Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-55351/USCOURTS-ca9-12-55351-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STREET SURFING, LLC, a Nevada

limited liability company,

Plaintiff-Appellant,

v.

GREAT AMERICAN E&S INSURANCE

COMPANY, a Delaware corporation,

Defendant-Appellee.

No. 12-55351

D.C. No.

8:11-cv-01027-

AG-MLG

OPINION

Appeal from the United States District Court

for the Central District of California

Andrew J. Guilford, District Judge, Presiding

Argued and Submitted

November 7, 2013—Pasadena, California

Filed June 10, 2014

Before: Alfred T. Goodwin, Raymond C. Fisher and

Richard R. Clifton, Circuit Judges.

Opinion by Judge Fisher

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2 STREET SURFING V. GREAT AM. E&S INS. CO.

SUMMARY*

California Insurance Law

The panel affirmed the district court’s summary judgment

in favor of Great American E&S Insurance Company in a

diversity insurance coverage action.

Great American’s insured was sued in an underlying

action alleging trademark infringement, unfair competition

and unfair business practices under federal and California

law. The insurance policies at issue covered, among other

things, personal and advertising liability. The coverage was

limited by several exclusions including a prior publication

exclusion which disclaimed coverage for “‘[p]ersonal and

advertising injury’ arising out of oral or written publication

of material whose first publication took place before the

beginning of the policy period.”

The panel held that the underlying action potentially fell

within the policies’ coverage, triggering Great American’s

duty to defend under the advertising injury provision, but not

under the slogan infringement provision. The panel

concluded that the prior publication exclusion in the

insurance policies relieved Great American of any duty to

defend its insured in the underlying action.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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STREET SURFING V. GREAT AM. E&S INS. CO. 3

COUNSEL

David A. Gauntlett (argued), James A. Lowe, Gauntlett &

Associates, Irvine, California, for Plaintiff-Appellant.

Linda Bondi Morrison (argued), Ryan B. Luther, Tressler

LLP, Irvine, California, for Defendant-Appellee.

OPINION

FISHER, Circuit Judge:

This case arises from general liability insurance policies,

including advertising injury coverage, that defendant Great

American E&S Insurance Company issued to plaintiff Street

Surfing, LLC. The parties dispute whether those policies

obligated Great American to defend Street Surfing in an

action alleging trademark infringement, unfair competition

and unfair business practices under federal and California

law. The district court granted summary judgment in favor

of Great American, concluding that the prior publication

exclusion in the policies relieved Great American of any duty

to defend. We affirm.

BACKGROUND

Street Surfing began selling a two-wheeled, inline

skateboard called the “Wave” to retail stores around

December 2004. Less than a year after Street Surfing began

doing business, it had already earned about $600,000 in sales. 

By 2007, Street Surfing also sold and advertised accessories

for the Wave, such as “Lime Green Street Surfing Wheels for

The Wave,” and the “New Ultimate Street Surfer Wheel Set.”

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4 STREET SURFING V. GREAT AM. E&S INS. CO.

In August 2005, Street Surfing applied for general

liability insurance coverage from Great American. Street

Surfing’s application certified that its website address was

“www.streetsurfing.com” and that the Wave displayed the

Street Surfing logo. The application did not include a picture

or any description of the logo. Great American granted the

application and provided general liability insurance to Street

Surfing from August 2005 until September 2007. This period

spanned two policies, the 2005 policy (August 2005 until

September 2006), and the 2006 policy (September 2006 until

September 2007).1

In September 2006, before it issued the

2006 policy, Great American captured a screenshot of Street

Surfing’s website and saved a copy in its underwriting file.

The policies covered, among other things, personal and

advertising injury liability.

2 That coverage was limited by

 

1

 The provisions at issue in this litigation are identical in both policies.

 

2

 Specifically, the insurance policies provided:

We will pay those sums that the Insured becomes

legally obligated to pay as damages because of

“personal and advertising injury” to which this

insurance applies. We will have the right and duty to

defend the Insured against any “suit” seeking those

damages. However, we will have no duty to defend the

insured against any “suit” seeking damages for

“personal and advertising injury” to which this

insurance does not apply.

