swift decision from the california supreme court as that post dated our reply brief test which was an earlier case from the same district judge did and as the court has before it both sets of briefs i might note that some of the points made in the tests for a brief visa v the analogy to the land decision and its output ability might also be germane here there was a twenty eight j letter that travelers filed which we responded on july fourteenth but given that the case as i mentioned in an article is the case for all seasons there is much there to address focusing on the disparagement coverage argument i'd like to direct the court's attention to the distinctions between swift and our facts you'll note that we have per our press release stated claims for objective studies cited that describe our product as superior to competing products that's far different then a far different than the facts in swift where they had a patent pending not patent in products and i think it brings it within the logic of lamb which swift of error and i'm missing is this walk me through slowly ok you say that you get coverage because the allegations about arthritis are that you spared the product crap yes now tell me what words are threats used in making that claim well you first there's five different places to look given the role of extrinsic evidence under california law and the role of inferences from facts alleged and the role of the potential for amendment the scottsdale relief well they have also sought attorneys fees such other in further relief beyond that lead and the potential for main relief is the declaratory judgment and an injunction wearie can look at things like attorney's fees which according to the supreme court of california power arena in two thousand and one is money ordered by a court that's what attorneys fees are for conduct we engaged in that act not tell me why the patent exclusion doesn't cook your goose because it's not an infringement claim and there is no violation of the patent claim available the only claim for we have a complaint for patent frenchmen we issue a press release that describes what i just mentioned they then file a counter claim that counter claim and paragraphs excerpts a record six seventy six seeks to enjoin us from threatening our charging infringement against our threats suppliers customers and distributors and users of its products that's the key paragraph in the counterclaim why because it it implies that our conduct in reaching out to that audience is the problem that they're concerned about they have elected for strategic advantage purposes for the hudson two thousand  decision from this court to not articulate a claim for tortious interference or unfair competition at that at that juncture but the potential to amend to so state is implicit in paragraph g understanding the litany of events that there occurred and so understood it's really no different than lamb land dealt with a situation where the patent owner went to customers i think what you're saying is i'm relating these different steps of the geisha and it all starts with you with your client bringing a patent infringement suit true the initial patent infringement suit created a basis for liability against our threats but our threats only inspired me let's be historical for a second the first thing that happened same suit you claim that that counter claim is implied leah disparagement of your alleges that you disparage their products right and i think you also exchange you have to only apply an exclusion to that conduct falling within coverage that's the only relevant aspect of the activity that is of any note usually mean coverage and their claim of the more conduct that is disparaging the disparaging conduct is the press release activity that carries forward the threat to customers that conduct has nothing to do with our patent frenchmen claim so what you're just finding we are suggesting that there might be certain aspects of this case that are not subject to a death that he because of the exclusion wonderful doesn't matter that's not what you let me to look at you'll need to look at any possibility for coverage based on those fact allegations that evidence potential coverage not those that don't have all the receivers declaratory leave how would there be any possibility of coverage because of the potential for amendment of the pleadings as the court in berg get recognized which was cited bought with approval by the supreme court in swift there there was an unfair competition count the court found the unfair competition cow gave rise to disparagement claims because of the contest as to who had trademark rights in the marketplace that contest court found also fell outside the ip exclusion because it was a potential for amendment of that count to allege disparagement that's what we're talking about swift goes to great lengths to distinguish epiphany was the situation where the nature of the position of one party was an important differentiator in the marketplace here that important differentiators the fact that we have a patent on key technology that they don't and we claim it's a period to there's if you look at the hutson case and it's mention of strategic advantage it appears that they were short cutting truncating the allegations to avoid having to  assert what might obviously fall within coverage but it came out in opposition to a motion for summary judgment where they said our whole plan of action was not to compete in the marketplace but to overzealously interpret our patent rights indeed the of process claim is premised on the notion that we purportedly mis led the p t o office to grant the patents and had the temerity to sue on them and then tell the public that our rights occupied the field and precluded anybody from competing with the ever make a claim for damages at all there was no amendment of the pleadings of her say about a demand letter or anything like that  well the injunction in paragraph as clarified by the opposition to the motion for summary judgment evidence is that they contend that what we did know i'm sorry did they ever send you a demand letter saying you  in its horns not being real articulate about a basis for liability and if you map that against the concept that you look for the potential for amendment look at the expense of governance which the dis ignored it makes a difference the only takes remote facts according to pension trust two thousand and two decision of this court the evidence of potential for coverage and those remote facts we think flow from paragraph g of the prayer when read in light of the opposition to the motion for summary judgment and the various advertisements that are referenced in the motion activity the motion