American States Insurance Co.v.Dastar Corp.

United States District Court, D. OregonOct 12, 2004
Civ. No. 00-6058-HO (D. Or. Oct. 12, 2004)

Civ. No. 00-6058-HO.

October 12, 2004


Order


MICHAEL HOGAN, Chief Judge, District

Background

Plaintiff, an insurance company, filed this action seeking a declaration that it has no duty to defend or indemnify defendants insureds in a lawsuit between Twentieth Century Fox Film Corp. and defendants. Defendants asserted counterclaims alleging,inter alia, that plaintiff has duties to defend and indemnify defendants. The parties filed cross motions for summary judgment and the court entered a declaratory judgment that plaintiff has no duty to defend defendants in the underlying lawsuit. See Order dated July 27, 2000 [#29] and Declaratory Judgment dated March 27, 2001 [#40]. The parties stipulated to dismissal of the indemnification claims without prejudice. The Court of Appeals for the Ninth Circuit dismissed defendants' appeal for lack of jurisdiction on the basis that the parties manipulated appellate jurisdiction. American States Ins. Co. v. Dastar Corp., 318 F.3d 881, 891-92 (9th Cir. 2003). This court reopened the case, vacated the declaratory judgment, reinstated the indemnification claim and permitted defendants to file a motion for reconsideration of the order resolving the cross motions for summary judgment. Order dated June 30, 2004 [#56]. Defendants' motion for reconsideration of the duty to defend claim is before the court.

The amended complaint in the underlying lawsuit alleges,inter alia, that defendants copied, repackaged and sold the video documentary series "Crusade in Europe" under their own title "Campaigns in Europe," infringing the plaintiffs' copyright. Gerber Decl., Ex. A at 4-11.

Discussion

Reconsideration is warranted due to intervening changes in controlling law. Pyramid Lake Paiute Tribe of Indians v. Hodel, 882 F.2d 364, 369 n. 5 (9th Cir. 1989). In Rice v. Fox Broadcasting Co., 330 F.3d 1170, 1181-82 (9th Cir. 2003), the court held that certain statements on videocassette packaging constituted advertising where the statements were "(1) commercial speech; 2) by a defendant who is in commercial competition with plaintiff; 3) for the purpose of influencing consumers to buy defendant's goods or services." Statements on defendants' videocassette packaging that the packaging "Contains Film Footage from the Previously Released CRUSADE IN EUROPE" meets the Ninth Circuit's definition of advertising set forth in Rice. Cf. Rice, 330 F.3d at 1181 (holding "Magic's Biggest Secrets Finally Revealed," "Never Before has a magician dared to reveal the dark secrets behind the world's mystifying illusions," and "You've Always Wondered How They . . . Saw a woman in half . . . Now for the first time, you'll learn the secrets behind these and many, many more tricks and illusions," constituted advertising where statements appeared on videocassette jacket). In a second intervening case, the Oregon Supreme Court held, "[a]n insurer has a duty to defend if the factual allegations of the complaint, without amendment, state a claim for any offense covered by the policy." Marleau v. Truck Insurance Exchange, 37 P.3d 148, 153 (Or. 2001). In Marleau, it was no defense that claims are not correctly identified or separately stated. Id.

Because the court finds grounds for reconsideration based on intervening changes in controlling law, it does not consider whether there is new evidence or whether reconsideration is necessary to correctly clear error or manifest injustice. See Pyramid Lake, 882 F.2d at 369 n. 5.

The amended complaint in the underlying action alleges public confusion from the similarity of defendants' title "Campaigns in Europe," to "Crusade in Europe." Gerber Decl., Ex. 4 A at 33, 39-40. These allegations state a claim for dilution of trademark. See 15 U.S.C. § 1125. The policy does not include trademark infringement within enumerated advertising injuries. Courts are split as to whether trademark claims fall within coverage for advertising injury of misappropriation of advertising ideas or style of doing business. See 98 A.L.R. 5th 1, § 10; cf. Cat Internet Svcs., Inc., v. Providence Washington Ins. Co., 333 F.3d 138 (3rd Cir. 2003) (finding coverage under Pennsylvania Law); with Advance Watch Co. Ltd. v. Kemper Nat'l Ins. Co., 99 F.3d 795 (6th Cir. 1996) (trademark infringement not within misappropriation coverage under Michigan law). The court finds no Oregon cases. Although not overruled, the Advance Watch opinion has been heavily criticized and appears to stand alone in holding that trademark claims are not within misappropriation coverage in cases such as ours where there is no exclusion for advertising injuries related to trademark infringement. 98 A.L.R. 5th 1, § 12(b), Comment.

"Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which — (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act." 15 U.S.C. § 1125(a)(1).

Under Marleau, a duty to defend exists if the factual allegations state a claim for a covered injury, notwithstanding that the claim is not properly identified in the complaint in the underlying action. Although no claim in the amended complaint in the underlying action is captioned misappropriation or trademark infringement, the policy includes misappropriation of advertising ideas and style of doing business within the definition of advertising injury. Feldman Decl., Ex. A at 12. This court believes Oregon's courts would follow the majority rule that trademark infringement falls within misappropriation coverage. Plaintiff therefore has a duty to defend defendants in the underlying lawsuit. See Marleau, 37 P.3d at 153.

Conclusion

For the foregoing reasons, defendants' motion for reconsideration [#58] is granted. Upon reconsideration, plaintiffs' motion for partial summary judgment [#14] is denied, defendants' motion for summary judgment [#12] is granted with respect to the duty to defend claim, and otherwise denied.

IT IS SO ORDERED.