HISTORICAL ANALYSIS OF
THE CHANGES TO COVERAGE B1*
by
James L. Haigh and Sarah L. Showalter
Attorneys at Law
Cousineau McGuire Chartered
Minneapolis, Minnesota

*Prepared for & presented at the Clarion Legal's "Insurance Law Institute 2003" held on July 21 and 22, 2003 in Bloomington, Minnesota, and reprinted here with Clarion Legal's permission.


Table of Contents:
  1. INTRODUCTION.
  2. PRE-1985 CGL FORM AND ENDORSEMENTS
    1. BROAD FORM CGL ENDORSEMENT
    2. PERSONAL INJURY LIABILITY (PIL) ENDORSEMENT
  3. 1985 CHANGES
  4. POST-1985 CHANGES
    1. 1988-1993 CHANGES
    2. 1996 CHANGES
    3. 1998 CHANGES
    4. 2001 CHANGES
  5. CONCLUSION
I.   INTRODUCTION

Prior to changes in 1985 to the Insurance Services Office, Inc. ("ISO") commercial general liability form coverage for "advertising injury" and "personal injury" was available only through purchase of a Broad Form commercial general liability ("CGL") policy endorsement or Personal Injury Liability endorsement. Where there was no Broad Form or Personal Injury Liability endorsement, no coverage existed for defamation, false arrest or malicious prosecution.2

The 1985 ISO standard CGL policy form included "personal injury" and "advertising injury" coverage. This change was a simplification and expansion of coverage3 and was simply called "Coverage B." The 1985 CGL policy eliminated the phrase endorsements and the decision-making necessary for purchase of those endorsements by insureds and agents.

In 1998, significant changes were made to the CGL policy for personal and advertising injury liability coverage. The most significant change was the combination of "personal injury" and "advertising injury" into a new blanket coverage term called "personal and advertising injury."

In 2001, ISO again revised personal and advertising injury liability coverage. Definitions of "personal and advertising injury" "advertisement" and "coverage territory" were clarified and several exclusions were added or expanded. These changes were designed, in larger part, to adapt to the internet.

II.   PRE-1985 CGL FORM AND ENDORSEMENTS

With the introduction of the ISO CGL policy form in 1973 "advertising injury" and "personal injury" coverage were available only through the purchase of a Broad Form CGL endorsement or Personal Injury Liability (PIL) endorsement.

       A.   BROAD FORM CGL ENDORSEMENT

The coverage grant language for personal injury and advertising injury liability provided as follows:

    (A)   The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured's business, within the territory, and the company shall have the right and duty to defend . . .

The Broad Form CGL endorsement provided the following definitions:

    "Advertising injury" means injury arising out of an offense committed during the policy period occurring in the course of the named insured's advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.

    "Personal injury" means injury arising out of one or more of the following offense, committed during the policy period:

    (1)     false arrest, detention, imprisonment or malicious prosecution;

    (2)     wrongful entry or eviction or other invasion of the right of private occupancy;

    (3)     a publication or utterance
      (a)     of a libel or slander or other defamatory disparaging material, or

      (b)     in violation of an individual's right of privacy; except publications or utterance in the course of or relating to advertising, broadcasting, publishing or telecasting activities conducted by or on behalf of the named insured shall not be deemed personal injury.
The term "advertising" was not defined under the policy. As a result, much litigation arising from this clause addressed what constituted "advertising" and many courts strictly construed the undefined term, "advertising" against the carrier.4

Courts and claimants also often focused on the scope of coverage under the term "unfair competition."

The Broad Form endorsement included the following exceptions:

    (B)   This insurance does not apply:

    (1)     to liability assumed by the insured under any contract or agreement:

    (2)     to personal injury or advertising injury arising out of the willful violation of a penal statute or ordinance committed by or with the knowledge or consent of the insured;

    (3)     to personal injury or advertising injury arising out of a publication or utterance of a libel or slander, or a publication or utterance in violation of an individual's right of privacy, if the first injurious publication or utterance of the same or similar material by or on behalf of the named insured was made prior to the effective date of this insurance;

    (4)     to personal injury or advertising injury arising out of libel or slander or the publication or the publication or utterance of defamatory or disparaging material concerning any person or organization or goods, products or services, or in violation of an individual's right of privacy, made by or at the direction of the insured with knowledge of the falsity thereof:

    (5)     to personal injury or advertising injury arising out of the conduct of any partnership or joint venture of which the insured is a partner or member and which is not designated in the declarations of the policy as a named insured:

    (6)     to advertising injury arising out of

      (a)     failure of performance of contract, but this exclusion does not apply to the unauthorized appropriation of ideas based upon alleged breach of implied contract, or

      (b)     infringement of trademark, service mark or trade name, other than titles or slogans, by use thereof on or in connection with goods, products or services sold, offered for sale or advertised;

    (7)     with respect to advertising injury

      (a)     to any insured in the business of advertising, broadcasting, publishing or telecasting, or

      (b)     to any injury arising out of any act committed by the insured with actual malice.

