seeks to reverse the findings of the u s district court of summary judgment in favor of hartford insurance company specifically the finding by the u s district court that no conflict of interest of rows arising out of hartford's reservation rights letter and also the district court's finding that hartford had no duty to provide independent conflict free counsel as a result of sadness or actions that breached a cooperation c have disputed liability what i thought that caesar was asking whether there was a conflict of interest of the council who appointed fight hard for it whether that council would have a conflict in defend your reservation with regard to some contractual knowing and willful conduct related to copyright infringement but what it did not do is make any mention to the ability by hartford to deny coverage based on violation of his terms code section five three three three regarding willful conduct therefore in defending the copyright claim the insurer retained counsel could vigorously defend a copyright position for my client cyber that is not guilty of copyright infringement but is guilty of doing it well out of that if it's not that he would take that affirmative position around or if the conduct certain is merely damages there does not arise a humorous obligation but in this case it's not the damages that are in dispute it's the conduct that leads to the damages for example under seventeen always a case i mean punitive damages regrettable to qualify for to do damage you have to show that you're entitled to some damages and then you have to go the next step but you're always looking at the conduct that exacerbates the damages but that doesn't mean it's not advantages claim that's correct but in this particular case the conduct which would be used by harper to deny coverage was also being litigated in the underlying dispute for example there is an issue of whether my client's conduct was annoying or willful or intentional for purposes of seeking enhanced statutory damages under seventeen you see u s c section five zero four that is also precisely the conduct that is at issue in deciding whether or not insurance code section five three three which prohibits indemnity for willful acts was involved as well therefore counsel the insurer retained counsel could vigorously spent the femina copyright infringement case but maybe not so vigorously defend or thales fail to seek affirmative evidence with regard to the knowing and well for the scienter component if you will and therefore conflict with arise therefore i do believe that a conflict of interest did exist i think the u s district court agrees that the district court found that there was a potential for conflict of interest and that any potential cover claims to the extent that they would not be covered under section five hundred three created that conflict however where the district court i believe went astray was focusing on whether this conflict was posed tensional or actual and if you look at the gas confiscates to match a case involved captive counsel by an insure of the counsel violate his ethical responsibilities it doesn't matter the real definitive issue is whether or not the defense counsel could and it's backed control the outcome the litigation by i think coverage issues i think a district court determinations by the conduct and whether the kind of the case in this particular case since there is an overlap between fee coverage issues and the issues being litigated in the underlying case there is clearly the possibility or they could potentially which became actual counsel provide documents i think there's least a troubling issue of fact in this issue i think the record reflects that at least prior to hartford denying coverage that ensure retained counsel was being kept in the loop by e mail and actually being involved and that any lack of cooperation occurred after hartford completely disavowed its coverage obligations without any further questions of yours or the one time one once they once hartford basically considered its defense obligations to terminate the then cybernet was allowed to have it you can't deny coverage and then get out of the case and then complain about the settlement code section five thirty three create a conflict which always requires a party of independent counsel whenever there is an allegation of intentional acts and the other question is did cybernetics refusal to allow hartford appointed counsel to associate inis counsel of record breached the contract to hartford prejudice and with regard to the the first question the conflict claimed is based on intentional acts but not all intentional acts are involved the costs the specific exclusion for intentional acts was waived so we're only talking about willful acts under section five thirty three of the statute by which california legislature  says to insurance companies you may not insure these things and that is far more limited than exclusion that was waived the surface killer music tells us what that means that it means a preconceived design to inflict injury the term willful describes an act done with malevolence or malice in fact it's something more than just intentionally doing an act or the intentional violation of the law and killer music says copyright infringement is not one of those activities that is willful per se so that is the context that we need to apply in seeing whether her perch of the appropriate position once the exclusion of policy exclusion for intentional acts was waved and how the conflict must be real as we've learned in the dynamic concepts case it must be significant not merely theoretical actual not merely quick tensional here the primary objective for both the policyholder and the insurance company was a finding of no liability no mention systems the about that both parties wanted to finding don't live believe that was the objective for defense counsel there would be no incentive on the part of hartford to attach life bill in a so even if the lawyer were to violate his ethical obligations to represent the policyholders best interests there is no incentive to do anything but push for a finding of the liability and there's no right and then a counsel when the potential conflict if there is even a potential can be reconciled such as by a defense based on total non liability the case is tell us that and that's the situation we have here so we have no real conflict we have a theoretically potential conflict but no real conflict because