Leech Tishman

230px-KimballTagPinnedToGarmentPackageA Florida federal court ruled that hang tags on clothing that were part of the basis for a trademark and copyright infringement lawsuit could be construed as giving rise to an “advertising injury” triggering coverage under an insurance policy.

Scottsdale Insurance Company issued a commercial general liability policy to E.S.Y., Inc. and Yariv Shaked.

Exist, Inc. filed suit against E.S.Y. and Shaked claiming that they used its copyrighted designs and trademarks for clothing and for labels and hang tags. The parties eventually settled the case.

Advertising Injury

The insurance policy covered damages for “personal and advertising injury.” This was defined to include:

d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; * * * f. The use of another’s advertising idea in your “advertisement”; or g. Infringing upon another’s copyright, trade dress or slogan in your “advertisement.”

The court found that hang tags are a form of printed advertisement, rather than (as Scottsdale contended) part of the garment itself:

While the hang tags provided information—at a minimum, identifying [E.S.Y.’s brand]—the hang tags’ special design presumably had the additional function of attracting consumers to the garments themselves and to the brand more generally. If the hang tags’ only purpose was to provide information, they would not need such a particular aesthetic.

The court thus found that the insurance company had a duty to defend E.S.Y. and Shaked.

The case is E.S.Y., Inc. v. Scottsdale Insurance Company.

Takeaway

Many business managers assume that their business insurance will cover them against any kind of commercial liability, but this is not always the case. Most general liability policies cover intellectual property claims only under very limited circumstances, often involving “advertising injury.”

About Us

Leech Tishman’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.

Please also visit us online for more information about our services.

Photo Attribution: “KimballTagPinnedToGarmentPackage” by JoelShprentz – Own work. Licensed under CC BY-SA 3.0 via Commons.


Leech Tishman’s Intellectual Property attorneys are dedicated to the protection and monetization of your ideas and innovations. Many of our registered patent attorneys have advanced degrees enabling them to truly understand the complex technical details of your idea. Several bring engineering expertise, others molecular biology, manufacturing and business acumen to your trademark, copyright, patent prosecution and litigation and trade secret issues, both domestic and international.

Our clients range from individual inventors, authors and owners of creative works to entrepreneurial enterprises, government entities, mid-sized corporations and Global 500 companies with operations throughout North and Central America, Europe, South Asia, the Far East and Australia.

We have serviced a vast array of industries including automotive, cosmetics, e-commerce, electronics, entertainment, fashion, food and beverage, furniture, internet, manufacturing, networks, optics, publishing, software, technology, toys, and wireless.

We are committed to providing you with strategic counseling and personal attention throughout the entire life cycle of your project.

We are proud of our longstanding relationships with local innovation communities and enjoy working with entrepreneurs and businesses who wish to protect their ideas and good names.

Contact us at ipinfo@leechtishman.com or call (626) 796-4000.

Leech Tishman’s Los Angeles Office is located at 100 E. Corson Street, Third Floor, Pasadena, CA 91103.

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