the record would support a finding that Applied reasonably expected when it purchased the policy that ASTM F959-94a would fit within the plain meaning of the policy term "advertising ideas." Thus, I am satisfied that ASTM F959-94a is not an "advertising idea."
In addition to there being no coverage under the plain meaning of the policy's terms, the courts that have considered the meaning of "misappropriation of advertising ideas" have defined it as "the wrongful taking of the manner by which another advertises its goods or services." Union Ins. Co. v. The Knife Co., 897 F. Supp. 1213, 1216 (W.D. Ark. 1995) (citing J.A. Brundage Plumbing v. Massachusetts Bay Ins., 818 F. Supp. 553, 557 (W.D.N.Y. 1993), vacated following settlement, 153 F.R.D. 36, 38 (W.D.N.Y. 1994)); Fluoroware, Inc. v. Chubb Group of Ins. Companies, 545 N.W.2d 678, 682 (Minn. App. Ct. 1996) ("the wrongful taking of another's manner of advertising.") (citations omitted). In Count III, Turner does not allege that Applied has wrongfully taken or misused the manner by which Turner or any other company advertises DTIs; rather, Turner alleges that Applied falsely advertises compliance with an industry testing standard, thereby causing Turner to lose sales to Applied. Turner intends to present evidence that Applied's DTIs do not comply with ASTM F959-94a. Turner does not intend to argue that Applied has wrongfully taken from Turner the idea to advertise the claim "all DTIs made to ASTM F959-94a."
Applied's alleged misuse of ASTM F959-94a also fails to qualify as a "misappropriation of ... style of doing business." The phrase "style of doing business" refers to a company's "comprehensive manner of operating its business." Poof Toy Products, Inc. v. United States Fidelity & Guar. Co., 891 F. Supp. 1228, 1232 (E.D. Mich. 1995) (quoting Saint Paul Fire & Marine Ins. Co. v. Advanced Int'l Sys., Inc., 824 F. Supp. 583, 585 (E.D. Va. 1993), aff'd, 21 F.3d 424 (4th Cir. 1994) (Table)); Fluoroware, 545 N.W.2d at 682; Atlantic Mut. Ins. Co, v. Badger Medical Supply Co., 191 Wis. 2d 229, 528 N.W.2d 486, 490 (Wisc. Ct. App. 1995). For there to be coverage, the underlying complaint must allege that Applied has in essence usurped Turner's "trade dress" or overall manner of conducting its DTI manufacturing business. See Saint Paul Fire, 824 F. Supp. at 585. I find that Applied's alleged misuse of ASTM F959-94a does not arguably amount to an allegation that Applied has wrongfully taken or misused Turner's "style of doing business."
For these reasons, USF&G is not required to defend or indemnify Applied, as the underlying suit does not potentially fall within coverage for "misappropriation of advertising ideas or style of doing business."
(2) "Infringement of ... slogan"
Applied contends that Count III of Turner's complaint alleges an "advertising injury" because the phrase "infringement of ... slogan" may be interpreted to mean "the non-fulfillment or the neglect to fulfill a representation made or position taken in advertising." Applied's Motion for Summary Judgment, p.27. In other words, Applied maintains that, because it allegedly fails to fulfill its representation that its DTIs are made to ASTM F959-94a, the underlying claim is covered as an "infringement of ... slogan." USF&G counters that the underlying complaint does not allege that Applied has infringed, or taken, Turner's "slogan," as Turner does not allege that it owns the phrase "all DTIs made to ASTM F959-94a" or that it uses that phrase when advertising.
The policy covers "'advertising injury' ... arising out of ... infringement of copyright, title, or slogan." A plain reading of this provision suggests that there is coverage only if Applied is alleged to have infringed Turner's ownership interest in or exclusive right to use a copyright, title, or slogan. Significantly, Applied has not cited any case, and I am unaware of any, in which a court has interpreted "infringement of ... slogan" to cover an underlying claim that does not involve an alleged infringement of an ownership interest in or exclusive right to use a slogan. Here, Turner alleges in the underlying suit that Applied falsely advertises that its DTIs conform to ASTM F959-94a. It is undisputed that Turner does not allege that it has an ownership interest in or an exclusive right to use "all DTIs made to ASTM F959-94a." Thus, assuming ASTM F959-94a is a "slogan" within the meaning of the policy, I am satisfied that the language "infringement of ... slogan" does not arguably require USF&G to defend or indemnify Applied.
As a final matter, Applied makes a more general argument that "advertising injury" should be defined in accordance with a statement made by the Vermont Supreme Court in Select Design, 674 A.2d 798. See Applied's Reply Memorandum, p.2. In Select Design, the court considered the meaning of the term "advertising" in a CGL policy that was identical to the policy at issue here. The issue presented in Select Design was whether the plaintiff had been "advertising" within the meaning of the provision that covers an underlying suit only if the injury occurs "in the course of advertising [the insured's] goods." 674 A.2d at 800 (emphasis added). The plaintiff argued that "advertising," as used in the above phrase, should be defined to include the solicitation of a competitor's known customers. The Vermont Supreme Court disagreed, choosing instead to define the term as "the widespread distribution of promotional material to the public at large." Id., at 801 (citations omitted). In rejecting the plaintiff's definition, the court made the following observation:
We find little congruity between the definition of 'advertising' offered by plaintiffs and the definition of 'advertising injury' set out in the policy before us. The term 'advertising injury,' as defined in the offenses set out in the policy, and as construed in an overwhelming majority of reported cases, is injury to another that results from the content of statements about the products or services of the insured.
