Opinion
Civil Action No. 04-2194-CM.
February 22, 2005
MEMORANDUM AND ORDER
On May 5, 2004, plaintiff Triple M Financing Company (Triple M) filed this action requesting a declaratory judgment that defendant Universal Underwriters Insurance Company (Universal) has a duty to defend and indemnify Triple M for a patent infringement suit (the underlying suit or the Driver ID action) brought against Triple M by Driver ID, Inc. (Driver ID) in the Eastern District of Michigan on February 3, 2000.
This matter comes before the court on Triple M's Motion for Partial Summary Judgment (Doc. 8), Universal's Cross Motion for Summary Judgment (Doc. 15), Triple M's Cross Motion for Summary Judgment #2 (Doc. 32), Triple M's Motion for Oral Argument (Doc. 39), and Universal's Motion for Leave to File Sur-Reply (Doc. 48). The parties have each moved for summary judgment on Universal's duty to defend and indemnify Triple M for the Driver ID action. In ruling on the pending summary judgment motions, the court also addresses Triple M's Requests for Judicial Notice (Docs. 10 and 26), and Triple M's Evidentiary Objections to the Affidavits of Mark Duplantis and Laura Manville (Docs. 27 and 38).
Both parties have moved for summary judgment. The court may therefore assume that no evidence needs to be considered other than that filed by the parties, but summary judgment is nevertheless inappropriate if disputes remain as to material facts. James Barlow Family Ltd. P'ship v. David M. Munson, Inc., 132 F.3d 1316, 1319 (10th Cir. 1997).
Universal issued Triple M a Commercial General Liability (CGL) insurance policy, no. 038401, effective July 1, 1998 through July 1, 1999. The policy was renewed for the periods July 1, 1999 to July 1, 2000, and from July 1, 2000 to July 1, 2001, consecutively.
The policy provides in relevant part as follows:
GENERAL LIABILITY UNICOVER COVERAGE PART 950
INSURING AGREEMENT — WE will pay all sums the INSURED legally must pay as DAMAGES (including punitive DAMAGES where insurable by law) because of INJURY to which this Coverage Part applies, caused by an OCCURRENCE arising out of the following hazards when shown in the declarations. WE have the right and duty to defend any SUIT asking for these DAMAGES. WE may investigate and settle any claim or SUIT WE consider appropriate. OUR payment of the limit shown in the declarations ends OUR duty to defend.
WE have no right or duty to defend SUITS for DAMAGES not covered or declared by this Coverage Part.
. . . .
"DAMAGES" means amounts awardable by a court of law. . . . DAMAGES does not mean civil penalties, fines or assessments.
INJURY will also mean the following Groups, when shown in the declarations:
. . . .
Group 3 — false arrest, false imprisonment, wrongful eviction, wrongful detention, malicious prosecution, abuse of process, libel, slander, defamation of character, private nuisance (except pollution), invasion of rights of privacy or possession of personal property;
Group 4 — plagiarism, misappropriation of advertising ideas or style, infringement of copyright, title, slogan or trademark.
. . . .
With respect to INJURY Groups 3, 4, 5 and 6, OCCURRENCE means acts of the INSURED during the Coverage Part period which result in such INJURY.
"SUIT" means a civil action for DAMAGES, including arbitration or mediation to which the INSURED must submit or submits with OUR consent. . . .
WHO IS AN INSURED — Except with respect to CUSTOMER COMPLAINT DEFENSE:
(1) YOU;
. . . .
(3) Any of YOUR partners . . . while acting within the scope of their duties as such;
. . . .
WHO IS NOT AN INSURED — Any partnership or joint venture, unless the partnership or joint venture is shown in the declarations as a Named Insured. This does not apply to any joint venture of which YOU are a part, with respect to any coverage afforded to YOU under Group 4 of the definition of INJURY.EXCLUSIONS — This insurance does not apply to:
. . . .
(m) INJURY, as defined in Groups 3 and 4 if the first injurious offense was committed prior to the Coverage Part period;. . . .