In relevant part, “personal and advertising injury” was defined as:

[I]njury including consequential “bodily injury” arising

out of one or more of the following offenses:

. . .

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STREET SURFING V. GREAT AM. E&S INS. CO. 5

several exclusions, including: (1) a prior publication

exclusion, which disclaimed coverage for “‘[p]ersonal and

advertising injury’ arising out of oral or written publication

of material whose first publication took place before the

beginning of the policy period”; (2) an intellectual property

exclusion (IP exclusion), which barred coverage for

“‘[p]ersonal and advertising injury’ arising out of the

infringement of copyright, patent, trademark, trade secret or

other intellectual property rights,” though it did not apply to

“infringement, in your ‘advertisement,’ of copyright, trade

dress or slogan”; and (3) an advertising injury amendment

(AI amendment), which further clarified that “[t]his insurance

does not apply to ‘advertising injury’ arising out of any actual

or alleged infringement of intellectual property rights or

violation of laws relating to patents, trademarks, trade dress,

trade names, trade secrets and know-how.”

Rhyn Noll, who owned the registered trademark

“Streetsurfer,” sued Street Surfing in June 2008, claiming

trademark infringement, unfair competition and unfair trade

practices under federal and California law. Street Surfing had

known that Noll owned the “Streetsurfer” trademark since

early 2005, and had unsuccessfully attempted to purchase the

trademark around that time. In September 2008, Street

Surfing submitted a claim for coverage to Great American

and tendered Noll’s complaint. Great American denied Street

Surfing’s claim, citing the IP exclusion and the AI

amendment. The letter did not mention the prior publication

f. The use of another’s advertising idea in your

“advertisement”; or

g. infringing upon another’s copyright, trade dress or

slogan in your “advertisement”.

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6 STREET SURFING V. GREAT AM. E&S INS. CO.

exclusion, but it did reserve to Great American “the right to

assert any and all other terms, provisions, conditions and/or

exclusions set forth in its policy which may be applicable to

the Noll action.” Street Surfing responded, arguing that none

of the “intellectual property, prior publication, knowing

violation of the rights of another, [or] breach of contract

exclusions” applied. Nevertheless, Great American again

denied coverage based on the IP exclusion and AI

amendment, noting that discussion of the other issues raised

by Street Surfing, including the prior publication exclusion,

would be irrelevant because Great American “did not cite or

rely upon [those] policy provisions for its denial of

coverage.”

Street Surfing settled with Noll in December 2009. Its

only response to Great American’s second denial was to file

this action in July 2011, seeking a declaration that Great

American was obligated to defend and to settle the Noll

action. When the parties filed cross-motions for summary

judgment, the district court concluded that the prior

publication exclusion relieved Great American of any duty to

defend Street Surfing in the Noll action. It accordingly

granted Great American’s motion for summary judgment,

denied Street Surfing’s motion for partial summary judgment

and entered judgment in favor of Great American.3 Street

Surfing timely appealed.

3

If Great American has no duty to defend the Noll action, it also has no

duty to settle that action. See Peerless Lighting Corp. v. Am. Motorists

Ins. Co., 98 Cal. Rptr. 2d 753, 766 (Ct. App. 2000).

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STREET SURFING V. GREAT AM. E&S INS. CO. 7

STANDARD OF REVIEW

We review de novo a district court’s rulings on crossmotions for summary judgment. See Rocky Mountain

Farmers Union v. Corey, 730 F.3d 1070, 1086 (9th Cir.

2013). A motion for summary judgment should be granted

when “the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as

a matter of law.” Id. at 1086–87 (quoting Fed. R. Civ. P.

56(a)) (internal quotation marks omitted). As both sides

agree, we apply California insurance law.

DISCUSSION

The parties dispute whether Great American was

obligated to defend Street Surfing in the Noll action. Under

California law, a general liability insurer “has a duty to

defend an insured if it becomes aware of, or if the third party

lawsuit pleads, facts giving rise to the potential for coverage

under the insuring agreement.” Waller v. Truck Ins. Exch.,

Inc., 900 P.2d 619, 627 (Cal. 1995). The duty to defend is

therefore “broader than the duty to indemnify; an insurer may

owe a duty to defend its insured in an action in which no

damages ultimately are awarded.” Montrose Chem. Corp. v.