674 A.2d at 802. Based on this passage, Applied argues that "advertising injury" should be defined as "injury to another that results from the content of statements about the products or services of the insured."
I will reject Applied's argument, primarily because the above-quoted sentence regarding the "meaning" of "advertising injury" is dictum: the meaning of "advertising injury" was not at issue in Select Design, and the court made the statement merely to emphasize that the plaintiff's definition of "advertising" in the phrase "in the course of advertising [the insured's] goods" was incorrect. Moreover, it is apparent the Select Design court did not intend to make the above statement to define "advertising injury" because "advertising injury" simply did not need to be defined. Like the present case, "advertising injury" in Select Design was defined in the policy by the four-subpart list of offenses. Only the four offenses, not the term "advertising injury" itself, would need to be interpreted or defined. Indeed, the reason why "advertising injury" always appears in the policy surrounded by quotation marks is to remind the reader to use only the four-subpart list of offenses to define that term. As such, Applied may not rely on the above-quoted passage from Select Design to define "advertising injury."
In summary, there is no possibility that USF&G has a duty to defend or indemnify under the policy, as the Count III of the underlying complaint does not allege an "advertising injury."
b. First-publication exclusion
Assuming arguendo that Turner's Count III does potentially fall within the policy definition of "advertising injury," I find that USF&G is under no duty to defend or indemnify in light of the policy's "first-publication exclusion." Expressly excluded from coverage is an "'advertising injury' ... arising out of oral or written publication of material whose first publication took place before the beginning of the policy period." USF&G argues that coverage is excluded because Applied's injurious advertisement was first published before coverage began. I agree.
Under the plain terms of the exclusion, USF&G need not defend or indemnify because the policy's coverage began on January 18, 1995, and Applied first published the claim "all DTIs made to ASTM F959-94a" sometime before January 18, 1995.
Applied contends that the first-publication exclusion does not control because Turner's complaint alleges a "continuous tort": namely, that there is coverage because, although Turner may have first suffered advertising injury prior January 18, 1995, Turner also suffered advertising injury while the policy's coverage was in effect. This argument is without merit. Under the exclusion's plain terms, the "first publication" date is a landmark: if the injurious advertisement was "first published" before the policy coverage began, then coverage for the "advertising injury" is excluded. See Advance Watch Co. v. Kemper Nat'l Ins. Co., 878 F. Supp. 1034, 1042-43 (E.D. Mich 1995); P.J. Noyes Co. v. American Motorists Ins. Co., 855 F. Supp. 492, 495 (D.N.H. 1994); John Deere Ins. Co. v. Shamrock Indus., 696 F. Supp. 434, 440-41 (D. Minn. 1988), aff'd, 929 F.2d 413 (8th Cir. 1991) (Table). It is irrelevant that later publications, made after the policy became effective, also caused "advertising injury" or increased the damages.
The exact date on which Applied first published "all DTIs made to ASTM F959-94a" is not established in the record. Nevertheless, Applied does not dispute that the first publication was made prior to January 18, 1995, and any publication of "all DTIs made to ASTM F959-94a" that was made prior to January 18, 1995, caused injury of the type Turner claims to have suffered (i.e., lost sales to Applied). See Dogloo, Inc. v. Northern Ins. Co. of N.Y., 907 F. Supp. 1383, 1391 (C.D. Cal. 1995) ("Based on the record before it, the Court cannot say that any advertising published prior to the policy period caused the type of injury alleged in [the underlying complaint]."); Hartford Accident & Indem. Co. v. Sherwood Brands, Inc., 111 Md. App. 94, 680 A.2d 554, 561 (Md. Ct. App. 1996) (same analysis). Therefore, even though Turner alleges that "advertising injury" occurred due to publication of "made to ASTM F959-94a" during the policy period, summary judgment in favor of USF&G is appropriate because the insurer has established conclusively that the "first" injurious publication predated policy coverage. See John Deere, 696 F. Supp. at 440-41. The exclusion cannot be read, as Applied urges, to bar coverage only if all of the injurious publications alleged in the underlying complaint occurred outside of the coverage period. Such a reading ignores the plain meaning of the exclusion's unambiguous terms. See Advance Watch, 878 F. Supp. at 1043 (rejecting the "continuous tort" argument as meritless in light of clear terms of the first-publication exclusion).