Universal also issued an umbrella policy, no. 083840I, entitled Umbrella Unicover Coverage Part 980, to Triple M for the policy periods July 1, 1998 through July 1, 1999. Universal renewed the policy for the periods July 1, 1999 to July 1, 2000, and from July 1, 2000 to July 1, 2001, consecutively. The umbrella policy is an excess policy that provides coverage over and above the amounts listed in the CGL policy. The umbrella policy contains identical language with regard to all relevant provisions of the CGL policy at issue in this case.
The Driver ID action was filed against Triple M and Payment Protection Systems, Inc. (PPSI) on February 3, 2000. The Driver ID complaint alleges that Triple M and PPSI committed patent infringement. Driver ID specifically alleged:
Count I — Patent Infringement
. . . .
6. Plaintiff is the owner by assignment of U.S. Letters Patent No. 5,519,260 issued May 21, 1996, a copy of which is attached to this complaint as Exhibit A.
7. . . . Defendants have infringed said Letters Patent No. 5,519,260 and will continue to do so in this judicial district and elsewhere throughout the United States to the irreparable damage of Plaintiff unless enjoined by this Court; 35 USC Section 271(a), Section 271(b) and Section 271(c).
. . . .
WHEREFORE, Plaintiff prays that:
1. the Defendants, both severally and jointly, account for and pay to Plaintiff all damages sustained by Plaintiff as determined by the jury by reasons of Defendants' infringement of said Letters Patent.
Driver ID attached a copy of its U.S. Patent to the complaint. A section entitled "Abstract" describes the patent as follows:
A system is provided for use with an automotive vehicle having a normally disabled ignition system. Each driver license is encoded with indicia, such as a magnetic strip, indicative of the identity of the driver. This driver's license is inserted into a reader container in the vehicle which then generates an identification signal representative of the identity of the driver's license. A microprocessor then compares the identification signal from the driver's license with prerecorded computer memory representative of the authorized driver(s) for the vehicle. When the driver's license identification signal matches the stored data in memory, the microprocessor generates an output signal which enables the vehicle ignition system. Alternatively, when the driver's license identification signal does not match the stored data, a radio transmitter transmits the driver's license identification signal to a central station which compares this signal against stored data representative of a plurality of different drivers. If a match is obtained, the central station generates a radio signal back to a radio receiver at the vehicle which is read by the microprocessor and the microprocessor then generates an output signal which enables the ignition system. Alternatively, a timer is employed to allow operation of the vehicle only during prescribed time periods. In still a further modification, the system includes a radio receiver which receives a radio signal from a transmitter on an ankle bracelet worn by a person with a restricted driver's license. Once the receiver detects the radio signal from the bracelet, a microprocessor compares the current time with a time schedule containing the time periods during which operation of the vehicle by the selected person is unauthorized. In the event that operation of the vehicle is unauthorized, the microprocessor generates a disabled signal which disables operation of the vehicle.
Triple M's allegedly infringing product, the On-Time Payment System, is implanted in used cars sold and/or leased by Triple M to customers with bad credit. The device is programmed to shut off the car at a pre-set time if the owner fails to make payments by their due date and insert a payment code into the device. Triple M advertised the On-Time System in booklets, seminar handouts, customer brochures and a video tape. The On-Time System was also featured in news segments on CNN, CBS and ABC.
In subsequent discovery in the Driver ID action, Driver ID asserted that Triple M and PPSI had infringed Driver ID's patent in their manufacture, use, sale and/or offer to sell vehicle disabling devices that fall within the scope of claims 7 and 8 of the patent.
Claims 7 and 8 are described in the U.S. Patent as follows:
7. For use with an automotive vehicle having an ignition system, a system for permitting operation of the vehicle only during preset time periods consisting of:
a clock having an output signal indicative of the time of day,
a timer circuit which receives said clock output signal and generates an ignition system enabling signal only when said clock signal is with a preset time period,
means for connecting said ignition signal enabling signal to the vehicle ignition system to thereby enable the vehicle ignition only during said preset time period.
8. The invention as defined in claim 7 and further consisting of means for adjusting said preset time period.
Triple M contends that, on February 17, 2000, Triple M tendered the defense, settlement and indemnity of the Driver ID action to Universal and that Universal rejected Triple M's tender. Universal contends that it neither agreed to defend and indemnify Triple M nor rejected Triple M's demand in February 2000. Universal claims it did not receive notice of the Driver ID action until May 4, 2004, via letter from Triple M. In any event, Universal has refused to defend and indemnify Triple M in the Driver ID action.
