Insurers face order to pay settlement for trademark infringement
A US 9th Circuit Court of Appeals in San Francisco has overturned a decision from February 2016, which ruled insurers Allied World Assurance, Colony Insurance and Crum & Foster Specialty Insurance were not obliged to defend nor indemnify a policyholder in a trademark infringement case involving former joint venture partners Repar and Willowood. The original hearing centred on the continued use of of the name of a brand of pesticide and was settled for $453,625.

Three insurers should have been ordered to defend a policyholder in a trademark infringement suit, and now may have to pay the case’s settlement, says a federal appeals court, in overturning a lower court ruling.

The insurers are New York-based Allied World Assurance Co. (U.S.), San Antonio, Texas-based Colony Insurance Co. and Phoenix-based Crum & Foster Specialty Insurance Co., according to Tuesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Crum & Forster Specialty Insurance Co. v. Wildwood USA L.L.C.; Brian Heinze v. Allied World Assurance Co. (U.S.); Colony Insurance Co.; Repar Corp.

Silver Spring, Maryland-based Repar began distributing agricultural pesticides containing the active ingredient tebuconazole in 2008 and obtained a trademark for it, Tebucon, according to court papers in the case.

Mr. Heinze, who founded Roseburg, Oregon-based Willowood, formed a joint venture with Repar’s primary stockholders in late 2007, according to court papers.

In 2011, Willowood stopped purchasing tebuconazole for Repar, but continued to use the Tebucon trademark. Repar then filed suit in U.S. District Court in Eugene, Oregon, charging Willowood with trademark infringement and breach of contract.

In ensuing litigation, the District Court held Willowood’s insurers were not obligated to defend the company in the case.

After the case was settled for $453,625, the District Court said in a February 2016 ruling the insurers were also not obligated to indemnify the settlement. The case was then appealed to the 9th Circuit.

“The Insurers’ polices each cover injury arising from ‘use of another’s advertising idea in your “advertisement,”’ said a unanimous three-judge panel.

“Oregon courts broadly interpret the term ‘arising out of’ in this context … The District Court should therefore have granted summary judgment to Willowood with respect to the obligation to defend and we remand with instructions to do so,” the ruling said.

The panel furthermore said there is documentation from attorneys and Willowood’s chief executive officer “all indicating that the Repar settlement was at least in part based on covered breach of implied contract claims.

“This was sufficient to create a triable issue on whether the settlement was for a covered claim,” said the ruling, in remanding the case for a trial on that issue.