# United Stat es Court of Appeals For the First C ircuit

No. 01-2342 OPEN SOFTWARE FOUNDATION, INC., and HEWLETT PACKARD COMPANY Plaintiffs, Appellants,

v. UNITED STATES FIDELITY AND GUARANTY CO.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. George A. O'Toole, U.S. District Judge ]

Before Torruella and Lipez, Circuit Judges , and Schwarzer, Senior District Judge .*

Eric R. Little , with whom David A. Gauntlett , Gauntlett & Associates , Ste phe n G. Hennessy , and Corcoran, Fitzgerald & Hennessy, LLC were on brief, for appellants. DavidM. Ostrander , with whom James S. Greenan , Greenan, Peffer, Sallander & Lally, LLP , Joh n Gr aceffa , and Morrison, Mahoney & Miller were on brief, for appellee.

October 4, 2002

______________________ *Of the Northern District of California, s i tting by designation.1 Both OSF and Hewlett-Packard (HP), one of OSF's sponsors,

filed this action against USF&G. USF&G claims that HP should not be permitted to sue because it failed to tender the claim to USF&G in a timely fashion. In l ight of our determination that OSF's claims lack merit, HP's identical claims against OSF must necessarilyfail as well. Therefore, we need not address the question of whet her HP properly brought suit. For the sake of convenience, we refer to the plaintiffs as OSF. -2- LIPEZ, Circuit Judge . Plaintiffs Open Software Foundation (OSF) and Hewlett-Packard (HP) brou ght this diversity action against USF&G, their general commercial liability insurer, claiming that USF&G had a duty to defend a lawsuit filed a gains t themby Addamax Corporation, a sof tware manufacturer. 1 After OSF decidednot to bundle Addamax security software into its UNIX-based operating system, Addamax sued OSF in 1989, alleging that it was a price-fixing purchasing pool. The litigation continued until 1998, when we affirmed Judge Tauro's grant of summary judgment to OSF. See Addamax v. Open Software Foundation , 152 F.3d 48 (1st Cir. 1998). OSF's gene ral commercial liability policy with USF&G obligedthe insurance company to i ndem nify OSF for liability incurredin suits based on a range of activities classified, inter alia , as "personal injury" or "advertising injury".

We agree with the distric t co urt that Addamax’s complai nts , read in conjunction with all relevant extrinsic evidence cited by OSF, neither stated nor adumbrated a claim for damages resulting froma "personal injury" or "advertising injury" definedin the policies. Consequently, we conclude that USF&G had

no duty to defend the Addamax litigation, and we affirm the decision of the district court granting summary judgment to USF&G.-3- I. Background Organizedin 1988 by seven computer hardware and software companies (the "sponsors"), pursuant to the Nation al C ooperative Research Act of 1984, 15 U.S.C. §§ 4301-05 (1993) , OSF was tasked with designing and marketing a UNIX-based operating system known as OSF/1 that would become an industry standard for U NIX u sers. To induce other com panies to develop components for its operating sy stem , OSF formulated various "requests for technology" (RFTs), which esse ntia lly offered competing suppliers the opportunity to subm it their products to be integrated into the OSF/1 operating system. One necessary component of the oper at ing system was security software. In November, 1989, OSF solicited two software developers, Addamax Corporation (Addamax) and Secureware, to submit their security technologies for evaluation. Roughly one year later, OSF selected Secureware's security technology to be incorporated into OSF/1.

