In AU Electronics, Inc. v. Harleysville Group, Inc., No. 13 C 5947, 2015 U.S. Dist. LEXIS 2887 (N.D. Ill. Mar. 10, 2015) the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of Harleysville Group, Inc. and Harleysville Lake States Insurance Co. (collectively Harleysville), finding, in pertinent part, that the underlying complaint did not allege “personal or advertising injury.”
AU Electronics, Inc. was sued by Sprint and T-Mobile for allegedly buying cellphones in bulk, unlocking the phones, and reselling the phones abroad. The Sprint complaint alleged trademark infringement under Section 32 of the Landmark Act and federal common law trademark infringement under Section 43(a) of the Lanham Act. The T-Mobile complaint set forth a trademark infringement claim under Section 43(a) of the Lanham Act. In essence, both underlying complaints alleged that AU’s activities constituted a false designation of origin, false descriptions and representations, and false advertising.
Harleysville rejected AU’s tender. Shortly thereafter, AU settled with Sprint and T-Mobile. It then filed suit against Harleysville, claiming that Harleysville had the duty to defend and indemnify AU. AU and Harleysville cross-moved for summary judgment.
AU contended that trade dress infringement is alleged in the underlying complaint, which would be a covered claim. The district court disagreed, holding that only trademark infringement was alleged, thereby absolving Harleysville of the duty to defend. The court explained that trade dress infringement and trademark infringement are separate offenses. Specifically, trade dress infringement concerns the overall image of the product, whereas trademark infringement is more specific, like a logo. Notably, after the court reviewed the underlying complaints, it was unable to find any allegations that Sprint and T-Mobile were concerned by the “look and feel” of the phones after AU had repackaged them. Further, the court concluded that the complaints’ allegations made clear that the use of the “marks” on the resold phones is what confused customers, not the phones themselves.
In addition, the court rejected AU’s contention that the underlying complaints alleged “personal and advertising injury” under the “use of another’s advertising idea” offense. Again, the court found allegations concerning the advertisement of Sprint/T-Mobile marks constituted trademark infringement, not a misappropriation of another’s advertising idea. In order for the “use of another’s advertising idea” offense to be triggered, there must be allegations concerning the misappropriation of another business’s idea in soliciting business. The court held that simply using another’s trademark does not rise to the level of misappropriating another’s advertising idea.