In a recent case, the 4th Circuit Court of Appeals affirmed the dismissal of a coverage dispute based on unambiguous exclusions barring coverage. Nothing dramatically unique here, but it serves as a good example of the need to read and understand the insurance policy and all of its exclusions.
In Synaptek Corp. v. Sentinel Insurance Co., No. 18-2416 (4th Cir. Jun. 4, 2019) (Unpublished), the policyholder sought defense coverage against a lawsuit accusing the policyholder of trademark infringement. The policyholder had procured an insurance policy for its technology services business that had a Business Liability part and a Technology part. The insurance company disclaimed any obligation to defend and this lawsuit ensued. The district court, in granting the insurance company’s motion to dismiss, found that exclusions in both coverage parts precluded coverage for trademark infringement. The circuit court affirmed.
In affirming, the circuit court noted that the policyholder argued that it was entitled to coverage under the personal and advertising injury coverage grant, which enumerated eight offenses, including copying in advertising, which includes trademark claims. But, as the district court pointed out, what the policyholder ignored was an endorsement that narrowed the personal and advertising injury coverage by excluding nearly all of the eight offenses, including the one for copying in advertising. The district court found the exclusion to be clear and unambiguous.
The policyholder also sought coverage under the Technology section, but the district court explained that coverage under that section was for claims arising out of technology services performed for others, which was not the case here. Moreover, this coverage grant also contained an unambiguous exclusion for intellectual property claims, including infringement and trademark claims.
Finally, on appeal, the policyholder tried to argue that there was coverage under the Umbrella coverage of the policy, but the circuit court rejected that argument as untimely, because it was not made at the district court and was argued for the first time on appeal. The circuit court affirmed the dismissal for the reasons stated by the district court.