The U.S. Fifth Circuit Court of Appeals upheld a district court’s summary judgment under Texas law that a home for sale constitutes an “advertisement” for purposes of trademark infringement coverage. Mid-Continent Casualty Co. v. Kipp Flores Architects, LLC, 2015 WL 795822 (5th Cir. Feb. 26, 2015).
Pursuant to a licensing agreement, an architect permitted the insured, a home builder, to construct homes using one of eleven different designs. The insured was required to seek additional licenses if it wanted to build additional houses. The insured instead built hundreds of homes using the copyrighted designs without licensing them. The architect sued the insured and obtained a judgment for copyright infringement. The builder’s insurer filed a declaratory judgment action seeking a declaration that it had no duty to pay the judgment. The policies covered copyright infringement in an “advertisement.” The insurer argued that a house, even one offered for sale, is not an “advertisement” as defined in the policy as “a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters” or as defined by Texas law as a “marketing device designed to induce the public to patronize a particular establishment” and “a public notice drawing attention to the attributes of a business.” The trial court found against the insurer, and the insurer appealed.
The Fifth Circuit found that the architect had established that it was damaged due to copyright infringement committed in the insured’s “advertisement” because the insured’s “primary means of marketing its construction business was through the use of the homes themselves, both through model homes and yard signs on the property of infringing homes it had built, all of which were marketed to the general public.” Accordingly, it held that the insured’s “use” and marketing of the infringing homes satisfied both the policies’ and Texas law’s meaning of the term “advertisement.”