Lexmark International, Inc. v. Transportation Insurance Co.
Case Date: 12/19/2001
Court: 1st District Appellate
Docket No: 1-01-0719,
0962
co
THIRD DIVISION Nos. 1-01-0719 and 1-01-0962, Consolidated
JUSTICE WOLFSON delivered the opinion of the court: The question before us is whether two insurance companieshad a contractual duty to defend their insured in underlyingcauses of action. To answer that question we have to test thetensile strength of factual allegations of the complaints filedagainst the insured in California and Kentucky courts. INTRODUCTION In December 1999, plaintiff Lexmark International, Inc.(Lexmark), filed a second amended complaint for declaratoryjudgment against defendants Transportation Insurance Company(Transportation) and American Motorists Insurance Company (AMICO)(collectively the "Insurers") seeking a declaration the Insurersowed a duty to defend Lexmark in lawsuits brought against it byBDT Products, Inc. and Buro-Datentechnik GMBH & Co., KG(collectively "BDT"). The Insurers had issued general liabilityinsurance policies to Lexmark. In response to Lexmark's complaint, the Insurers filed,among other things, counterclaims seeking declarations they owedno duty to defend Lexmark because BDT's complaints againstLexmark did not contain allegations that created a potential forcoverage under the Insurers' policies. That is, BDT's complaintsdid not contain allegations of "personal injury" or "advertisinginjury," as those terms are defined in the Insurers' policies. Lexmark and the Insurers moved for summary judgment on theinsurance coverage issue. In January 2001, the trial courtgranted summary judgment in Lexmark's favor, finding "there is apotential for coverage based upon the language contained in this[BDT's] Complaint." The trial court held the Insurers had a dutyto defend Lexmark against BDT's lawsuits. Both insurance companies contend the trial court erred inentering summary judgment in Lexmark's favor and erred in denyingsummary judgment in their favor. We agree. We reverse the trial court's decision and remand this causewith directions to enter summary judgment for the insurancecompanies. FACTS THE INSURANCE COMPANIES' POLICIES AMICO, an Illinois corporation with its principal place ofbusiness in Long Grove, Illinois, issued two comprehensivegeneral liability policies to Lexmark, a Kentucky corporationwith its principal place of business in Lexington, Kentucky. They were effective from April 3, 1997, to April 3, 1999. Transportation, an Illinois corporation with its principalplace of business in Chicago, Illinois, issued three commercialgeneral liability policies to Lexmark. They were effective fromMarch 27, 1994, to March 27, 1997. The issues in this case arise out of AMICO andTransportation policy coverage for personal injury andadvertising injury claims brought against Lexmark. The pertinentprovisions in the policies are almost identical: "COVERAGE B - PERSONAL AND ADVERTISING INJURY COVERAGE 1. Insuring Agreement a. We will pay those sums that the insured becomeslegally obligated to pay as damages because of'personal injury' or 'advertising injury' to whichthis insurance applies. We will have the rightand the duty to defend any 'suit' seeking thosedamages ***. * * * b. This insurance applies to: 1) 'Personal injury' caused by an offensearising out of your business, excludingadvertising, publishing, broadcasting ortelecasting done by or for you; 2) 'Advertising injury' caused by an offensecommitted in the course of advertising yourgoods, products or services; but only if the offense was committed in the'coverage territory' during the policy period." The policies defined the term "personal injury:" " 'Personal injury' means injury, other than 'bodilyinjury,' arising out of one or more of the followingoffenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, orinvasion of the right of private occupancy of a room,dwelling or premises that a person or organizationoccupies, if committed by or on behalf of its owner,landlord or lessor; d. Oral or written publication of material that slandersor libels a person or organization or disparages aperson's or organization's goods, products or services;or e. Oral or written publication of material that violates aperson's right of privacy." The policies defined the term "advertising injury:" " 'Advertising injury' means injury arising out of one ormore of the following offenses: a. Oral or written publication of material that slandersor libels a person or organization or disparages aperson's or organization's goods, products or services; b. Oral or written publication of material that violates aperson's right of privacy; c. Misappropriation of advertising ideas or style of doingbusiness; or d. Infringement of copyright, title or slogan."
