1. 1 2014 ACC-SoCal In-House Counsel Conference [add logo of sponsor] #IHCC14 Marketing and Advertising Injuries – Are You Covered? January 22, 2014 Los Angeles, California Sponsored by K&L Gates LLP Panelists: Seth A. Gold and David P. Schack #IHCC12

2. 090701_2 2 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Seth A. Gold – Partner – K&L Gates LLP – seth.gold@klgates.com  David P. Schack – Partner – K&L Gates LLP – David.schack@klgates.com Panelists

3. 090701_3 3 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  False advertising/IP and the challenges for coverage  CGL policies contain coverage for “personal and advertising injury” (PI/AI) – Disparagement Coverage – Privacy Coverage – Limited IP Coverage  PI/AI coverage can be in-house lawyer’s best friend Agenda

4. 090701_4 4 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  False advertising  Media Liability Coverage—broader coverage for media companies  Cyber Coverage—may offer broader coverage for media type liability  CGL—typical basic liability policy for businesses Types of Coverage

5. 090701_5 5 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Virtually all Commercial General Liability (CGL) policies contain coverage for “personal and advertising injury” (PI/AI)  PI/AI coverage includes: 1)Disparagement Coverage 2)Privacy Coverage 3)Limited IP Coverage Without respect to the title of a particular claim. Coverage for “Personal and Advertising Injury” (PI/AI)

6. 090701_6 6 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Covers oral/written publication of material that: – Slanders or libels a person or organization or – Disparages a person’s or organization’s goods, products or services 1) Disparagement Coverage

7. 090701_7 7 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Powerful tool for triggering insurer’s duty to defend for a variety of types of litigation – Disparagement Coverage can be basis for coverage if there is any allegation that defendant disparaged plaintiff’s goods, products or services. – It may not cover all false advertising claims. 1) Disparagement Coverage (cont.)

8. 090701_8 8 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Disparagement is not defined in the CGL policy  It can be construed very broadly to mean 1)“To lower in rank or reputation: degrade 2)To depreciate by indirect means (as invidious comparison): speak slightingly about.” 1) Disparagement Coverage (cont.)

9. 090701_9 9 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Duty to defend may be triggered in false advertising types of cases if…  There is any allegation defendant stated plaintiff’s products were inferior to those of defendant.  Types of claims:  Lanham Act §43(a) claims  Cal. Bus. & Prof. Code §17500 claims  Unfair competition  Example: Pharmaceutical companies “battling it out”  Need a claim for “damages” 1) Disparagement Coverage (cont.)

10. 090701_10 10 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  May be basis for triggering duty to defend in other types of business disputes: 1)Interference with contract/prospective economic advantage  Plaintiff alleges defendant asserted it had a contract with a third party in derogation of plaintiff’s rights. 2)Disputes over ownership rights  Plaintiff alleges defendant improperly advised third parties that defendant, rather than plaintiff, had ownership rights in real property, intangible property, intellectual property, etc. 1) Disparagement Coverage (cont.)

11. 090701_11 11 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  May be basis for triggering duty to defend in other types of business disputes: 3)“Badmouthing”  Plaintiff makes isolated allegations in a complaint that defendant engaged in “badmouthing” of plaintiff to third parties; took incidental potshots.  May trigger even if technical causes of action might otherwise not be covered.  Courts have found duty to defend even in antitrust suits, where such allegations exist. 1) Disparagement Coverage (cont.)

12. 090701_12 12 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  May be basis for triggering duty to defend in other types of business disputes: 4)Defamation  Slander and libel causes of action clearly trigger duty to defend under Disparagement Coverage.  Definition of defamation  Example: Drug companies “battling it out” with press releases and communications to competitors 1) Disparagement Coverage (cont.)

