The opinion of the court was delivered by: JAY C. WALDMAN
This is an action by Atlantic Mutual Insurance Company ("Atlantic") against Brotech Corporation ("Brotech") for a declaratory judgment and ruling that Atlantic, under two comprehensive general liability policies it issued to Brotech, owes no duty to defend Brotech in a patent infringement action or to indemnify Brotech for any liability it may incur in that action.
Brotech filed a counterclaim seeking a declaration that Atlantic owes a duty to defend and indemnify Brotech as an insured. Brotech also filed a third-party complaint against Lexington Insurance Company ("Lexington") and Planet Insurance Company ("Planet") for similar relief based on their issuance of policies to Brotech after the effective coverage periods of the Atlantic policies.
Presently before the court is the Motion or Defendant and Third-Party Plaintiff Brotech Corporation for Partial Judgment on the Pleadings or, in the Alternative, Partial Summary Judgment on the Duty to Defend and the Cross-Motions for Summary Judgment of Plaintiff Atlantic Mutual Insurance and Third-Party Defendants Planet Insurance Company and Lexington Insurance Company.
All parties involved have requested a judgment on the pleadings under Fed. R. Civ. P. 12(c), or alternatively, partial summary judgment. Since all parties have presented material outside the pleadings which the court has considered, the court will treat the motions as motions for summary judgment pursuant to Fed. R. Civ. P. 56.
In considering a motion for summary judgment, the court must determine whether the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact, and whether the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Arnold Pontiac-GMC, Inc. v. General Motors Corporation, 786 F.2d 564, 568 (3d Cir. 1986). Only facts that may affect the outcome of a case under applicable law are "material." Anderson, supra at 248.
All reasonable inferences from the record must be drawn in favor of the non-movant. Anderson, supra at 256. Although the movant has the initial burden of demonstrating an absence of genuine issues of material fact, the non-movant must then establish the existence of each element on which it bears the burden of proof. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990), cert. denied, 499 U.S. 921, 111 S. Ct. 1313, 113 L. Ed. 2d 246 (1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)).
There is no dispute among the parties as to the following material facts pertinent to a resolution of this case.
On March 1, 1990, Rohm & Haas filed an action against Brotech for patent infringement. Rohm & Haas alleged that from 1981 Brotech has infringed certain patents by selling or using the products defined by the claims of those patents or by selling or using the products made by the processes defined by the claims of those patents. The Rohm & Haas litigation is proceeding in the District of Delaware. Brotech has incurred substantial costs.
On June 15, 1992, pursuant to two comprehensive general liability insurance policies that covered the period from November 6, 1981 to December 15, 1986, Brotech requested that Atlantic defend and indemnify Brotech in the Rohm & Haas litigation. On July 6, 1992 and July 23, 1992, Brotech made similar requests of Lexington and Planet respectively, pursuant to policies that covered the period from December 15, 1986 through October 1, 1990. All of the insurance companies denied coverage.
Atlantic's duty to defend and indemnify is contained in § II (A) of the Broad Form Comprehensive General Liability Endorsement entitled Personal Injury and Advertising Injury Liability Coverage. It provides that Atlantic:
. . . will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business, within the policy territory, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury, even if any of the allegations of the suit are groundless, false or fraudulent. . .
This boiler plate insurance contract provision is also contained in nearly identical form in the policies of Lexington and Planet.
The insurance companies denied Brotech's assertion that the patent infringement action was encompassed by the term "advertising injury".