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut," rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
III. Procedural Issues
A. Requests for Judicial Notice (Docs. 10 and 26)
Triple M seeks judicial notice, pursuant to Fed.R.Evid. 201, of various dictionary definitions of the terms "personal property," "invasion," "possession," "offense," "injury," "advertise," "idea," "misappropriate," and "piracy" to show that, under the ordinary understanding of the terms, Universal had a duty to defend Triple M in the Driver ID action. Triple M contends that Kansas is a "plain meaning" jurisdiction and that the court must first afford contractual terms their objectively reasonable meaning when interpreting contractual provisions. Triple M argues that dictionary definitions are a common source for determining the ordinary meaning of terms that are not defined in the insurance policy. Triple M has also requested that the court take judicial notice of a July 25, 2000 article by Lekan Oguntoyinbo entitled "Lawyer's Gadget Parks Criminals," in which the inventor of the vehicle disabling device made statements regarding the Driver ID action. Triple M contends that the article demonstrates that Driver ID has alleged that Triple M's technology is an adaptation of the same advertising concept that Driver ID claims is the core of its inventive concept.
Universal opposes Triple M's request, contending that judicial notice of dictionary definitions of technical terms in an insurance policy is not appropriate without competent testimony regarding the meaning of those terms under the insurance policy at issue in this case. Universal further argues that a dictionary definition does not properly encompass the meaning of terms in an insurance policy without evaluation of the context in which the terms are used. Universal points out that construction of an insurance contract is a matter of law for the court, and thus judicial notice of the terms is unwarranted.
The Federal Rules of Evidence allow the court to take judicial notice of adjudicative facts. R. 201(a). According to Fed.R.Evid. 201(b), "A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to resources whose accuracy cannot reasonably be questioned." Id. "Because the effect of judicial notice is to deprive a party of the opportunity to use rebuttal evidence, cross-examination, and argument to attack contrary evidence, caution must be used in determining that a fact is beyond controversy under Rule 201(b)." Int'l Star Class Yacht Racing Assoc. v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 66, 70 (2nd Cir. 1998).
In this case, the court finds that judicial notice is not appropriate. While the court may use dictionary definitions to assist in its determination of the meaning of terms in the insurance policy, taking judicial notice of the definitions set out by Triple M would eliminate the court's ability to interpret the policy terms in the context of the insurance policy as a whole. In this case, the court finds that the terms for which Triple M requests judicial notice are subject to reasonable dispute. With regard to the July 25, 2000 article, the court finds that the statements made in the article fall outside the scope of Rule 201. Accordingly, Triple M's requests for judicial notice are denied.
B. Evidentiary Objections to Affidavits (Docs. 27 and 38)
Triple M objects to the affidavit of Mark Duplantis that Universal served in support of its opposition to Triple M's motion for partial summary judgment and in support of Universal's cross motion for summary judgment. Triple M contends that Duplantis' affidavit presents inadmissible hearsay, lacks foundation, lacks personal knowledge, and is speculative.
Triple M also objects to the affidavits of Mark Duplantis and Laura Manville that Universal served in support of Universal's reply brief and in opposition to Triple M's cross-motion for summary judgment. Triple M contends that the affidavits fail to establish that either Duplantis or Manville had personal knowledge of claim handling activities in February 2000; thus, the information they proffered is inadmissible hearsay and speculative.
The information in Duplantis' and Manville's affidavits address the timing of Triple M's notice of the Driver ID action to Universal. Because the matters contained in the Duplantis and Manville affidavits are immaterial to the court's ruling, the court does not address Triple M's evidentiary objections.
D. Motion to File Sur-Reply (Doc. 48)
Universal has moved for leave to file a sur-reply for the limited purpose of amending the affidavits of Duplantis and Manville, and to add the affidavit of Jane Allen. Universal contends that its request is in response to Triple M's reply brief, which asserted several objections to the Duplantis and Manville affidavits. Triple M contends that Universal's request is an untimely response to the objections to the affidavits and does not meet the purposes set forth under the Local Rules for filing sur-replies.
