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.
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 may be obligated to defend you and possibly cover any resulting liability. At Harrigan IP, we’re well-versed in trademark law and can help you understand whether your insurance policy offers meaningful protection.
CGL Policy Language: What It Typically Covers
Most standard CGL policies do not explicitly cover trademark infringement. However, many include language that may offer a potential pathway to coverage.
CGL policies often provide coverage for “infringing upon another’s copyright, trade dress, or slogan in your advertisement.” At the same time, most include an exclusion that reads something like this:
‘Personal and advertising injury’ arising out of the infringement of copyright, trademark, patent, trade secret, or other intellectual property rights. This exclusion does not apply to infringement, in your advertisement, of copyright, trade dress, or slogan.
This creates a gray area where certain types of intellectual property claims may be covered depending on how the lawsuit is framed.
To better understand these nuances, check out our detailed post on Trademark vs. Copyright.
Trademarks, Slogans, and Trade Dress: Know the Difference
To understand whether your policy might provide coverage, you need to know the distinctions among trademarks, slogans, and trade dress:
- Trademark: A distinctive word, phrase, logo, or symbol identifying the source of goods or services. Think of “Nike” or the Coca-Cola script. Trademark infringement occurs when a competitor uses a confusingly similar mark in a way that misleads consumers.
- Slogan: A memorable phrase used in marketing or advertising. While it falls under the umbrella of trademark law, slogans are often treated separately under CGL policies. Examples include “Just Do It” or “I’m Lovin’ It.”
- Trade Dress: The visual appearance of a product or its packaging that signifies the source of the product. Examples include Tiffany’s blue box or the shape of a Coca-Cola bottle.
Understanding these distinctions is crucial. While your CGL policy may exclude trademark infringement, it could still cover slogan or trade dress infringement.
When Is It Really Trademark Infringement?
Interestingly, some lawsuits that claim “trademark infringement” may really involve slogan or trade dress infringement — both of which are often covered under CGL policies.
Hypothetical Example: Suppose Company A owns a registered slogan, “Just Sip It,” and sues Company B for using “Just Guzzle It.” Although labeled as trademark infringement, the real claim may involve slogan infringement — potentially triggering insurance coverage.
Similarly, if a competitor sues over your packaging that mimics their own (including color schemes, layout, or design), you may be facing a trade dress claim, not just trademark infringement. Again, trade dress is more likely to fall within CGL coverage.
Understanding CGL Policy Coverage: Practical Tips
- Read the fine print: Policy language varies. Even minor differences in wording can drastically affect coverage. Not sure what it all means? The team at Harrigan IP can help you review and interpret the terms.
- Take preventive measures: Conduct trademark clearance searches before launching new products or marketing campaigns. This helps reduce your risk of infringement claims.
- Register your trademarks and trade dress: Federal registration with the USPTO strengthens your legal position and gives you greater protection under U.S. law.
- Consider extra coverage: If you frequently advertise or operate in a brand-heavy industry, consider supplemental IP or advertising injury insurance.
- Work with a legal team early: Don’t wait until you’re sued to call a lawyer. Legal counsel can help you preemptively reduce risk and be better prepared should a claim arise. Our team regularly assists clients in trademark infringement defense and related matters.
Protecting Your Business: What You Can Do Now
As a small business owner, understanding the scope of your insurance coverage is essential — especially in the world of intellectual property.
Even if your insurer initially denies coverage for a “trademark infringement” lawsuit, you may have a viable argument that the claims involve trade dress or slogan infringement, which are more likely to be covered.
If you need help interpreting your policy, preparing a defense, or even avoiding these issues entirely, Harrigan IP is here to help.
Ready to Take the Next Step?
- Contact our team to discuss your insurance concerns and trademark issues.
- Schedule a consultation to review your policy or defend your brand.
- Explore our full range of services, including Trademark Registration, Office Actions & Refusals, and Infringement & Enforcement.
- Learn more by reading our blog posts on Choosing a Strong Trademark.