On August 13, 1998, BDT filed a lawsuit against Lexmark inthe Superior Court of the State of California, San Diego County(the "California State Lawsuit"). In BDT's California StateLawsuit complaint, it alleged Lexmark improperly acquired BDT'sprinter paper feed and handling technology and incorporated BDTtechnology into Lexmark's line of printers. BDT sought damagesand other relief for (1) breach of contract (implied-in-fact),(2) breach of contract (implied-in-law), (3) misappropriation oftrade secrets, (4) fraud and deceit, (5) unfair businesspractices, (6) tortious interference with business relationships,(7) breach of fiduciary duty, and (8) breach of confidence. On September 9, 1998, Lexmark removed the California StateLawsuit to the United States District Court for the SouthernDistrict of California (the "California Southern DistrictLawsuit"). On September 11, 1998, BDT filed a first amendedcomplaint. The allegations and prayer for relief of the firstamended complaint were virtually the same as the California StateLawsuit complaint. On or about September 28, 1998, BDT filed a separatecomplaint against Lexmark in the United States District Court forthe Central District of California (the "California CentralDistrict Lawsuit"). The California Central District Lawsuitcomplaint was almost identical to the first amended complaint ofBDT's California Southern District Lawsuit. Consequently, BDTdismissed the California Southern District Lawsuit on October 22,1998. On October 8, 1998, Lexmark filed a lawsuit against BDTseeking a declaratory judgment that, among other things, "Lexmarkdid not misappropriate any trade secrets belonging to thedefendants[, BDT,] or engage in any wrongdoing with regard todefendants (or either of them) whatsoever." Lexmark filed thesuit in the United States District Court for the Eastern Districtof Kentucky, Lexington Division. On February 10, 1999, the California Central DistrictLawsuit was transferred to the United States District Court forthe Eastern District of Kentucky. On August 3, 1999, BDT filedits first amended complaint in the Kentucky District Court("BDT's Kentucky Complaint"). BDT's Kentucky Complaint contained counts for (1) breach ofcontract (implied-in-fact), (2) breach of contract (implied-in-law), (3) misappropriation of trade secrets, (4) unfaircompetition, and (5) breach of confidence. The General Allegations of the Kentucky Complaint tell thestory of BDT's claims against Lexmark: BDT alleged it was a design, development, and manufacturingcorporation, organized under the laws of the state of California,with its principal place of business in Irvine, California. Forover thirty years, BDT has been one of the world leaders in papersingulation and feeding technology. Sometime in 1991, BDT andLexmark began a joint development program on various projects. BDT worked closely with Lexmark's design engineers on advancedsolutions in printer paper handling technology, that is, "sheetfeed paper handling" for printers. In 1992, BDT began production of a laser printer withmultiple paper input trays and a variety of paper output options. BDT provided its production information and prototype printers toLexmark for general evaluation and for Lexmark to considerpossible custom applications of BDT's technology into Lexmarkproducts. BDT alleged that, for the next few years, it kept Lexmarkapprised of its progress in paper singulation and feedingtechnology. BDT continued to disclose to Lexmark's engineers itsconfidential technology, trade secrets, and "general paperhandling know-how." More specifically, BDT disclosed to Lexmarkdetails concerning BDT's "critical trade secrets and papersingulation and feeding systems." BDT alleged it also continuedto provide Lexmark with samples of its re-designed laser printerprototypes for in-house evaluation and testing by Lexmark'sengineering staff. After some time, BDT alleged Lexmark began developing itsown new laser printer that would print 16 pages per minute. Lexmark allegedly asked BDT to develop and manufacture an outputdevice and auxiliary trays for its new laser printer, which wouldlater be named the "Optra S." In February 1995, BDT allegedlyagreed to leave prototype products with Lexmark while the partiesnegotiated a formal development agreement. In September 1995, however, BDT alleged that, after it hadalready disclosed to Lexmark the essential design aspects of itspaper singulation and feeding technology, Lexmark's GeneralManager of Printer Operations discontinued negotiations with BDT. Lexmark allegedly advised BDT it was pursuing "other options"with its laser printer program and was performing research anddesign functions for its laser printers "in-house." According to BDT, it first became suspicious of Lexmarkmisappropriating its technology in January 1997. It was thenthat representatives of Lexmark tried to market its newest 16page per minute laser printer -- the Optra S -- to BDT. TheLexmark salesman brought a pre-release Optra S printer to BDT'soffices in Irvine, California. While displaying the printer, theLexmark salesman mistakenly tried to insert one of BDT's displaypaper trays into Lexmark's printer. BDT alleged that when the salesman mistakenly put BDT'sdisplay paper trays into Lexmark's printer, a senior Lexmarkrepresentative commented to the effect that Lexmark "always takesBDT's ideas, and never pays for them." BDT also alleged itsrepresentatives noticed the paper singulation and feeding systemutilized in Lexmark's new laser printer was nearly identical inappearance and function to BDT's system. BDT alleged it was not permitted, however, to examine theinternal mechanics of Lexmark's new laser printer. As such, BDTcould not, at that time, confirm the extent to which Lexmark hadallegedly stolen its paper singulation and feeding system. According to BDT, its suspicions that Lexmark wasmisappropriating its technology were confirmed when BDT visitedLexmark's offices in February 1997 and again saw Lexmark's newpaper trays for its Optra S printer, and when, several weekslater, BDT obtained from Lexmark a pre-release copy of the User'sManual for the Optra S and saw a paper tray almost identical toBDT's prior design. When Lexmark finally released its "new-generation" Optra Sseries of printers in May of 1997, BDT alleged, Lexmark's productannouncements were in a language almost identical to BDT'spromotional literature, in that Lexmark trumpeted its "IndustryLeading Paper Handling," and its ability to "support the widestvariety of media including challenging labels, signage and cardstock." According to BDT, months later, when it received an Optra Sprinter, it was then able to confirm that, indeed, "Lexmark hadstolen its critical trade secrets and had incorporated BDT'spaper singulation system, technology and know-how into itsproducts." BDT alleged it also was able to confirm Lexmark stole itstechnology when, in the fall of 1997, during an annual tradeshow, it visited Lexmark's display booth and was greeted by aLexmark Booth Manager who congratulated BDT on its "exceptionaldesign job," apparently under the wrong impression Lexmark hadcompensated BDT for the supply or license of its technology toLexmark. DECISION STANDARD OF REVIEW The parties filed cross-motions for summary judgment. Whenthat happens, "the court is invited to decide the issuespresented as a question of law." Container Corp. of America v.Wagner, 293 Ill. App. 3d 1089, 1091, 689 N.E.2d 259 (1977). We review de novo the trial court's order granting summaryjudgment. Outboard Marine Corp. v. Liberty Mutual Insurance Co.,154 Ill. 2d 90, 102, 607 N.E.2d 1204 (1992). The construction of these insurance policy provisions, and adetermination of the rights and obligations under them, arequestions of law suitable for summary judgment. See Crum andForster Corp. v. Resolution Trust Co., 156 Ill. 2d 384, 390-91,620 N.E.2d 1073 (1993). APPLICABLE LAW Although the insurance companies suggest in their briefs that Connecticut law should apply here, no such claim was made in the trial court, where the parties were content with the application of Illinois law. The issue was waived and we willuse the law of this state wherever we can. See CommercialDiscount Corp. v. Bayer, 57 Ill. App. 3d 295, 299, 372 N.E.2d 926(1978). DUTY TO DEFEND STANDARDS The principles of law that attend an insurance company'sduty to defend are firmly established: "To determine an insurer's duty to defend its insured, thecourt must look to the allegations of the underlyingcomplaints. If the underlying complaints allege factswithin or potentially within policy coverage, the insurer isobliged to defend its insured even if the allegations aregroundless, false, or fraudulent. [(Citation omitted.)] Aninsurer may not justifiably refuse to defend an actionagainst its insured unless it is clear from the face of theunderlying complaints that the allegations fail to statefacts which bring the case within, or potentially within,the policy's coverage. [(Citation omitted.)] Moreover, ifthe underlying complaints allege several theories ofrecovery against the insured, the duty to defend arises evenif only one such theory is within the potential coverage ofthe policy. [(Citation omitted.)]" U.S. Fidelity & GuarantyCo. v. Wilkin Insulation Co., 144 Ill. 2d 64, 74, 578 N.E.2d926 (1991). (Emphasis in original.) We need not restate the rules concerning ambiguities in aninsurance