activities where this case got legs the dish hear from the insurance company more your honour's i'm brucella breezy for travelers property and casualty company there are three separate and independent reasons your honor that this court should affirm the decision of the district court and find that travelers had no duty to defend k f acts against the allegations and they are threats counterclaim first your honour's of already touched on there was no allegation whatsoever in the counter claim that could possibly fit into any of the judgment that that the patent should be unenforceable or the patent should be on a forcible because k f x had engaged in an equitable conduct before the p t o there is a no allegation whatsoever that x did anything in the p t o process that misused the process of the p t o misused being critical but most importantly and we cite these cases in our briefs there's a case called abbott labs from the federal circuit which is basically i would analogize it to a preemption case in that case there were the same allegation was made that one of the parties had basically his counsel had withheld information from the p t o during the prosecution process and an abuse of process claim was brought in the district court and i was actually a jury trial in a judgement and a federal circuit reversed that stating that one cannot have there is no such thing as a state court abuse of process to essentially collateral attack the p t o so as a matter of law the claim about whatever happened to be p t o cannot support an abuse of process claim and we also cited a case from the california court of appeal called stoltz where two parties were trying to obtain a license for a radio station from the f c c and there was some pushing and shoving and one brought out an abuse of process claim against the other and the california court of appeal held that that a claim before  administrative agency could not support an abuse of process claim was because of the abuse of process tort is meant to protect the integrity of the judicial system not an administrative system but even if it were broader as your suggesting there is no allegation whatsoever in the counter claim of misuse the law of abuse of process is that the filing of an action is not an element the prosecution of an action is not an element even and alter your motive in and of itself is not an element your point is a mere filing of a frivolous lawsuit maybe malicious prosecution but it is an abuse of process correct but isn't california  california law makers abuse of process and malicious prosecution when the same thing well only for purposes of determining whether or not it is an offense for insurance coverage purposes it's there are still two separate and distinct torts and there was no claim here counsel doesn't even claim that there was an if it's whose purpose is defined in the offenses that defined coverage under california law that if you say abuse of process you're invoking coverage of the grid of coverage because it means the same thing as militias that's what this court has said in the lunsfor malicious prosecution but k f x is not even asserting that it was so there is no evidence either in the counterclaim or in the extrinsic facts that remotely suggest that there is even a possibility of the abuse  process toward being asserted here likewise there is no evidence that would create a potential for coverage for just berridge might again in the swift case which as counsel indicated has been honor's attention through our letter briefs in two thousand and fourteen the california supreme court set out the state of the law today in california on disparagement and justice lou speaking for the supreme court  stated that in order for there to be a claim presented for a disparagement there has to be a false and misleading statement that specifically refers to the plaintiff's product or  business and clearly delegates the product or business and there has been either an expressed mention of the allegedly injured party or that entity has to be identified by clear implication and this fits very well into the insurance policy definition of disparagement because the policy covers oral or written publication that disparages a person's or organizations goods products or services well there's nothing not a single word in the counter claim itself referring rely on the press release yes or no whole what's the problem well the press release is in the record at it's quarter in the record it pages easier went away and went on nine and it's a very short press release that was issued the very day that x versus our threats pan infringement suit was filed and the first couple of paragraphs simply say you know we filed a suit and we've got great lawyers and then the third paragraph it makes no reference whatsoever to our threats it simply makes a statement that studies showing show that there's a demonstration of the superiority of the double repair of rotator cuff tears and then there was a paragraph that an anonymous party had previously complained to the p t o about k affects us patent and the p t o had rejected those arguments and upheld the patent there's nothing whatsoever that suggests in this press release in your office for me to forwards backwards anyway your honour's want that suggests any false or misleading that the filing of a lawsuit can support an independent tort such as disparagement wouldn't that mean your honor that every single defend every single person who sues somebody is subject to being sued for dispar i suppose in this case we sued to travellers sued seeking declaratory judgment does that mean that k f x can say well you implied that there was no coverage and that made our business look bad and therefore that's disparaging to some authority the so that's my authority goes to the merits of the question because it doesn't go to the merits your honor in the question that your honor is asking that it would be different and counsel cites the lamb case if prior to having filed the lawsuit if k f x was running around telling its customers you know you really shouldn't be buying arthritis products because they're infringing our patent that's completely extrajudicial it would have nothing whatsoever to do with the litigation exclusion of course but only come into play in the event that there was otherwise a potential for coverage but it is absolutely one hundred percent on point to this situation the exclusion has been cited repeatedly in california and in this district and in the districts in this circuit as well as by this court over the last dozen or so years and there's two prongs to the exclusion which is in the record at page five nineteen the first of which says this insurance does not apply