Tuesday, March 1, 2011, 3:11 PM

4th Circuit Limits Insurer's Duty In Furniture Trademark Case

The United States Court of Appeals for the Fourth Circuit affirmed a district court decision holding that Hartford Casualty Insurance Co. had no duty to defend furniture-maker representative Marvin J. Perry against Perry & Wilson's claims of trademark infringement.  The case is Perry Inc. v. Hartford Casualty Insurance Co. (Case No. 09-1639).

The dispute arose after Marvin J. Perry ("MJP") sold the tradename "Marvin J. Perry & Associates" to Perry & Wilson ("P&W") and MJP began using the name again, allegedly in violation of a 1993 agreement between the companies.  P&W sued MJP for unfair competition and trademark infringement in 2005.  That case settled in 2007.  MJP then sought recovery of its defense costs from its insurer, Hartford.

Hartford denied coverage, claiming that MJP's policy specifically excluded injuries related to intellectual property rights.  MJP countered that P&W's claims were directed to MJP's advertising activities and thus should be covered by the advertising injury clause of the policy.  The United States District Court for the District of Maryland sided with P&W and denied coverage.  On appeal, the Fourth Circuit affirmed, finding that P&W's complaint identified customer confusion as giving rise to its claim thus implicating the Lanham Act and violation of P&W's intellectual property.

The case is a good reminder for companies to check the scope of their general commercial liability policy for intellectual property exclusions and evaluate whether an "IP rider" is warranted.  In addition, the case lays a strategic map for litigation when the plaintiff wants to craft a complaint that either avoids or implicates insurance coverage for a defendant.

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