implicates one particular enumerated events the so called use of an advertising idea and i my instincts tell me that the best use of my fifteen minutes would be to address very briefly the use of an advertising idea i would like to touch on the prior publication of exclusion i will touch on the  intellectual property exclusion across the villany exclusion and the third cause of action and that's a lot of conversation but i'll be rightful shotting some of these points on the on the first subject where the district court erred in our view and where it got off track is on the subject of an advertising idea itself the court was insurance that an advertising idea must be creative unique or original as opposed to and i'm paraphrasing the court mechanical or uncreative and this in california speak this this is certainly heresy because we know that questions of fact always and invariably implicate the duty to are you only focusing on the los angeles use of this product or as you at the advertising idea or more at this point all of them but i will i will specifically address the fourth advertising panel to reverse and as to which claims just give me your strongest arguments we're asking the court to reverse in remand and what the trial should look like in our view is this this case isn't isaacson z back sampson prune case those cases and probably ten or twelve of their progeny state that the rule in california is that where an insurance carrier denies coverage or breaches the duty to defend the insured enjoyed the right to settle and in a proper case that settlement creates t presumptions one as to the fact of liability which speaks to the lack of collusion and the amount which speaks to the reasonableness and we know that the burden th shifts to the to the insurance companies to come in improve that this deal was either collusive or unreasonable and that would that would make for a robust trial down the road but none of those issues were litigated on the summary record before the court so the arguments that you're getting and pages and pages and pages of briefs frankly way over brief to go to points that are so well established and so easy for the california supreme court that one wonders why they why they burden the ninth circuit for example to say that the advertising idea is not creative or unique original goes to the merits and in seventh circuit judge posturing or in taco bell had no problem saying whether meritorious or not this is the kind of coverage you purchased and therefore you get a defen they when in this case it's even it's even better than that because we're talking about not the entire universe of consumers but specific market segments namely public utilities that would want to buy an automatic retraction system and so to be able to go to the county or a dozen other potential users and say we've already done it we're successful has the advantage first of all that it you appear much better than you otherwise would but also you you don't have to do all of the drawings you don't have to come up with a prototype and so forth that is specifically alleged in the complaint now it may be good or bad or ugly or purple or or creative or not but it is it is an advertising idea it's a way to go and get these contracts and so the policy nowhere defines advertising idea but the case law and your colleagues in the different circuits that have struggled with this have had no problem saying that it simply is a method apparently with the agreement that the insurers would not have to pay the amount and so i'm just trying to figure out on the settlement by the insurance does that affect our analysis of the insurers duty to defend it it does not and this gets complicated before it gets simple but the short answer is this the third fourth and fifth causes of action were against burlington and they they were pleadings in the alternative basically said let's assume for the sake of argument there's no contractual duty to defend and i choke when i say that because there was but if that were the case then burlington even in that situation w still have breached the implied covenant of good faith because it it it promised to defend it it agreed to defend but then did not i don't know if that is responsive to your question and so on that on the issue of payment which i was just wonder if we should be concerned about a case based on a settlement like this right i think the answer resides in in a footnote written by the late great walter crosstie who is the dean of our was the dean of our of our coverage from bar and in the prune case he specifically opined that he could see no reason in law or logic why a party settling would have to actually make that payment in fact he went on to make the point that it would defeat the entire purpose of a covenant not to execute and so i think if you read prune and specifically that footnote you'll get a good feeling about that issue and what effect should the insurers allegations of fraud and collusion have on our analysis and i think it's white noise in the context of this case they did not have they simply did not raise the issue in other words no one raised their hand in the lower court and said where this whole thing is a sham or it's a collusion there were no declarations to that effect and we just lie in wait hoping they'll do that if and when we're four so fortunate as to be remanded because dermot's claim clearly exceeded one hundred or two hundred or three hundred million dollars it was a these you can go to any major city in the country now and you will see storm drain devices that prevent babies and tennis balls going down the drain but but not you know but tons of water will safely go off during a flood and so it's it was a big deal so six point seven million is is is a relatively small royalty and i think the evidence will show that but the rectory responsive to your honor's question there's nothing in this case that about late notice like why would they litigating for four years and only now do they raise it that's not before the court and there's no issue about fraud and collusion or any of that before the court to talk a little bit about the school trying to figure out what standard governs  the prior publication exclusion plied here does there need to be any evidence to show that some advertising ideas fell outside this exclusion or mere possibility of that and i said your honor i'm really glad that you asked that question the burden of proof with regard to exclusions generally is always on the insured as you  know and the the insurer must prove on under spewed facts as a matter of law that the exclusion conclusively negates coverage in other words there is no possibility or no potential for coverage