       B.   PERSONAL INJURY LIABILITY (PIL) ENDORSEMENT

In the coverage under the PIL endorsement, Coverage P for personal injury liability refers to "Groups" in its grant of coverage. The endorsement provides:

    (a)     The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury (herein called "personal injury") sustained by any person or organization and arising out of one or more of the following offenses committed in the conduct of the named insured's business:

    Group A - False arrest, detention, or imprisonment, or malicious prosecution;

    Group B - The publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy; except publications or utterance in the course of or related to advertising, broadcasting or telecasting activities connected by or on behalf of the named insured;

    Group C - Wrongful entry or eviction, or other invasion of the right of private occupancy;
The exclusion provision provided:

    This insurance does not apply:

    (a)     to liability assumed by the insured under any contract or agreement;

    (b)     to personal injury arising out of the wilful violation of a penal statute or ordinance committed by or with the knowledge or consent of any insured;

    (c)     to personal injury sustained by any person as a result of an offense directly or indirectly related to the employment of such person by the named insured;

    (d)     to personal injury arising out of any publication or utterance described in Group B, if the first injurious publication or utterance of the same or similar material by or on behalf of the named insured was made prior to the effective date of this insurance;

    (e)     to personal injury arising out of a publication or utterance described in Group B concerning any organization or business enterprise, or its products or services, made by or at the direction of any insured with knowledge of the falsity thereof.
Without a definition of "advertising" courts, carriers, and insureds struggled with what activities constituted "advertising" precluding coverage under the PIL endorsement.

In Fox Chemical Co., Inc. v. Great American Ins. Co., 264 N.W.2d 385 (1978), the Minnesota Supreme Court considered the following grant of coverage language for personal injury liability: ". . . arising out of . . . the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation if an individual's right of privacy; except publications or utterances in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the named insured." The court found coverage for the insured's distribution of seventy-four defamatory pamphlets to its distributors for purposes of educating customers because it was not advertising. The pamphlet extolled the superiority of the insured's product and the inferiority of the competitor's product. The court found that the insured's activities did not constitute a public distribution within the scope of the exclusionary clause.

The 7th Circuit in Playboy Enterprises, Inc. v. St. Paul Fire & Marine Ins. Co., 769 F.2d 425 (7th Cir. 1985) agreed with the Fox court's rationale that the term "advertising" means public or widespread distribution in addressing whether the insured's advertising manager's circulation of eleven letters fell with the exclusionary clause ". . . in the course of or related to advertising, broadcasting or telecasting activities conducted by or on behalf of the named insured." However, the court ultimately determined that the carrier breached its duty to defend Playboy, finding the clause regarding advertising ambiguous.

III.   1985 CHANGES5

The introduction in approximately 1985 of "personal injury" and "advertising injury" coverages into a single coverage called Coverage B was an attempt to simplify and expand prior CGL coverage forms. After the changes to the policy the insured automatically received these coverages and did not have to purchase separate endorsements.

The thrust of the changes were to more clearly distinguish the two liability coverages. However, the coverages remained similar to those previously provided. Coverage B was made available in both "occurrence" and "claims made" policies, however, coverage was, and continues to be, available only for "offenses" committed during the policy period.

Still, however, the term "advertising" was not defined.

Under the new Coverage B, the insurer agreed to provide, in part, coverage for:

    (f)     "Advertising injury" caused by an offense committed in the course of advertising your goods, products or services;

    but only if the offense was committed in the "coverage territory" in the coverage period.
The 1985 changes standardized the CGL policy and definitions. The standard form policy's definition of "advertising injury" reads:

    a.     "Advertising Injury" means injury arising out of one or more of the following offenses (in the course of advertising your goods, products or services):

      (1)     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;

      (2)     Oral or written publication of material that violates a person's right of privacy;

      (3)     Misappropriation of advertising ideas or styles of doing business; or

      (4)     Infringement of copyright, title or slogan.

The policy further provided:

    b.     "Personal Injury" means injury, other than bodily injury, arising out of one or more of the following offenses:

      (1)     False arrest, detention or imprisonment;

      (2)     Malicious prosecution;

      (3)     Wrongful entry into, or eviction of a person from, a room, dwelling or premises that the person occupies;

      (4)     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;

      (5)     Oral or written publication of material that violates a person's right of privacy.

