A federal court in California denied a commercial general liability insurance carrier’s motion for summary judgment seeking a declaration that it had no duty to defend a former franchisee sued for trademark violations by the franchisor. Tower Ins. Co. of New York v. Capurro Ent., Inc., 2011 U.S. Dist. LEXIS 144436 (N.D. Cal. Dec. 15, 2011). Certa Pro, a national franchisor of painting and decorating services franchises, had entered into a franchise agreement with defendant Capurro. After termination, Capurro began marketing a new business using Certa Pro’s marks, including referring to itself as a former Certa Pro franchise and advertising its technicians as being trained by Certa Pro. Certa Pro sued Capurro for infringement and Capurro tendered defense to Tower under the Personal & Advertising Injury Liability coverage in its policy. Tower denied coverage and filed a declaratory judgment action. Tower argued that the underlying lawsuit complained of Capurro’s use of Certa Pro’s name and that simply using the name Certa Pro did not constitute use of Certa Pro’s “advertising idea, trade dress, or slogan” under the policy.
The court rejected Tower’s argument, relying on the allegations of the complaint asserting that Capurro wrongfully used Certa Pro’s proprietary marks and trade dress. The court found the allegations in that complaint sufficient to allege an advertising injury under the policy, triggering Tower’s duty to defend.