January 19, 2012
This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
In an important "advertising injury" decision, Pennsylvania joined the majority of jurisdictions that have interpreted the plain and ordinary meaning of "advertising" in commercial general liability (CGL) policies to require the widespread distribution of promotional material to the public at large, rather than one-to-one solicitations.
In OneBeacon Ins. Co. v. William A. Graham Co., No. 2009-41636 (Pa. C.C.P., Montgomery Cty.) (Ott, J. Dec. 14, 2011), the policyholder sought coverage over a 14-year period under the "advertising injury" provision of its CGL policies in connection with an underlying copyright lawsuit. The underlying plaintiff alleged that the policyholder infringed its copyright by providing individualized insurance brokerage services to its customers. Because advertising injury coverage requires that copyright infringement must be committed in the "course of advertising," and because the CGL policies did not define "advertising," the Court had to determine the natural, plain and ordinary meaning of the term "advertising." While the policyholder argued for a broader definition, the Court ruled that advertising requires the action of calling something to the attention of the public especially by paid announcements, and held that the policyholder's individually customized, one-to-one solicitations do not constitute advertising.
Coverage under the advertising injury provisions of a CGL policy has received increased notoriety over the past several years. As claims for product disparagement, unfair competition, intellectual property disputes and other business torts rise, insureds are turning to their CGL carriers for coverage for these claims. When evaluating these coverage issues, what constitutes "advertising" becomes a key part of the analysis. The Graham decision is significant because with it, Pennsylvania joins the clear majority of jurisdictions that interpret "advertising" in CGL policies to require the widespread distribution of promotional material to the public at large. In the last several months, federal courts in Texas and Virginia and a state appellate court in Illinois have also aligned themselves with the majority view.
For further analysis of this issue or other matters related to advertising injury coverage, please contact Nancy Portney at 215-358-5107 or via email at nportney@nldhlaw.com.
