The United States Second Circuit Court of Appeals recently held that the selling of goods with a counterfeit brand label did not constitute covered advertising injury. In U.S. Fidelity & Guar. Co. v. Fendi Adele S.R.I., 823 F.3d 146 (2d Cir. 2016), the insured, Ashley Reed Trading, Inc. was in the business of purchasing and selling off-price branded handbags and other luxury goods. Ashley Reed was insured by USF&G which provided coverage for defined "advertising injury." The policy defined "advertising injury" as "attracting the attention of others by any means for the purpose of seeking customers or supporters or increasing sales or business." The policy set forth four advertising injury offenses, including the "use of another's advertising idea" or other "advertising" and the "infringement of another's copyright, trade dress or slogan in your 'advertising.'"
SECOND CIRCUIT HOLDS THAT ADVERTISING INJURY COVERAGE DOES NOT APPLY TO THE SALE OF COUNTERFEIT BRANDED GOODS
Is Advertising Injury In The Bag? United States Second Circuit Court Of Appeals Finds That The Sale Of Counterfeit Branded Goods Was Not Covered As Advertising Injury
In United States Fidelity & Guaranty Co. v. Fendi Adele S.R.I., 823 F.3d 146 (2nd Cir. 2016), the United States Court of Appeals held in favor of USF&G finding that USF&G's policy did not provide coverage for the legal liability of its insured for selling counterfeit handbags and other goods with counterfeit brand labels. The insured, Ashley Reed Trading, Inc., was in the business of purchasing and selling off-price branded handbags and other luxury goods. Ashley Reed was insured by USF&G under two liability policies for "advertising injury." Under the policies, "advertising injury" was defined by the policies as the act of "attracting the attention of others by any means for the purpose of seeking customers or supporters or increasing sales or business." The policies listed four advertising injury offenses which included the "use of another's advertising idea in your 'advertising,'" as well as "infringement of another's copyright, trade dress or slogan in your 'advertising.'"
