third seven sixty three and seven seventy nine hundred seventy nine decision by the california supreme court states in california corporations right and redress against defamation is well established the it happens published on electronic form as well as a court's denial and reconsideration the court attempted to distinguish that case because it found that there was insufficient evidence of fact allegations as evidence or america that's because the court did not look at the full record it looked at what judge matsch had found regarding libel the full record would show that this case was actually a better case than the video and that had the standard as applied by the video but applied to or facts a defense would have been to tell in that respect i'll call your attention to allegations in the first counter claim that paragraph thirty five or america has made false and misleading factual misrepresentations regarding alleged patent protection of its supreme value roe change very similar to what was that issue in the vidia case where there were allegations that the proprietary rights of the parties were implicated and the video relied on the line of seven circuit decisions that had found that the act of misstating your patent rights could be defamatory to the party that was so accused at one of the cases it cited republic tobacco v north atlantic at three eighty one at thirty seven seventeen it's seven twenty eight affirmed the judgment against the defendants for defamation under illinois law where the defendant falsely claimed the plaintiff was violating its patent rights so if you misstated the patent rights of another to their detriment and tell customers of that party that they are in fact running afoul of your own patents you can in fact the say that because you injure his reputation in the community if you look at the further allegations in the complaint it's quite clear that they are  substantially injured in its business property goodwill and reputation now it's not the most artful series of complaints if someone was trying to trick out a claim for true libel as well as trade libel but you've got to recognize that they're not trying to plead into coverage they're just pleading what they were upset about and so it's this court's job to deduce whether libel might be implicated i'd also note that the eleven cause of action which states and  agree with indeed at the end of the second order for reconsideration and we got oral argument and reconsideration a rare event in the federal court these days and the last statement of the judge was basically i'm not real sure about what i'm doing here we need to have this set up for the night circuit told the law unless he was unclear what to do with cetera he's looking for some guidance and i think that the guidance is readily available if you just look at some of the misstatements that were made by federal as to what the law is it said without any authority that the law that i decided to illinois is not the law in california well that's not what the video court said when it looked eight six zero eight for the proposition that those insurance policies there that misrepresented the business property and rights possessed by the plaintiff to persons with whom played as did business stated a claim for  california sends injured pascoe's reputation and sales by falsely representing the sales representatives and competitors in the air freshener industry that pesto infringed upon california cents air freshener dress so we have all of this authority that the law is the statements that federal made that california and illinois part company on the approach here good solid case law another fine jur moving on to the intellectual property exclusion it's a troubling exclusion because you have to read in the term personal injury which is a defined term into it to make it sensible and done that and all read what i think it says if you actually read all the elements it's a little clear actually this insurance does not apply to you and here is from the definition of personal injury injury arising out of publication of material that libels an organization arising out of publication of written statements which are claimed as an infringement violation or defense  copyright rights are lost so the opposite of the vents is as it should be not the injury but it is the effects and the offense here libel has to arise out of the publication of richard statements and those statements have to be claimed as an infringement or violation we were not sued for patent infringement and the counter claim that we as it is true here we were sued for a variety of unfair competition claims using that term quite broadly in character had misuse false advertising common law cetera and pat misuse is not a violation of patent law it is a form of unfair competition and there is clear precedent on that issue and i'll note in our reply brief we pointed out that federal did themselves violate the law but they drew anti competitive francs from the patents right and were deemed to be contrary to public policy just as there is a key case is decided after briefing fees of each reliable there is also one as language and i just read to you that that would avoid applicability of the exclusion in an analogous setting now judge matsch had some difficulties because he relied on the decision of judge white and judge white  correct decision in l a ten corps at two thousand and three u s district lexis ten four five six asked for it eighteen but he did so in a way that involved in it a little bit of a misreading of the constituted disparagement that the company was going down the tubes were distinct in character from the patent claim to the exclusion didn't apply in all possible worlds therefore it dispensed properly rose because you focused however on the word injury related to the publication he misstated somewhat the exclusion which was not true in judge where subsequent opinion the reason he misstated it is he didn't read