Exclusions similar to the exclusions under the Broad Form endorsement were incorporated in the CGL form but the "actual malice" exclusion was deleted. The 1985 policy provides two separate sets of exclusions that apply to advertising liability coverage. The first set applies to both "personal injury" and "advertising injury" and states:

    This insurance does not apply to:

    a.     "Personal injury" or "advertising injury;"

      (1)     Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;

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

      (3)     Arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured; or

      (4)     For which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement.

A second set of exclusions applied only to "advertising injury." The post-1985 policy provided in part:

    The insurance does not apply to:

    b.     "Advertising injury" arising out of:

      (1)     Breach of contract, other than misappropriation of advertising ideas under an implied contract;

      (2)     The failure of goods, products or services to conform with advertised quality or performance;

      (3)     The wrong description of the price of the goods, products or services; or

      (4)     An "offense" committed by an insured whose business is advertising, broadcasting, publishing or telecasting.

The second of these exclusions for advertising injury was new in the 1985 policy.

The 1985 CGL standard form eliminated certain terms in an attempt to clarify the scope of coverage under "advertising injury" coverage. The policy no longer included in the definition of "advertising injury" the terms "defamation," "piracy," or "violation of right of privacy." The term "unfair competition" was replaced with "style of doing business." The 1985 CGL form also deleted exclusions in the prior Broad Form endorsement relating to infringement of trademark, service mark or trade name as well as acts committed by the insured with actual malice.6

The incorporation of personal injury and advertising injury liability coverage into the basic CGL policy eliminated the need for endorsements and simplified the task of determining coverage because the two similar yet conflicting endorsements had been eliminated. The new form eliminated the problem some courts faced in trying to fit "advertising injury" into a "personal injury" category in the PIL endorsement when the insured did not have coverage for "advertising injury."7

Cases in the 1980s interpreting the PIL and Broad Form endorsements also focused on the terms of the grant coverage to insureds providing coverage for "other invasion of the right of private occupancy." This language created the potential coverage for "racial discrimination,"8 breach of an "implied warranty of habitability,"9 and pollution claims not anticipated by the underwriters.10

The deletion of the phrase "other invasion of the right of private occupancy" had an impact in a significant Minnesota case, Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254. In that case, Justice Simonett analyzed whether or not a telephone call could be considered "wrongful entry into a room that a person occupies" for the purposes of personal injury coverage. The answer to that question by the court was no.

In Garvis, the policy form in question used language similar to the 1985 CGL Form. Justice Simonett indicated that there is a difference between "wrongful entry" and "invasion of the right of private occupancy." Also, the court noted that while "wrongful entry" is akin to trespass, the two concepts are "not quite the same." The court noted that wrongful entry is ordinarily understood as related to the invasion of an interest in real property, and it is in that sense the court thought it was used in "personal injury" insurance coverage. The court also noted that the language "other invasion to the right of private occupancy" was not in the insurance policy at issue in that case, and the court denominated that grant of coverage as "expanded language," in the course of its opinion.

However, the change in the form eliminating "or other invasion of the right of private occupancy" was short lived. In 1988, the phrase "other invasion of the right of private occupancy," returned. However, the phrase changed and was more restrictive. See, Infra. at page 10.

The 1985 CGL Policy Form also indicated an intent to restrict the scope of "advertising injury" coverage while broadening personal injury coverage. The deletion of "piracy," "unfair competition," and "other invasion of the right of private occupancy" removed some significant potential areas of coverage. Courts also have taken a narrow interpretation of "unfair competition" limiting the scope of coverage provided for damages for advertising injury caused by "unfair competition."

In Bank of the West v. The Superior Court of Contra, 833 P.2d 545, 10 Cal. Rptr.2d 538 (Cal. 1992), the Supreme Court of California analyzed the grant of coverage provided in the CGL Liability Extended Coverage Endorsement. In Bank of the West, the court severely cutback on expanding case law for advertising activity under pre-1986 CGL policies for "unfair competition." In so doing, the court noted that the post-1986 version of the standard ISO policy eliminated coverage for "unfair competition." The court held that the pre-1986 CGL policies at issue did not cover statutory claims that arose under the California Unfair Business Practices Act, ruling that the coverage would exist for the common-law tort of "unfair competition" in advertising activities, to which the underlying litigation was not causally connected. The court further went on to state that the program in the underlying class action litigation was "advertising" directed to agents and brokers who placed allegedly illegal automobile loans. There was no causal connection between the advertising activity and the alleged injury sustained by consumers.11

However, as noted earlier, even after the changes to the 1985 CGL form, "advertising" still had not been defined and the courts were left to grapple with the problem of interpreting whether the activity was "advertising."

