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California Appeals Court Affirms Insurer’s Denial of Trademark Infringement Claim Under the Prior Publication Exclusion
Insurance Law Update
California Court of Appeal, Second District
In Kim Seng Co. v. Great American Ins. Co. of New York, 179 Cal.App.4th 186 (November 13, 2009), the California Court of Appeal, Second District, held that a trademark infringement claim may be excluded by a commercial general liability policy’s prior publication exclusion if a registered trademark is improperly published prior to and during the policy period.
Kim Seng Co. was sued for trademark infringement. Great American disclaimed Kim Seng’s claim for defense because the alleged infringement occurred prior to and during the applicable policy period, and, therefore, the prior publication exclusion applied. A declaratory judgment action was filed as to Great American’s coverage obligations. Great American’s motion for summary adjudication was granted and Kim Seng appealed.
On appeal, Kim Seng argued that the prior publication exclusion: (1) does not apply to trademark infringement claims; (2) is limited only to publication on “material” tangible goods; and (3) cannot be used to bar coverage when the first publication occurred during a time period that is not subject to the underlying dispute and that also occurred before the policy’s inception.
The California Court of Appeal rejected Kim Seng’s arguments and affirmed. The court held that the policy’s advertising injury insuring agreement clearly applied to trademark infringement claims due to the plain meaning of “advertising injury.” The court also held that the definition of “material” is construed as the trademark itself and not publication on a “tangible” good. Finally, the court concluded that the first date of publication may occur at a time prior to the policy period if the trademark is used in the same or similar context during the policy period.
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