99 F. Supp. 3d 899
E.D. Wis.2015Background
- Design Basics sued five related building-supply defendants alleging copyright infringement (derivative works and public displays of house plans) and a DMCA claim; Amended Complaint lists 64 registered plans with alleged infringements from 1994–2014.
- Wilson Mutual issued successive business and umbrella policies to the defendant companies; key umbrella policies at issue run March 21, 2010–April 1, 2014 (the “later umbrella policies”).
- Earlier (pre-2010) policies defined "advertising injury" to require that infringement occur in the insured’s advertising; the later umbrella policies defined "advertising injury" to include copyright infringement without requiring it to occur in the insured’s own advertising.
- Some accused plans were publicly displayed by third parties during the later umbrella policy period (e.g., Signature’s website "Allister" in May 2010; a plan in the 2011 Parade of Homes; Westmark website listings).
- Procedural posture: cross-motions for summary judgment by Wilson Mutual and the defendants; motion to compel production of 233 documents in Design Basics’ privilege log; defendants’ Rule 12(c) motion for partial judgment on statute-of-limitations grounds.
Issues
| Issue | Plaintiff's Argument (Design Basics) | Defendant/Insurer's Argument (Wilson Mutual / Defendants) | Held |
|---|---|---|---|
| Whether later umbrella policies provide coverage for copyright infringement as an "advertising injury" | Coverage not at issue for plaintiff; argues infringement claims fall within policy periods and are timely | Wilson Mutual: "advertising injury" requires nexus to insured’s advertising; earlier-policy language controls; no coverage for third-party advertising | Held: Later umbrella policies’ definition of "advertising injury" includes copyright infringement without requiring it to be in insured’s own advertisement; coverage exists for infringements after March 21, 2010 |
| Whether defendants’ knowledge/consent to third-party advertising or third-party advertising itself defeats coverage | N/A (Design Basics is plaintiff in underlying infringement suit) | Wilson Mutual: some displays were third-party ads or done with insureds’ consent; willful-violation exclusion (penal statute) applies | Held: No record showing willful infringement or that the exclusion (willful violation of a penal statute) applies; consent/third-party advertising does not negate coverage under later umbrella policies |
| Scope of insurer’s duty to indemnify and defend | Design Basics not party to coverage dispute but underlying allegations seek relief against defendants | Defendants: seek indemnity and defense for infringements after March 21, 2010; Wilson Mutual sought no-coverage declaration | Held: Wilson Mutual has no duty to indemnify for claims predating March 21, 2010; it must indemnify for infringements after March 21, 2010 and must defend the entire amended infringement suit |
| Whether some infringement claims are time-barred under 17 U.S.C. § 507(b) (3-year statute) | Design Basics: discovery rule and equitable tolling apply; claims timely because discovery began May 19, 2010 and removal of copyright management info may toll | Defendants: move to dismiss earlier claims as untimely; rely on accrual rules | Held: Denied. Seventh Circuit discovery rule controls; Design Basics’ claims are not dismissed at pleading stage — discovery rule and equitable tolling may apply |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary-judgment standard and burden-shifting)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary-judgment inferences and standards)
- McKinney v. Cadleway Prop., Inc., 548 F.3d 496 (7th Cir. 2008) (cross-motions for summary judgment: draw inferences for nonmovant)
- Johnson Controls, Inc. v. London Market, 325 Wis.2d 176 (2010) (insurance-policy interpretation follows reasonable insured; duty to defend analysis)
- Fireman’s Fund Ins. Co. of Wis. v. Bradley Corp., 261 Wis.2d 4 (2003) (insurer’s duty to defend when advertising-injury language at issue)
- Gaiman v. McFarlane, 360 F.3d 644 (7th Cir. 2004) (copyright accrual and discovery rule)