this is copyright infringement and the elements are really very simple was there copyright ownership or was there no copying of a protected work that's it that's what has to be proved intent is not an issue except for enhancement of damages so it really is a damages issue that the the could enhanced damages but it's not a question of liability and of course the standard for enhancing damages is not the five thirty three standard it's a much lower standard  but i think the comment before was the appropriate comment if the primary goal is to prove no liability how realistically could a defense counsel say there was no infringement no copying work but we did it well fully we did it with a preconceived designed to inflict injury you can't do that those are entirely inconsistent arguments and if the basic premise is that  a defense lawyer even under civil code section twenty eight sixty has the objective ethically representing his client it would not be proper to to create a conflict by establishing something that is not a realistic defense approach no wire will take a position that is inconsistent and contrary to the interests of his client and to use that as the standard say ok that is enough to create a conflict giving rise to independent counsel would be saying that when ever there is an allegation of intentional acts there is always an obligation to appoint independent coun and california law just does not have that requirement this isn't the law it should not be the right to base a requirement of appointment of an independent counsel on a premise that depen counsel would do something that has no legitimate defense purpose that is just not the law fit that is what would be required in order for the hallums to prevail on that point now the second issue is whether and step back one second we heard and i saw in the brief and we heard today about presenting a conflict free defense well the point is  conflict free defense was presented once the reservation of rights was withdrawn and all we're talking about is what california law flies it was a conflict free defense for the reasons i've stated there was never a of coverage there was a continued request repeated every couple of months please let us comment in defense defend please let us exercise our right to defend so there was not an abandonment there is a statement saying we have a right under the policy to defend allow us to associate in they would not do that ultimately we said ok since you won't let us defend we can't defend the record shows it really with the prejudice because if you can't if the lawyer can associate then what provokes the nature of the compliance nature of the way by lation twenty eight sixty provoked that because whether there's a conflict or not twenty eight sixty says the insurance company appointed counsel has a right to associate and has a right to participate in the defense and it was violation of that that created the problem and in fact it to some extent the first staff work to the policyholders advantage because when this would be the questions a little maybe a little beyond that in other words presumably cybernet knew about the statute and in the face up while there was agreement to pay for independent counsel harvard said we want our council to associate in understanding that independent council with control  refused so the response to that to some extent to the policy holders advantage was all right we're going to withdraw the policy reservations that gave rights in panic council so there was more coverage being granted then  really hartford was obligated to do but they decided in order to control that event we're going to take that step but it still continued so this started even when it depended council was allowed and it continued to not allow if any council would not allow cybernet would not allow ensured defense counsel assure and point appointed counsel to associate and to participate in the defense which meant that coun could not be of record could not get on the service list could not appear in court could not take any positions and that is prejudice that creates prejudice when the parties agree by contract that if the insurance company is going to pay for the fence they have a right to participate in that event and cybernet will not allow it that is a breach of the contract and it is a breach of the obligations under twenty eight sixty hartford never required cybernetic council to withdraw it was a question of associating in they knew they had to work together there would have been an issue as to who got to control the defense were it's a dispute as to what should be done in connection with the defense but it never got to that point because counsel was not allowed to associate in they were not allowed to exercise hartford's right to defend how there was a comment about well there's an issue of fact because there were a couple of e mails a couple of e mails between august eighth and august tenth that's all that's in the record about meetings that had been held and would be held back procedural matters very preliminary matters is not sufficient to establish that there was an opportunity to exercise parker's right to defend without associating in that right was not allowed and there was prejudiced now this is not a case about settlement payments to this day while while we know the case  that we were told that much we have no idea what the settlement was we have no idea what amounts where there was never a request for settlement payments so we're only talking about defense costs and the defense costs that were incurred while independent counsel was allowed were paid defense costs were paid throughout the time that it was appropriate we're talking about  reservation of rights were removed after cybernet precluded hartford's counsel from participating in the defense and after hartford said we will take over the defense we will pay all the costs with our counsel so any of those costs were voluntarily incurred any costs incurred to pay the defense counsel that cybernet selected at to the exclusion of hard for selective counsel of our voluntary payments and the policy is very clear that voluntary payments are not in when cybernet bought the insurance policy it agreed that hartford would have both the right and the duty to defend and that hartford would cooperate with parker when it's not that offense but instead cybernet as defense they refused to cooperate they wanted the duty without the right they wanted to impose the duty on