In Ross v. Briggs and Morgan, 540 N.W.2d 843 (Minn. 1995), the Minnesota Supreme Court considered the definition of "advertising injury" under the CGL policy and narrowly interpreted the enumerated offenses arising from alleged advertising activity. A physician brought a claim of legal malpractice against the law firm which had represented him in settling a claim brought against him by the professional association with which he had formerly practiced. The physician claimed that the law firm should have tendered the defense of the underlying claims to the physician's insurer. The court considered the definition of "advertising injury" in the physician's CGL policy and the underlying claims based upon the physician's mailing of a notice to the association's mailing list.12 The court took a narrow reading of claims in the underlying complaint and amended complaint of "unfair, deceptive, or misleading trade practices actionable at common law" and "unfair competition" at common law in determining that they did not fall within the scope of coverage under advertising injury. The court noted that neither the underlying complaint nor the amended complaint alleged a claim of unauthorized taking of advertising ideas or a style of doing business or the infringement of copyright, title or slogan. Although the court stated it was not necessary to plead the language of the insuring document, the allegation fell outside of the enumerated offenses contained in the policy.

IV.   POST-1985 CHANGES

       A.   1988-1993 CHANGES

The main changes in this time frame, after the 1985 form, related to the phrase "other invasion of the right of private occupancy." As noted above, this phrase was put back into the policy, albeit in a different form than in the 1985 version.

The coverages, beginning with CG 00 01 11 8813 form read 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 of libels a person or organization or disparages a person's or organization's good, products or services;

      b.     Oral or written publication of material that violates a person's right of privacy;

      c.     Misappropriation of advertising ideas or style of doing business; or

      d.     Infringement of copyright, title or slogan.

      * * *


    10.     "Personal injury" means injury, other than "bodily injury," arising out of one or more of the following offenses:

      a.     False arrest, detention or imprisonment;

      b.     Malicious prosecution;

      c.     The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupied by or on behalf of its owner, landlord or lessor;14

      d.     Oral or written publication of material that slanders or libels a persons or organization or disparages a person's or organization's goods, products or services; or

      e.     Oral or written publication of material that violates a person's right of privacy.

      * * *


    2.     Exclusions.

      This insurance does not apply to:

      a.     "Personal injury" or "advertising injury:"

        (1)     Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;

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

        (3)     Arising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured; or

        (4)     For which the insured has assumed liability in a contract or agreement. This exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement.

      b.     "Advertising injury" arising out of:

        (1)     Breach of contract, other than misappropriation of advertising ideas under an implied contract;

        (2)     The failure of goods, products or services to conform with advertised quality or performance;

        (3)     The wrong description of the price of goods, products or services; or

        (4)     An offense committed by an insured whose business is advertising, broadcasting, publishing or telecasting.

The phrase "invasion of the right of private occupancy" was reinserted back into the policy, but limited to a "room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor." This was an apparent attempt to limit the exposure and possibly curtail suits which had found coverage for items such as pollution, racial discrimination or breach of a covenant of habitability.

Certainly the language had narrowed substantially from that contained in the Broad Form CGL endorsement which existed before 1985. In the pre-1985 policy, the coverage grant for "personal injury" was for ". . . wrongful entry or eviction or other invasion of the right of private occupancy." The change beginning with the CG 00 01 10 88 form eliminates the word "other" and specifically ties the invasion of the right of private occupancy to a ". . . room, dwelling or premises." Further, the language appears to imply some type of physical entry. However, it is certainly a broadening of the prior form which had not used the term "invasion of the right of private occupancy."15

The changes initially begun in the CG 00 001 10 88 policy continued unchanged with respect to "personal injury" or "advertising injury" until the mid-1990's.

       B.   1996 CHANGES

By approximately 1996, ISO CGL policy forms were modified to include pollution exclusions from the "personal injury" coverage.16

In the 1996 ISO CGL form the policy was changed to state Coverage B did not apply to any personal and advertising injury:

    Exclusions:
      * * *


        (10)     Arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time.

      b.     Any loss, cost or expense arising out of any:

        (1)     Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants"; or

        (2)      Claim or suit by or on behalf of a governmental authority for damages because testing for, monitoring for, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants."

This change eliminated the potential for significant area of coverage.