based on this exclusion now you look at and very quickly on the prior publication exclusion where there the trial court got off track was it read into into its analysis paragraph seventy one of the first amended cross complaint paragraph seventy one unmistakably clearly only had to do with a the still claim of trade libel which we have now abandoned the first a minute complaint was written in two thousand and thirteen and i was one of those lawyers during two thousand and thirteen and fourteen and fifteen who were we were waiting for the supreme court to decide hartford versus swi and in the spring of two thousand and fifteen in my wisdom having read that decision i thought this bird is no longer going to fly out it went but those allegations nonetheless remain but as you read paragraph seventy one i would ask you for the court when you go back to your sanctum sanctorum circle the word that as it appears twice in paragraph seventy one issue over because because what was alleged was these these false statements went to that there was an exclusive right of ownership or that there was a patent pending those only have to do with trade law i think apple orange  and the apple would be the trade libel which is now dead and the orange would be all of the vital allegations of the use of an advertising idea if you want to reserve the rest of your time i gotta thank you enjoy it is significant the timing of the events because it's undisputed here it goes to the voluntary payment provision idea we didn't even get notice of the settlement this is not a case where we left our insurer to hang in the wind and we didn't get notice of the supplement until they had already agreed on it and at that time they were being already represented by another insurer with respect to make it all into the advertising idea concept and i think that a very correct what the district court found what was being advertised was the product itself this idea that it was being promoted to authors really just concerns the product but that's not it in a nutshell there's other reasons why the advertisers tasing injury doesn't come into play first and foremost there's no wrongful taking here the complaint clearly alleges that mr sherman suggest to all p and west coast put this information on our website to increase your profits and then that will increase my share of the profits so the crux of this complaint as the district court found is that not not advertising ideas like your honor pointed out the chap chihuahua or the stripes on the adidas tennis shoes were being misappropriated what was being mis for a proper e a a that was was the invention itself and there's numerous california cases and cases  ask about the prime publication of mr dermond state complaint consistent with the possibility that the prior publication exclusion did not fully bar coverage i believe that it r before our policy in sept and it doesn't have to be you look at the facts the fact that it's in the claim that he's now abandoning those are the only facts in the complaint as to when they begin but if it was possible that some injuries fell outside of the prior publication exclusion would that be enough to trigger all the differences judy to defend no because if they're the same that began earlier than that would not and it wouldn't it would not bar coverage that as a district court found i think in his opinion he he really struggled with that a little bit he said they've been given numerous times to come in here and show me you know show me an advertisement they never did that show me what you're talking about and they could have done that and i think we carried our burden in the first place to come forward with facts as alleged that take it outside our policy these material with respect to whether you know there's an actual advertising injury here i don't think they're necessarily material as to our voluntary payment issue  the one key fact with respect to drugs that's not in dispute is we didn't get this amended complaint until me six which was the date they all agreed hey this is what we're going to do we then promptly and notified them that we're reserve mean our rights we need to investigate this so in terms of our policy you can't go out and settle without involving your insure and even under california law you don't have to prove prejudiced but here there's clearly prejudice to all parties because they're doing this you know weeks before a big trial is to start at burlington address their clear patent vial it has already been in litigation for four years in the they attempted to and then the complaint when it was may sixth and that was less than a month before the actually found here that what they would see in the amended complaint was not try as they might artfully plead i'm glad to hear the admission that wasn't covered under the recent california supreme court they've dropped the trade disparagement claim and they're really stretching to find the advertising injury claim i wanted to point out just quickly i think that forty seconds left that he didn't argue this but in their brief they're trying to argue a new argument hey this is a trade dress claim and bring it in under a separate provision but it's not a trade dress claim either again it's the fault of the product that's involved here and i'll defer now that michael thank you very much good morning your honor is thomas holden for the burlington insurance company one of the questions that was asked of mr ford was whether it matters that there was a stipulation to a large  cannot be bound to a settlement to which it has not agreed and that's the situation we have here burlington agreed to defend appointed counsel to defend never said they were withdrawing from the defense and in fact said we do not consent to the settlement that you are proposing because we're defending insure and we have the right to consent to it and we don't consent and one other thing i think i should point out is that as far as the dates of when the complaint was filed the case had been in litigation for about four years the amended complaint was filed on may twenty first the trial was scheduled for july twelfth so it was less than two months before trial it was coverage analysis decided to accept the defense and did so within thirty days which is well within the regulatory time that insurer has to make a decision on coverage and agreed to defend  best argument is there with respect to the duty to defend what were your what were your duties relating to the state proceeding well in addition to the advertising injury arguments that insurance is making which we have all the same arguments it's the same exact language we don't have the prior publication exclusion but in terms of