Dish Network Corp. v. Arch Specialty Insurance
659 F.3d 1010
10th Cir.2011Background
- DISH sought a judicial declaration that insurers must defend Dish in a patent infringement suit brought by RAKTL under Colorado law.
- District Court granted summary judgment to insurers, ruling the underlying complaint did not allege an advertising injury.
- Policies issued by Arrowood, Travelers, XL, Arch, and National Union promised defense for advertising injury and related claims.
- Policy definitions of advertising injury generally encompassed misappropriation of advertising ideas or related offenses; National Union was narrower, Arch contained IP exclusion with carveouts.
- RAKTL alleged Dish infringed multiple patents by using a patented interactive telephone system to offer pay-per-view and customer-service functions.
- This appeal asks whether patent infringement can be read as advertising injury and whether the underlying complaint potentially alleges misappropriation of advertising ideas.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can patent infringement be advertising injury under the policies? | Dish contends misappropriation of a patented advertising idea falls within advertising injury. | Insurers argue patent infringement is not included in misappropriation of advertising ideas. | Yes, under ambiguous terms patent infringement can be advertising injury. |
| Does the underlying complaint allege misappropriation of advertising ideas or style of doing business? | RAKTL patents could be used for advertising; the complaint broad enough to claim misappropriation of advertising ideas. | Complaint insufficient to allege misappropriation of advertising ideas or a style of doing business. | Complaint potentially alleges misappropriation of advertising ideas. |
| Was the alleged injury causally connected to advertising activities? | Injury arises from use of patented technology to market goods via advertising. | Injury must be caused by advertising; otherwise no coverage. | Injury potentially arose in the course of advertising; causal nexus present under Colorado law. |
| Should the district court’s four-corners/compliant-rule approach apply given ambiguity? | Colorado four-corners rule requires broad defense duty when allegations may fall within policy. | Ambiguity should be resolved against coverage; district court correctly applied policy terms. | Ambiguity resolved in Dish's favor; duty to defend potentially exists. |
Key Cases Cited
- Hyundai Motor Am. v. Nat. Union Fire Ins. Co. of Pittsburgh, Pa., 600 F.3d 1092 (9th Cir. 2010) (advertising idea if patent relates to advertising feature; 'advertising idea' can cover patent-based advertising methods)
- Amazon.com Int'l, Inc. v. Am. Dynasty Surplus Lines Ins. Co., 85 P.3d 974 (Wash. Ct. App. 2004) (advertising ideas through technology may constitute advertising injury)
- Novell, Inc. v. Federal Insurance Co., 141 F.3d 983 (10th Cir. 1998) (two-part test for advertising injury: predicate offense and causal connection)
- Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294 (Colo. 2003) (four corners rule; broad duty to defend when complaint may fall within policy)
- Compass Ins. Co. v. City of Littleton, 984 P.2d 606 (Colo. 1999) (policy ambiguity construed in insured's favor; defense duty when doubt exists)