advertising injury policy covers Lanham Act/intentional interference claims even though policy uses different words for the torts

IntermediaryEd v. Cincinnati Ins. Co., 2026 WL 1847615, No. 3:25-cv-00038-SHL-HCA (S.D. Iowa, May 20, 2026)

The court introduces the case:

After filing a lawsuit against a competitor in Tennessee, Plaintiff IntermediaryEd (formerly known as “ACT”) sent letters to two of the competitor’s customers making disparaging statements about the competitor’s products. This was a bad move. The competitor brought counterclaims under the Lanham Act and for intentional interference with business relationships, and ACT ended up on the wrong end of a multimillion-dollar jury verdict.

Its commercial general liability policy covered “personal and advertising injury” arising out of the “oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or service.” Thus, ACT was entitled to defense and indemnity coverage for both the Lanham Act and intentional interference claims.

But there was an important caveat: The policy contained exclusions for “knowing violation of rights of another” and/or “material published with knowledge of falsity,” and the court couldn’t conclude as a matter of law that ACT lacked such knowledge. Thus, ACT wasn’t entitled to partial summary judgment on that issue.

The jury in the underlying case was instructed on the elements of a Lanham Act claim, including commercial advertising and promotion, and on the elements of intentional interference with business relationships, which required “improper means,” including “conduct such as violation of statutes, regulations, or laws. Violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation, or deceit, defamation, duress, undue influence, misuse of insider confidential information, or breach of its fiduciary relationship.” The jury instructions continued that punitive damages “are reserved for egregious conduct” and should be awarded only if WIN “has shown by clear and convincing evidence that the defending party has acted intentionally, recklessly, maliciously, or fraudulently.”

The jury awarded damages ACT in the amount of $218,000 for false advertising under the Lanham Act and $5,400,000 for intentional interference with business relationships, additionally finding that punitive damages should be awarded, though not setting an amount.

The instructions continued (cleaned up):

A person acts intentionally when it is the person’s purpose or desire to do a wrongful act or to cause the result. A person acts recklessly when the person is aware of but consciously disregards a substantial and unjustifiable risk of injury or damage to another. … A person acts maliciously when the person is motivated by ill will, hatred, or personal spite. A person acts fraudulently when (1) the person intentionally either misrepresents an existing material fact or causes a false impression of an existing material fact to mislead or to obtain an unfair or undue advantage, and (2) another person suffers injury or loss because of reasonable reliance upon that representation.

ACT ended up reaching an out-of-court settlement with WIN (which was redacted), and thus the jury never rendered a verdict on the amount of punitive damages to award.

CIC argued for a formalistic interpretation: “if WIN did not recover on theories of slander, defamation or disparagement, then coverage must be denied, period.” The court disagreed. Coverage can exist when liability is founded on a different legal theory than the one in the policy but that involves “identical conduct” by the insured to what would be covered, as long as the policy does not limit coverage to specific tort names and specify the formalistic labels that govern. Here, the relevant policy language was “simply too broad” to be formalistic:

By covering injuries for “personal and advertising injury” that arise out of the “oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services,” the CGL Policy includes coverage for tort claims that arise out of false and disparaging statements about a competitor’s goods, products, or services, regardless of the label attached to those claims. In other words, the policy covers “causes of action for product disparagement or one that is analogous.”

This conclusion made sense because “courts use a wide range of terminology to describe commercial tort claims arising out of the ‘oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services.’” Relevant labels include “disparagement,” “product disparagement,” “trade libel,” “slander of goods,” “injurious falsehood,” “product defamation,” “commercial disparagement,” or “trade defamation.” “Regardless of the terminology, the gist of these claims is the same: ‘a party publishes material derogatory to another’s business, intending to prevent others from dealing with plaintiff.’” All these torts fell within the scope of the coverage, “regardless of the exact terminology used in the underlying litigation.” And sometimes, as here, an intentional interference with business relationships claim will also fall within the scope of coverage, because of the “improper means” element of business interference torts: a plaintiff can prove improper means in the form of trade libel or commercial disparagement. Indeed, “[t]rade libel and product defamation” are “born of the cause of action for unlawful interference.”

Likewise, “claims under the Lanham Act sometimes revolve around trade libel or commercial disparagement in the form of false advertising regarding a third party’s goods, products, or services. Many courts even characterize such claims as ‘product disparagement under the Lanham Act’ or similar verbiage.”

Thus, ACT was entitled to indemnity coverage as a matter of law, subject to the exclusions. It didn’t matter that the underlying counterclaimant proved only pecuniary losses in the underlying litigation, not “reputational harm.” Indeed, in the commercial context, pecuniary losses are a form of reputational injury: “there is arguably no better way for a business to show that its products have become ‘lower in esteem or reputation’ or ‘lower in rank’ than to prove that customers stopped buying them.” Anyway, the policy language clearly contemplated commercial torts, not just invasion-of-privacy and defamation-type torts in the personal sense.