Applied contends that it seeks coverage from USF&G for advertising injury that Turner suffered during the policy coverage period only, and thus, Applied argues, the first-publication exclusion, which pertains to events that occurred prior to policy coverage, has no bearing on whether the underlying suit is covered. Applied supports this argument by claiming that Turner suffers a "different" injury each time Applied publishes "made to ASTM F959-94a" because Turner allegedly loses sales to different customers each time Applied publishes the offending advertisement. Applied thus argues that, because Turner's injuries during the policy coverage period are distinct from those that arose prior to the coverage period, any publication Applied made prior to coverage should simply be disregarded.
Once again, Applied ignores the plain language of the policy. The policy excludes coverage if the "first publication" of the offending advertisement was made before the coverage period began. Thus, the only dispositive issue under this exclusion is whether the injurious advertisement was "first published" prior to coverage. It is irrelevant that the injurious publication caused a variety of different injuries before and during the coverage period. Applied does not dispute that the only injurious advertisement challenged in the underlying suit is the claim "all DTIs made to ASTM F959-94a." Applied also concedes that the first time this advertisement was published was before coverage began. Based on these facts, the exclusion bars coverage. Whether Turner suffers a different type of injury following each publication of Applied's advertisement is irrelevant under the plain terms of the exclusion, and Applied cannot seek coverage for injuries Turner suffered during the policy period when it concedes that the offending advertisement was "first published" prior to the date coverage began.
In addition to its "continuous tort" arguments, Applied argues that there is coverage because the first-publication exclusion applies only to an "advertising injury" arising out of libel, slander and invasion of privacy torts, and does not apply to an "advertising injury" arising out of "misappropriation of advertising ideas or style of doing business" and "infringement of ... slogan." To support this argument, Applied relies on Irons Home Builders, Inc. v. Auto-Owners Ins. Co., 839 F. Supp. 1260 (E.D. Mich. 1995). In Irons Home, the district court ruled that the first-publication exclusion applies to "advertising injury" as defined by the offenses listed in subparts (a) and (b) of the policy definition, but does not apply to the offenses listed in subparts (c) and (d) of that definition.
The court reached this conclusion by reasoning that
the exclusion provision refers to the 'oral or written publication of material.' It mimics the provisions of the policy that relate to advertising injury involving libel, slander, and invasion of privacy. In each case, advertising injury is defined as the 'oral or written publication of material' that is slanderous or libelous or invades privacy. The clear implication is that the exclusion provision relied upon by [the insurer] merely limits the coverage for advertising injury that arises from those three particular torts.
839 F. Supp. at 1264.
I disagree with the Irons Home interpretation of the policy. In my view, the first-publication exclusion must be read to apply to the entire definition of "advertising injury," which includes the offenses of "misappropriation of advertising ideas or style of doing business" and "infringement of copyright, title, or slogan." In the policy, the term "advertising injury" is always surrounded by quotation marks, and it appears with quotation marks in the first-publication exclusion. "Advertising injury" is defined by the four, not two, offenses expressly set forth in the policy to define "advertising injury." The first-publication exclusion bars coverage for "'advertising injury' ... arising out of oral or written publication of material whose first publication took place before the beginning of the policy period." I read this exclusion to mean that "advertising injury," which I must assume the insurance company intentionally surrounded with quotation marks when it used that term in the exclusion, has the same four-subpart meaning when used in the exclusion that it has every other time it appears in the policy surrounded by quotation marks.
The exclusion must be read to give effect to the plain meaning of "advertising injury." When that is done, it is certainly irrelevant that some of the language in the exclusion happens to match some of the words in subparts (a) and (b) of the definition of "advertising injury" but not match some of the language in subparts (c) and (d). Accordingly, I find that the first-publication exclusion applies to all of the offenses listed in the four-subpart definition of "advertising injury," which would include any "advertising injury" alleged by Turner.
Finally, it seems evident that the first-publication exclusion was inserted in the policy to avoid precisely the situation presented in this case. In December, 1994, Applied began advertising that its DTIs satisfied ASTM F959-94a. Thereafter, on January 18, 1995, Applied obtained a CGL policy providing coverage for "advertising injury," and then continued its advertising campaign by republishing its claim "all DTIs made to ASTM F959-94a." Obviously, USF&G never intended to provide coverage for such republications during the policy period.
In summary, pursuant to the first-publication exclusion, USF&G is not required to defend or indemnify the underlying allegation of "advertising injury" (assuming arguendo there is an underlying allegation of "advertising injury").
USF&G's cross-motion for summary judgment will be granted, as the underlying complaint does not arguably allege an "advertising injury." If there is an "advertising injury," the policy's first-publication exclusion bars coverage. Applied's motion for summary judgment will be denied, and judgment will be entered in favor of USF&G.
An appropriate order follows.
For the reasons set forth in the accompanying memorandum, it is ORDERED that Plaintiff's "Motion for Summary Judgment on Issues of Liability" (Docket Entry # 7) is DENIED, and Defendant's Cross-Motion for Summary Judgment (Docket Entry # 9) is GRANTED. Accordingly, it is FURTHER ORDERED that JUDGMENT is entered in favor of the Defendant, United States Fidelity & Guaranty Company, and against the Plaintiff, Applied Bolting Technology Products, Inc.
BY THE COURT:
Donald W. VanArtsdalen, S.J.