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Ninth Circuit Upholds Insurance Exclusion for Misleading Domain Name

I’m not much of an insurance guy, but these cases don’t come along too often, so they’re interesting when they do: courts interpreting insurance policies as they relate to coverage for trademark infringement.

The underlying dispute arose out of a trademark infringement complaint that AcademyOne, Inc., filed against CollegeSource, Inc. AcademyOne claimed that CollegeSource had registered AcademyOne’s trademark as its domain name, which was likely to divert AcademyOne’s customers to CollegeSource’s Web site.

CollegeSource tendered a claim to its insurer, Travelers Indemnity. When Travelers denied the claim, CollegeSource sued for breach of contract.

Travelers moved for judgment on the pleadings, and the Southern District of California granted the motion. It found the underlying trademark infringement claim fell within the policy’s exclusion for “‘personal injury,’ ‘advertising injury,’ and ‘web site injury’ arising out of the unauthorized use of another’s name or product in your email address, domain name or metatag, or any other similar activities that mislead another’s potential customers.”

On appeal, the Ninth Circuit agreed. It found that “[e]ven construing the exclusion narrowly, the phrase ‘any other similar activities that mislead another’s potential customers’ can be read only as referring to activities similar to ‘unauthorized uses of another’s name or product in your e-mail address, domain name, or metatag,’ because ‘use’ is the only word in the clause which constitutes an ‘activity.’”

It also rejected CollegeSource’s contrary interpretation. “The only reasonable reading of the complaint’s allegation (that CollegeSource used AcademyOne’s domain name in its own domain name in a way likely to cause confusion in the marketplace) is that it claims injury from an activity that (1) is ‘similar to’ the unauthorized use of another’s name or product in one’s domain name, and (2) would mislead customers. We also reject CollegeSource’s argument that Travelers’s removal of a trademark infringement exclusion from the policy shows an intent to provide coverage for domain name infringement. Because the language of the Unauthorized Use exclusion is unambiguous, we do not consider drafting history or other extrinsic sources to determine the parties’ intent.”

The case cite is CollegeSource, Inc. v. Travelers Indem. Co. of Connecticut, No. 11-55708, 2013 WL 492462 (9th Cir. Feb. 11, 2013).

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