Companies purchase commercial general liability (“CGL”) insurance policies to protect themselves in the event they are sued for various reasons, including injury caused due to the company’s advertising. Yet, the question remains: Does your CGL policy actually protect you from potential lawsuits due to your advertising in the way you need it or do you need additional insurance coverage?
Advertising injury coverage has become a standard in CGL policies and potentially provides insurance coverage for various types of claims including when the insured’s advertisements infringe upon another’s intellectual property rights. Typical to insurance policies, the coverage for advertising injuries is also subject to a myriad of exclusions, including exclusions for the exact claims you want covered, such as trademark infringement.
Exclusions to coverage for advertising injury includes, among others, when the injury is a result of a breach of contract or where the insured assumed liability, when the injury arises out of a criminal act the insured either committed or directed, or when the injury was caused by or done at the direction of the insured with the knowledge the act would violate another’s rights. In 2001, CGL policies began to include a new exclusion related to coverage for advertising injury related to infringement of copyright, patent, trademark or trade secret. This language was further modified in 2007 and typically excludes injuries:
arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another’s advertising idea in your “advertisement.” However, this exclusion does not apply to infringement, in your “advertisement,” of copyright, trade dress or slogan.
Based on this language, CGL policies exclude coverage for trademark infringement but provide coverage for infringement of a “slogan.” What exactly is a slogan and how does it differ from a trademark?
The line between trademark and slogan is incredibly thin. Both are used to promote, market and sell products or services. Both can be registered with the United States Patent and Trademark Office. A trademark, however, can be anything from a partial word, such as COMP® to a long string of words and/or phrases, such as THE BEST MARGARITAS COME FROM MARGARITAVILLE®.
On the other hand, courts have determined that a slogan, as the word is used in insurance policies, can only refer to a phrase, i.e., “Collect them all” or “The Wearable Light.” If the policyholder is facing a claim for trademark infringement and the alleged mark infringed is a single word, it is more likely than not that the CGL insurer will conclude that the claim does not involve infringement of a slogan and will deny coverage. This applies even to single word marks that are the combination of two words. See N. Coast Med., Inc. v. Harford Fire Ins. Co., Case No. 13-CV-03406-LHK, 2014 U.S. Dist. LEXIS 20701 (N.D. Cal. Feb. 17, 2014) (holding that “THERA-PUTTY” is a single-word trademark and not a slogan, even though it is a combination of the words “therapy” and “putty”).
Further, while trademarks can be used for a variety of purposes, including identifying a good/service, branding, or identifying a company, a slogan can only be used in advertising. Courts have specifically defined “slogan” as “a brief attention-getting phrase used in advertising or promotion or a phrase used repeatedly, as in promotion.” St. Surfing, LLC v. Great Am. E&S Ins. Co., 776 F.3d 603 (9th Cir. 2014). If the infringement alleged involves the name of a product or the name of a company, it is likely that coverage for the matter will be denied. This is true even if the name of the product is used to suggest a certain quality of the product, such as the product is made from natural ingredients. See Interstate Bakeries, Corp. v. One Beacon Ins. Co.,773 F.Supp.2d 799 (W.D. Mo. 2011) (holding that infringement of the phrase “Nature’s Own” as used as a product name was not slogan infringement). Nevertheless, there may be limited circumstances where the name of a product may also be used as a slogan.
Finally, for coverage to apply, both parties in the underlying action must use the phrase as a slogan. For example, if the plaintiff owns the rights to the trademark “StreetFighter” and is claiming that the policyholder’s use of the mark in the phrase “Be Like a Street Fighter” to sell similar products is an infringement, the insurance policy likely does not cover this claim, even though the insured is using the mark in a slogan. See Palmer v. Truck Ins. Co., 21 Cal.4th 1109, 988 P.2d 568 (1999) (holding that ‘the infringing use of a trademark that is merely a word in a phrase used as a slogan is not the same as the infringing use of a slogan” and is not covered as advertising injury under a CGL policy).
A CGL policy providing coverage for advertising injury will only cover a trademark infringement claim where (1) the trademark is a slogan or a phrase; (2) used in advertising a product or service, and (3) both the plaintiff and the defendant use the trademark as a slogan. Outside of this limited circumstance, any tender of a defense in a trademark infringement claim under a CGL policy is likely to be denied. While a CGL policy may not provide coverage for simple trademark infringement, there are insurance policies that provide such coverage. Policyholders seeking coverage for these types of claims should work with their insurance broker and/or coverage counsel to procure this coverage and assure that they receive the broadest coverage available.