Upon analyzing the motions for summary judgment, the court has concluded that the information contained in Duplantis', Manville's and Allen's affidavits is immaterial to the disposition of the motions for summary judgment. Accordingly, the court denies Universal's Motion to File Sur-Reply.
E. Motion for Oral Argument (Doc. 39)
Triple M has requested, pursuant to Local Rule 7.2, that the court hear oral arguments on the summary judgment briefing. Local Rule 7.2 provides that "[r]equests for oral arguments on motions shall be granted only at the discretion of the court." The court finds that oral argument will not materially assist in the disposition of the motions before the court. Accordingly, having found a sufficient basis for ruling on the pleadings before the court, the court denies Triple M's Motion for Oral Argument.
IV. Discussion
In a diversity action, the court uses state law to define the terms of insurance policies and determine the scope of Universal's duty to defend. The parties do not dispute, and the court agrees, that Kansas law applies to the issues raised in the summary judgment motions.
Universal asserts that it has neither a duty to defend nor indemnify in the Driver ID action. Universal claims that under federal and Kansas law, there is no coverage for the patent infringement claim brought by Driver ID under the insurance policy language at issue. Universal also points out that there are separate insurance policies available to cover patent infringement claims, and that, while the policy covers infringement of copyright, title, slogan or trademark, the policy does not specifically cover patent infringement.
Triple M contends that coverage arises under Group 3 of the policy as "invasion . . . of possession of personal property" or under Group 4 as "misappropriation of advertising ideas or style."
A. Duty to Defend
"The duty to defend and whether the policy provides coverage are not necessarily coextensive." Spivey v. Safeco Ins. Co., 254 Kan. 237, 246, 865 P.2d 182 (1993). An insurer has a duty to defend if there is a potential for liability under the contract. Id. at 245. The determination of whether there is a duty to defend ultimately depends upon whether coverage exists under an insurance policy. Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 709-10, 732 P.2d 741 (1987) (citing Spruill Motors, Inc. v. Universal Underwriters Ins. Co., 212 Kan. 681, 684, 512 P.2d 403 (1973)); Cas. Reciprocal Exch. v. Thomas, 7 Kan. App. 2d 718, 647 P.2d 1361 (1982) (holding that insurer has no duty to defend if there is no coverage). Moreover, with respect to whether an insurer has a duty to defend, the court must examine the complaint in the underlying action and decide whether there are any allegations that arguably or potentially bring the action within coverage. Am. Motorists Ins. Co. v. Gen. Host Corp., 946 F.2d 1482, 1490 (10th Cir. 1991). In other words, the complaint must state facts suggesting that the case falls within the policy's coverage.
The duty to defend rests primarily on the possibility that coverage exists, and the possibility of coverage must be determined by a good faith analysis of all information the insurer may know or could have reasonably ascertained. Aselco, Inc. v. Hartford Ins. Group, 28 Kan. App. 2d 839, 847, 21 P.3d 1011 (2001). Thus, the insurer determines if there is a potential of liability under the policy by examining the allegations in the complaint and considering any facts brought to its attention or which it could reasonably discover. "Where a petition alleges an act that is clearly not covered, for example, that the defendant acted willfully and intentionally, there would be no potential of liability under the policy for intentional acts." Spivey, 254 Kan. at 245-46, 865 P.2d 182. If ambiguities in coverage are judicially determined against the insurer, the ultimate result controls the insurer's duty to defend. Aselco, Inc. v. Hartford Ins. Group, 28 Kan. App. 2d 839, 847, 21 P.3d 1011 (2001) (quoting Steinle v. Knowles, 265 Kan. 545, 554, 961 P.2d 1228 (1998)).
To determine whether an insurance contract is ambiguous, the court must consider not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean. Hodgson v. Bremen Farmers' Mut. Ins. Co., 27 Kan. App. 2d 231, 233, 3 P.3d 1281 (1999). This should not be confused with the insured's uninformed expectations of the policy coverage; it only requires the policy to be read as a reasonably prudent insured would read it. Where an insurance contract is not ambiguous, the courts will not make another contract for the parties but will enforce the contract as written. Elliott v. Farm Bureau Ins. Co. Inc., 26 Kan. App. 2d 790, 793, 995 P.2d 885 (1999). An insurance policy is not ambiguous unless there is a "genuine uncertainty as to which of two or more possible meanings is proper." Crescent Oil Co. v. Federated Mut. Ins. Co., 20 Kan. App. 2d 428, 433, 888 P.2d 869 (1995). The policy must be read as a whole. Lightner v. Centennial Life Ins. Co., 242 Kan. 29, 35, 744 P.2d 840 (1987).