Superior Court, 861 P.2d 1153, 1157 (Cal. 1993) (quoting

Horace Mann Ins. Co. v. Barbara B., 846 P.2d 792, 795 (Cal.

1993)). The duty continues “until the underlying lawsuit is

concluded or until it has been shown that there is no potential

for coverage.” Id. (citation omitted).

To prevail, “the insured need only show that the

underlying claim may fall within policy coverage,” whereas

“the insurer must prove it cannot.” Id. at 1161. That is,

“[a]ny doubt as to whether the facts establish the existence of

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8 STREET SURFING V. GREAT AM. E&S INS. CO.

the defense duty must be resolved in the insured’s favor.” Id.

at 1160. These principles apply only to facts potentially

“giv[ing] rise to a duty to defend,” however, not to “doubts

regarding the legal interpretation of policy terms.” Indus.

Indem. Co. v. Apple Computer, Inc., 95 Cal. Rptr. 2d 528, 533

(Ct. App. 1999); see also Mirpad, LLC v. Cal. Ins. Guarantee

Ass’n, 34 Cal. Rptr. 3d 136, 143 (Ct. App. 2005) (“If

coverage depends on an unresolved dispute over a factual

question, the very existence of that dispute would establish a

possibility of coverage and thus a duty to defend.”); Lebas

Fashion Imps. of USA, Inc. v. ITT Hartford Ins. Grp., 59 Cal.

Rptr. 2d 36, 40 (Ct. App. 1996) (“[I]t is settled that a potential

for coverage cannot be based on an unresolved legal dispute

concerning policy interpretation which is ultimately resolved

in favor of the insurer.”).

In this duty to defend case, we first address the scope of

potential coverage, accepting Great American’s concession

that the Noll action potentially falls within coverage for use

of another’s advertising idea, but rejecting Street Surfing’s

argument that the action would also fall within the policies’

coverage for slogan infringement. Next, we hold that the

prior publication exclusion relieves Great American of its

duty to defend Street Surfing in the Noll action because the

extrinsic evidence available to Great American at the time of

tender conclusively establishes: (1) that Street Surfing

published at least one advertisement using Noll’s advertising

idea before coverage began; and (2) that the new

advertisements Street Surfing published during the coverage

period were substantially similar to that pre-coverage

advertisement. Accordingly, we affirm the district court’s

grant of summary judgment to Great American.

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STREET SURFING V. GREAT AM. E&S INS. CO. 9

A. The Noll action potentially falls within the policies’

coverage.

In resolving insurance coverage disputes, before

“considering exclusions, a court must examine the coverage

provisions to determine whether a claim falls within [the

policy terms].” Waller, 900 P.2d at 625 (alteration in

original) (quoting Hallmark Ins. Co. v. Superior Court,

247 Cal. Rptr. 638, 639 (Ct. App. 1998)) (internal quotation

marks omitted). We accept Great American’s concession, for

purposes of summary judgment, that the Noll action

potentially falls within the policies’ coverage of injuries

arising from “[t]he use of another’s advertising idea in [Street

Surfing’s] ‘advertisement.’”

We reject Street Surfing’s contention that the Noll action

also falls within the policies’ slogan infringement liability

coverage, which extends to injuries arising out of “infringing

upon another’s . . . slogan in [Street Surfing’s]

‘advertisement.’”4Interpreting a similar provision, the

California Supreme Court defined a “slogan” as “‘a brief

attention-getting phrase used in advertising or promotion’ or

‘[a] phrase used repeatedly, as in promotion,’” but recognized

that “there may be instances where the name of a business,

product or service, by itself, is also used as a slogan.” Palmer

v. Truck Ins. Exch., 988 P.2d 568, 576 & n.9 (Cal. 1999)

(quoting Webster’s Collegiate Dictionary 1105 (10th ed.

