HIJACKING THE HOBBIT

Commercial General Liability	Advertising Injury	Infringement On Title
Copyright, Trade Dress Or Slogan	Trademark Infringement

In 2006, the Saul Zentz Company (Zentz) doing business as Tolkien Enterprises sued Hobbit Travel, a Minnesota travel agency, for wrongfully appropriating the “Hobbit” trademark owned by Tolkien. General Casualty of Wisconsin (General Casualty) insured Hobbit Travel under a commercial general liability policy (CGL) and an umbrella liability policy.

General Casualty defended Hobbit Travel under a reservation of rights. It then filed a declaratory judgment action in the U.S. District Court of Minnesota, asserting that Tolkien’s allegations were not an “advertising injury” offense within the meaning of the policies. Because Minnesota law had no precedent for this issue, the federal district court asked the Minnesota Supreme Court to determine if Tolkien’s trademark infringement allegations fell within the scope of the policies.

There were two specific certified questions: (1) Does trademark infringement fall within the scope of “misappropriation of advertising ideas or style of doing business” or constitute “infringement of copyright, title or slogan” as set forth in the CGL policy, and (2) Is a trademark an “advertising idea” or does trademark infringement constitute “infringing upon another’s copyright, trade dress or slogan” as set forth in the umbrella policy?

The relevant portions of the General Casualty CGL policy defined “advertising injury” as “injury arising out of...“misappropriation of advertising ideas or style of doing business” or “infringement of copyright, title or slogan.” As an initial matter, the Minnesota Supreme Court determined that the absence of the word “trademark” in the definitions did not foreclose the possibility that trademark infringement fell within the scope of the definition. The court then addressed the first certified question. It found that the trademark infringement fell within the plain and ordinary meaning of “infringement of title” in the General Casualty CGL policy. In reaching this decision, the court adopted a broad construction of the plain meaning of “title,” noting that such an interpretation was “more consonant with the canons of insurance policy interpretation.”

The court then addressed the second certified question. The General Casualty umbrella policy defined “advertising injury” as injury arising out of the “use of another’s advertising idea in your ‘advertisement.’” “Advertising” was not defined. General Casualty argued that “advertising” should be defined as “a device for the solicitation of business.” Hobbit Travel favored a broader definition: “The action of calling something to the attention of the public.” Again, the court chose to apply a broad definition. It then detailed the various ways that Hobbit Travel had used the “Hobbit mark,” including painting jets to identify them as the “Airline to Middle-earth” and using the word “Hobbit” on its Web site to attract public attention. Applying the facts to the definition, the court concluded that “Hobbit” was used as an “advertising idea.”

The court concluded that coverage existed under both policies because both certified questions were answered in the affirmative.

General Casualty Company of Wisconsin vs. Wozniak Travel, Inc.-No. A08-321-Supreme Court of Minnesota-March 19, 2009-762 North Western Reporter 2d 572