150 F. Supp. 3d 771
N.D. Tex.2015Background
- Shanze Enterprises, d/b/a Baja Auto Insurance, sought a defense from its insurer American Casualty Co. of Reading, PA (ACCO) for a California suit by Baja Insurance Services alleging trademark infringement, false advertising, and unfair competition under the Lanham Act and California law.
- ACCO’s businessowners policy provided coverage for certain "personal and advertising injury" offenses (e.g., use of another’s advertising idea or infringement of a slogan in an advertisement) but excluded injuries "arising out of the infringement of ... trademark" while excepting infringement in an advertisement of copyright, trade dress, or slogan.
- Baja’s First Amended Complaint asserted facts about Baja’s registered marks, long use and advertising, consumer confusion from Shanze’s use of the name/domain "Baja Auto Insurance," and alleged trademark infringement and related unfair competition/false advertising.
- Shanze argued the complaint potentially alleged covered "personal and advertising injury" because Baja’s marks/function could be a slogan or an "advertising idea," and thus ACCO owed a defense; ACCO denied coverage relying on the policy language and an intellectual-property exclusion.
- The court applied Texas law and the eight-corners rule (looking to the underlying complaint and policy only) and considered exhibits attached to the Baja complaint but declined to consider other website content not incorporated into the complaint.
Issues
| Issue | Plaintiff's Argument (Shanze) | Defendant's Argument (ACCO) | Held |
|---|---|---|---|
| Whether ACCO owed a duty to defend under the policy’s "slogan infringement" offense | Baja’s mark or portions ("Baja Insurance") function as a slogan; complaint facts could support slogan inference | Complaint pleads trademark infringement, not slogan use; cannot read facts into the complaint | No duty — complaint does not allege slogan infringement or facts permitting that inference |
| Whether the complaint alleged "use of another’s advertising idea" | "Baja Insurance" is an advertising idea (e.g., appeals to Hispanics/low-price connotation); trademark registration shows it is an advertising idea | Under Texas law a trademark is not an "advertising idea" for coverage purposes; underlying facts show only trademark claims | No duty — trademark/its idea is not an "advertising idea" under Texas law |
| Whether extrinsic website evidence may be considered under eight-corners | Website printouts show advertising/slogan use and should be considered (or are judicially noticeable) | Court should not consider website material beyond what is attached to the complaint | Court refused to consider website content outside exhibits to the complaint and declined to adopt a broad extrinsic-evidence exception |
| Whether the policy’s intellectual-property exclusion bars coverage for all claims | Unfair competition/false advertising claims are broader than trademark claims and separate from IP exclusion | All claims arise from alleged trademark infringement and thus fall within the IP exclusion; exclusion precludes duty to defend | Held for ACCO — the IP exclusion applies because underlying allegations are rooted in trademark infringement, barring coverage for all claims |
Key Cases Cited
- St. Paul Guardian Ins. Co. v. Centrum GS Ltd., 283 F.3d 709 (5th Cir. 2002) (duty to defend arises if underlying allegations potentially state a claim within policy)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (Texas ‘‘eight-corners’’ rule described and limits on extrinsic evidence)
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (resolve doubts in favor of duty to defend; scope of considering extrinsic evidence)
- Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596 (5th Cir. 2006) (application of eight-corners rule and duty-to-defend principles)
- Sport Supply Group, Inc. v. Columbia Casualty Co., 335 F.3d 453 (5th Cir. 2003) (under Texas law trademarks are not "advertising" for purposes of advertising-idea coverage)
- Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (5th Cir. 2004) (insured bears initial burden to show potential coverage; insurer must prove exclusion)
- America’s Recommended Mailers, Inc. v. Md. Cas. Co., 579 F.3d 791 (5th Cir. 2009) (underlying complaint sounding only in trademark infringement does not trigger advertising-idea or slogan coverage)