       C.   1998 CHANGES

In approximately 1998, the definitions for "personal injury" and "advertising injury" were combined to form a new coverage term called "personal and advertising injury."17

      "Personal and advertising injury" means injury, including consequential "bodily injury," arising out of one or more of the following offenses:18

      a.     False arrest, detention or imprisonment;

      b.     Malicious prosecution;

      c.     The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of it owner, landlord or lessor;

      d.     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;

      e.     Oral or written publication of material that violates a person's right of privacy;

      f.     The use of another's advertising idea in your "advertisement";19 or

      g.     Infringing upon another's copyright, trade dress or slogan in your "advertisement".      20

Differences from the 1985 form include the incorporation of consequential bodily injury into the definition of "personal and advertising injury" and the requirement that the offenses of "use of another's advertising idea" and "infringement of copyright, trade dress or slogan" must occur in the named insured's "advertisement."

These changes significantly expanded coverage, including providing for consequential "bodily injury" arising out of "personal and advertising injury." For instance, under prior coverage forms, if an insured had falsely imprisoned a claimant, and the claimant only claimed "bodily injury", Coverage B might not have covered the claims. Further, because the tort of false arrest is not caused by accident, the implication would be that Coverage A would not apply. See, e.g., Red & White Airway Cab Co. v. Transit Cas. Co., 305 Minn. 353, 234 N.W.2d 580 (1975). Now, there would no dispute but that if the false arrest led to bodily injury, there would be coverage, absent any other exclusion that would apply.21

Finally in 1998 a definition for "advertisement" was added to the ISO CGL form.

      "Advertisement" means 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.

It is expected that the addition of the definition of "advertisement" will clarify what conduct qualifies as "advertising."

The exclusions for personal injury and advertising injury were combined into one section which reads:

      This insurance does not apply to:

      a.     "Personal and advertising injury":

        (1)     Caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury";

        (2)     Arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity;

        (3)     Arising out of oral or written publication of material whose first publication took place before the beginning of the policy period;

        (4)     Arising out of a criminal act committed by or at the direction of any insured;

        (5)     For which the insured has assumed liability in a contract or agreement. The exclusion does not apply to liability for damages that the insured would have in the absence of the contract or agreement;

        (6)     Arising out of a breach of contract, except an implied contract to use another's advertising idea in your "advertisement";

        (7)     Arising out of the failure of goods, products or services to conform with any statement of quality or performance made in your "advertisement";

        (8)     Arising out of the wrong description of the price of goods, products or services stated in your advertisement;

        (9)     Committed by an insured whose business is advertising, broadcasting, publishing or telecasting. However, this exclusion does not apply to Paragraphs 14.a., b. and c. of "personal and advertising injury" under the Definitions Section; or

        (10)     Arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants" at any time.

      b. Any loss, cost or expense arising out of any:

        (1)     Request, demand or order that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants"; or

        (2)     Claim or suit by or on behalf of a governmental authority for damages because testing for, monitoring for, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of, "pollutants".

In 1998 ISO also changed the form to eliminate the language, "misappropriation of advertising ideas or style of doing business," that had given rise to a theory of coverage for patent infringement claims.22

       D.   2001 CHANGES

The ISO form23 was changed in 2001 to recognize the impact of electronic communications. The definition of "advertisement" was changed to add the following language at the end of the previous definition:

      For purposes of this definition:

      a.     Notices that are published include material placed on the Internet, or on similar electronic means of communication; and

      b.     Regarding web-sites, only that part of a web-site that is about your goods, products or services for the purpose of attracting customers or supporters is considered an advertisement.

Also the definition of "Personal and advertising injury" enumerating the covered offense was revised as follows:

      d.     Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;

      e.     Oral or written publication, in any manner, of material that violates a person's right of privacy;

The addition of "in any manner" apparently takes into account electronic communication via the internet or other mediums.

The definition of "Coverage territory" was revised as follows:

      a.     The United States of America (including its territories and possessions), Puerto Rico and Canada;

      b.     International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in a. above; or

      c.     All other parts of the world if the injury or damage arises our of:

        (1) Goods or products made or sold by you in the territory described in a. above;

        (2)     The activities of a person whose home is in the territory described in a. above, but is away for a short time on your business; or

        (3)     "Personal and advertising injury" offenses that take place thorough the Internet or similar electronic means of communication provided the insured's responsibility to pay damages is determined in a "suit" on the merits, in the territory described in a. above or in a settlement we agree to.

Again, the revisions to take into account the Internet and other means of electronic communication.