Under these standards, the issue is whether the Driver ID action gave rise to the possibility of coverage when Triple M requested defense and indemnity from Universal. Specifically at issue is whether Driver ID's patent infringement claims falls under either the definition of the injuries of "misappropriation of advertising ideas or style" or "invasion . . . of possession of personal property." The court finds that they do not.
1. Misappropriation of Advertising Ideas or Style
Universal's policy does not explicitly define the phrase "misappropriation of advertising ideas or style." Neither party argues that the language of the policy is ambiguous. Rather, Triple M argues that, reading the policy as a reasonably prudent insured would read it, Driver ID's claims fall within the meaning of the phrase "misappropriation of advertising ideas or style." Triple M argues at length that its advertisement of the On-Time System is at the core of Driver ID's patent infringement claims. The court disagrees.
Plaintiff also argues that the phrase "misappropriation of advertising ideas or style" replaced the terms "piracy" and "unfair competition" in older CGL policies. Plaintiff provided a lengthy history of changes in CGL policies, and documents from the Insurance Services Office, an insurance industry standard organization, on the changes in contract drafting. Plaintiff also provided the testimony of an expert to bolster its arguments regarding the evolution of the phrase "misappropriation of advertising ideas or style" in CGL policies. Plaintiff thus contends that the phrase should be defined to include piracy, which would, by plaintiff's definition, include patent infringement claims. Because the language of the policy at issue is unambiguous, the court declines to consider plaintiff's arguments in this regard. See United Nat. Ins. Co. v. SST Fitness Corp., 182 F.3d 447, 450 n. 1 (6th Cir. 1999) (declining to address similar arguments where policy language not ambiguous); see also Curtis-Universal, Inc. v. Sheboygan Emergency Med. Servs. Inc., 43 F.3d 1119, 1123 (7th Cir. 1994) ("It would be odd if an insured had to do legal history to figure out the scope of its insurance coverage.") However, even if the court considered plaintiff's argument, it would be unsuccessful. See Iolab Corp. v. Seaboard Sur. Co., 15 F.3d 1500, 1505 (9th Cir. 1994) (finding that patent infringement not piracy related to advertising); Gencor Indus., Inc. v. Wausau Underwriters Ins. Co., 857 F. Supp. 1560, 1566 (M.D. Fla. 1994) (finding that the terms piracy and unfair competition do not include patent infringement).
The patent infringement alleged in the Driver ID complaint does not, in any way, allege that Triple M used Driver ID's patented advertising technique or misused Driver ID's advertising ideas. In fact, the complaint does not allege any type of advertising injury. Rather, Driver ID alleges that Triple M infringed on its patented technology by its manufacture, use, sale and/or offer to sell vehicle disabling devices that fall within the scope of Driver ID's patent. The fact that Triple M subsequently advertised the On Time System has no bearing on the claims as alleged in the Driver ID complaint.
