Intellectual Property Law

Ninth Circuit Finds Endorsement No Reason to Dismiss Advertising Injury Case

By Michael Atkins

Ex-members of The Doors and surviving relatives of Jim Morrision sued Ray Manzarek, a founding member of The Doors, and Doors Touring, Inc., in two lawsuits, alleging that Mr. Manzarek and his new band were liable for infringing THE DOORS name, trademark, and logo in conjunction with their planned national and international tours. Mr. Manzarek’s defense fees and costs in those suits exceeded $3 million.

St. Paul Fire & Marine Insurance Co. insured Mr. Manzarek under a commercial general liability policy and Mr. Manzarek, DTI, and another band member under a second CGL policy. Mr. Manzarek and the other insureds claimed they were entitled to coverage under the policies’ “advertising injury” provisions.

Mr. Manzarek and DTI sued St. Paul in California state court after St. Paul refused to defend or indemnify them based on a “Field of Entertainment Endorsement” (FELE) that excepted from coverage advertising injury within the policyholders’ “field of entertainment business.” St. Paul removed the action to the Central District of California and then moved to dismiss for failure to state a claim. The court granted the motion, finding the Field of Entertainment Endorsement was conspicuous, unambiguous, and enforceable.

On March 25, the Ninth Circuit reversed this finding. It found:

“The fundamental problem with the district court’s decision is that it fails to apply the language of the FELE to the factual allegations contained in the complaints in the Underlying lawsuits. The FELE excludes coverage for ‘advertising or publicizing for, any Properties or Programs which are within your Field of Entertainment Business.’ Contrary to the interpretation adopted by the district court, the definition of Field of Entertainment Business is not broad enough to cover the entirety of the allegations in the Underlying Lawsuits.”

The court concluded:

“In this case, the Underlying Lawsuits allege that Manzarek and DTI marketed products and merchandise at their concerts and on The Doors official website. The Underlying Lawsuits, however, are silent about what type of products and merchandise that Manzarek and DTI produced and marketed. For all St. Paul knew when it denied coverage, the products marketed by Manzarek and DTI included guitars, t-shirts, and perhaps (although we realize it is not likely) salad dressing bottles with The Doors logo and/or Morrison’s likeness affixed to them. These allegations raised the potential for coverage under the Policies and, for that reason, the district court erred by summarily dismissing Manzarek’s and DTI’s breach of contract claim.”

For the same reasons, the court also concluded the district court erred by summarily dismissing the insureds’ claim for breach of the implied covenant of good faith and fair dealing.

The case cite is Manzarek v. St. Paul Fire & Marine Ins. Co., __ F.3d __, 2008 WL 763385, No. 06-55936 (9th Cir. March 25, 2008).

Full post as published by Seattle Trademark Lawyer on April 01, 2008 (boomark / email).