advertising idea we have the same arguments in addition to that we have across liability exclusion which provides that  any claim by an employee former present future employee of any insured is not covered and the idea there is you don't want insured or parties affiliated with insurance to be suing each other because of the possibility of collusion among parties that are affiliated with each other is something that the insurance company doesn't want to insure and so they put on an endorsement said cross liability exclusion said we're not going to cover any claim by any insured or have that effect with this exclusion because just because the word any insured as the supreme court said in the make or case there may be cases of an exclusion that is so clear that it's intended to apply not just to the insured making the coverage claim specifically says an employee of any insured you know this is a case that involves questions concerning the conduct of insurance companies and if it involves interpretation of insurance policies under california law we're just we're the federal court we can't give any any authority to decisions under california law so if the very close we also have an intellectual property exclusion endorsement on our policy which is broader than the intellectual property exclusion that's in the standard form implies to any intellectual property right believe such as false imprisonment things like that that don't have anything to do with intellectual property malicious prosecution i think is one of them how would that be an advertising  r interpretation of the policy could you ever have an advertising injury that was not excluded under your interpretation exclusion i don't think so i think the there would be personal defined offenses that would not be affected by the exclusion but the advertising injury the kinds of things that are set up to be infringed in an advertisement or intellectual property ideas which by i believe mr dermot was officially an employee of ocean or orange orange precision o p which was owned by minute or a minute or it was a holding company for opie and so in you consider him to be an employee of both entities for terms of the exclusion not just because of the any inferred clause which just because of the practical reality that he was employed by this company that was owned wholly by the other company in fact there are two i don't believe there were any employees of minute dora other than the partner who owned it mr tres on who owned opium the purpose of it was to own i just want to quickly touch on the idea that by agreeing to  and then the defense not being as perfect as it could have been according to their allegations that that somehow makes creates coverage for the settlement that they reached it doesn't to create the case law is very clear that a breach of a duty to defend even if it was a breach the damages for that far the cost of defending the case they did not include a settlement only if it is ultimately determined that the policy provides coverage for the claim then the insurer can recover the settlement and that's a showing beyond simply potential coverage that's actual coverage and that's the  richards case we cited in our papers thank you very much thank you very quickly your honor i can deal head on and fearlessly with each of the nine or ten points in a nutshell number one the insurance is counsel suggests that the so called voluntary payments provision applies case after case after case says that does not come into play unless and until you are a defendant carrier point two we were the allegation is that is theft of a product not the use of an advertising idea that argument is be allied by any fair reading of the first a minute cross complaint all through that that document are allegations what the ideas were when they were communicated a breach of an implied covenant to use the ad idea it cetera the third argument there was no wrongful taking there doesn't have to be a wrongful taking justice wrote judge wrote or will recall and i've been litigating this long enough i remember when piracy was one of the offenses and that would be pre teen nine hundred eighty six and then later on the i s o form changed and became misappropriation of an advertising idea or style of doing business will now we've moved on and now we're dealing with the use of an advertising idea which is simpler and cleaner and really straightforward her next point was the crux of the complaint and she tried to summarise what the crux was which she assumed was the theft of an invention when i hear the word crux or grab them and or just or essence i cringe and so does the supreme court because we know now from hor mann that you don't look at the predominating factors in the complaint you're looking for actual facts pleaded no other words the duty of defense is not triggered the magically it is triggered through through actual facts point five on the prior publication exclusion i invite the court to look at the bourse trays on declaration it resides at our for a one paragraph fifteen and sixteen kill that argument mr tres on declares that there was no mention of the city contract no occasion to mention the city contract until the spring of zero nine which manifestly is after january only nine so so that  that exclusion never should have been decided the way it was moving to in durance there's a lot of chatter about the complaint was pending for a long time and so forth troup this coverage of litigation fact for the trial court but let's assume for the sake of argument and again i choke but let's assume that the tender was in may so what burlington for its part accepted the defen done quote and insurance for it for his part did nothing now that any lawyer worth his salt can always have one more question i need to know this i need to know that i need another document but we know from the supreme court and f montrose that the duty to defend is invariably decided as they said quote in the first instance quote by the charging allegations of the operative complaint so all in durance had to do and all burlington had to do was read one point very quickly on the ip exclusion unless you don't need to hear our now but you have are on the team seconds now on the intellectual property exclusion you have burlington attaching an intellectual property exclusion to a policy this is a surplus line carrier that comes into our state and does this now any sophisticated reader forget lay reader but any good sophisticated reader of the policy would would look at that endorsement say well this blows up exclusion i which is the old ip exclusion and probably it changes coverage judy but there's no way to get into it that would have anything to do