Insurance Coverage for Trademark Infringement Lawsuits

If a company has been sued for trademark infringement, it likely can obtain insurance coverage under the advertising injury section of its standard business liability policy, and this coverage includes the duty to pay the costs of defense. Insurers generally contend that no such coverage exists because their policies do not contain the word “trademark,” and all too often insurance brokers and corporate risk managers accept the insurers' position at face value and fail to press the issue any further. This is a costly mistake ' even when a case ends with no liability, defending a trademark infringement suit can cost upward of $1 million. Since the majority of cases to address the coverage issues have found coverage for defense costs and liability, companies that choose not to pursue coverage for trademark lawsuits are likely leaving money on the table.

This article provides an overview of case law holding that insurance companies are obligated to provide coverage for trademark claims under advertising injury coverage, even when the word “trademark” does not appear anywhere in the policy. Further, it discusses rulings on the prior publication exclusion, which insurers frequently assert applies to advertising injury in the trademark infringement context.