to personal injury and advertising injury arising out of any actual or alleged infringement or violation of any of the following rights or laws and then there's a list number two is patent number seven is other intellectual property rights or laws but then there is the second prong and the second prong says that the insurance does not apply to any other personal injury or advertising injury alleging any claim or suit that also alleges any such infringement or violation so i sort of plug in the words if your honour's were to find that there was a potential for either abuse of process or disparagement the exclusion would still apply because it says the insurance doesn't apply to any other personal injury those to allege suit that also alleges infringement or violation of patent rights or loss well that is exactly what we have here and the most critical case your honor is the molecular products case which we've cited now that is a district court case from a judge or my in the southern district of california but it has been repeatedly cited including by the california court of appeal and in a case that was affirmed by this court there's a case called s b c c which we cite in our brief and that case there were eleven causes of action there were competitors in the construction industry one of the causes of action was for trade secret infringement other words and intellectual property claim and the other ten weren't and in that case the court of appeal nonetheless found and the court heavily relies on molecular bio products in reaching that conclusion similarly there was a case called ventana which came up to the district of arizona but was affirmed by this court in a very short opinion so this court did not cite molecular but the district court relied very heavily on molecular in a very similar situation where there was a patent infringement claim the same counsel who represents chaotic that represented intent in that case and argued that one could read into the pleading a claim because there were press releases and websites imply disparagement and the district court in that case found regardless it didn't reach that issue that it said relying on molecular bio products that's because those claims whatever they were arose a case that also involve violations of patent infringement or patent laws the exclusion applied no duty to defend at all and the molecular case itself it is so rare that we have a case that is so on point to the facts that we have here today in molecular molecular and pour x where competitors in this business they make pipette devices which are currently glass tubes that one uses in a laboratory setting so molecular soused four x for patent infringement just like three causes of action asserted by por x are identical the first to the three causes of action we have here a collaboration that poor x is products don't infringe molecular patents a declaration of patent in validity and a declaration that the patents were unenforceable because of molecular is allegedly an equitable conduct before the p t o and judge gonzales and that case found that the exclusion was clear explicit and dispositive that in that case again the same counsel representing molecular mr gantlet and he argued that based on the allegations there even though there were no causes of action it could be abuse of process it could be malicious prosecution it could be disparagement but again judge gonzales not reaching that issue nonetheless found that when you have allegations that are other personal injury arising alleged in a suit that also contains allegations of infringement or violation of patent rights or laws that the exclusion applies and there are six or seven other district court cases that also reach the same conclusion relying on molecular by a products there is no case that we have found applying this exclusionary language to this facts an area that has not enforced the exclusion counsel argues that well there's no claim in the in the conclave for patent infringement but there doesn't have to be the language says a legend at the following are laws and such infringement are violation will surely an allegation by arthur acts against the k f x that k f x mr abused in some way the  there was a potential for coverage for one of the two offenses or as your honor was saying earlier there was no claim for damages and the policy only covers damage your position is that attorney fees on the damages meaning of damages in california law correct your  cite the color rosy case and the health net case for that so for all those reasons we would ask your honour's to please affirm the decision of the district court and find no duty to defend thank you your honour's thank you counsel mr gantlet you have some reserve time poor o citing partridge a cal supreme court that asked for twenty five notes the broad coverage and narrow exclusion principle as well illustrated with respect to the phrase arising out of so it's narrowly interpret it even though the phrase arising out of might otherwise be brought the console is case from the california court of appeal is of the same ilk despite the semantic gymnastics of travelers if you look at the pinnacle case which is the last in the violation of a patent only infringements of the court's speculation in molecular that that's what the word violation meant is ungrounded by any knowledge patent flaw the word violation makes sense because there's trade secret claims that can be deemed violations but it doesn't extend to patent the just record didn't reach the exclusions for good reason because it no they couldn't apply as to this privilege argument also your post molecular you suggest you lose later cases somehow casts some doubt on molecular is that what you're saying i'm saying that molecular had a deficient legal analysis that no one's product to the court's attention that under supreme court case is not authority for a proposition it doesn't address and no one has attacked molecular on those grounds is also another problematic crown in fibrous a published decision of this court if you have a buried amended tory endorsement that purports to eliminate coverage it can't be given that effect unless you tell the insured what you're taking away they don't tell us or taking away the defense of mixed action which is the settled concept of california law for decades i cite the concept enterprise's case which founded that faith is a matter of law for a carrier not to defend the entire action because that's what they would have expected not that some buried reference to an excluded claim would exclude the entirety of the whole lawsuit even if you find that a violation does extend to claims for the deck relief suits so i just don't think you get there as to