4 We address this argument despite Great American’s concession

because we interpret the prior publication exclusion in light of the nature

of potential coverage. See infra p. 13 (citing Ringler Assocs., Inc. v.

Md. Cas. Co., 96 Cal. Rptr. 2d 136, 147–48 (Ct. App. 2000)) and p. 22

note 9.

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10 STREET SURFING V. GREAT AM. E&S INS. CO.

1993); American Heritage College Dictionary 1282 (3d ed.

1993)).

Although “Streetsurfer” arguably could be used as such

a slogan, Street Surfing has not identified “any instance of

such a use that would have been readily ascertainable by

[Great American] at the time the claim was filed,” and

specifically, nothing in the complaint or in the extrinsic

evidence suggests that Noll ever used “Streetsurfer” as a

slogan. Interstate Bakeries Corp. v. OneBeacon Ins. Co.,

686 F.3d 539, 546 (8th Cir. 2012). Street Surfing’s claim for

coverage under this provision therefore fails. See id. (holding

that the third-party complaint did not fall within the policy’s

slogan infringement coverage because, although “it is

conceivable that ‘Nature’s Own’ could serve as a slogan,” the

complaint made no “specific allegation relating to such a use”

and the insured had not shown that the insurer otherwise

knew of such a use). Street Surfing’s purported use of “Street

Surfing” as a slogan in its own advertising is irrelevant. The

policies’ coverage extends only to Street Surfing’s

infringement of another’s slogan.

We therefore conclude that the Noll action potentially fell

within the policies’ coverage, triggering Great American’s

duty to defend under the advertising injury provision, but not

under the slogan infringement provision.

B. The prior publication exclusion applies to the Noll

action.

Wemust next consider whether the district court correctly

concluded that the prior publication exclusion relieves Great

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STREET SURFING V. GREAT AM. E&S INS. CO. 11

American of its duty to defend.5 The policies’ prior

publication exclusion exempts from coverage “‘[p]ersonal

and advertising injury’ arising out of oral or written

publication of material whose first publication took place

before the beginning of the policy period.” The

straightforward purpose of this exclusion is to “bar coverage”

when the “wrongful behavior . . . beg[a]n prior to the

effective date of the insurance policy.” Taco Bell Corp. v.

Cont’l Cas. Co., 388 F.3d 1069, 1072 (7th Cir. 2004); see

also Kim Seng Co. v. Great Am. Ins. Co., 101 Cal. Rptr. 3d

537, 548 (Ct. App. 2009) (“The purpose of the prior

publication exclusion is to preclude coverage for risks that

have already materialized . . . .”).

5 Equitable estoppel does not bar Great American from raising this

defense even though it neither cited the exclusion when it denied coverage

nor specifically refuted Street Surfing’s argument that the exclusion did

not apply. “An insurer can be estopped from raising coverage defenses if,

knowing of the grounds of non-coverage, it provides a defense under the

policy without a reservation of rights, and the insured reasonably relies on

this apparently unconditional defense to [its] detriment.” State Farm Fire

& Cas. Co. v. Jioras, 29 Cal. Rptr. 2d 840, 844 (Ct. App. 1994). At a

minimum, the insured must show that the insurer’s conduct caused both

(1) a reasonable belief that the insurer would provide coverage and

(2) detrimental reliance on that conduct. See id. at 845. There is no

evidence that either of these conditions was met with respect to Great

American ultimately asserting the prior publication exclusion. 

Significantly, Great American’s letters explicitly reserved its rights to

“assert any and all other terms, provisions, conditions and/or exclusions

set forth in its policies which may be applicable to the Noll action.”

We also decline Street Surfing’s invitation to apply Illinois’ “mend

the hold” doctrine, see Harbor Ins. Co. v. Cont’l Bank Corp., 922 F.2d

357, 362–65 (7th Cir. 1990) (describing the doctrine and its history),

because California law has never incorporated it.

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12 STREET SURFING V. GREAT AM. E&S INS. CO.