policy since the parties agree there are no ambiguousterms in the provisions at issue. The key phrases -- "personalinjury" and "advertising injury" -- are defined in the policies. The dispute centers on whether those provisions were triggered bythe BDT lawsuits. We give the policies' words their "plain, ordinary, andpopular meaning." Outboard Marine Corp., 154 Ill.2d at 108. Weconstrue the underlying complaints liberally and resolve alldoubts in favor of the insured. LaGrange Memorial Hospital v.St. Paul Insurance Co., 317 Ill. App. 3d 863, 869, 740 N.E.2d 21(2000) ("For potentiality of coverage to exist, the complaintneed present only a possibility of recovery, not a probability ofrecovery.") We give little weight to the legal label that characterizesthe underlying allegations. Instead, we determine whether thealleged conduct arguably falls within at least one of thecategories of wrongdoing listed in the policy. See LaGrangeMemorial Hospital, 317 Ill. App. 3d at 869. OUTSIDE EVIDENCE Lexmark urges us to consider the affidavit of PaulRahenkamp, a Lexmark sales manager, and the deposition testimonyof Glenn Klein, a BDT executive. The documents were submitted byLexmark in the course of summary judgment proceedings in thiscase. Lexmark contends they include true but unpleaded factswhich support its duty to defend claims. The general rule, recited in case after case, is that "it is only the allegations in the underlying complaint, consideredin the context of the relevant policy provisions, which shoulddetermine whether an insurer owes a duty to defend an actionbrought against an insured." Bituminous Casualty Corp. v.Fulkerson, 212 Ill. App. 3d 556, 562, 571 N.E.2d 256 (1991). Also see Atlantic Mutual Insurance Co. v. American Academy of Orthopaedic Surgeons & Scoliosis Research Society, 315 Ill. App.3d 552, 567, 734 N.E.2d 50 (2000) ("Where summary judgment issought in the context of a declaratory judgment action todetermine whether an insured has a duty to defend, the use ofextrinsic evidence is inappropriate.") Some courts have found exceptions to the general rule. Extrinsic evidence has been considered when it does not "impactupon the underlying plaintiff's ability to pursue a theory ofliability or resolve any issue critical to the insured'sliability in the underlying litigation." Fremont CompensationInsurance Co. v. Ace-Chicago Great Dane Corp., et al., 304 Ill.App. 3d 734, 743, 710 N.E.2d 132 (1999). The exception for truebut unpleaded facts was not meant to be applied to situationswhere the only extraneous facts are supplied by the insured. Shriver Insurance Agency v. Utica Mutual Insurance Co., 323 Ill.App. 3d 243, 251, 750 N.E.2d 1253 (2001). We decline to move our analysis beyond the four corners ofthe California state and Kentucky federal complaints. Takentogether, they provide a plethora of facts. Rahenkamp'saffidavit and Klein's deposition are directed at the issues inthe underlying case. To consider them, we would have todetermine issues crucial to the BDT lawsuit. The trial judge sawno need to consider extrinsic evidence and neither do we. Our inquiry into the merits of this case is confined to theCalifornia and Kentucky complaints filed by BDT. We, like theparties in their briefs, consider all the facts alleged in bothcomplaints in a single analysis of the duty to defend question. Lexmark did not buy insurance that specifically coveredclaims against it for misappropriation of trade secrets. ForLexmark to succeed here, the factual allegations of theunderlying complaints have to contend BDT suffered an injuryarising out of one of the enumerated offenses in the policies andthe offense was committed during the policy period. The covered offense can be an "advertising injury" or a"personal injury." Lexmark says the complaints allege both. Weconsider separately the two categories of covered offenses,although Lexmark's claims overlap. We note that each prayer for relief in the California andKentucky complaints speaks to an injury caused by the wrongfulobtaining and misusing of BDT's trade secret. Still, weunderstand a claim for relief is not essential to establish theduty to defend; "only the allegations in the complaint must fallwithin the covered provisions." Sun Electric Corp. v. St. PaulFire and Marine Insurance Co., No. 94-C-5846, 1995 WL 270230, at*5 (N.D. Ill May 4, 1995). But see Aetna Life & Surety v.Northern Trust, 169 Ill. App. 3d 678, 681, 523 N.E.2d 1043(1988), for what appears to be a stricter duty to defend test:"Most importantly, Baron's complaint did not allege in substanceall the factual elements necessary to causes of action inmalicious prosecution or abuse of process, and Northern has notshown how the complaint could have been amended to state suchclaims." At any rate, specific claims aside, we perform a textualexegesis on the complaints to determine whether their factualallegations trigger the insurance companies' duty to defend. 