Despite the absence of an on-point case in Kansas case law, the overwhelming majority of courts that have examined this issue have found that patent infringement claims, such as the ones alleged by Driver ID, do not fall within the definition of the phrase "misappropriation of advertising ideas or style [of doing business]" in CGL policies. See, e.g., Green Mach. Corp. v. Zurich-Am. Ins. Group, 313 F.3d 837, 841 (3rd Cir. 2002) (holding that underlying patent infringement claims not covered in definition of misappropriation of advertising ideas, and noting that: "[m]isappropriation of an advertising idea is the wrongful taking of an idea concerning the solicitation of business and customers. Misappropriation of a style of doing business is the wrongful taking of a company's plan for interacting with customers and getting their business. There are no such allegations in the underlying action which form the basis for [the insured's] request for coverage under its policy of insurance with [the insurer]."); Fantasia Accessories, Ltd. v. N. Assurance Co., 2001 WL 1478807 at *5 (S.D.N.Y. Nov. 20, 2001) (finding that the phrase "misappropriation of advertising ideas or style of doing business," although not defined in the insurance policy, was not ambiguous, and holding that, defining the terms as they would be understood by a lay person, patent infringement, including design patent infringement, is outside the scope of advertising idea); Green Mach. Corp. v. Zurich-Am. Ins. Group, 2001 WL 1003217 at *4 (E.D. Pa. Aug. 24, 2001) (holding that patent infringement that is made the subject of advertising is not, in and of itself, an advertising idea, and the fact that advertising exposed the alleged misappropriation did not place patent infringement claims into the meaning of misappropriation of an advertising idea); Heritage Mut. Ins. Co. v. Advanced Polymer Tech., Inc., 97 F. Supp. 2d 913, 926 (S.D. Ind. 2000) (defining the phrase "misappropriation of advertising idea" broadly as "the insured wrongfully took an idea about the solicitation of business" and finding that patent infringement claims are not encompassed within the definition); Intelicad Computers, Inc. v. Travelers Property Cas. Co., 1998 WL 34007420 at *2 (N.D. Okla. Sept. 29, 1998) (holding that patent infringement does not constitute misappropriation of advertising ideas or style of doing business). In fact, the Ninth Circuit has held that, "'as a matter of law, patent infringement cannot occur in the course of an insured's advertising activities.'" Id. (citing Simply Fresh Fruit, Inc. v. Cont'l Ins. Co., 94 F.3d 1219, 1222 (9th Cir. 1996)).
The Tenth Circuit has set forth a two-part test for analyzing whether coverage exists for an advertising injury under similar CGL policies in both Novell Inc. v. Federal Insurance Company, 141 F.3d 983 (10th Cir. 1998) and IDG, Inc. v. Continental Casualty Company, 275 F.3d 916 (10th Cir. 2001). "We first examine whether [the underlying plaintiff's] complaint alleged a predicate offense, i.e., one of the offenses specifically listed in the definition of 'advertising injury.' We then examine whether there was any causal connection between the underlying plaintiff's alleged injuries and the instant plaintiff's advertising activities." IDG, Inc., 275 F.3d at 921 (citing Novell, 141 F.3d at 986). In this case, the parties agree that the policy does not state that there has to be a causal relationship, and there is no separate "advertising injury" or a definition of "advertising injury" in the policy. Nonetheless, the Tenth Circuit's analysis of the meaning of the phrase "misappropriation of advertising ideas or style of doing business" is instructive in this case.
According to Triple M, a misappropriation offense potentially arises from Driver ID's allegation that Triple M offered the On-Time technology for sale. However, alleging that infringement occurred by Triple M offering to sell the infringing product does not constitute a claim that Triple M wrongfully took Driver ID's ideas for selling the product or its manner of operating its business. Offering to sell is simply one of the ways that Driver ID alleges that Triple M infringed its patent. Neither Driver ID's complaint, nor the additional information provided to the court, reference Triple M's advertising ideas or business styles or that Triple M misappropriated them from Driver ID. The claims alleged by Driver ID simply do not constitute misappropriation of advertising ideas or style. See Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. United Catalysts, Inc., 182 F. Supp. 2d 608, 610-12 (W.D. Ky. 2002) (holding that patent infringement does not constitute advertising injury, even when an offer to sell claim is part of the underlying patent infringement claims).
Moreover, the inclusion of an offer to sell claim does not change the analysis of whether patent infringement is recognized as a misappropriation of an advertising idea or style of doing business. Homedics, Inc. v. Valley Forge Ins. Co., 315 F.3d 1135, 1141 (9th Cir. 2003). "[T]he fact that offering to sell an infringing product may now trigger a patent infringement action, see 35 U.S.C. § 271(a), does not render infringement of that type an 'advertising injury' within the meaning of the insurance policy." Precision Automation, Inc. v. West Am. Ins. Co., 1999 WL 1073819 at *2 (9th Cir. Nov. 24, 1999).
