Interlocken v. Markel Insurance CV-02-298-B 03/04/03

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Interlocken International Camp, Inc. d/b/a Interlocken Center for Experiential Learning

v. Civil No. 02-298-B Opinion No.

Markel Insurance Company

MEMORANDUM AND ORDER

This declaratory judgment action arises from an underlying

lawsuit in which Interlochen Center for the Arts has sued

Interlocken International Camp, Inc. ("IIC") for allegedly

misusing the name "Interlocken" in its internet domain name, on

its website, and in its advertising. IIC argues that its

insurer, Markel Insurance Company, must defend and indemnify it

in the underlying action because the action asserts claims for

covered "advertising injury."

Markel has filed a summary judgment motion challenging IIC'

coverage claim. It argues that because IIC used the name "Interlocken" in advertisements that were published before it

purchased the policies at issue, its claim is subject to a policy

exclusion for injuries "[a]rising out of oral or written

publication of material whose first publication took place before

the beginning of the policy period . . . Ap p . to Def's. Mot.

for Summ. J. (App.) at 32.

I. BACKGROUND1

A. The Insurance Policies

Markel insured IIC under commercial general liability

policies covering successive periods from 1993 to 1999. Each

policy provided coverage for "'advertising injury' caused by an

offense committed in the course of advertising [IIC's] goods.

1 I describe the facts in the light most favorable to IIC, the non-moving party. See Bailey v. Georgia-Pacific Corp.,

(1st Cir. 2002). The burden of establishing non­ coverage is on Markel, see Weeks v. St. Paul Fire & Marine Ins. C o .,

(1996). Therefore, I will grant its motion for summary judgment only if the undisputed material facts demonstrate that it has satisfied its burden of proof. See Torres Vargas v. Santiago Cummings,

(1st Cir. 1998) .

- 2 - products or services." App. at 26.2 The phrase "advertising

injury" is defined as follows:

1. "Advertising injury" means injury arising out of one or more of the following offenses:

a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; b. Oral or written publication of material that violates a person's right of privacy; c. Misappropriation of advertising ideas of style of doing business; or d. Infringement of copyright, title or slogan.

App. at 32. The "advertising injury" coverage is subject to the

following pertinent exclusion:

This insurance does not apply to:

a. ... 'advertising injury:'

(2) Arising out of oral or written publication of material whose first-publication took place before the beginning of the policy period . . . .

B. The Underlying Action

Interlochen operates the Interlochen Arts Academy, the

Interlochen Arts Camp, the Interlochen Arts Festival, the

2 Each policy contained identical coverage and definition language regarding the phrase "advertising injury."

- 3 - Interlochen Public Radio Station and the Interlochen Pathfinder

School. While it did not seek to register the "Interlochen"

trade name until 1997, it has used the name for more than 70

years. As a result, the name "Interlochen" has become widely

associated with arts education.

IIC, a New Hampshire corporation, operates summer camps and

travel programs for boys and girls. The focal point of these

camps and programs is music and art education. IIC first used

the name "Interlocken" in 1961. It later used the name in

advertisements it published in the New York Times as early as

1964. Since at least 1982, IIC has also used the name in its own

newspaper, the "Interlocken Globe." In 1996, IIC registered the

internet domain name "www.interlocken.org." Since then it has

used its website to advertise its programs and distribute

information about IIC to the public.

Interlochen charges in the underlying action that IIC has

misused the "Interlocken" name in its domain name, on its web

site, and in its promotional materials (i.e., mail, telephone,

and fax). Claiming that the name is confusingly similar to its

"Interlochen" trade name, Interlochen charges IIC with trademark

infringement in violation of

, unfair competition

- 4 - and false designation of origin in violation of

(a), trademark dilution in violation of

(c)(1), trademark cybersguatting in violation of

(d)(1)(A) and deceptive trade practices in violation of the

Illinois Consumer Fraud and Deceptive Business Practices Act, 815

111. Comp. Stat. Ann. 510/1 et seq. (1996). See Interlochen's

Compl., App. at 1-14.

III. ANALYSIS3

It is undisputed that IIC used the "Interlocken" name in

advertisements and promotional materials long before it purchased

the policies on which its coverage claim is based. The guestion

3 The parties appear to agree that the policies at issue are to be construed using New Hampshire law. "[BJecause there is at least a 'reasonable relation' between the dispute and the forum whose law has been selected by the parties, . . ." Merchants Ins. Co. of N.H., Inc. v. U.S. Fidelity and Guar. Co.,

(1st Cir. 1998) (guotation omitted), I accept the parties' decision to apply New Hampshire law.