1. Advertising Injury The parties agree on how advertising injury coverage can betriggered. There are three elements: (1) Lexmark must have beenengaged in advertising activity during the policy period when theinjury occurred; (2) BDT's allegations must raise a potential forliability under one of the offenses listed in the policies; and(3) there must be a causal connection between the alleged injuryand the advertising activity. See Zurich Insurance Company v.Sunclipse, Inc., 85 F. Supp. 2d 842, 852 (N.D. Ill. 2000). a. Advertising Activity To satisfy the advertising activity requirement, Lexmarkpoints to allegations that it circulated promotional literature,product announcements, and newsletters, and that it displayed,promoted, and sold the Optra S system -- all the time claimingthe BDT paper input and output system in its printer had beendesigned and created by Lexmark. Lexmark's first obstacle to success concerns the question of advertising activity. There is no generally accepteddefinition of "advertising activity" in the reported decisions, but this court, in a duty to defend context, has said: "The term'advertising' has been held to refer to the widespreaddistribution of promotional material to the public at large." International Insurance Co. v. Florists' Mutual Insurance Co.,201 Ill. App. 3d 428, 433, 559 N.E.2d 7 (1990). We recognize, however, "The appropriate definition ofadvertising under Illinois law is by no means a settled issue." Winklevoss Consultants, Inc., et al. v. Federal Insurance Co.,991 F. Supp. 1024, 1032, n.9 (N.D. Ill. 1998) ("Winklevoss II.") Lexmark contends it was accused of engaging in advertisingactivity by the allegation that it promoted and marketed itsprinter to potential customers. Despite our doubts about thesoundness of Lexmark's position, we will, for the purpose of thisopinion, assume Lexmark's promotional and marketing effortsconstitute "advertising." b. Covered offenses We understand Lexmark to be contending three of the four advertising injury "offenses" listed in the policies arecontained in the allegations of the BDT complaints. They are,according to Lexmark, "misappropriation of advertising ideas orstyle of doing business," "disparagement of BDT's goods,products, or services," and "infringement of slogan." We discusseach of them, bearing in mind BDT has alleged its paper traydesign, which provides a method for moving and stacking paper,was wrongfully taken and incorporated into Lexmark's desktoplaser printer, the printer Lexmark promoted and sold. Our analysis of Lexmark's duty to defend claims begins with the proposition that a complaint charging trade secretmisappropriation does not allege advertising injury. Winklevoss II, 991 F. Supp. at 1034-35; see also Simply Fresh Fruit, Inc.,v. Continental Insurance Co., 94 F.3d 1219, 1222 (9th Cir. 1996). This proposition from Winklevoss II was cited with approval inMcDonald's Corp. v. American Motorists Insurance Co., 321 Ill.App. 3d 972, 981, 748 N.E.2d 771 (2001), an insurance indemnitycase. Lexmark, to succeed, would have to find in one of the BDTcomplaints factual allegations of a listed advertising injuryother than trade secret misappropriation. (1) Misappropriation of advertising ideas or styleof doing business. Lexmark's "misappropriation" theory centers on its beliefthere are "trade dress" infringement references in the BDTcomplaints. In paragraph 17 of the Kentucky federal action BDTsays there was a time when "BDT's representatives noticed thatthe paper singulation and feeding system utilized in Lexmark'snew printer was nearly identical in appearance and function ofLexmark's new product ***." In paragraph 18 of the Kentucky complaint BDT tells how itbecame suspicious of Lexmark's new paper singulation system forthe Optra S printer and how those "suspicions were confirmedseveral weeks later, when it obtained from Lexmark a pre-releasecopy of the User's Manual for the Optra S, and observed a papersingulation system virtually identical to BDT's prior design." Lexmark's trade dress infringement theory rests most heavilyon paragraph 34 of the California state court complaint, whichalleges, in part: "34. Lexmark's misappropriation of BDT's tradesecrets, and its outright copying of BDT's 'trade dress,'and its promotional statements that it owns the design tothe complete Optra S design has also created profound,actual confusion in the finite marketplace in which BDTcompetes as to the origination of what is, in fact, aBDT-designed feed-arm and angled wall paper tray ***." Although there is no Illinois decision directly on point, as is true of almost all of the issues in this case, there is sufficient other authority for us to agree with Lexmark that "misappropriation of advertising ideas or style of doingbusiness" encompasses trade dress infringement claims. See B.H.Smith, Inc. v. Zurich Insurance Co., 285 Ill. App. 3d 536,539-40, 676 N.E.2d 221 (1996) (New York law provides trademarkinfringement claim is covered under the offense ofmisappropriation of style of doing business); also see Dogloo v.Northern Insurance Co., 907 F. Supp. 1383 (C.D. Calif. 