Trademark Infringement: Are You Protected by Your General Liability Insurance?

Trademark Infringement: Are You Protected by Your General Liability Insurance?

Imagine you own a small business called “Tasty Treats,” specializing in gourmet cookies. You’ve developed an eye-catching package design featuring a whimsical, cartoonish character enjoying a cookie. Unbeknownst to you, a competitor called “Tasty Delights” has a similar package design with a slightly different character.

Tasty Delights accuses your business of trademark infringement and files a lawsuit against you. At this point, you look to your business’s insurance policy for possible help, only to discover that “trademark infringement” is excluded from coverage. Now, you’re faced with the prospect of defending your business in court without the financial assistance of your insurance to defend you.

But does your standard commercial general liability (CGL) insurance policy cover you in cases of trademark infringement?

The short answer is… maybe.

Battling a trademark infringement lawsuit can be a costly and time-consuming process, particularly for small businesses. Insurance can help alleviate the burden – if the claim is covered, your insurance company will be obligated to defend you in the lawsuit and potentially cover your liability. At Harrigan IP, we’re well-versed in trademark law and stand ready to help guide you on the ins and outs of your policy’s coverage. Whether you’ve been sued for trademark infringement or simply want to better understand your insurance policy, don’t hesitate to reach out to our knowledgeable team.

CGL Policy Language

At the outset, it must be noted that nearly all standard CGL policies do not cover trademark infringement. That said, many trademark infringement lawsuits potentially trigger other policy provisions that do offer you coverage.

CGL policies typically use similar language that cover you for “infringing upon another’s copyright, trade dress, or slogan in your advertisement.” Additionally, these policies exclude coverage for the following:

‘Personal and advertising injury’ arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another’s advertising idea in your ‘advertisement’. However, this exclusion does not apply to infringement, in your ‘advertisement’, of copyright, trade dress or slogan.

So, are you covered, or not?

Understanding Trademarks, Slogans, and Trade Dress

Trademark infringement, slogan infringement, and trade dress infringement are essential concepts to understand when it comes to protecting one’s intellectual property. Though a standard CGL policy generally does not cover trademark infringement, it will include coverage for slogan and trade dress infringement. To understand whether a lawsuit potentially triggers coverage, you first must understand the distinctions between trademarks, slogans, and trade dress.

A trademark is a distinctive symbol, word, or phrase that serves as an identifier for a company’s products or services. Trademarks are legally protected to prevent other businesses from using similar marks in a manner that might cause confusion among consumers regarding the origin of the products or services. Examples of trademarks that are not considered slogans or trade dress include names such as “Nike” and “Coca-Cola.” When a business exploits another’s trademark in a way that could deceive customers, the act is deemed trademark infringement.

Slogans, in contrast, are brief, memorable phrases that convey an essential aspect of a business. Often regarded as a subset of trademarks, slogans can become synonymous with a company’s brand or identity. For instance, imagine Company A adopts the catchy slogan “Just Sip It” for their fruit juice line. If Company B starts using a similar phrase, “Just Guzzle It,” for their sports drinks, Company A could potentially argue that Company B has infringed on their slogan. Some well-known slogans include “I’m Lovin’ It,” “Think Different,” “Finger Lickin’ Good,” and “Melts In Your Mouth, Not in Your Hands.”

Trade dress, on the other hand, pertains to the visual appearance of a product or its packaging that signifies the product’s source. Trade dress encompasses various elements such as color schemes, shapes, patterns, and designs. It offers businesses a means of distinguishing their products from those of competitors, thereby creating a unique brand identity. For instance, Tiffany & Co.’s signature blue box is a form of trade dress. Another example is the shape of Coca-Cola’s classic contour bottle. Trade dress infringement transpires when one company’s product or packaging bears such a striking resemblance to another’s that it is liable to create confusion among customers.

Understanding the differences between trademarks, slogans, and trade dress is essential for determining whether your insurance company will potentially defend and indemnify you in an infringement lawsuit. While a standard CGL policy might not encompass trademark infringement, it frequently offers coverage for slogan and trade dress infringement. To evaluate if a lawsuit prompts coverage, businesses must first comprehend these concepts and how they relate to each other.

Is it Really Trademark Infringement, or Something Else?

Interestingly, many lawsuits that are styled as “trademark infringement” can instead be framed as slogan or trade dress infringement.

Consider the earlier example, where Company A owns a federally registered trademark for “Just Sip It” and initiates a lawsuit against Company B for using “Just Guzzle It.” Although Company A’s lawsuit might assert that it is a case of trademark infringement, Company B could still submit the claim to its insurer for defense and indemnity on the grounds that the lawsuit primarily concerns slogan infringement. This is significant, as slogan infringement is typically covered by a CGL policy.

Similarly, if a lawsuit encompasses claims concerning the infringing use of a trademarked logo, that logo will likely include a distinctive color scheme. Color schemes are considered trade dress, and claims involving trade dress infringement could potentially trigger coverage under your insurance policy.

It’s crucial to recognize that even if the plaintiff refers to the claim as “trademark infringement,” your insurer may still have a duty to defend you if the claim is arguably covered by your policy. In such contentious situations, the expertise of Harrigan IP can prove to be invaluable in assisting you in determining the most appropriate course of action. Our team of legal professionals will carefully assess the nature of the claims, evaluate the potential coverage under your policy, and guide you through the complex litigation process. Our experience in intellectual property law can make all the difference when facing a trademark infringement lawsuit.

Understanding CGL Policy Coverage

Understanding your CGL policy and its coverage of trademark infringement, slogan infringement, trade dress, and advertising ideas can be confusing. Here are some key points to consider:

• Read your policy carefully: Not all CGL policies are created equal. Some may offer broader coverage, while others may exclude certain types of infringement. Be sure to read your policy’s fine print and understand the specific terms and conditions that apply to your business. If you’re unsure about your coverage, consult with a knowledgeable professional like Harrigan IP to help clarify any uncertainties.
• Be proactive: As a small business owner, it’s essential to take steps to avoid potential infringement issues. This includes conducting thorough research before adopting a trademark, slogan, or advertising campaign to ensure you’re not infringing on another company’s intellectual property. Additionally, consider registering your trademarks and trade dress with the United States Patent and Trademark Office (USPTO) to strengthen your legal protection.
• Consider additional insurance: If your CGL policy does not adequately cover your business’s needs, you may want to explore additional insurance options. Intellectual property (IP) insurance or specialized coverage for advertising injury could provide more comprehensive protection against infringement claims.
• Consult with legal experts: In the event of an infringement dispute, it’s crucial to have experienced legal professionals on your side. Harrigan IP can help guide you on the best course of action for your specific situation.

Protecting Your Small Business

As a small business owner, it is essential to recognize that claims involving intellectual property disputes may not always be straightforward trademark infringement cases. They may instead involve nuances related to slogan or trade dress infringement, which can have a significant impact on whether your insurance policy covers the claim. By partnering with a knowledgeable legal team like Harrigan IP, you can ensure that your business is well-prepared to face any intellectual property challenges and protect your valuable assets.

Remember to read your policy carefully, be proactive in avoiding infringement issues, consider additional insurance options, and consult with an experienced law firm like Harrigan IP. At Harrigan IP, we’re committed to offering you the support and expertise you need to successfully manage intellectual property disputes, whether they involve trademark, slogan, or trade dress infringement. With our extensive experience in the field, we’re confident in our ability to guide you through these legal matters and help protect your business’s interests.