Seattle Trademark Lawyer

Crocs sued Australia Unlimited for trade dress infringement.
Australia then sued its insurer for failing to provide a defense.

On Dec. 15, the Washington Court of Appeals decided a rare trademark case, finding in part that claims of trade dress infringement triggered an insurer’s duty to provide its insured with a defense.

Seattle-based Australia Unlimited, Inc., filed suit against its insurer, Hartford Casualty Insurance Co., in King County Superior Court claiming breach of contract, bad faith, and violation of Washington’s Consumer Protection Act based on Hartford’s refusal to defend it in three lawsuits.

The lawsuits stemmed from Australia’s producing, importing, and distributing NOTHINGZ-brand shoes. Competing shoe maker Crocs, Inc., alleged claims for trade dress infringement and, after the cases settled, for breach of the parties’ settlement agreement. Australia tendered defense in each instance to Hartford under its commercial general liability and umbrella policies, which Hartford denied.

King County Superior Court Judge Steven Gonzalez granted summary judgment in Hartford’s favor, and Australia appealed.

The Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings.

In summary, the court found: “An insurer’s duty to defend arises ‘if the insurance policy conceivably covers the allegations in the complaint, whereas the duty to indemnify exists only if the policy actually covers the insured’s liability.’ Here, the complaint filed by Crocs, Inc., in the federal lawsuit in Colorado against Australia Unlimited (AU) alleges trade dress violations that are conceivably covered by the umbrella policy issued by The Hartford Casualty Insurance Co. [covering advertising injury]. Thus, Hartford had a duty to defend AU in that action. However, Hartford had no duty to defend AU either in the International Trade Commission proceeding seeking injunctive relief or the second lawsuit in Colorado by Crocs for breach of contract.” 

The case cite is Australia Unlimited, Inc. v. Hartford Casualty Ins. Co., __ P.3d. __, 2008 WL 5234761, No. 61113-5 (Wn. App. Dec. 15, 2008).