In the context of advertising injury coverage, an allegedly

wrongful advertisement published before the coverage period

triggers application of the prior publication exclusion. See

infra section B.1. If this threshold showing is made, the

exclusion bars coverage of injuries arising out of

republication of that advertisement, or any substantially

similar advertisement, during the policy period, because such

later publications are part of a single, continuing wrong that

began before the insurance policy went into effect. Cf.

Ringler Assocs., Inc. v. Md. Cas. Co., 96 Cal. Rptr. 2d 136,

150 (Ct. App. 2000). If a later advertisement is not

substantially similar to the pre-coverage advertisement,

however, it constitutes a distinct, or “fresh,” wrong that does

not fall within the prior publication exclusion’s scope. See

Kim Seng, 101 Cal. Rptr. 3d at 546–48.

Street Surfing argues that Great American has not met its

burden of proving that the prior publication exclusion applies

for two reasons. First, Street Surfing argues that the prior

publication exclusion does not apply at all because neither

the Noll complaint nor the extrinsic evidence available to

Great American at the time of tender conclusively established

that Street Surfing used Noll’s advertising idea in its own

advertisements before coverage began in August 2005. Street

Surfing further contends that even if it published such precoverage advertisements, Great American’s duty to defend

was separately triggered by new Street Surfing

advertisements published during the policy period using

Noll’s advertising idea, because the advertisements were not

substantially similar to any pre-coverage advertisements. We

address these two arguments in turn.

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STREET SURFING V. GREAT AM. E&S INS. CO. 13

1. StreetSurfing published at least one advertisement

using Noll’s advertising idea before coverage

began.

The policies’ prior publication exclusion is triggered only

if the insured published allegedly injurious material before

the beginning of the policy period. The California Court of

Appeal interpreted the scope of an identical exclusion in

Ringler by looking to the nature of the potential coverage. 

See 96 Cal. Rptr. 2d at 147–48 (interpreting the exclusion “in

the context of the law of defamation” because “[o]nly the

underlying lawsuits’ ancillary claims of defamation

potentially fell within the Policy’s ‘personal’ or ‘advertising’

injury coverage”). In this case, the potential coverage is for

injuries arising out of “[t]he use of another’s advertising idea

in [Street Surfing’s]‘advertisement.’” Because this provision

specifies the covered injuries in the policies’ own terms, we

can interpret the policies’ prior publication exclusion without

looking to underlying principles of substantive law.

Here, the Noll action is potentially covered because it

alleged that Street Surfing’s advertisements using its “Street

Surfing” logo and brand name were wrongful uses of

“Streetsurfer” – Noll’s advertising idea. Accordingly, if

Street Surfing used its brand name or logo in an

advertisement (as defined by the policy) before August 2005,

the prior publication exclusion would bar coverage of injuries

from the republication of that advertisement after August

2005.6

 

6

 The policies define an “advertisement” as:

[A] notice that is broadcast or published to the general

public or specific market segments about your goods,

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14 STREET SURFING V. GREAT AM. E&S INS. CO.

To determine whether Street Surfing used Noll’s

advertising idea in its own advertisements before coverage

began, the district court looked to the Noll complaint and

three items of extrinsic evidence: the affixation of the Street

Surfing logo to the Wave, Street Surfing’s website address

and the screenshot of Street Surfing’s website content. We

conclude that affixing the Street Surfing logo to the Wave

was an advertisement using Street Surfing’s brand name and

logo. Because the Street Surfing logo was published on the

Wave before coverage began, the prior publication exclusion

bars coverage of injuries caused by that affixation during the

policies’ coverage periods. Accordingly, we need not decide

whether Street Surfing’s website address and content also

constituted advertisements under the policy.

a. Noll Complaint

We agree with Street Surfing that the Noll complaint

itself does not establish that Street Surfing used Noll’s

advertising idea in advertisements that were published before

August 2005. The complaint alleged that the challenged

conduct occurred “since at least on or about January of 2005,

products or services for the purpose of attracting

customers or supporters. For the purposes of this

definition:

a. notices that are published include material placed

on the Internet or on similar electronic means of

communication; and

b. regarding websites, only that part of a website that

is about your goods, products or services for the

purposes of attracting customers or supporters is

considered an advertisement.

