A California Court of Appeal in San Francisco ruled that an insurance company’s intellectual property exclusion barred a claim for coverage for unfair competition.
R. Buckminster (“Bucky”) Fuller, who died in 1983, was a noted author, designer, and inventor, known for popularizing the geodesic dome, among other things.
His estate registered its claim as the successor in interest to all of Fuller’s intellectual property rights, including the rights to use his name and image in marketing materials. Licensees for Fuller’s image include Apple Computer and the US Postal Service.
In 2009, Maxfield & Overton Holdings, LLC began selling “Buckyball” products, including Buckyballs and Buckycubes.
A Maxfield press release stated that Buckyballs were “inspired [by] and named after famous architectural engineer and inventor, R. Buckminster Fuller.”
(A “buckyball” is also a common nickname for Buckminsterfullerene, a spherical fullerene molecule that resembles a soccer ball or geodesic dome.)
The IP Lawsuit
In 2012, the Fuller estate sued Maxfield for:
- unfair competition under the Lanham Act
- invasion of privacy (appropriation of name and likeness)
- unauthorized use of name and likeness in violation of California Civil Code 3344.1
- violation of California Business and Professions Code section 17200 et seq.
According to the estate’s complaint, “Buckyballs are 216 round rare earth magnets packaged in a cube shape.”
(The toy was taken off the market in 2014, due to safety concerns about children swallowing the balls.)
The Insurance Policy
Max Specialty Insurance Co, a predecessor to Alterra Excess and Surplus Insurance Co., issued an insurance policy to Maxfield in 2010. Maxfield tendered defense of the estate’s case to its insurer. Soon after, Alterra sought declaratory relief that the policy did not provide coverage.
The policy included a typical exclusion for “’personal and advertising injury’ arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.”
The trial court held that Alterra had no obligation to defend Maxfield under the policy.
The Court of Appeal noted that “it is well-settled under California law, both statutory and common law, that, whilst the right of publicity is derivative from a right of privacy, it is clearly considered an intellectual property right which is specifically excluded from coverage” under an IP exclusion in an insurance policy.
Are you covered?
Many general liability policies include similar intellectual property exclusions. Thus, many companies may find that have no insurance coverage for a wide range of IP-related claims and may wish to consider obtaining special insurance for such claims.
The firm’s Intellectual Property Group is based in Pasadena, California with a team of highly-regarded legal professionals with prosecution and litigation expertise in the fields of patent, trademark, copyright, and trade secrets.
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Photo Attribution: “Bucky Balls” by Visitor7 – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.