Most commercial liability policies provide what is known as “personal and advertising injury” coverage, which usually provides coverage for claims that an insured’s advertising defamed or disparaged another person’s or organization’s goods or services. Section 43(a) of the Lanham Act (as well as various state law analogues) provides plaintiffs with a cause of action for false advertising, which generally requires proof that the defendant made a false or misleading statement of fact in a commercial advertisement or promotion that caused injury to the plaintiff. Defendants that are sued for anything involving their advertising or promotional activities should examine their policy’s advertising injury provision, as often coverage can be found for at least the defense of such actions.
A recent case out of Pennsylvania provides a good example. The well-known energy drink company 5 Hour Energy sued a competitor, Vitamin Energy, for trademark infringement and other claims, including false advertising. The false advertising claim alleged that Vitamin Energy had published a misleading comparison of its products to those of 5 Hour Energy. Vitamin Energy sought coverage from its insurer Evanston Insurance Company, and Evanston denied the claim. Ultimately, Vitamin Energy sued its insurer to obtain coverage. The district court ultimately sided with Evanston, finding no coverage. This week, the Third Circuit reversed.
In Pennsylvania (like many states, including Washington, Oregon and...
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