A specific exclusion was added to clarify the limited coverage for intellectual property claims and new exclusions were added to take into consideration internet activities. The new exclusions read:

      This insurance does not apply to:

      * * *


      i.     Infringement Of Copyright, Patent, Trademark Or Trade Secret

        "Personal and advertising injury" arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.

        However, this exclusion does not apply to infringement, in your "advertisement", of copyright, trade dress or slogan.

* * *


      k.     Electronic Chatrooms Or Bulletin Boards

      "Personal and advertising injury" arising out of an electronic chatroom or bulletin board the insured hosts, owns, or over which the insured exercises control.
      l.     Unauthorized Use Of Another's Name Or Product
      "Personal and advertising injury: arising out of the unauthorized use of another's name or product in your e-mail address, domain name or metatag, or any other similar tactics to mislead another's potential customers.


V.   CONCLUSION

An historical analysis of Coverage B in the standard CGL policy shows a trend to coverage that is probably consistent with the original intent to cover "personal injury and advertising injury."

The most significant changes since 1985 occurred in 1998, with the change of the coverage to merge personal and advertising injury" into one coverage. This policy form also included, significantly, bodily injury" as an injury that could be covered as a result of a "personal injury" and the inclusion of a definition of "advertisement." The inclusion, at long last, of a definition of the term "advertisement" may answer and supplant some case law attempting to define the terms "advertisement," "advertising" or "advertise."24

The original coverage, stemming from pre-1985 endorsements, carried interpretations that had roots stemming from the nature of the intentional torts meant to be covered. It seems anomalous, in the abstract, to insure "intentional torts." Coverage B could be seen as covering "negligent intentional torts," made by insureds. This has lead to Coverage B's use as a tool to cover torts not covered by "occurrence based" insurance.

The standard form of Coverage B has changed, however, from the 1985 form to the present in response to these unique and creative challenges to the grant of coverage contained in Coverage B and the "traditional" coverage for "personal injury" and "advertising injury" before 1985. In particular, the environmental suits and the change in the standard form can be see as one response.25 Another area would have been attempts to secure coverage for claims such as "patent infringement" or "trade secrets."

The form continues to evolve, as can be seen in the most recent form's scope including internet activities, and defining the way in which Coverage B would and would not be applicable in that medium. For instance, one could have coverage for an "advertising injury" arising out of one's website, but not have coverage for an advertising injury arising out of a "chat room" or "bulletin board." However, this form does not identify the now increasing use of weblogs or blogging on the internet, specifically. If an "advertising injury" or "personal injury" is alleged to have occurred on a weblog, is there coverage under the 2001 form?

This area promises to be an active area of litigation in the future, especially with the broadening of "personal injury" to include "bodily injury." However, the most recent version of the ISO form appears to curtail the use of Coverage B in intellectual property litigation.

There is substantial litigation focusing on what satisfies the causal link between the insured's advertising activity and the advertising injury and it appears that this will continue to be an area of much litigation. In Fireman's Fund Ins. Co. of Wisconsin v. Bradley Corp., 261 Wis.2d 4, 660 N.W.2d 666 (Wis. 2003) the court found the insured's activities of preparing materials promoting an infringing product and displaying the product at trade shows was advertising within the insured's CGL policy which specifically defined advertising to include "infringement of trademark." In concluding that there was a causal link, the court stated that "where an advertising injury is alleged, the relevant causation issue with regard to the insurance coverage is not whether the "injury could have taken place without the advertising, "but" whether the advertising did in fact contribute materially to the injury. (Citations omitted, emphasis original).


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Footnotes:
1 This paper includes copyrighted material with the permission of Insurance Services Office, Inc. Copyright, Insurance Services Office, Inc., 1984, 1994, 1997, 1998 and 2000.BACK

2 See Ed Winkler & Son, Inc. v. Ohio Casualty Ins. Co., 51 Md. App. 190, 441 A.2d 1129 (1982).BACK

3 In the 1973 CGL Broad Form endorsement combined coverage for personal injury and advertising liability, The Personal Injury Liability endorsement covered personal injury, only, not advertising liability.BACK

4 See CNA Casualty of California v. Seaboard Surety Company, 222 Cal. Rptr. 276, 176 Cal. App. 3d 598 (1986). See also Playboy Enterprises, Inc. v. St. Paul Fire & Marine Ins. Co., 769 F.2d 425, 428 (7th Cir. 1985) stating:

