265 F. Supp. 3d 1356
N.D. Ga.2017Background
- Respondents (Airport Mini Mall, Yes Assets, and individual Yehs) operated the Old National Discount Mall and held Allstate commercial general liability (CGL) policies providing Coverage B for “personal and advertising injury.”
- Federal/local law enforcement raided the mall on Nov. 21, 2014 and seized thousands of alleged counterfeit Ray‑Ban and Oakley products; Luxottica sent cease‑and‑desist letters in Dec. 2014 and Apr. 2015 warning of potential Lanham Act claims and landlord liability for tenant counterfeiting.
- Luxottica sued Respondents for contributory trademark infringement (filed Apr. 29, 2015). Respondents were served May 27, 2015; Allstate was not notified until June 26, 2015. Allstate reserved rights and provided a defense.
- A jury found Respondents contributorily liable for infringement (not willful) and awarded $1.9 million. Allstate sought a declaratory judgment that the policy did not cover the claim and that pre‑suit notice was untimely.
- The Allstate policies defined “advertising injury” to cover certain enumerated offenses (including trade dress infringement and “use of another’s advertising idea in your advertisement”) but expressly excluded trademark infringement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Luxottica’s contributory trademark claim is a covered “advertising injury” under the policy | Luxottica argues underlying allegations referencing advertising/display trigger Coverage B; Respondents contend PA announcements and amended complaint references suffice | Allstate argues advertising injury requires an actual advertisement causally connected to the injury and trademark infringement is excluded | Court: No coverage. Claim was for trademark (not trade dress in an advertisement), lacked causal connection to any Respondents’ advertisement, and exclusion for trademark applies |
| Whether Respondents’ PA announcements or other mall communications constitute an “advertisement” causing the injury | Respondents: PA announcements and mall promotion amount to “advertisement” under policy definition | Allstate: Announcements merely welcomed shoppers and did not advertise Respondents’ goods/services or cause the trademark injury | Court: PA announcements insufficient — they did not promote Respondents’ goods/services or cause the infringement; selling counterfeit goods by tenants is not advertising for coverage purposes |
| Whether the policy’s trademark exclusion is ambiguous or inapplicable | Respondents implicitly argue ambiguity or potential overlap with trade dress/advertising idea | Allstate: Policy unambiguously excludes trademark infringement and separately covers trade dress; reading trademark into “advertising idea” would nullify the exclusion | Court: Policy read as whole; trademark exclusion is enforceable and precludes coverage for trademark claims |
| Whether Respondents provided timely notice as required by the policy | Respondents: dispute existence of an offense/claim and assert technical defects in letters; argue factual issues on justification for delay | Allstate: Respondents knew (or should have known) upon receipt of cease‑and‑desist letters after the raid and unreasonably delayed notifying insurer until after suit | Court: Notice was untimely as a matter of law. Cease‑and‑desist letters and raid objectively put Respondents on notice that a claim might arise; seven‑month pre‑suit delay unjustified and bars coverage |
Key Cases Cited
- Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179 (11th Cir. 2002) (discusses scope of “advertising idea” and causal connection between advertising and injury)
- Steinberg v. State Farm Fire & Cas. Co., 393 F.3d 1226 (11th Cir. 2004) (survey of ISO revisions to advertising‑injury language and framework for coverage analysis)
- James River Ins. Co. v. Bodywell Nutrition, LLC, 842 F. Supp. 2d 1351 (S.D. Fla. 2012) (distinguishing trademark claims from trade dress for advertising‑injury coverage)
- Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453 (5th Cir. 2003) (trademark as product label not necessarily an advertising idea under CGL policies)
- Ekco Group, Inc. v. Travelers Indem. Co. of Ill., 273 F.3d 409 (1st Cir. 2001) (no causal connection where infringement was sale of physical product rather than conduct in an advertisement)
- Penn‑America Ins. Co. v. Disabled Am. Veterans, 490 S.E.2d 374 (Ga. 1997) (duty to defend broader than duty to indemnify; compare complaint allegations to policy language to determine duty to defend)