“Prior Publication” Exclusion Bars Advertising Injury Coverage, Court Finds

A federal district court in Pennsylvania has ruled that “prior publication” exclusions in a commercial general liability and commercial umbrella liability policies barred coverage of an action against the insured that sought damages for advertising injury allegedly begun before the policies’ inception date.  

The Case

The Navajo Nation sued Urban Outfitters and its wholly-owned and controlled subsidiaries, entities, and retail brands (collectively, “Urban Outfitters”) for trademark infringement, trademark dilution, unfair competition, false advertising, and commercial practices laws violations and for violation of the federal Indian Arts and Crafts Act. The Navajo Nation alleged that it had suffered “advertising injuries” arising out of Urban Outfitters’ “misappropriation of the Navajo Nation’s advertising ideas and styles of doing business.” The Navajo Nation asserted that its injuries included advertising injuries and Web site injuries arising out of Urban Outfitters’ infringement of title by falsely suggesting and misrepresenting that its products were Indian made when they were not, advertising injuries arising out of disparagement of the Navajo Nation’s products, advertising injuries arising out of Urban Outfitters’ use of the Navajo Nations’ advertising ideas, and advertising injuries and Web site injuries arising out of Urban Outfitters’ infringing upon the Navajo Nation’s identity, culture, and cachet associated with being a producer of authentic Indian products.

Urban Outfitters’ insurance carrier contended that there was no coverage for the claims because the commercial general liability and the commercial umbrella liability policies it had issued contained “prior publication” or “first publication” exclusions that barred coverage with respect to claimed “personal and advertising injury” in situations in which the same or substantially similar publications began prior to the policy periods. It filed a declaratory judgment action and moved for judgment on the pleadings.

The Court’s Decision

The court granted the insurer’s motion.

It first found that The Navajo Nation’s complaint clearly alleged “personal and advertising injury” to which the insurance applied.

Then, the court found that the complaint alleged that Urban Outfitters had started using the “Navajo” and “Navaho” names in its product line, or in connection with the sale of its retail clothing goods and accessories, online, in its catalogs, and in its physical stores, before the policies’ inception date, and thus were excluded from coverage.

The court said that it was “immaterial” whether Urban Outfitters advertised various allegedly injurious retail clothing or accessory products prior to the policies’ inception date as well as other, additional, different retail clothing or accessory products after the publication date because, under the “prior publication” exclusion, it was “irrelevant that later publications, made after the policy became effective, also caused ‘advertising injury’ or increased the damages.”

Accordingly, the court granted the insurer’s request for a declaration that it had no potential duty to indemnify, and therefore, no duty to defend the Urban Outfitters defendants in connection with the underlying suit.

The case is Hanover Ins. Co. v. Urban Outfitters, No.12-cv-3961 (E.D. Pa. Aug. 19, 2013).