1995). Other than the conclusory phrase "outright copying of BDT's'trade dress,'" the complaints contain no factual allegations oftrade dress infringement. Actually, the complaints obviate anytrade dress infringement claim. The trade dress of a product is essentially "its total image and overall appearance." Blue-Bell Bio-Medical v. Cin-Bad, Inc.,864 F.2d 1253, 1256 (5th Cir. 1989). The total image of aproduct "may include features such as size, shape, color or othercombinations, texture, graphics, or even particular salestechniques." John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir. 1983). Blue-Bell Biomedical and John H.Harlan Co. were cited with approval by the U.S. Supreme Court inTwo Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 765, n.1, 120L. Ed.2d 615, 622, 112 S. Ct. 2753, 2756 (1992) (Onlynonfunctional, distinctive trade dress is protected under section43(a) of the Lanham Act). No "passing off" is alleged by BDT. That is, there is no claim Lexmark was trading on the total image or appearance of theBDT paper tray. Decisions relied on by Lexmark "involvedallegations that an insured was trading on the recognizable name,mark, or product configuration (trade dress) of the underlyingplaintiff." The Frog, Switch & Manufacturing Co., Inc. v.Travelers Insurance Co., 193 F.3d 742, 749 (3d Cir. 1999). In fact, according to the complaints, the paper tray couldnot be identified merely by looking at the printer whichincorporated the design. Even the BDT people could not do that.They had to wait until the Lexmark manual came out before theyconcluded their design had been misappropriated. It is the theft of a product design that is alleged by BDT, not the misappropriation of advertising or marketing ideas. SeeWinklevoss II, 991 F. Supp. at 1038-39. In addition, BDT's allegations are centered on the function, not the appearance, of the paper tray. Trade dress has nothing to do with function. In fact, they are mutually exclusive. Our examination of the California and Kentucky complaints finds no factual allegations of trade dress infringement against Lexmark. (2) Disparagement of BDT's goods, products, orservices. Lexmark contends the BDT complaints allege Lexmark promotedand advertised its products in a way that disparaged BDT's papertray. They did that, says Lexmark, by accusing Lexmark ofbelittling BDT's paper tray and by defaming it, a libel per quod.To support its contention Lexmark points to allegations that halfof BDT's customers held off doing business with BDT becauseLexmark falsely advertised that it developed the design of thepaper tray. Disparagement has been defined as "words which criticize the quality of one's goods or services." Crinkley v. Dow Jones & Co., 67 Ill. App. 3d 869, 877, 385 N.E.2d 714 (1978). See also Soderlund Brothers, Inc. v. Carrier Corp., 278 Ill. App. 3d 606,620, 663 N.E.2d 1 (1995) (disparagement is a "defamation of thequality of one's goods and services."). To qualify as "disparagement," there must be "statement[s]about a competitor's goods which [are] untrue or misleading and[are] made to influence or tend to influence the public not tobuy." Zurich Insurance Co. v. Sunclipse, Inc., 85 F. Supp. 2d842, 855-56 (N.D. Ill. 2000), quoting from Sentex Sys., Inc. v.Hartford Accident & Indemnity Co., 882 F. Supp. 930, 944 (N.D.Cal. 1994). Disparagement has been found where there are allegations the insured, in its advertising, criticized thequality of the underlying plaintiff's product as being inferior. Knoll Pharmaceutical Co. v. Automobile Insurance Co. of Hartford,152 F. Supp. 2d 1026, 1038-39 (N.D. Ill. 2001). Nowhere in the underlying complaints does BDT claim Lexmarkreferred to BDT or BDT's products when advertising or promoting the Lexmark printer. The complaints say BDT's customers "werereluctant to engage in new business prospects with BDT" becauseit "could lead them into litigation with Lexmark" or "cause themdelay in getting their products to the exceedingly time-sensitivecomputer marketplace." That is, not because Lexmark