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STREET SURFING V. GREAT AM. E&S INS. CO. 15

or such other date as may later be determined.” These

allegations explicitly leave open the possibility that the

challenged conduct occurred at “such other date as may later

be determined.” After discovery, the evidence could have

established that the challenged conduct actually started after

coverage began in August 2005. See CNA Cas. of Cal. v.

Seabord Sur. Co., 222 Cal. Rptr. 276, 284–85 (Ct. App. 1986)

(holding that there was a potential for coverage when the

policy period began in November 1969 and the underlying

complaint challenged a course of conduct beginning in 1966,

because no dates were alleged for the specifically listed

wrongful acts). Thus, the Noll complaint on its face does not

prove that Street Surfing used Noll’s advertising idea before

the coverage period began.

b. Logo on the Wave

We therefore turn to whether extrinsic evidence “presents

undisputed facts which conclusively eliminate a potential for

liability,” Montrose, 861 P.2d at 1159–60 (internal quotation

marks omitted), and conclude that it does. Specifically,

extrinsic evidence shows that Street Surfing affixed its logo

to the Wave before August 2005, constituting “a notice that

is broadcast or published to the general public . . . about your

goods, products or services for the purpose of attracting

customers or supporters,” the policies’ definition of an

advertisement.7

Street Surfing’s insurance application, filed before

coverage began, certified that “[a]ll products display the

7 Street Surfing does not dispute that using a logo in this fashion

constitutes a “notice” under the policies. We therefore assume without

deciding that it does.

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16 STREET SURFING V. GREAT AM. E&S INS. CO.

Street Surfing Logo.” At the time, its only product was the

Wave, although new products were in progress, and it had

earned about $600,000 in sales of the Wave, primarily to

retailers. Affixing the Street Surfing logo to the Wave

thereby “broadcast or published” that logo to the general

public through displays of the Wave in retail stores. Because

the record does not include a description or depiction of the

logo affixed to the Wave, we cannot draw any conclusions

about what that logo, standing alone, may have

communicated or broadcast to the public. Nevertheless, we

agree with the district court that affixing Street Surfing’s logo

to the Wave broadcast information about Street Surfing’s

products by informing the public of the Wave’s origin for the

purpose of attracting future customers who might like what

they saw. Accordingly, the logo constituted an

“advertisement” under the policies. Because the logo

advertisement predated coverage and used the term “Street

Surfing,” which the underlying complaint alleged was a

wrongful use of Noll’s advertising idea, “Streetsurfer,” the

prior publication exclusion applies to any injuries arising

from affixing the logo on the Wave during the coverage

period.

2. The advertisements Street Surfing published

during the coverage period fall within the scope of

the prior publication exclusion because they are

substantially similar to its pre-coverage affixation

of its logo to the Wave.

Street Surfing contends that even if the prior publication

exclusion bars coverage of liability for pre-coverage

advertisements usingNoll’s advertising idea, Great American

was still obligated to defend the Noll action because Street

Surfing published new, post-coverage advertisements using

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STREET SURFING V. GREAT AM. E&S INS. CO. 17

Noll’s advertising idea that were not substantially similar to

any advertisements published before the policy period. Even

assuming that affixing the Street Surfing logo to the Wave

was the only pre-coverage advertisement, we are not

convinced.

The Ringler court explained that the prior publication

exclusion “bar[s] coverage of republication of any

identifiably defamatory ‘material’ whenever the first

publication of substantially the same material occurred before

the inception of the policy period, without regard to whether

or not the defamatorymaterial is literally restated in precisely

the same words.” 96 Cal. Rptr. 2d at 150. This concept was

further explained in Kim Seng, which held that the prior

publication exclusion does not preclude coverage if, during

the coverage period, the insured publishes “new matter”

constituting “fresh wrongs” in the underlying liability suit. 

See 101 Cal. Rptr. 3d at 547. That is, “new matter” is

material that is not “substantially similar” to the material

published before the coverage period. See id.

