My advertising injury may not be your advertising injury. Many general business insurance policies cover defense of claims for ‘advertising injury.’ But what does that mean exactly? This comes up when the insured is sued for IP infringement and tenders the defense to the insurance company. Then the insurance company refuses to defend the claim because it doesn’t fit into the definition of advertising injury. In recent cases, the courts were able to give some guidance on how to analyze the duty to defend "advertising injury". Here are a few examples. In Diamond State Insurance v. 21 Century, the court held that defendant’s false and misleading statements in telephone calls to its competitor’s customers fell within the definition of advertising injury. In Sentry Insurance v. Provide Commerce Inc., the court held that the defendant’s use of Google search terms to redirect users to a competitor’s website could conceivably fall within the definition of advertising injury. In Mid-Continent Cas. Co. v. Kipp Flores Architects LLC, the court held that claims for copyright infringement stemming from an advertising idea were covered. In Sentinel Insurance Co. Ltd. v. ITD, the court held that claims of trade secret misappropriation do not fall within the definition of advertising injury.

WHY YOU SHOULD KNOW THIS. Insurance policies are written to "giveth" and then "taketh away". They give coverage and then list exclusions from coverage. All insurance policies should be carefully reviewed. If the extent of coverage is unclear, an insurance professional or counsel familiar with insurance coverage should be consulted. If potential litigation isn’t covered, the business owner should inquire about the costs of a rider for additional coverage. It wouldn’t hurt to also ask whether opinions of counsel or changes in business methods can help reduce premiums. IP litigation is costly and time consuming. So the premiums might be worth the additional coverage.