The Idaho Supreme Court has ruled that an insured's Facebook post precluded insurance coverage of a trademark infringement lawsuit against the insured because of the prior publication exclusion in the insurance policy.
The Case
On October 1, 2012, Scout, LLC, an Idaho limited liability company, purchased Casa Del Sol, a downtown restaurant in Boise. The members of Scout decided to renovate the restaurant into a pub and to brand it as Gone Rogue Pub.
On October 10, 2012, Scout posted a public picture of the Gone Rogue logo on Facebook, accompanied by the words, “Here is our new logo! Signs are going up today and tomorrow! Hope everyone likes it! Let us know what you guys think!” In the same month, Scout registered Gone Rogue Pub as an assumed business name with the Idaho Secretary of State. Scout did not display any other advertising or logos until after November 7, 2012.
On November 7, 2012, Scout requested a commercial business insurance policy through Truck Insurance Exchange, and a policy was issued by Farmers Insurance.
Scout then began the process of opening Gone Rogue Pub: obtaining an alcohol license, hanging signs, and ordering merchandise and glassware emblazoned with the Gone Rogue Pub logo.
Gone Rogue Pub officially opened sometime around November 21, 2012.
In January 2013, the Oregon Brewing Company (“OBC”) informed Gone Rogue that it believed Gone Rogue was infringing on five of its registered ROGUE trademarks, including use of the mark in connection with (1) beer and ale; (2) restaurant, pub, and catering services; (3) beverage glassware; (4) beer; and, (5) clothing. All OBC's registrations predated Gone Rogue's use by at least two years.
For a year-and-a-half OBC attempted to negotiate a deal with Gone Rogue, but to no avail.
In October 2014, OBC sued Scout, alleging in part that “[i]n October 2012, long after OBC's first use and registration of the mark ROGUE, [Gone Rogue Pub] commenced use of the mark ROGUE as the name of their restaurant and bar.” OBC asserted six different claims against Scout: (1) trademark counterfeiting under the Lanham Act; (2) trademark infringement; (3) unfair competition and false designation of origin under the Lanham Act; (4) cyber-squatting under the Lanham Act; (5) unfair business practices under Idaho law; and, (5) common law trademark infringement.
OBC attached exhibits to its complaint featuring a host of screenshots from Scout's Facebook page showing Gone Rogue's marks. OBC sought injunctive relief, attorneys' fees and costs, and treble damages.
Truck Insurance took the position that Scout's claim was not covered under its insurance policy because of an exclusionary provision in the policy that denied coverage for any “'advertising injury' [a]rising out of oral or written publication of material whose first publication took place before the beginning of the policy period.” Truck Insurance pointed out that OBC's complaint stated that the infringing activity had begun in October 2012 – a month before Scout's liability coverage commenced – when Scout posted the Gone Rogue Pub logo on its Facebook page.
Scout settled with OBC, agreeing to cease using ROGUE as a mark. Scout then rebranded “Gone Rogue Pub” as “Double-Tap Pub.”
Thereafter, Scout sued Truck Insurance for breach of contract, breach of the covenant of good faith and fair dealing, and bad faith failure to defend.
The trial court concluded that Truck Insurance had no duty to defend Scout, and the dispute reached the Idaho Supreme Court.
The Idaho Supreme Court's Decision
The court affirmed, holding that the prior publication exclusion in the Truck Insurance policy precluded any duty it had to defend Scout.
In its decision, the court explained that, when reading the OBC complaint broadly, it was “clear” that there was no coverage and thus no duty to defend. The court noted that the OBC complaint alleged that the use of the mark ROGUE began in October 2012, a month before Truck Insurance began providing insurance coverage. The court then ruled that because OBC alleged that the mark ROGUE was first published before Truck Insurance's policy was issued, and it was supported by an exhibit showing that use, the prior publication exclusion excluded coverage and Truck Insurance had no duty to defend.
The court found that the prior publication exclusion was “unambiguous,” and that the October Facebook posting “was the landmark for Scout's continuing acts that ultimately resulted in an infringement suit.” Because of this landmark, the court ruled, Truck Insurance had no duty to defend Scout because any advertising injury that occurred after the October publication was excluded from coverage due to the prior publication exclusion.
Thepost-coverage use of the ROGUE mark was not sufficiently distinct from the pre-coverage use to constitute “fresh wrongs” triggering Truck Insurance's duty to defend, the court concluded.
The case is Scout, LLC v. Truck Ins. Exchange, No. 45349 (Idaho, Jan. 29, 2019). Attorneys involved include: Simmons Townsend, PLLC, Boise, for appellant. Chynna C. Simmons argued. Elam & Burke, P.A., Boise, for respondent. Jeffrey A. Thomson argued.