in the in quote language personal injury into the ethical that libels an organisation are rising out of publication of written statements which are claimed as an infringement violation or defense he dealt with the defense aspect but the defense aspect here would not be  what we did to defend against the libel claims was not something that would be defended against a violation of patent law he would not have the same statements california seventy eight ninety nine one hundred that a reasonable purchaser of the policy would not realize that their risk is excluded and thus would reasonably expect the insurance to furnish of the fence a defense is required it applied a policy holder seeking to evaluate the limits of its coverage for defamation as a form of personal injury understand with the scope of this policy is given the kind of convoluted anguish not only prove through conclusive evidence that the exclusion applies to all possible worlds and i don't find that that standard can be satisfied here in also i note in the land decision another underpinning of this analysis is what is the nature of the damages sought in the action against the insured but by the nature of the claims made against the insured and that action coverage is triggered by the offense not the injury or damage judge matsch thought the injury was important injury need only arise out of the offense that's a distinction that gets you into trouble when you try to apply the exclusion and say i wonder if there's some link between since the reason we're going to get coverage is because there's a libel claim because we claimed that the end of the issue was infringing our patent rights to the marketplace and pos them business our defen that can be both what is contained in the allegations of the operative pleading as well as what is contained and any extrinsic evidence what is obviously missing from this case obligates federal insurance company to the family it gets they're not biased searching here's the cause of action here is the allegation here is the extrinsic evidence but specifically is saying that it was like you was the court through inference and innuendo to come up with that cause of action on your own well it's sort of california law that was meant and sense i mean i hate to say that but it's but if california says even if you look at extensive evidence could there be an amendment what do you mean an amendment could could there be a potential that an allegation could be included that would fit within libel what do you make of th district judge a statement that all the elements of libel are found in the pleading when you read the decision as a whole your honor what the district judge is saying is that the allegations are for the claim for trade libel and that california has i don't think that's what the judge said he said all of the elements of libel are present he didn't say a trade libel but as he went on in his decision he specifically distinguished and said this is trade labor libel not true libel yeah but didn't he may have been confused in thinking that it had to be one or the other wouldn't california law were met and the allegation of a sort of allegation of facts to constitute both trade libel and regular law it is completely plausible that a complaint can include both libel and trade like well what which element of regular life will isn't present in the pleading in this situations is there any defamatory statement or left in the notice to the trade they simply say we only has rights and by the way we're going to protect them they don't mention b m w they don't attack them in the first letter to cue the scene they say we don't need patents on jewelry end of story period again no attack on the n w in the second letter to q b see they say here are three styles this constitutes defamation similarly in california it's not getting to the merits of that i mean how do you get with j lamb because you've got it seems to me under california law if you can construe the pleadings as alleging that  and two if you look at the words of the complaint they're talking about reputation damage so when you take that and you look at the letters you're talking about three you take jail i am on those that line of cases where it says we you can by saying that this person's an infringe you were disparaging the company's reputation as well as claiming infringement it seems to me that's where the case goes a lot of interesting questions if i can search right and hit those one by one the jail and decision the insurance policy at issue was different language included coverage for disparaging comments we don't have that the bennett case out of california among others polygram as well in the attic as we specifically say libel are distinct amendments that are in language very similar to the policy at issue here when you are just ensuring rival when these allegations only involve the property a underlying lawsuit did not trigger a duty to defend because the allegedly false statements were directed at the plainest property of some jury and not of the plaintiff's business reputation this is completely consistent with the california courts all of the courts that have addressed this question have have really been unequivocal in saying when all you are dealing with is property when all you're dealing with is an allegation of ownership rights to intellectual property that is not going to translate into some sort of defamation claim but isn't there language right there allegations in the complaint to the effect that the injury to reputation of the corporation the that in the complaint wares on a regular libel the reputation of a person that is correct around that's the key different element between the two but here if they're alleging and in the their complaint that their reputation was disparaged not just the product  doesn't that a right hasn't that stayed a claim for libel even though it is it relates to a crime because the only allegations that is premised agree