Court ruled in favor of Tessera, holding that the license agreement did not “convey an intellectual property right,” and thus a suit for breach of that claim did not trigger the IP exclusion. Tessera, No. 5:12-cv-01827, Dkt. 89, at pp. 6–9. Moreover, the District Court held that PTI’s claim for patent misuse did not trigger the IP exclusion because it was predicated on alleged anticompetitive conduct. Id. at 9–10. Finally, PTI’s allegations did not otherwise trigger the IP exclusion because they focused on Tessera’s purported false representations, not the violation of IP rights. Id. at 10–12.