Many liability policies now cover ‘advertising injury’. In the USA the wording of a particular clause was held to include the displaying of a logo on a hang tag fixed to new clothing in a store.

The insured, ESY, manufacturers and sellers of garments, put a shield logo similar to that of their opposition on hang tags and labels on their clothing and were sued for infringement of trademark and copyright. The insurers denied that this amounted to advertising injury.

The policy included the “use of another’s advertising idea … or … infringing another’s copyright, trade dress or slogan in your advertisement”. An advertisement was a “notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters …”. An exclusion in the policy for breach of copyright and trademark provided that the insurance did not apply to the use of another’s advertising idea in an advertisement.

The court held that the insurer had a duty to defend ESY because there was a causal connection between the alleged injury and the advertising activities of the insured. The hang tags were advertisements because they were there to attract consumers to the garments and to the brand.

(ESY Inc. v Scottsdale Insurance Co. case number 1:15-cv-21349, Southern District of Florida (14 October 2015))