A manufacturer of pens and its internationally recognized designer were sued by a major pen manufacturer, charging them, in principal part, with "....importing, advertising or offering for sale and selling throughout the United States, ....writing instruments having a trade dress, product design, and configuration which are reproductions, counterfeits, copies and colorable imitations" of its own writing instruments and which simulated its trade dress and trademark.

The complaint also alleged that the named manufacturer, with the approval of the designer, printed and disseminated countrywide the designer's writing instruments catalog that featured its pens. The advertised pens were alleged to be imitations of the plaintiff's pens and that they simulated its trade dress and trademark.

The defendant manufacturer's general liability insurer denied defense and indemnification obligations under its policy, whereupon the insured sued its insurer for breach of contract and bad faith. The central question for the federal court was whether or not "advertising injury," as covered in the policy, had occurred.

Advertising injury coverage, included in the policy, required the insurer to ...."pay those sums that the insured becomes legally obligated to pay as damages because of....'advertising injury' to which this coverage part applies." The term "advertising injury" was defined to include injury which arises out of ". ....misappropriation of advertising ideas or style of doing business."

The insured argued that the claims for trademark and trade dress infringement were within the policy's coverage "for misappropriation of advertising ideas or style of doing business." The insurer contended that they clearly were not.

The court concluded that the policy covered "misappropriation of a style of doing business" related to advertising. It found that the allegations of a copied pen that was advertised in the catalog were within the scope of the advertising injury coverage, requiring defense by the insurer.

Accordingly, the judgment of the trial court on the central question was in favor of the insured and against the insurer.

Editor's Note: This is a significant one in a series of recent cases helping to define the scope of advertising injury coverage, assuredly not a catchall for claims not covered elsewhere.

(ADVANCE WATCH COMPANY, LTD., Plaintiff v. KEMPER NATIONAL INSURANCE COMPANY ET AL., Defendants. United States District Court for the Eastern District of Michigan, Southern Division. No. 94-CV-71918-DT. February 28, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5318.)