The Travelers Insurance Company provided a Commercial General Liability Policy to a division Ekco Industries, a manufacturer of certain types of cookware. In 1998, Ekco and Kmart, a chain distributor of its products were sued by Chantal Corp., another cookware maker. Chantal Corp. accused Ekco of making and selling a teakettle which was a less expensive, lower quality copy of its most popular model. Chantal sued for damages, alleging that Ekco infringed upon its product design, interfering with its sales.

Ekco filed a claim under its Travelers CGL policy which included coverage for "advertising injury." The insurer turned down the request, notifying the insured that it had no obligation to either defend the suit or pay under its CGL.

Ultimately Ekco made a settlement with Chantal and then pressed for recovery from Travelers. Both Ekco and Travelers filed for summary judgement in district court to resolve whether the CGL policy applied to Ekco’s claim. The court ruled in favor of Ekco, interpreting the policy provisions as being applicable to the damages paid to Chantal. Travelers appealed the decision.

The higher court centered its attention on Ekco’s argument that coverage exists due to the CGL granting coverage under the third source of loss that is listed under the advertising injury definition. The policy states that coverage applies to damage caused by

"c. Misappropriation of advertising ideas or style of doing business;"

The court reviewed related cases as well as alternate ways the language could be applied to one manufacturer selling a product that was similar and less expensive than a model made by another manufacturer. However, the court decided that the loss situation could reasonably be construed to involve a conventional understanding of "advertising". The court reversed the lower court’s decision and remanded the case.

Ekco Group, Inc.,Plaintiff, Appellee,v. The Travelers Indemnity Company Of Illinois, Defendant, Appellant. No. 01-1029 filed December 01, 2001. Reversed.