criticizedthe quality of BDT's paper tray. The line we draw is the same one that separates WinklevossII from Winklevoss III, 11 F. Supp. 2d 995 (N.D. Ill. 1998). InWinklevoss II, the court held the underlying plaintiff, Lynchval,had not alleged disparagement of its product: "There is nothingin the complaint to suggest that Winklevoss said anything at allabout Lynchval -- let alone anything negative or misleading -- ordid anything other than promote its own product." Winklevoss II,991 F. Supp. at 1039-40. It was clear to the district courtjudge, as it is to us in this case, that the wrongdoing allegedby the underlying plaintiff was that Winklevoss had developed itsproduct by misappropriating trade secrets, not that Winklevossmisled the public with negative statements about the plaintiff'sproducts. For one reason or another, the underlying plaintiff in the Winklevoss case filed an amended complaint, giving rise toWinklevoss III. This time, Winklevoss was accused of makingfalse statements about the speed of its software, comparing it toLynchval's less efficient software. Making false and misleadingnegative statements about Lynchval's products in the course ofadvertising in violation of Lanham Act section 43(a)(2) wasenough to trigger the insurance company's duty to defend. Winklevoss III, 11 F. Supp. 2d at 998. To find allegations of disparagement of BDT or BDT'sproduct, that is, belittling or libel per quod, not only would wehave to stretch the words of the BDT complaints, we would have torewrite them. We decline to do so. (3) Infringement of BDT's slogans. The third and final way Lexmark seeks "advertising injury"coverage is the contention that BDT alleged Lexmark infringed onits slogans. Lexmark relies on allegations in paragraphs 19 ofthe Kentucky complaint, where BDT said Lexmark's productannouncements "trumpeted Lexmark's 'Industry Leading PaperHandling,' " and Lexmark's "ability to support the widest varietyof media including challenging labels, signage and card stock,"and on paragraph 21, where Lexmark was accused of marketing itsnew printers as a "bold new breed" and "an entirely newgeneration," which offers "versatile paper handling options forthe most demanding printing needs." There are no factual allegations that Lexmark lifted any ofBDT's advertising slogans. The word "slogan" does not appear inthe BDT complaints. Nor does BDT allege the words of any of itsown advertising ideas. BDT never claimed ownership or exclusiveright to the language it accused Lexmark of using. See SorbeeInternational Limited v. Chubb Custom Insurance Co., 735 A.2d712, 714-15 (Pa. Super. Ct. 1999) (candy manufacturer did notinfringe on competitor's slogan by advertising its product as"low calorie," "sugar free," "fat free," and "cholesterolfree."). See also Ross v. Briggs and Morgan, 540 N.W.2d 843,848, (Minn. 1995) (dermatologist did not infringe on competitor"Institute of Cosmetic Surgery and Hair Transplants" byadvertising itself as "Institute of Cosmetic and LaserSurgery."). We have found no Illinois decisions that would guide ourconsideration of when an infringement of slogan has been alleged. We are persuaded, however, the facts alleged in the BDTcomplaints do not fall within the "infringement of slogan"offense covered by the Insurers' policies. A contrary decision would constitute an unnecessary inhibition on the ability of acompany to advertise its wares. Because we find no "advertising injury" alleged in theunderlying complaints, we see no need to determine whether BDTalleged its injuries were caused by the misappropriation of itstrade secret, not by Lexmark's advertising. But seeInternational Insurance Co., 201 Ill. App. 3d at 433 ("The factthat the purpose of FTD's Rule 18(b) was to protect itsadvertising investment is of no consequence when the injury[antitrust violations] is alleged to have been caused, not byadvertising, but by the rule."). 2. Personal Injury It appears to us that Lexmark's "personal injury"contentions are a repeat of the claims it made under the"advertising injury" offenses listed in the policies --disparagement of BDT's goods, products, or services bybelittlement or libel per quod. Our conclusions are the same. We find no personal injury allegations that trigger the insurancecompanies' duty to defend. CONCLUSION We find BDT's allegations against Lexmark in the underlying complaints do not potentially fall within the coverage of the Insurers' policies. The Insurers have no duty to defend Lexmark. We reverse the trial court's grant of summary judgment to Lexmark and remand this cause with directions to enter summary judgment for the insurance companies. Reversed and remanded. HALL, P.J., and SOUTH, J., concur. |