B&C: No Duty to Defend Patent Claims Under “Advertising Injury” Provision Patent claims against Bates & Carey clients were not within the coverage for “misappropriation of advertising ideas or style of doing business,” according to a summary judgment ruling of the United States District Court for the Central District of California. Hyundai Motor America v. National Union Fire Insurance Company of Pittsburgh, PA, et al., Case No. SACV 08-00020 JVS (RNBx), United States District Court, Central District of California (August 19, 2008). Hyundai Motor America sought a determination that it was entitled to a defense from National Union Fire Insurance Company of Pittsburgh, PA and American Home Assurance Company against claims that Hyundai had infringed two patents – a patented “Electronic Proposal Preparation System” and a patented “Computer-Assisted Parts Sales Method.” According to Hyundai, the underlying patent infringement claims involved a “misappropriation of advertising ideas or style of doing business” committed in the course of advertising its goods, products, or services, and therefore triggered National Union and American Home’s duty to defend under the “advertising injury” coverage of their policies. The insurers disagreed and denied coverage. Cross-motions for summary judgment were filed in the ensuing coverage action. Denying Hyundai’s cross-motion for summary judgment and granting the cross-motion for summary judgment of National Union and American Home, the Honorable James V. Selna held that, because patent infringement was not an “advertising injury,” as defined by the insurers’ policies, Hyundai could not demonstrate that the insurers owed Hyundai a duty to defend it in the underlying patent infringement lawsuit. Separately, the Court held that the insurers had no duty to defend because no causal connection existed between the alleged patent infringement and Hyundai’s advertising, as required by the insurers’ policies. In this regard, the Court observed that the infringement could have been committed without Hyundai ever advertising its products to consumers. Accordingly, the Court held that the alleged infringement was caused by Hyundai’s use of the patents rather than by Hyundai’s advertising, and was therefore outside the scope of the policies’ “advertising injury” coverage. Should you have any questions regarding this decision, please contact Richard H. Nicolaides, Jr. or Daniel I. Graham, Jr.