It was also clear that the underlying verdict was based on covered claims; even though both the Lanham Act and intentional interference can be broader than product defamation (etc.), the underlying litigation’s specific theories were all based in these business torts.

What about the exclusion for “knowing” falsity? It doesn’t automatically apply to claims for which something less than “knowledge” is sufficient to establish liability. “For example, the exclusion does not necessarily apply to defamation claims because they can be established through evidence that a false statement was made with reckless disregard for the truth.” Thus, further development of the record was necessary to determine whether ACT’s conduct was “knowing” in the way contemplated by those exclusions. “The fact that [the underlying plaintiff] established the elements for an award of punitive damages does not change this conclusion, although it undoubtedly strengthens CIC’s position,” given that the instructions didn’t require intent: “As phrased, the instruction allows punitive damages based on something less than ‘knowing’ conduct.”

"hypoallergenic" plausibly means "free of ingredients likely to sensitize the skin"

Novick v. Unilever U.S., Inc., 2026 WL 1879145, No. 25cv4804 (EP) (JBC) (D.N.J. Jul. 30, 2026)

The court mostly allows claims that the “hypoallergenic” and “sensitive skin” representations on Unilever’s Dove Sensitive Skin Body Wash are false and misleading because the body wash contains ingredients that are known skin sensitizers that cause allergic reactions under New Jersey, New York, and California law. According to the complaint, “[t]he scientific and regulatory definition of a skin sensitizer is a substance that causes sensitization by skin contact in a substantial number of persons based on human evidence or appropriate animal testing.”  

A skin sensitizer “may elicit an allergic response at concentrations smaller than 0.1% in individuals who are already sensitized to the chemical,” making the “entire product mixture” a skin sensitizer. Allegedly, a “product that is a skin sensitizer is not hypoallergenic and is not suitable for sensitive skin,” although there’s no FDA regulation defining the terms.

“Like similarly situated consumers,” plaintiffs allegedly do “not know the identity of every ingredient” to which their families “are allergic ... [and do] not know [to] which ingredients” they or their families “may develop an allergy,” but the Dove product allegedly contains at least six skin sensitizers in amounts “that can be reasonably expected to induce an allergic response in a significant number of people, and especially so in the [Product’s] intended customer base.” Consumers allegedly expect a product labeled as “hypoallergenic” to contain no skin sensitizers that could elicit an allergic response in sensitized individuals.

Notably, Dove brand Sensitive Skin Body Bar allegedly “contains neither fragrance chemicals nor a ‘hypoallergenic’ representation on its label and packaging,” and Kroger’s “copycat” sensitive skin bodywash—marketed as comparable to Dove’s—declines to claim it is “hypoallergenic” anywhere on its front label.

On standing, plaintiffs properly pled a price premium theory of economic injury. Plaintiffs identified two cheaper comparators: Dove’s own non-hypoallergenic Sensitive Skin Body Bar and the Kroger Copycat explicitly as a “compare to” alternative.  “A store brand marketed as the cheaper equivalent is, almost by definition, a comparable, cheaper product.” Plaintiffs didn’t need to specify the exact value of their economic injury at the pleading stage.

In addition, “hypoallergenic” etc. was plausibly misleading. The court found the relevant state consumer protection laws to apply “substantially the same” standards, though they “diverge in how much a plaintiff must show at the pleading stage”:

At the pleading stage, the NYGBL and the CA Consumer Laws both require allegations that “a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” But unlike the NYGBL and the CA Consumer Laws, the NJCFA treats “capacity to mislead” as the “prime ingredient” of consumer fraud and does not have the “significant portion” requirement.

Necessarily, a claim that survives under NY/CA misleadingness would survive under NJ law as well.

Unilever alleged that “hypoallergenic” couldn’t mislead anyone because the word is inherently relative and “not an objective guidance about the specific amount of any ingredient in a product.” The prefix “hypo-” means “less than,” not “zero.” The court disagreed that this prevented reasonable consumers from being deceived. Plaintiffs plausibly alleged that:

“hypoallergenic” and “sensitive skin” communicate to reasonable consumers that the Product: (a) is not itself a skin sensitizer; (b) will not cause irritation, corrosion, or contact dermatitis when used as directed by intended users; (c) does not contain significant amounts of ingredients known to cause such reactions in intended users; and (d) does not contain sensitizers in amounts reasonably expected to induce allergic responses in significant numbers of intended users or sensitized individuals.

That the FDA has declined to define “hypoallergenic” and lets companies decide its meaning was not dispositive. “Unilever’s authorities do not coalesce around a common definition of ‘hypoallergenic.’ That is the hallmark of an ambiguous term—not a settled one.” The court declined to decide on a meaning at this stage.

