In Colony Insurance Co. v. Frison Flea Market, Inc., No. 4:13CV2193(JCH), 2014 U.S. Dist. LEXIS 130841 (E.D. Mo. Sept. 18, 2014), the district court found no coverage under the “personal and advertising injury” part of the subject insurance policy because there was no alleged causal connection between the advertising and sale of counterfeit goods.
As background, Jack Frison and Frison Flea Market Inc.’s (Flea Market) were found liable for having infringed Coach’s trademarks and copyrights by, in pertinent part, allowing the illegal sale of counterfeit Coach merchandise by vendors doing business at the Flea Market. Colony Insurance Company (Colony), the insurer of the Flea Market, had defended Frison and the Flea Market under a reservation of rights. Colony filed the instant action seeking a declaration that it had no duty to indemnify the Flea Market for its liability to Coach.
The district court held that the Flea Market’s copyright infringement did not occur in its advertisement, as required by the policy definition of “personal and advertising injury.” Instead, the Flea Market’s liability was the result of its material contributions to the sale of counterfeit products. Because there was no causal connection between the vendors’ sale of infringing goods and the Flea Market’s advertising, Colony had no duty to indemnify the Flea Market.