To assess substantial similarity, courts have not

considered all differences between pre-coverage and postcoverage publications, but have focused on the relationship

between the alleged wrongful acts manifested by those

publications. A post-coverage publication is “substantially

similar” to a pre-coverage publication if both publications

carry out the same alleged wrong. See, e.g., Taco Bell,

388 F.3d at 1073 (explaining that if an article infringing a

copyright was published before coverage, but was

republished during the coverage period as part of an

anthology, “[t]he anthology would be a different . . . work

from the magazine, but the wrongful act – the copying of the

copyrighted article without authorization – would be the same

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18 STREET SURFING V. GREAT AM. E&S INS. CO.

and so the prior-publication exclusion would . . . click in”). 

Focusing on the alleged wrongful acts fulfills the prior

publication exclusion’s purpose of barring coverage when

“the wrongful behavior had begun prior to the effective date

of the insurance policy.” Id. at 1072.

In Kim Seng, the California Court of Appeal applied this

framework when it considered whether the insurer was

obligated to defend and indemnify the insured in an action

alleging infringement of the trademark “Que Huong.” See

101 Cal. Rptr. 3d at 541–42. The infringement allegations in

the complaint were based on the insured’s pre-coverage use

of the marks “Que Huong” and “Old Man Que Huong

Brand.” See id. at 541, 545. The insured argued that the

prior publication exclusion did not relieve the insurer of its

duty to defend because the underlying action sought to enjoin

new marks introduced during the policy period – including

“‘Bun Tuoi Hieu Que Huong Brand,’ ‘Bun Que Huong Dac

Biet,’ and a trademarked logo that included a water buffalo

and the words ‘Que Huong,’” id. at 540 – that differed from

those it used before coverage began. See id. at 545. The

court rejected that argument because “[t]he alleged wrongs

before and during the policy period were the use of the words

‘Que Huong,’” noting that “[t]he words added by [the

insured] to ‘Que Huong’ during the policy period [were]

merely product description.” Id. at 547.

In contrast, the Seventh Circuit held in Taco Bell that the

insurer had a duty to defend the insured’s publication of “new

matter that the plaintiff in the liability suit against the insured

allege[d] as fresh wrongs.” 388 F.3d at 1073. The plaintiff

in the underlying suit alleged that it had “developed a

marketing gimmick that it called ‘Psycho Chihuahua,’” as

well as several specific examples of that advertising idea –

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STREET SURFING V. GREAT AM. E&S INS. CO. 19

e.g., “the idea of a Chihuahua popping his head out through

a hole at the end of a commercial.” Id. at 1072. The insured,

Taco Bell, developed a national advertising campaign based

on the “Psycho Chihuahua” idea, airing some commercials

for the first time before the coverage period, and others for

the first time during the coverage period. See id. at 1072–73. 

The insurer argued that, although the post-coverage

commercials were different from the pre-coverage

commercials, the prior publication exclusion applied because

all of the commercials used the same misappropriated

“Psycho Chihuahua” idea. See id. at 1073.

The Seventh Circuit rejected the insurer’s argument. See

id. It acknowledged that if broadly construed, the “Psycho

Chihuahua” idea would “encompass[] all the subordinate

ideas embodied in the later commercials.” Id. at 1074. 

Nevertheless, the court looked to the allegations in the

underlying complaint “that those later commercials

appropriated not only the ‘basic idea’ (‘Psycho Chihuahua’)

but other ideas as well that are protected by Michigan’s

common law of misappropriation, like the idea of the

Chihuahua’s poking its head through a hole at the end of a

commercial.” Id. at 1073 (emphasis added). Because the

underlying complaint “charge[d] the misappropriation of the

subordinate ideas as separate torts, and those torts occurred

during the period covered by [the insurer]’s policy,” the court

held that the prior publication exclusion did not bar coverage

of the underlying action. Id. at 1074.

Street Surfing argues that this case is analogous to Taco

Bell because, during the coverage period, it published

advertisements for “Lime Green Street SurfingWheels for the

Wave” and the “New Ultimate Street Surfer Wheel Set,” and

these advertisements differed from any pre-coverage

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20 STREET SURFING V. GREAT AM. E&S INS. CO.

advertisements.8 Conversely, Great American contends that

this case is indistinguishable from Kim Seng. We conclude

that Street Surfing’s post-coverage advertisements are

substantially similar to its pre-coverage advertisement and

therefore that the prior publication exclusion precludes

coverage of the Noll action.

