812 F. Supp. 2d 905
N.D. Ill.2011Background
- Citizens Insurance filed a diversity action seeking a declaration it has no duty to defend or indemnify Uncommon against counterclaims by UncommonGoods in a related suit.
- Uncommon counterclaims included trademark infringement, unfair competition, deceptive practices, tortious interference, and unjust enrichment arising from Uncommon’s use of the UNCOMMON marks.
- Uncommon holds two identical Citizens policies covering personal and advertising injury, with an IP exclusion for infringement of IP rights, including trademarks.
- Underlying counterclaims were settled and dismissed with prejudice in a stipulated order.
- Citizens denied coverage after notice of the counterclaims; the insurer later filed suit for a declaratory judgment, and both sides moved for judgment on the pleadings or summary judgment.
- The court held that the IP exclusion precludes coverage and granted judgment for Citizens.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the IP exclusion bar coverage for counterclaims arising from trademark infringement? | Citizens argues all counterclaims arise from infringement of UncommonGoods’ trademarks. | Uncommon contends some counterclaims may proceed without trademark infringement and thus fall outside the exclusion. | Yes; IP exclusion precludes coverage because claims arose from trademark infringement. |
| Can the IP exclusion be avoided by the exception for 'slogan' infringement? | Plaintiff argues no slogan infringement is involved because the term 'slogan' is not defined. | Uncommon contends 'uncommon' is a slogan and thus within the exception. | No; 'uncommon' is not a slogan; exclusion applies. |
| Is the term 'slogan' ambiguously defined, requiring strict construction against the insurer? | The policy does not define 'slogan'; ambiguity could favor coverage. | Uncommon argues for a broader meaning based on case law defining slogans. | Unambiguous; historical meaning excludes trademark names as slogans. |
| May the court grant judgment on the pleadings for the insurer under Rule 12(c)? | Citizens seeks judgment on the pleadings. | Uncommon challenges 12(c) posture for a plaintiff. | Yes; Rule 12(c) permits judgments on the pleadings by any party. |
Key Cases Cited
- Clarendon Nat’l Ins. Co. v. Medina, 645 F.3d 928 (7th Cir. 2011) (ambiguous policy terms liberally construed in insured’s favor; otherwise, interpret contract as a whole)
- Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 223 Ill.2d 352 (Illinois Supreme Court 2006) (ambiguity and liberal construction rules; duty to defend based on underlying allegations)
- Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729 (7th Cir. 2006) (ambiguity and defense duty considerations in Illinois law)
- Amerisure Mut. Ins. Co. v. Microplastics, Inc., 622 F.3d 806 (7th Cir. 2010) (duty to defend depends on underlying factual allegations, not labeled theories)
- Santa’s Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339 (7th Cir. 2010) (insurer bears burden to prove exclusions; insured bears burden to prove exceptions)
- Hugo Boss Fashions, Inc. v. Federal Insurance Co., 252 F.3d 608 (2d Cir. 2001) (established meaning of 'slogan' excludes trademark names)
- Zen Design Grp., Ltd. v. Cincinnati Ins. Co., 329 F.3d 546 (6th Cir. 2003) (dictionary-based, unambiguous interpretation of 'slogan')
- Interstate Bakeries Corp. v. OneBeacon Ins. Co., 773 F. Supp. 2d 799 (W.D. Mo. 2011) (claims about product marks and slogans consideration)
- Marvin J. Perry, Inc. v. Hartford Cas. Ins. Co., 412 Fed. Appx. 607 (4th Cir. 2011) (gravamen of underlying claim determines exclusion scope)