R.C. Bigelow Inc. v Liberty Mutual Insurance, 041802 FED2, 01-7197

Docket Nº:01-7197
Party Name:R.C. Bigelow Inc. v Liberty Mutual Insurance
Case Date:October 12, 2001
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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R.C. BIGELOW, INC., PLAINTIFF-APPELLANT,

v.

LIBERTY MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLEE.

Docket No. 01-7197

August Term 2001

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: October 12, 2001

April 18, 2002

Appeal from a judgment of the United States District Court for the District of Connecticut (Alvin W. Thompson, District Judge, granting summary judgment to an insurer in an insured's suit for damages for failing to defend a suit alleging advertising injury.

Reversed and remanded.

Frank S. Occhipinti, Stewart, Occhipinti & Makow, Llp, New York, N.Y. (Colin Gunn, Gunn, Godfrey & Allison, Westport, Conn., on the brief), for Plaintiff-Appellant.

Richard J. Kenny, Rome McGuigan Sabanosh, P.C., Hartford, Conn. (William W. Kaliff, Hartford, Conn., on the brief), for Defendant-Appellee.

Before: Walker, Chief Judge, Newman, and Kearse, Circuit Judges.

Jon O. Newman, Circuit Judge.

The issue on this appeal is whether the "advertising injury" provision of a liability insurance policy obligated an insurer to defend a claim that an insured infringed a competitor's trade dress and included the allegedly infringing trade dress in published advertisements. Plaintiff-Appellant R.C. Bigelow, Inc. ("Bigelow") appeals from a judgment of the United States District Court for the District of Connecticut (Alvin W. Thompson, District Judge), granting summary judgment to Defendant-Appellee Liberty Mutual Insurance Co. ("Liberty Mutual"). The Court rejected Bigelow's claim for the costs incurred in successfully defending a suit by Celestial Seasonings, Inc. ("Celestial"). We conclude that Liberty Mutual had a duty to defend, and we therefore reverse the judgment of the District Court.

Background

Bigelow, a Connecticut corporation, is a manufacturer and distributor of specialty teas. Celestial is a competitor of Bigelow's in the herbal tea market. Liberty Mutual, a Massachusetts company, provided liability insurance to Bigelow. The policy contained an "advertising injury" provision, discussed below, which is at issue in this litigation.

Celestial's suit in Colorado. In June 1995, Celestial filed in the United States District Court for the District of Colorado a complaint against Bigelow for trade dress infringement, false advertising, unfair competition, and trade dress dilution, arising under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and under state statutes and common law. In February 1996, Celestial filed an amended complaint, adding a damage claim to its false advertising claim and adding a new claim for dilution of a famous mark under section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c). The first claim, for trade dress infringement, alleged that in January 1994, Bigelow introduced its herbal teas in new packaging with trade dress confusingly similar to that of Celestial's boxes. The second claim, for false advertising, alleged that Bigelow failed to correctly indicate on the packaging that the teas were "artificially flavored," and that Bigelow engaged in false advertising by mounting an aggressive marketing and print advertising campaign to promote these teas, while conveying the false and misleading impression that those herbal teas were all natural. The third claim, for unfair competition, incorporated the factual allegations from the first two claims and alleged that Bigelow had misappropriated Celestial's product image, trust, loyalty, and goodwill. The fourth and fifth claims, for trade dress dilution and common law trade dress dilution, incorporated the factual allegations from the trade dress infringement claim and alleged that Bigelow had intentionally "whittled down, blurred or tarnished plaintiff's trade dress so as to dilute the trade dress in commerce." In January 1997, the District Court in Colorado entered judgment in favor of Bigelow on all counts in Celestial's action. Request for Liberty Mutual to defend and indemnify. While the Colorado suit was pending, Bigelow notified Liberty Mutual of the suit, sent the insurer a copy of the complaint, and requested the insurer to defend and indemnify Bigelow in the action. In February 1996, Bigelow sent Liberty Mutual a copy of Celestial's amended complaint. In March 1996, Liberty Mutual denied Bigelow's claim for coverage.

Bigelow's suit in Connecticut. In August 1996, Bigelow brought the instant suit against Liberty Mutual in the Connecticut District Court, seeking damages for defense of the Colorado suit and...

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