In New Hampshire, the interpretation of insurance policy language presents a guestion of law. See Panciocco v. Lawyers Title Ins. Corp.,

(N.H. 2002) . Ambiguities are to be resolved in favor of policyholders. See

Further, a court may look beyond the facts pleaded in the underlying complaint to resolve an insurance coverage claim. See M. Mooney Corp. v. Fidelity and Guarantee Company.

(N.H. 1992). I apply these basic concepts in resolving this case.

- 5 - that Markel raises in its summary judgment motion is whether this

prior use bars IIC from claiming coverage because of the

policies' "first publication" exclusion.4

Markel's argument for the application of the exclusion can

be summarized as follows: (1) the exclusion plainly applies when

the "material" from which the underlying action arises was "first

published" before the policy went into effect; (2) the "material"

from which Interlochen's claims arise is IIC's use of the

confusingly similar "Interlocken" name on its website and in

other advertising and promotional materials; and (3) IIC "first

published" the "Interlocken" name in advertisements that appeared

in the New York Times well before it purchased the policies at

issue.

Not surprisingly, IIC construes the exclusion differently.

4 In analyzing this guestion, I assume without deciding that the underlying action asserts claims for "advertising injury" either because the claims arise from the "misappropriation of advertising ideas or style of doing business," see, e.g., EKCO Group, Inc. v. Travelers Indem. Co. of 111.,

(1st Cir. 2001) (recognizing possibility of covered misappropriation claim where trademark is misappropriated in advertisement), or because they assert claims for "infringement of copyright, title or slogan," see, e.g.. Charter Oak Fire Ins. Co. v. Hedeen & Cos.,

, 736 (7th Cir. 2002) (recognizing that "infringement of . . . Title" includes trademark infringement)).

- 6 - It argues that the underlying action arises solely from its use

of "Interlocken" in its internet domain name. Thus, it asserts

that the "material" that gives rise to the action is the domain

name "www.interlocken.org," rather than its other advertising

uses of "Interlocken." Next, it argues that the exclusion is

inapplicable because it did not begin to use - and thus did not

"first publish" - the domain name until 1996, several years after

it had begun purchasing insurance from Markel. According to IIC,

its earlier uses of "Interlocken" in newspaper advertisements is

irrelevant because the underlying action is focused solely on the

use of the www.interlocken.org domain name.

I reject IIC's argument. First, the language of the

exclusion simply does not support IIC's narrow reading which

would limit the exclusion's application to cases in which an

infringing trade name was previously used in precisely the same

way as the use that provoked the coverage claim. Second, its

interpretation is inconsistent with the exclusion's obvious

purpose which is "to prevent an individual who has caused an

injury from buying insurance so that he can continue his

injurious behavior." Maddox v. St. Paul Fire and Marine Ins.,

(W.D. Pa. 2001). If, as IIC's

- 7 - interpretation would permit, a corporation could misappropriate a

trade name in a particular advertisement published in one medium

and then purchase insurance to cover future infringements using

the same name in different advertisements or different media, the

exclusion would be of such limited utility that it would be

virtually meaningless. Thus, because IIC used the allegedly

infringing name "Interlocken" in advertisements to market its

business and services before it purchased insurance from Markel,

the first publication exclusion bars it from obtaining coverage

for claims that arise from its subseguent uses of the same name,

even though those uses were in other advertisements that appeared

in different media.5

CONCLUSION

As Markel had no duty under the policies to defend or

indemnify IIC against any of the counts in the underlying action,

5 Some courts have held that the first publication exclusion does not apply to misappropriation and infringement claims. See, e.g.. Irons Home Builders, Inc. v. Auto-Owners Ins. C o .,

(E.D. Mich. 1993); but see Applied Bolting Prod., Inc., v. United States Fidelity & Guar. Co.,

(E.D. Pa. 1996). Because IIC does not press this argument, I make no attempt to evaluate its merits on my own initiative. Markel's motion for summary judgment (Doc. No. 9) is granted and

IIC's cross motion for summary judgment (Doc. No. 11) is denied.

SO ORDERED.

Paul Barbadoro Chief Judge

March 4, 2003

cc: Michael R. Callahan, Esg. Andrew D. Dunn, Esg.