First Circuit finds no coverage under personal and advertising injury for manufacturer's use of trademark similar to competitor's trademark

Sterngold Dental manufactures and sells dental products.  Intra-Lock International alleged that it had infringed Intra-Lock's trademark (literally the mark itself) on a product called OSSEAN, by using a nearly identical marks, OSSEO and OSSEOS, for a nearly identical product.  Sterngold's insurer, HDI Global Insurance Company, denied coverage under the personal and advertising coverage of the policy.


In Sterngold Dental, LLC v. HDI Global Ins., __ F.3d __, 2019 WL 2754185 (1st Cir.), a decision full of puns and phrases requiring both a Latin and an English dictionary that could only have been written by Judge Selya, the court agreed with HDI that there was no coverage.

The court first examined the definition of "personal and advertising injury" in the policy.  That definition included the use of "another's advertising idea" or "infringing upon another's copyright, trade dress or slogan in an advertisement."  The policy provided that publication on the internet may constitute an advertisement. 

The meaning of the phrase "advertising idea," the court noted, "is somewhat nebulous."  It includes "if the insured took an idea for soliciting business or an idea about advertising."  But if the underlying complaint merely alleges that the insured "wrongfully took a product and tried to sell that product," that is not a injury stemming from another's advertising idea.

In the claim before the court. Intra-Lock had alleged that Sterngold's use of "confusingly similar marks . . . in internet advertising . . . was likely to cause confusion, mistake, and deceive third parties." 

The court punted on whether the mark was an advertising idea.  It assumed that it was so that it could move on to analysis of an exclusion to the personal and advertising injury coverage.

The exclusion excluded coverage for injury "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 an advertisement."

The exclusion had an exception for "infringement, in your advertisement, of copyright, trade dress, or slogan." 

The court examined whether the advertising injury claim arose out of the claimed infringement of Intra-Lock's trademark, which would trigger the exclusion.

The court noted that the phrase "arising out of" indicates a wide range of causation, and means "originating from," "growing out of," "flowing from," "incident to," or "having connection with."  The court held that under that definition the exclusion was triggered because the claim was alleged to have arisen out of infringement of Intra-Lock's trademark.  

Sterngold argued that the exclusion did not apply because it provided that "other such intellectual property rights do not include the use of another's advertising idea in your advertisement."  The court held that, based on the language of the exclusion and common grammatical rules, that phrase applied only to "other intellectual property rights." 

Finally, the court rejected Sterngold's argument that the marks were actually slogans, so that the claim came within the exception to the exclusion.  A "slogan is certainly not by definition a trademark."