In addition, “labeling could also be ambiguous if consumers would not understand the label’s representations at face value.” This is the newly emerging consumer protection law meaning of ambiguity: “[A product’s] front label is not ambiguous simply because it is susceptible to two possible meanings; a front label is ambiguous when reasonable consumers would necessarily require more information before reasonably concluding that the label is making a particular representation” (emphasis added). This is the ambiguity “that governs whether a court may look past the front label to the back. The front label here makes a definite representation that the Product is suited for sensitive skin and, as hypoallergenic, will not provoke the reactions that non-hypoallergenic products may.”

The complaint also sufficiently pled that this was in fact misleading. It identified a recognized scientific and regulatory threshold—0.1%—above which a sensitizing ingredient is classified as a skin sensitizer. Citing Unilever’s own Safety Data Sheet, it alleged that the product contains cocamidopropyl betaine, the American Contact Dermatitis Society’s “Allergen of the Year” in 2004, at a concentration of 1 to 10%. Plaintiffs also alleged the presence of five other skin sensitizers, including fragrance chemicals, which are allegedly a leading cause of allergic contact dermatitis according to the American Academy of Dermatology. Other ingredients—citric acid, glycerin, and sodium benzoate—were allegedly recognized or classified as skin sensitizers shown to cause allergic reactions on contact, and several were classified as skin and eye irritants.

Plaintiffs didn’t need to allege laboratory testing under these circumstances, including that the product was “a mass-produced, fixed-formula body wash.”

The presence of Amazon consumer reviews reporting reactions also mattered, though the court considered them not for their truth or as evidence of how the public understands the term “hypoallergenic.”  Although 87% of reviews submitted by Unilever gave the product five stars, that proved little. “That most buyers are satisfied does not establish, as a matter of law, that the label does not mislead people with sensitive skin—the actual consumers whom the ‘significant portion of ... targeted consumers’ standard exists to protect. Consumer fraud could still be plausible despite high product satisfaction” (citing Lanham Act cases accepting 15% and lower confusion).

Nor did the back label, even if consulted, cure the front’s alleged misrepresentation. Here, “reasonable consumers would not require more information before reasonably concluding that the front label [of the Product] was making a specific representation.” “And importantly, requiring a consumer to know the ‘properties, origins, and effects on the skin’ of each listed ingredient in the Product’s back label is ‘plainly untenable.’” The court believed that each of the relevant jurisdictions would so hold (as do I).

Nor were plaintiffs required to allege that they suffered allergic reactions as a result; that wasn’t their theory of deception/harm.

The court then kicked out NJCFA omission claims, but not NJCFA affirmative misrepresentation claims. “To establish an act of omission under the NJCFA, ‘plaintiff must show that defendant (1) knowingly concealed (2) a material fact (3) with the intention that plaintiff rely upon the concealment.’ ” Intent can be alleged generally but must still be plausible.

Plaintiffs alleged that Unilever had knowledge because of: (1) Unilever’s website; (2) the Product’s Safety Data Sheet; and (3) negative reviews posted to the “Dove store” on Amazon. While Unilever’s website acknowledges that “a selection of ingredients used in fragrances have the potential to cause skin allergies in some individuals,” it explains that Unilever discloses its fragrance ingredients “for transparency and to help you make informed choices.” “That statement is candor, not knowledge of falsity or concealment.”

Likewise, the Safety Data Sheet’s statement about chemical concentration was not knowledge of its alleged falsity. “A manufacturer that reasonably reads ‘hypoallergenic’ to mean ‘less’ would not knowingly conceal the alleged misrepresentation by selling the product. And the negative reviews didn’t provide knowledge because plaintiffs never alleged that “Unilever operates the Dove store, monitors Amazon, or receives notice of those reviews.” More generally, “Internet postings, standing alone, do not impute knowledge to the manufacturer without facts indicating that the manufacturer ‘viewed or would have viewed those websites’ or ‘monitored third-party website complaints.’” Pleading monitoring or reporting lines, cy contrast, can support an inference of knowledge.

New York statutory claims survived. California UCL & FAL claims failed, though a CLRA claim survived, because the remedies for the first two are equitable and plaintiffs didn’t plead that they lacked an adequate remedy at law.

The implied warranty claim survived in California and New Jersey; even though it could clean the skin, it was plausibly unfit for ordinary use because it couldn’t be used for the “purpose of being a body wash suitable for sensitive skin,” which was the purpose for which it was sold. After all, just “because a car can be driven does not mean it is merchantable.” Express warranty claims survived in all jurisdictions.

Unjust enrichment survived, but not common-law fraud and fraudulent concealment, given the failings on scienter above.