13. 090701_13 13 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here Travelers Prop. Cas. Co. of Am. v. Charlotte Russe Holding, Inc., 207 Cal.App.4 th 969 (2012)  Versatile alleges that Charlotte Russe’s “fire sale” of People’s Liberation Branded apparel at “close-out prices” caused damage to and diminished the People’s Liberation Brand.  Charlotte Russe tendered to Travelers under the Disparagement Coverage. Travelers denied coverage, and in coverage litigation, the trial court granted summary judgment in Travelers’ favor.  The Court of Appeal reversed finding a duty to defend and no need for the underlying action to allege all elements of trade libel.  The California Supreme Court declined to review. Current Issue in Disparagement Coverage

14. 090701_14 14 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 210 Cal.App.4 th 915 (2012).  Dahl sued Swift Distribution, Inc. dba Ultimate Support Systems (“Ultimate”) claiming that Ultimate’s “Ulti-Cart” infringed patents and trademarks held by Dahl for its “Multi-Cart” and diluted Dahl’s trademark.  Ultimate tendered defense of the Dahl action to Hartford arguing that, inter alia, (i) Dahl had alleged Ultimate’s advertising misled the public to believe that Ultimate’s inferior product was made by Dahl thus damaging Dahl; and (ii) such allegations triggered Hartford’s duty to defend under the Disparagement Coverage.  The trial court granted summary judgment in favor Hartford and the Court of Appeal affirmed finding no allegation of disparagement in the Dahl Action and disagreeing with the decision in Charlotte Russe.  The Court of Appeal found that Ultimate’s advertising did not refer to Dahl’s product directly or by implication.  The Supreme Court has granted review of Swift Distribution. Current Issue in Disparagement Coverage (con’d)

15. 090701_15 15 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Covers oral or written publication of material that violates a person’s right of privacy  Can be triggered in a variety of cases where plaintiff alleges dissemination of information violates privacy rights. 2) Privacy Coverage

16. 090701_16 16 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Example: Claims of unlicensed/unapproved use of a person’s image in defendant’s advertising may trigger duty to defend.  Right of Publicity Statute—based on common law right to privacy 2) Privacy Coverage

17. 090701_17 17 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Covers infringing on another’s copyright, trade dress, or slogan in your “advertisement.”  Insurers have narrowed IP coverage in CGL policies over time. 3) Limited IP Coverage

18. 090701_18 18 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Limited IP Coverage is the coverage for IP claims that remains in standard CGL policy.  Important coverage in suits alleging copyright and trade dress infringement.  Those suits often include claims of infringement by defendant’s advertising. 3) Limited IP Coverage (cont.)

19. 090701_19 19 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Plaintiffs often allege infringement over a period of years.  Those allegations may trigger earlier CGL policies with broader IP coverage. 3) Limited IP Coverage (cont.)

20. 090701_20 20 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  A basis for triggering insurer’s duty to defend, based on limited allegations  In cases that would not otherwise be covered.  Under California law, once duty to defend is triggered, insurer must defend entire case.  Even uncovered claims/causes of action.  Insurer would avoid paying defense costs only to extent it can show legal services are “solely allocable” to an uncovered claim.  This is a very difficult standard for insurer to meet. PI/AI coverage – In-House Lawyer’s Best Friend

21. 090701_21 21 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Almost all CGL policies contain coverage for “personal and advertising injury.”  Disparagement coverage is a powerful tool for triggering insurer’s duty to defend.  Privacy coverage can be triggered in cases where plaintiff alleges dissemination of information violates privacy rights. Significant Take-Away Points

22. 090701_22 22 #IHCC14 2014 ACC-SoCal In-House Counsel Conference Insert Sponsor Logo here  Allegations of infringing on another’s copyright, trade dress, or slogan may trigger earlier CGL policies with broader IP coverage.  Under California law, once duty to defend is triggered, insurer must defend entire case. Significant Take-Away Points

23. 000000_23 11 th Annual In-House Counsel Conference January 22, 2014 (Los Angeles, CA) #IHCC14 23 www.acc.com/chapters/socal/