Unlike the underlying complaint in Taco Bell, the Noll

complaint does not mention any specific advertisements. 

Instead, it makes general allegations that Street Surfing

injured Noll by using the Street Surfing name and logo on the

Wave and in its advertisements. In particular, the Noll

complaint does not allege that the post-coverage

advertisements were separate torts occurring during the

policy period. One of the primary grounds for the Seventh

Circuit’s decision in Taco Bell is therefore not applicable

here. See 388 F.3d at 1073–74.

More importantly, if Street Surfing’s post-coverage

publications were wrongful, that would be so for the same

reason its pre-coverage advertisement was allegedly

wrongful: they used Noll’s advertising idea in an

advertisement. Whether that idea was manifested specifically

as “Street Surfing” or as “Street Surfer” is not a meaningful

8 Street Surfing sent Great American these post-coverage advertisements

with its letter contesting Great American’s first denial of coverage,

making Great American aware of these advertisements even though they

were extrinsic to the complaint. Accordingly, if the advertisements

created a potential for coverage, Great American would be obligated to

defend the Noll complaint. See Waller v. Truck Ins. Exch., 900 P.2d 619,

627 (Cal. 1995) (“It has long been a fundamental rule of law that an

insurer has a duty to defend an insured if it becomes aware of, or if the

third party lawsuit pleads, facts giving rise to the potential for coverage

under the insuring agreement.”).

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STREET SURFING V. GREAT AM. E&S INS. CO. 21

differentiation, because the alleged wrong arose out of each

term’s similarity to Noll’s advertising idea, “Streetsurfer.” 

Arguably, “Street Surfer” and “Street Surfing” could each be

viewed as a separate, subordinate version of the basic

“Streetsurfer” idea. The extreme similarity between all these

terms, however, convinces us otherwise. Rather, we are

persuaded this is an instance where “a difference between the

republished version of an unlawful work and the original

version [is] so slight as to be immaterial.” Taco Bell,

388 F.3d at 1073.

That the advertisements were for different products is also

not a material distinction, because the advertising idea being

used was the same regardless of the product. In Taco Bell,

the material distinction was not between commercials for

tacos and commercials for burritos, but between commercials

that infringed one general idea allegedly protected by

misappropriation law (“Psycho Chihuahua”) and a separate,

more specific idea that was also allegedly protected by

misappropriation law (a Chihuahua poking its head through

a hole). See id. at 1073. The distinct products being

promoted in Street Surfing’s post-coverage advertisements

are more akin to the words of product description added to

the marks during the policy period in Kim Seng; they

differentiate the publications, but not the alleged wrongs,

which were the same before and during the policy period. 

See 101 Cal. Rptr. 3d at 547. The difference in products is

therefore also not material for purposes of the “fresh wrongs”

analysis.

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22 STREET SURFING V. GREAT AM. E&S INS. CO.

Accordingly, we conclude that Street Surfing’s postcoverage advertisements are not fresh wrongs that escape

application of the prior publication exclusion.9

CONCLUSION

At its core, this case involves a company that began a

wrongful course of conduct, obtained insurance coverage,

continued its course of conduct, then sought a defense from

its insurer when the injured party sued. Although “a liability

insurer owes a broad duty to defend its insured against claims

that create a potential for indemnity,” Horace Mann Ins. Co.

v. Barbara B., 846 P.2d 792, 795 (Cal. 1993), the prior

publication exclusion, strictly construed, serves to place

reasonable limits on that broad duty. We therefore affirm the

district court’s grant of summary judgment in favor of Great

American. We do not reach Great American’s alternate

arguments based on the IP exclusion and the AI amendment.

AFFIRMED.

9 Street Surfing’s additional contention that it began using “Street

Surfing” as a slogan only after coverage began is not convincing, because

there is no potential coverage under the slogan infringement provision. 

See supra Part A.

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