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Ah ... the commercial general liability policy: savior of the business sector, the great indemnifier, the ... defender of patent infringement lawsuits?
That's right. The Tenth Circuit Court of Appeals ruled last week in Dish Network Corp. v. Arch Specialty Ins. that insurers may have a responsibility to defend and indemnify Dish Network (Dish) against a patent infringement lawsuit because the lawsuit could be considered an advertising injury under Dish's commercial general liability (CGL) policy.
Before you get excited about the new breadth of CGL policies, keep in mind that most patent infringement lawsuits will not fall within the narrow scope of this decision.
Dish sells satellite television programming. Ronald A. Katz Technology Licensing, L.P. (RAKTL), sued Dish, alleging that Dish had infringed one or more claims in 23 patents by "making, using, offering to sell, and/or selling ... automated telephone systems ... that allow [Dish's] customers to perform pay-per-view ordering and customer service functions over the telephone."
Multiple claims in the RAKTL lawsuit explicitly mention advertising or product promotion, which is where the CGL policy comes in.
Dish has primary and excess CGL policies from five insurance companies (Insurers) that promise to defend and indemnify Dish against claims alleging "advertising injury," among other things. On receiving RAKTL's complaint, Dish requested a defense from Insurers, who denied coverage.
Dish sued the Insurers. The district court, finding that Dish had not alleged an advertising injury, granted the Insurers' motion for summary judgment.
The Tenth Circuit Court of Appeals reversed and remanded the case, finding that Dish might be covered under Colorado insurance law because the RAKTL lawsuit potentially alleged advertising injury arising from Dish's misappropriation of RAKTL's advertising ideas, which Dish committed in the course of advertising its goods, products, or services.
While the Tenth Circuit agreed with the district court's conclusion that patent infringement may, under certain circumstances, constitute "misappropriation of advertising ideas," it disagreed with the district court's ruling that the patented means of conveying advertising content at issue in the Dish-RAKTL dispute could not be "advertising ideas" within the meaning of Dish's CGL policies.
How do you feel about this decision, commercial litigators? Patent infringement lawsuits are extremely costly; has the Tenth Circuit Court of Appeals potentially driven up the cost of insurance by finding that patent infringement claims might fall within the advertising injury scope of commercial general liability policies?