The record before the court is clear that Driver ID sued Triple M for patent infringement arising out of Triple M's misappropriation of the vehicle disabling technology, and not from Triple M's promotion of the technology to its potential customers. "'The fact [the insured] may have advertised the competing product to consumers simply did not cause [the underlying plaintiff's] injuries.'" IDG, Inc., 275 F.3d at 923 (citing Novell, Inc., 141 F.3d at 988). "When the claim for infringement exists irrespective of the advertising activities, the claim for defense must fail." Farmington Cas. v. Cyberlogic Techs., 996 F.Supp. 695, 704 n. 17 (E.D. Mich. 1998).
In this case, a reasonable interpretation of the phrase "misappropriation of advertising ideas or style" simply does not encompass the patent infringement claims that Driver ID has alleged. In fact, specific coverage for any type of patent infringement claim is conspicuously absent from the policy at issue.
2. Invasion of Possession of Personal Property
Triple M similarly argues that Driver ID's patent infringement claims fall within the definition of "invasion . . . of possession of personal property." Triple M contends that the term "personal property" includes both tangible and intangible property and that by piecing together dictionary definitions of each of the terms in the phrase "invasion of possession of personal property," coverage of Driver ID's claims is warranted.
Universal contends that it is doubtful that the plain, ordinary meaning of the term "personal property" would be interpreted to include a patent because a patent is generally characterized as an "intangible right" as opposed to a tangible piece of property. Universal further contends that infringement upon patented technology does not in any way prevent the patent holder from using or possessing the patented product.
The court agrees that the reasonable meaning of the phrase "invasion of possession of personal property" does not tend toward inclusion of patent infringement. Again, neither party contends that the policy language is ambiguous. Specific coverage for patent infringement is noticeably absent from the policy at issue. Moreover, there were separate insurance policies available to Triple M that would have provided specific coverage for patent infringement. The court is unwilling, from the plain language of the policy, and especially in light of the underlying claims, to construe the phrase "invasion of possession of personal property" as covering patent infringement claims.
The policy itself is not ambiguous; plaintiff simply wants the court to infer that the Driver ID claims are covered by creative interpretation of the phrases "misappropriation of advertising ideas or style" and "invasion of possession of personal property," and through creative construction of Driver ID's claims. The court has examined the complaint and other available materials in the Driver ID action and has not found any allegations that arguably or potentially bring the action within coverage under either of the phrases on which Triple M relies.
The court will not make another contract for the parties but will enforce the contract as it is written. Accordingly, Universal is not required to defend Triple M in the Driver ID action.
B. Duty to Indemnify
The duty to indemnify is narrower than the duty to defend. Freightquote.com, Inc. v. Hartford Cas. Ins. Co., ___ F.3d ___, 2005 WL 290087 at *6 (10th Cir. Feb. 8, 2005) (citing Am. Motorists Ins., 946 F.2d at 1488-89). "Although the duty to defend is determined by the allegations of the underlying complaint and any facts the insurer independently knew or could have reasonably ascertained, the duty to indemnify is determined by the facts as they are established at trial or as they are finally determined by some other means, such as settlement." Id.
Triple M has not provided any information about settlement or resolution of the Driver ID action that would trigger the duty to indemnify. Moreover, since the court has already concluded that Universal had no duty to defend Triple M, we further conclude that Universal has no duty to indemnify Triple M for any amounts incurred or paid in connection with the Driver ID action. See id. IT IS THEREFORE ORDERED that Triple M's Motion for Partial Summary Judgment (Doc. 8) and Triple M's Cross Motion for Summary Judgment #2 (Doc. 32) are denied.
IT IS FURTHER ORDERED that Universal's Cross Motion for Summary Judgment (Doc. 15) is granted.
IT IS FURTHER ORDERED that Triple M's Motion for Oral Argument (Doc. 39), and Universal's Motion for Leave to File Sur-Reply (Doc. 48) are both denied.
IT IS FURTHER ORDERED that Triple M's Requests for Judicial Notice (Docs. 10 and 26) are denied.
IT IS FURTHER ORDERED that Triple M's Evidentiary Objections to the Affidavits of Mark Duplantis and Laura Manville (Docs. 27 and 38) are denied as moot.
IT IS FURTHER ORDERED that this case is hereby dismissed.