Friday, June 27, 2014

Website statements aren't trade dress for insurance purposes

Test Masters Educational Services, Inc. v. State Farm Lloyds, 2014 WL 2854536, No. H–13–1706 (S.D. Tex. June 23, 2014)
Test Masters offers test prep services.  It was involved in a series of lawsuits by and against third party competitor Singh.  In the underlying case here, Singh filed counterclaims alleging that Test Masters’ website purported to offer LSAT preparation courses across the country under the “Test Masters” name and mark, mimicked a map on Singh’s website, and made material misrepresentations in an effort to trick consumers into believing that Plaintiff’s services were associated with Singh’s.  State Farm agreed to defend the counterclaims, but when Singh dropped the accusation that Test Masters mimicked Singh’s map, it ultimately withdrew its defense because the absence of a trade dress claim meant there was no potential coverage under the advertising injury policy it provided Test Masters. This suit followed.
Texas uses the “eight corners” rule, under which the duty to defend considers only the pleadings, liberally construed, and the policy language, focusing on the factual allegations in the pleading rather than the legal theories.  Here, the only question for the court was whether the underlying complaint alleged infringement of “trade dress.”
Test Masters argued that Singh’s citation of §43(a) and allegations that Test Masters used a similar name, mark, and website constituted allegations of trade dress infringement.  But §43(a) covers more than trade dress, and statutory citation isn’t enough to trigger coverage.  The underlying complaint alleged that Test Masters “changed its website so that it was confusingly similar to Singh’s, purporting to offer LSAT preparation courses in every state,” and “represents on its website that it offers live LSAT classroom courses in 100 cities and in all 50 states,” and that its actions “as described above (in particular, [Plaintiff’s] use of the TESTMASTERS name and mark and domain name) are likely to cause confusion, mistake, or deception ... and thus constitute trademark infringement and false designation of origin in violation of Section 43(a) of the Lanham Act.”
This wasn’t trade dress, which is a product’s total image and overall appearance. The complaint didn’t allege anything about any “look and feel” of the website.  (The court mistakenly says “inherently distinctive” here but of course acquired distinctiveness can also—indeed only, in this case since website design would be product design—produce protectable trade dress.) “Absent some allegation of aesthetic similarity to another’s advertisement, a claim that defendant infringed a trademark does not itself comprise a claim for trade dress infringement.”  Allegations that the website was “confusingly similar” to Singh’s because Test Masters copied some of Singh’s course locations and purported to have taught “thousands of LSAT students” said nothing about the distinctive aesthetics of Test Master’s website as compared to Singh’s.  Advertisement of the locations in which one actually does business isn’t trade dress, so falsely advertising locations wouldn’t be copying trade dress. And even if a list of locations where courses are offered did constitute trade dress, the underlying counterclaims didn’t allege that the locations were copied—rather they alleged false advertising of Test Masters locations.
State Farm was entitled to summary judgment on Test Masters’ claim for breach of contract.


  1. Patent Lawyer Who Now Dabbles in Other Types of IP10:43 AM

    Interesting. The definition of "advertising injury" in the policy includes "infringing upon another's. . . slogan" (slip op. at 8) and the amended counterclaims did contain a trademark infringement claim (slip op. at 11). Test Masters does not appear to have argued that the duty to defend was triggered by the trademark infringement claim and the coverage for "slogan infringement." While it is not certain that "slogan" encompasses any trademark, it seems to me that Test Masters could have made a sound argument that the trademark infringement claim was covered by the policy.

    While I am not a practitioner in this area, it seems to me that "slogan" is a sloppy word to use in an insurance policy. It's a reminder to me that counsel must play a role in reviewing insurance policies and negotiating appropriate riders with the insurance carrier.

  2. Based on reading the cases, it seems to me that the insurance companies don't want to cover anything; I don't understand why the standard is to list slogan or title but exclude trademark, but that appears to be the case. Covering trade dress and not trademark is a bit surprising, I think.