A commercial general liability policy’s “intellectual property” exclusion relieved the insurer of any duty to defend or indemnify its insured against a suit alleging commercial misappropriation of the claimant’s name. ( Alterra Excess and Surplus Insurance Company v. Snyder (2015) 234 Cal.App.4th 1390)
Facts
R. Buckminster “Bucky” Fuller (Fuller) was an architectural engineer and inventor who was known for popularizing the geodesic dome. After Fuller died in 1983, Fuller’s estate became the successor-in-interest to all of Fuller’s rights. Fuller’s estate subsequently entered into licensing agreements with various businesses pursuant to which the businesses paid to use Fuller’s nickname “Bucky” in their marketing activities.
Maxfield & Oberton Holdings, LLC (Maxfield) manufactured and sold desktoys which were “inspired by” Fuller and which were known as known as “Buckyballs” and “Buckycubes.” However, Maxfield used the “Bucky” name without ever entering into any licensing agreement with Fuller’s estate. Thus, Fuller’s estate filed a lawsuit against Maxfield alleging claims for (1) unfair competition in violation of 15 United States Code section 1125(a) (Lanham Act), (2) invasion of privacy (appropriation of name and likeness), (3) unauthorized use of name and likeness in violation of California Civil Code section 3344.1, and (4) violation of California Business and Professions Code section 17200 et seq.
Maxfield tendered the lawsuit to its general liability insurer, Alterra Excess and Surplus Insurance Company (Alterra). In response, Alterra agreed to defend Maxfield under a reservation of rights. Among other things, Alterra reserved the right to deny coverage based on the policy’s “intellectual property” exclusion, which barred coverage for personal and advertising injury “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.”
Alterra then filed a declaratory relief action against both Maxfield and Fuller’s estate. Maxfield did not contest the declaratory relief action, but Fuller’s estate did. Eventually, the trial court ruled that the Alterra policy’s “intellectual property” exclusion barred coverage for Maxfield’s alleged liability to Fuller’s estate in the underlying action. Fuller’s estate appealed.
Holding
The California Court of Appeal affirmed the judgment in favor of Alterra. According to the appellate court, Alterra’s “intellectual property” exclusion was “conspicuously” placed in the policy and “plainly and clearly” barred coverage for Maxfield’s alleged liability to Fuller’s estate in the underlying action. The court emphasized that all of the claims Fuller’s asserted against Maxfield were based on allegations that Maxfield infringed on “rights of publicity” belonging to Fuller’s estate. According to the court, any such right of publicity was an “intellectual property right.” Thus, all of the claims Fuller’s estate asserted against Maxfield fell within Alterra’s exclusion for claims arising out of “infringement of copyright, patent, trademark, trade secret or other intellectual property rights .” There was no potential for coverage, and hence no duty to defend.
Comment
Alterra case is consistent with an earlier case entitled Aroa Marketing, Inc. v. Hartford Ins. Co. of the Midwest (2011) 198 Cal.App.4th 781. In Aroa , another California appellate court held that a similarly-worded “intellectual property” exclusion relieved a general liability insurer of any duty to defend its insured, a marketing company, against claims that it had misappropriated a model’s name and likeness. Both cases hold that an intellectual property exclusion bars coverage for claims based on the “right of publicity,” as any such right is an “intellectual property” right.