The term "advertising" has been defined as follows: "the action of calling something (as a commodity for sale, a service offered or desired) to the attention of the public especially by means of printed or broadcast paid announcements." Webster's Third New International Dictionary of the English Language, unabridged, 31 (1963). This definition requires that the presentation of the item to be sold or approved be made in a medium directed to the public at large.BACK
5 The use of historical dates ties to the "date" of the ISO form. The policy form discussed herein is the CG 00 01 11 85 form, copyrighted in 1982 and 1984 by ISO. However, promulgation of the form publicly and adoption by the states occurred in the mid-1980's. CG 00 01 11 85 was approved in Minnesota April 1, 1986. The "1988" form, CG 00 01 1188 bears a 1982 and 1991 copyright date, and was approved in Minnesota March 1, 1990.BACK

6 The elimination of "actual malice" avoided a redundancy in the policy. Prior to the 1985 changes, both the Broad Form and PIL endorsements stated the insurance did not apply to injury arising out of the publication or utterance of statements "by or at the direction of any insured with knowledge of the falsity thereof." The common law standard for malice was recognized as statements made with the knowledge of their falsity. See Hirman v. Rogers, 257 N.W.2d 563 (Minn. 1977); Morgan v. Dun & Bradstreet, Inc., 421 F.2d 1241 (5th Cir. 1970). However, the PIL endorsement only excluded personal injury arising out of libel or slander concerning any "organization" or "business enterprise," "or its products or services." Therefore, personal injury coverage existed if an insured libeled or slandered any person even with knowledge of the falsity thereof.BACK

7 See Fox Chemical Co. v. Great American Ins. Co., 264 N.W.2d 385 (Minn. 1978) (concluding that the limited and controlled distribution of material for the stated purpose of personnel education, did not constitute public distribution within the scope of the clause excluding coverage for advertising activities in the PIL endorsement).BACK

8 See Gardner v. Romano, 688 F.Supp. 489 (E.D. Wis. 1988) (finding insurer had a duty to defend its insured apartment building owner against claims of racial discrimination where the phrase "other invasion of the right of private occupancy" was vague).BACK

9 Beltway Management Co v. Lexington-Landmark Ins. Co., 746 F.Supp. 1145 (D.D.C. 1990) (concluding that a claim for an implied breach of habitability was an "invasion of the right of private occupancy").BACK

10 Edgerton v. General Casualty, 172 Wis.2d 518, 493 N.W.2d 768 (holding that pollution is "an invasion of the right of private occupancy"). For a review of those cases interpreting personal injury coverage as granting or rejecting coverage for pollution see: Titan Holding Syndicate, Inc. v. Keene, 898 F.2d 265 (1st Cir. 1990); see also, Pipefitters Welfare Education Fund v. Westchester Fire Ins. Co., 976 F.2d 1037 (7th Cir. 1992). Courts have rejected "personal injury" coverage claims in the following cases: Gregory v. Tennessee Gas Pipeline Co., 948 F.2d 203 (5th Cir. 1991) (applying Louisiana law); In Re Texas Eastern Transmission Corp. PCB Contamination Insurance Coverage Litigation, MDL Document Number 764 (E.D. PA, July 9, 1992) (applying Texas law).BACK

11 In Knoll Pharmaceutical Co. v. Automobile Ins. Co., 152 F.Supp.2d 1026 (N.D. Ill. 2001) the court held that the duty to defend could be invoked by a non-competitor's claims for "unfair competition" injury, as an "advertising injury." Consumers and third-party payors commenced numerous lawsuits against the insured pharmaceutical company based upon its marketing of Synthroid through advertisements that allegedly falsely claimed that there was no substitute for Synthroid and there was no proven bioequivalent product.BACK

12 The policy provided as follows:
Advertising injury means injury caused by any of the following offenses that result from the advertising of your product or work:
-libel or slander;
-written or spoken material made public which belittles the products or work of others;
-written or spoken material made public which violates an individual's right of privacy;
-unauthorized taking of advertising ideas or style of doing business;
-infringement of copyright, title or slogan.
Ross, 540 N.W.2d at 846.BACK

13 Coverage B remained unchanged in the 1993 version (CG 00 01 10 93), copyright 1992. The form was approved in Minnesota December 1, 1993.BACK

14 This is the only change in this policy form. The remainder of the language in Coverage B mirrors the 1985 form.BACK

15 Query whether Garvis, supra, would have had the same result today under the revised form?BACK

16 The ISO form number is CG 00 01 01 96. The revised 1996 form number CG 00 01 01 96 was approved in Minnesota October 1, 1996.BACK

17 The ISO CGL form is CG 00 01 07 98, and was approved in Minnesota April 1, 1999.BACK

18 New language.BACK

19 This is new language. The prior version had read: "Misappropriation of advertising ideas or style of doing business."BACK

