California Supreme Court Defines Scope of Advertising Injury Coverage

Hartford v. Swift imposes “specificity” requirements that may provide comfort to companies facing disparagement claims while requiring careful navigation to trigger CGL policies.

The California Supreme Court recently issued a ruling that may serve as a classic “double-edged sword” for companies whose alleged competitors attempt to bring disparagement claims. In Hartford Casualty Insurance Co. v. Swift Distribution, Inc., No. S207172 (June 12, 2014),1 the Supreme Court clarified and limited the circumstances in which an implicit “disparagement” claim can trigger an insurer’s duty to defend under the “advertising-injury” component of comprehensive general liability (CGL) insurance policies. Importantly, however, in doing so the court also provided businesses with a potential reprieve from an onslaught of future disparagement lawsuits.

As a result of the ruling in Swift, California businesses facing intellectual property rights or advertising law litigation risk should carefully evaluate their coverage portfolios to accurately assess their available insurance benefits, and consult with experienced coverage counsel before interpreting Swift hastily.

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