What you need to know:

The US Eighth Circuit Court of Appeals ruled that an insurer had no duty to defend under an advertising liability policy that covered title or slogan infringement, but not trademark infringement, because the allegations and evidence showed only that the underlying plaintiff marketed its products using the mark—not that it used the mark as a title or slogan.

What you need to do:

Companies should consider the impact of the Eighth Circuit ruling in assessing coverage for claims of title or slogan infringement.

Background

Flowers Bakeries Brands, Inc. sued Interstate Bakeries Corp. for trademark infringement, asserting that Interstate’s marks were confusingly similar to Flowers’ mark “Nature’s Own.” Interstate’s advertising liability policy covered infringement of title or slogan, but excluded coverage for trademark infringement claims. Interstate’s insurer refused to defend. The federal trial court entered judgment for the insurer, concluding that it owed no duty to defend. The Eighth Circuit affirmed. See Interstate Bakeries Corp. v. OneBeacon Ins. Co., No. 11-1802, 2012 U.S. App. LEXIS 15200 (8th Cir. July 24, 2012).

The Court’s Ruling

The Eighth Circuit held that:

  • The underlying complaint and record failed to show facts indicating that the trademarked phrase “Nature’s Own” was potentially a title or a slogan.
  • Title. The policy defined “title” as the “caption or name of matter.” The court concluded that the record did not show that the phrase “Nature’s Own” was used as the “caption or name of matter.” The underlying complaint alleged only that the trademark was used on the packaging of Flowers’ products. The court ruled that “[t]he mere appearance of the trademarked phrase on the packaging does not allow us to assume that it is being used as the ‘heading’ or ‘distinctive designation’ of the wrapper.” The court therefore concluded that Flowers’ claim did not fall within the policy’s coverage for title infringement.
  • Slogan. In construing the phrase “slogan,” which was undefined in the policy, the court invoked the following dictionary definitions: “(1) a word or phrase used to express a characteristic position or stand or a goal to be achieved;” and “(2) a brief attentiongetting phrase used in advertising or promotion.” The record did not show that Flowers used the phrase “Nature’s Own” as a slogan to express a characteristic position or stand or a goal to be achieved, or a brief attention-getting phrase used in advertising or promotion. While it was “conceivable” that the mark could be so used, the lack of allegation or evidence showing such use defeated Interstate’s claim for defense under the policy.D
  • Dissent. Judge Smith dissented, concluding that OneBeacon had the duty to defend because the plaintiff could have alleged title or slogan infringement based on the facts asserted in the complaint. Because the underlying facts potentially gave rise to a title or slogan infringement claim, Judge Smith concluded that the insurer had a duty to defend.

Conclusion

The Eighth Circuit ruled that the insurer had no duty to defend under an advertising liability policy that covered title or slogan infringement, but not trademark infringement, because the allegations and evidence showed only that the underlying plaintiff marketed its products using the mark, but not that it used the mark as a title or slogan.