20 This is new language. The prior version had read: "Infringement of copyright, title or slogan."BACK

21 It should also be noted that Coverage A providing "bodily injury" and "property damage" coverage was revised to exclude "bodily injury" arising out of "personal and advertising injury." Coverage may arise if, for example, the insured slanders or libels a person who as a result suffers severe emotional distress manifesting physical ailments. See, Garvis, supra.BACK

22 Prior to this change, the courts were divided on whether there was a duty to defend patent infringement claims under advertising liability/advertising injury. See e.g., John Deere Ins. Co. v. Shamrock Ind. Inc., 929 F.2d 413 (8th Cir. 1991) (holding that there was a duty to defend where underlying claims of misappropriation of trade secrets arguably fell with the "advertising activity" coverage of the policies), but see Darby & Darby v. VSI International, Inc., 95 N.Y.2d 308, 739 N.E.2d 744 (N.Y. 2000) (citing Florida and New York's continued refusal to follow California's lead in recognizing the duty of an insurer to defend patent infringement claims under a CGL's advertising injury clause).BACK

23 ISO Form CG 00 01 10 01, approved in Minnesota December 1, 2002.BACK

24 See Fox Chemical Co., supra.BACK

25 See section IV., B., supra, at p. 13, 1996 Changes.BACK

   
James L. Haigh

   Born Kankakee, Illinois, June 19, 1948; admitted to bar, 1978, Minnesota, U.S. District Court, District of Minnesota and the Eighth Circuit. Education: B.A., University of Illinois, 1970; M.A., University of Southern California, 1973; J.D., William Mitchell College of Law, 1978; Lecturer, Minnesota Institute of Legal Education:"Coverage B in CGL Policies," 1987 and 1992;"Primary, Excess and Other Insurance," 1991 and 1993; "Legal Ethics for the Insurance Defense Attorney,"1994;" Introducing the 1996 ISO CGL Policy," 1996; "Insurance Coverage Institute," 1997. Qualified Neutral Mediator and Arbitrator under Rule 114 of the Minnesota General Rules of Practice. Member: Hennepin County Bar Association; Minnesota State Bar Association; American Bar Association; Defense Research Institute; Minnesota Defense Lawyers Association. AV-rated by Martindale-Hubbell.

Jim has handled numerous complex cases during his tenure at CMA. He has handled construction cases (for contractors, sub-contractors and material providers), the defense of architects and engineers in construction cases, malpractice cases for dentists, product liability cases and coverage issues.

*Successfully tried product liability case for major water heater manufacturer involving allegations of defective design and manufacture that resulted in a fire.

*Defended major engineering firm in multi-million dollar case involving cost overruns and performance issues for a waste to energy power plant.

*Successfully defended major manufacturer of truck wheels in product liability action involving bodily injury where there were allegations of defective design and failure to warn.

*Successfully defended at trial in Federal Court and on appeal manufacturer of anti-lock brake system against allegations of defective design and manufacture.

*Defended major carrier in case of first impression involving first party coverage for asbestos removal from commercial apartment buildings.

*Selected by major carrier for its representation in environmental cases, and he has provided coverage analysis in many cases, including analysis stemming from the Minnesota Landfill Clean-Up Act, Minn. Stat. Sect. 115B.39, et seq. That Act removed "qualified facilities" (i.e., landfills) from the liability provisions of CERCLA and MERLA, and provided a vehicle for direct recovery from carriers which had insured landfills, entities that transported waste to landfills, or entities that had contributedwaste to the landfills. Recently, after several interim settlements, Jim assisted in the negotiations and settlement of a global release pursuant to the provisions of the Act

.*Jim has been heavily involved with the defense of companies that have been accused of causing mold damage to homes and commercialbuildings. This is a new form of environmental damage and concern to which carriers and their insureds will need to respond aggressively. Jim has been working with experts on causation and medical responses to exposure to mold in a number of cases.
Haigh

direct dial number: (952) 525-6943
e-mail: jlh@cousineaulaw.com

Sarah L. Showalter

      Born Brookfield, Wisconsin, December 13, 1973; admitted to bar, Minnesota, 2000, U.S. District Court of Minnesota, 2001, Court of Appeals, Eighth Circuit, 2001. Education: B.A., Political Science, University of Minnesota, 1995, J.D., William Mitchell College of Law, 2000. Staff member and author, William Mitchell Law Review, 1999. Member, Moot Court, 1998. Area of Practice: Civil Litigation. Member: Minnesota State Bar Association, Minnesota Defense Lawyers Association, and Minnesota Women Lawyers Association.
Sanville

direct dial number: (952) 525-6947
e-mail: sls@cousineaulaw.com
  
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