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Vol. 8 - Issue 7
August 21, 2019


Personal And Advertising Injury: Disparagement Of A Product Without Mentioning It


I’ve always found this to be an interesting issue.  Is coverage owed, for “personal and advertising injury,” if the insured says something about its own product and makes no mention of the claimant’s product.  One theory is that, if a company touts its own product in a way that is not true, then its competitor’s product is, by implication, disparaged, if it does not also have the same supposed positive trait as the insured’s. 

The facts that gave rise to the coverage issues in Albion Engineering Company v. Hartford Fire Insurance Co., No. 18-1756 (July 10, 2019) are not spelled out in detail.  But, in general, the case involves coverage for “personal and advertising injury,” for disparagement, where the insured made no mention of the claimant’s product.

Albion Engineering sells products such as caulking guns and dispensing accessories.  Albion’s competitor, Newborn, believed Albion had claimed its products were made in the United States when they were really made in Taiwan.  Newborn sued Albion in the District of New Jersey, bringing claims for false advertising and product marking in violation of the Lanham Act and New Jersey tortious unfair competition through false statements and material omissions.

Albion sought coverage for the Newborn action under a commercial general liability policy issued by Hartford.  The insurer refused to defend.  Albion sued Hartford.

At issue was whether the Newborn action alleged “personal and advertising injury,” specifically, “oral, written or electronic publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.”

The district court found in favor of Hartford and the Third Circuit affirmed.  At the heart of the court’s decision was that, under New Jersey law, Newborn’s causes of action require publication of a false statement concerning another.

Here, the court concluded that Albion did not publish a false statement about Newborn: “For its Lanham Act claim, Newborn alleged that Albion made ‘false statements of facts, misrepresentations, and material omissions of facts of the geographic origin of the subject merchandise and the commercial activity of Albion in violation of . . . the Lanham Act.’  Newborn made materially similar allegations for its claim of unfair competition.  The gravamen of Newborn’s suit, in other words, is that Albion lied about Albion’s products, not Newborn’s. Newborn never claims that Albion published false statements about Newborn’s products. Newborn’s suit therefore does not meet the requirements for coverage under the Hartford policy.”  (emphasis in original).

The court also declined to conclude that Albion had “implicitly” defamed Newborn, concluding that New Jersey law did not recognize such a claim.   
It is an interesting issue, as well as involving an interplay between coverage and the elements of the law controlling the underlying action.  And how does that fit in with the issue of whether extrinsic evidence can be considered for purposes of determining an insurer’s duty to defend? 

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