National Insurance Law Forum : Insurance Litigation Lawyer & Attorney : National Insurance Law Forum : Insurance Coverage, Bad Faith Litigation

Although Acuity agreed to defend under a reservation of rights, it refused to acknowledge coverage, with the result that the insured settled for $300,000 and sued Acuity. In reversing a lower court’s finding of coverage, District III of the Court of Appeals refused to find that the web site postings involved the offenses of “libel” or “disparagement” for purposes of Coverage B.

 As to the claim of libel, the Court pointed out that the representations on the web site were not false but merely incomplete as they failed to note that the work of the employees in question had been during the term of their employment with Hoffman, not Community. Nor did the representations harm Hoffman’s reputation as they did not even mention Hoffman. Under the circumstances, the Court found that the web site postings failed to satisfy the common law elements for a cause of action for libel or slander under Wisconsin law.

For similar reasons, the Court found that the claims could not be construed as setting forth a claim for disparagement. As with the discussion of libel, the Court pointed out that the web site did not say anything about Hoffman directly and merely gave the insured’s employees credit for jobs done by another party without specifically attributing those jobs to Hoffman. Under the circumstances, the Court found that it is “difficult to see how the web site could have diminished Hoffman’s esteem, reputation or respect by including information that did not reference Hoffman in any way.”

More significantly, in contrast to the Seventh Circuit’s recent ruling in Santa’s Best, the Court held that the issue of Acuity’s indemnity obligations was not based on mere allegations in the complaint but whether any evidence had been adduced in the course of the case to support a claim for coverage. Accordingly, despite the fact that the underlying complaint had also made reference to various oral statements by Community employees, the Court found that no evidence had been presented to support such claims and therefore limited the scope of its analysis to the web site postings. Notwithstanding the insured’s invitation to the Court to adopt a standard of whether it settled covered claims in “reasonable anticipation of liability” for such claims, the Court held instead that it would constrain its analysis to whether actual facts existed to support a claim of indemnity.
 

In Acuity, A Mutual Ins. Co. v. Bagadia, 2008 WI 62 (Wis. June 18, 2008), Symantec sued the insured software company for infringing various copyrights and trademarks by selling knock off copies of Symantec’s security software through advertisements that featured the copyrights and trademarks.  The court held that this was not only "advertisiing" but  that the trademark infringement were covered as involving the infringement of a “title.    The Supreme Court reached this conclusion by comparing the dictionary definitions of "title" and "trademark" and noting that both involve descriptiions concluded that they must have the same meaning (yes, and "mud" and :"paint" both involve elements in a liquid solution, so your 3 year old daughters' class project must be a Rembrandt).

Although we have learned to expect surprising things from the Wisconsin Supreme Court of late, this new AI opinion is disappointing, as the meaning of "title" has seemed relatively settled for the last 10 years or so or at least since the California Supreme Court ruled in Palmer v. Truck Ins. Exch., 21 Cal.4th 1109, 988 P.2d 568 (1999) that coverage for “infringement of copyright or of title or of slogan” only extends to claims for infringement of the names of literary or artistic works or names that are “slogans,” not to other names. In rejecting the insured’s contention that coverage extend to unfair competition claims that the insured had wrongfully utilized colored flags, signs and slogans that the plaintiff was using for a competing real estate development. The court held that the term “title,” read in the broader context of the policy, can only mean the name of a literary or artistic work, and did not extend to any claim based on “formal right of ownership of property.” Further, although the underlying suit alleged that the insured had used a slogan in its own marketing, the Supreme Court declared that there was no indemnity obligation as the jury’s award had been based upon the insured’s infringing use of a trademark. “The infringing use of a trademark that is merely a word and a phrase used as a slogan is not the same as the infringing use of a slogan which would give rise to coverage under the policy.”

As an interesting footnote for those of you waiting for the Supreme Court to rule on allocation issues, the court ducked the issue of set-offs here.  Despite the fact that the insured had earlier settled similar claims against Continental Casualty for a payment of $165,964, the court refused to order that Acuity receive an off-set for this payment due to factual questions with respect to what CNA had paid for and why.