hartford without giving hartford the right to defend her participate in that defense and that's contrary to the policy  cybernet does not have a right did not have a right to unilaterally put restrictions on the right to defend demand payment and come in to court and say you can't be a part of it but you can write us checks both parties have the same objective to establish that there was no copyright infringement no conflict existed that would have allowed defense counsel to work towards this objective and at the same time impact any coverage issues when cybernet chose not to cooperate and to voluntarily incur defense costs it was making a choice that it would not obtain insurance coverage for those defense costs you address the trademark there was a reservation of rights trademark there was a reference to the exclusion for trademark infringement even though there was an absolute denial of the claim that the cause of action portrayed mark infringement a denial does not give rise under twenty eight sixty two the right to independent counsel the district court found because there is both a denial and a reference to the trademark exclusion there might have been and been an ambiguity as to which it was was it a reservation or what they did not tell but the elements of trademark infringement even if it is considered a reservation do not involve intentional acts do not involve any conduct that could be impacted by insurance code section five thirty three so the same analysis without the enhanced damages should apply to the trademark infringement cause of action of the writers for all of these reasons we believe the district court's ruling was correct and of course this court evaluates on its own the record and the facts that were presented but we believe that the same result should be reached thank you paid to to miss council so i think what harper thought was in order to avoid the expense of having to pay humans council and fight with them over what amount to pay them well issue the second reservation of rights letter and way the intentional acts exclusion but what they didn't  didn't even mention was that there's insurance code section five three three which is basically a intentional acts exclusion that is implied never policy by operation of law so what they're really saying was look we're going to withdraw our reservation  intentional act exclusion and therefore you no longer have a right to independent counsel will remain silent on insurance code section five three three and therefore in the event that intentional conduct is proven in the underlying case will search that instead so essentially they're seen as well give you the illusion that you're getting more coverage to get rid of your independent counsel at the same time we're going to hold five three three in reserve you're saying they could waive and express intentional on was that ensure retained counsel would not commit malpractise violate its ethical duties by taking things and positions and on that basis found that there was no actual conflict of interest given rising and it's you covered in office on the way out of the courthouse the libraries here ok to really look at what happened here this insurance company in the ports of seventy seven days your honor went from you have a right to independent counsel and within seventy seven days they went from napa zation to  terminated and sue me that's been lee and reasonable given the fact there was a genuine dispute going on between the parties regarding whether or not the second reservation of rights letter really did eliminate any conflict asking that they explain what their position is on five three three and response ten days later harford basically said unless we hear from you within twenty four hours that you're transferring the entire defense to ensure a chain coun obligations are terminated so they really weren't interested in talking about five three three and whether or not harper would still rely on five three three as a bar to coverage of the where that argument was covered  entire the the argument was that cybernet isn't titled summary judgment because the insurance company could rely on insurance code section five three three to bar claims and this effect that the who's you know the defendant says i wasn't there but if i was there i was crazy under criminal law he's entitled to say that but that's not something that any intelligent defense lawyer is going to try and raise here i think what your point is saying is that the defense lawyer would say there was no infringement but if there was in french when it was willful well how do you do that i think think i any comprehensive defense will have two elements to it you also have to fall back number one it was not there was no one there is no infringement ok but what if they do find infringement then you have to address the issue of damages you want to mitigate any exposure for your clients what you do is you gather  information there's no infringement but if there was an infringement it was innocent it was not willful wasn't intentional it was not intended to bring about the harm so i guess what we can say is the defense counsel could mount the first argument and say there was no infringement but not gather the evidence regarded with regard to willfulness and just basically not make that back up argument that if there is a finding of infringement that it wasn't willful it was negligent or  the factual issues that would be decided in assessing damages over a laugh with the insurance coverage issues so that necessarily when the defense counsel addresses issues of damages and there litigated in the underlying case they would have a direct impact on the coverage issues because of the coverage issues pertaining to whether there's willful or intentional conduct and that's the same exact issues that are being determined on a finding of damages on this kind of sliding august fifteenth harvard issued the second reservation of rights letter but in august twenty one twenty first six days later they were asking cybernet not to just allow that there was no potential conflict of interest in that transfer to defense the entire defense to ensure retained counsel so finally here on earth i would submit to the court that there was an actual conflict of interest getting right into an independent counsel because insurance code section five through three was still in play and there's an overlap of issues and the coverage issues regarding intentional willful conduct and