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.”