Recent Decision Determines Retail Displays May Qualify as ‘Advertisements’ Under CGL Insurance Policies

A recent decision interpreting insurance coverage for “advertising injury” under commercial general liability (CGL) insurance policies ruled that claims of allegedly infringing product displays can trigger the duty to defend.   Most businesses purchase CGL insurance as a key part of their liability insurance programs.   The current version of the typical form used by insurers in connection with CGL policies provides coverage for “advertising injury” caused by an offense committed in the course of “advertising” the insured’s goods, products or services.   That form typically defines “advertisement” as notice published to the general public at large or specific market segments for purposes of attracting customers or supporters. A recent Illinois appellate court decision, however, has recognized that advertising injury coverage extends to certain product displays.   Specifically, the First Judicial District of the Appellate Court of Illinois determined that retail store displays may constitute “advertisements” for purposes of meeting the requirements for advertising injury coverage under CGL policies to the extent such displays constitute advertisements in and of themselves and do not merely serve to display the products at issue. In Selective Insurance Company of the Southeast v. Creation Supply, Inc. , 2015 IL App (1st) 140152-U (February 9, 2015), the insured Creation Supply had been sued in an underlying lawsuit alleging trademark infringement, trade dress, and unfair competition based on Creation Supply’s import and sale of double-ended, square shaped colored markers.   The underlying complaint alleged, among other things, that Creation Supply’s “unauthorized use of [the underlying plaintiffs’] squarish marker body configuration and squarish marker cap-end configuration in connection with marker products in retail store displays in Oregon and the rest of the United States, and on the websites of Creation Supply and its other online retailers, is causing confusion among potential purchasers of [the underlying plaintiffs’] products.