with you don't rise to the level of general liable if you palming off plus an allegation of damage to business reputation then you're getting into an area that's beyond micro tech it seems to me i we just agreed on it because like i think what micra tech is saying is that we're going to look at the nature of the allegation is the nature of the allegation going to the product is the nature of the allegation going to a personal attack  something about the individual conduct the allegations here there is just simply no question but that the allegations here all go to the product nothing let me say with i'm happy they all relate to the product but but they're not alleging the product is bad or substandard or they're alleging that the product is is their intellectual property so they're they're questioning the other sellers reputation indirectly they are questioning ownership of property but they what the california courts of specifically would change in the light as i said to you we see you're selling stolen property we know those properties stolen and we're just putting you in notice that it's our property and it was stolen would you say that's enough to damage  defense would be extended because it's not as is the case here is a situation where you're dealing with the ownership of the property what it is it is the stolen property and the whole note is relates to property just like in this case it's just a little more clearly articulated that it's involved in a wrongful conduct the the nature of the allegation that you're referencing contains a statement as i understand what you're saying that d and w engaged in immoral conduct there is no such allegation here the allegation is simply one of ownership or a violation of certain styles being sold by hugh v c let me give you a different hypothetical let's assume that we're dealing with somebody who had manufactured the product and this defendant  if you're involved in a situation where all they're doing is alleging an infringer of the product don't deal with this person there are patent infringement this is a third party has nothing is a business competitor but has nothing to do with this america did was say we don't need rights and we're going to protect them they're not they're not casting aspersions they're not making a statement except that the pleading says business reputation and they  are ok but it only goes to the intent of whether there's a claim that whether it's a successful client but they are allowed to take a look at what the specific notices to the trading letters did include and then judg addressed what you're dressing as well when he looked at the white drapery area and i'm drawing a blank on the the name of the other case when he said i can look at the viability of the at saying can we infer an allegation and the cause of action that aren't play anywhere in the pleadings that aren't included in any of the strengths of governance he can say what i'm left with is to say who they even do concluded no they can't there wasn't sufficient allegations to write what level of defamation the problem with the q b see letter i think is that it's communicated to the third party on the classic patent infringement claim case you've got communication between the two and i i grant you in those cases where there's only communication between the two parties you don't have you can't meet the elements of publication and in the defamatory defamation case but here you've got a communication to a third party two party case wasn't and i'm wrong that there was no communication of third parties around and i don't recall if it involved third party or not i would i'm happy to supplement on that if you would like in the last two minutes here your hon or i would jump to the intellectual property exclusion and just so we're clear on the record let me read what that language says advertising injury or personal injury arising out of or directly or indirectly related to the actual were alleged publication or utterances of oral or written statements whether made in advertising or otherwise which is claimed as an infringement violation or defense of any of the following rights or last copyright other than infringement of copyright it advertising material patent trade dress trade secrets or trademark or service mark or certification mark or collective mark or tra name other than trademark or service mark titles or slogans judgments found and i would ask that this court affirm that the intellectual property exclusion is pacifically meant to apply to this situation you have a claim where they the d m w is coming at this and saying we're entitled to be protected from patent misuse and abuse that is the intellectual property right at issue and presented in the case it was directly what judge matsch came down and said this fits directly into the holding of kalay ten core where they say that if it fits within the parameters of intellectual property rights coverages preclude and i would report that that exclusion is directly flexible here what was admission were patent rights period you look at the allegations the notice to trade personally there's no disparagement coverage but conceptually if you look at the notion of contacting a third party and saying you don't have patent rights and if you buy from the party you want to buy from paul so you two that's that may create liability it's what's applied because it could be a frivolous claim as it turned out to be here in our view or america's acts are likely to cause injury to the business reputation says nothing about products in that recitation searches in the complaint even without the business reputation reference enough to impact a claim for defamation because they go to the capacity to actually  district court judges i find looking at coverage issues to decide whether a defamation claim is pled such that it would survive the twelve b six motion if there might it is not no duty to defend different standard tenchi halle's much broader