Who Says Insurers Can't Win in Washington: Selman Breitman's Seattle Office Obtains Summary Judgment for Insurer on Duty to Defend in Advertising Injury Case in Washington State

February 2, 2016

Selman Breitman Seattle Office managing partner Peter Mintzer and senior associate Justin Landreth have obtained a ruling, on summary judgment, that our client, Evanston Insurance Company, owed no duty to defend its insured in a series of related lawsuits alleging misappropriation of trade secrets and unfair competition. The underlying suits asserted claims under the Lanham Act and state unfair competition law alleging the insured improperly obtained and used the underlying plaintiff's fire-retardant chemical treatment process in its sale of cedar roof shakes in California. The insured was alleged to have improperly obtained industry certification for their products treated with the proprietary process. Based on Washington law, the client agreed to defend the insured under reservation of rights under the Advertising Injury coverage afforded under Coverage B in the CGL policy. The client commenced a declaratory judgment action in federal court in Washington, a notoriously difficult state for insurers, seeking a declaration of no coverage, especially regarding the duty to defend.    

In granting Evanston's Motion for Summary Judgment, the Court agreed the allegations of misappropriation of trade secrets, Lanham Act violation, and unfair competition did not constitute Advertising Injury as defined in the Policy. Among other issues, the Court agreed that third party approvals or certifications, such as those certifying compliance with an industry standard, are not "advertising ideas." The Court further held that, in Washington, "misappropriation of advertising ideas involves the stealing of the manner in which another entity advertises goods, emulating their form, logo, or trade dress, and does not extend to appropriating another entity's goods and passing them off as your own."  Finally, the Court agreed that multiple exclusions would also apply in the event there was coverage, including exclusions for knowingly false publication and knowing violations of the intellectual property rights of another.

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