In April, 1990, Addamax's counsel sent a demand letter to OSF claiming that its decision to "bundle" Secureware software into OSF/1 violated federal and state a ntit rust laws, and threatening litigation if the alleged violations were not remedied. When OSF fai ledto respond to these demands, Addamax filed a complaint

a gainst OSF and two of its sponsors, Hewlett-Packard and D igita l Electric Corpo rati on. Addamax alleged that the sponsors and members of OSF were a "buyers' cartel" that conspired to coerce software makers into offering their products to OSF at prices below2 An unabridged account of the claims and their dis pos ition

may be found in the opinions Addamax v. Open Software Found. , 964 F. Supp. 549 (D. Mass. 1997), and Addamax v. Open Software Found. , 152 F.3d 48 (1st Cir. 1998). The district court's decision in this case provides a concis e summary of these two cases. See Open So ftwa re Found., Inc. and Hewlett-Packard Corp. v. United States Fid. and Guar. Co. , 2001 WL 1298878 (D. Mass. 2001). -4- fair market value. 2 The complaint summ arized Addamax's claims as follows: This is an action to recover damages and obtain

permanent injunctive relief against the Open Software Foundation, Inc. ("OSF"), Dig ita l Equipment Corporation ("DEC"), and He wle ttPackardCompany ("H-P") for violations of federal and st ate antitrust laws, unfair trade practice law, and the commo n law of the Commonwealth of Massachusetts . . . . OSF acts as an illegal cartel through which it s Sponsors . . . hav e illegally combined, contracted, or conspired to exercise their aggregate market po wer by, among other things, fixing pr ice s for the software technology OSF acquires from software developers; setting a price ceiling in certain software markets; allocating product markets among the Sponsors; and boy cotting certain independent software developers, including [Addamax]. The net effect, among others, of the defendants' activities has been and will be to unla wfully andunreasonably restrain trade, substanti all y lessen competition among purchasers of software, drive independent software developers out of business, and reinforce the strong market positions of OSF and its Sponsors.

Of the nine counts in the complaint, the first seven were based on federal or state antitrust statutes. The eighth count alleged that OSF's operations constituted "unfair methods of c o mpetition and unfair or deceptive acts or practices" in violation of Mass. Gen. Laws ch. 93A, §§ 2 and 11 ("Chapter 93A"). The ninth count alleged that OSF andits sponsors "intentionally andimproperly interfered3 Under Massachusetts law, allegations contained in any version

of the complaint may trigger an insu rer's duty to defend. See Lumbermen's Mu t. Cas . Co. v. Belleville Indus., Inc. , 555 N.E.2d 568, 575 (Mass. 1990) ("[U]ntil there is an unalterable determination as to the nature of the underlying claim, any declaration of rights concerning the insurer's duty to defend cannot be conclusive."). Accordingly, we use the term "complaints" in our discussion of the case to refer collectively to Addamax's original complaint and first amended complaint. -5- with Addamax's actual contractual relations and prospective contractual relations." Approximately two years after filing its original complaint, Addamax filed an amended complaint to include, inter alia , more detailed allegations describing and illustrating OSF's practice of coercing independent software vendors to license their products at below-market prices. 3

OSF and HP successfully defended the Addamax suit. We "foundthat antitrust violations, even if they were assumed to have occurred, were not a material cause of Addamax's failure in the line of business at issue," and accordingly affirmed the district court's gr ant o f summary judgment to OSF. Addamax Corp. v. Open Software Found. , 152 F.3d 48, 50 (1st Cir. 1998).

Anticipating the c osts of defending the Addamax suit, OSF's corporate counsel sent a let ter t o USF&G on March 5, 1992, requesting that they defend the claim pursuant to the primary and

excess liability policies issued by USF&G. In a memorandum appendedto the letter, OSF's asso ciat e general counsel, Sue Schlener, argued that the Addamax claims were covered by OSF's policywith USF&G under the "advertising injury" or "personal injury" clauses of the policies. After consulting outside counsel, USF&G notified OSF on August 25, 1992, that it did not consider any-6-

of the claims to fall within the coverage furnished by the primary andexcess liability policies, and therefore declined to accept tender of the defense.

Approximately six y e ars later, OSF filed this lawsuit against USF&G while Addamax's appeal in the underlying action was still pending before this court. Claiming that USF&G had a duty to defend the Addamax claim, OSF requested a declaratory judgment to this effect as well as damages in the amount of reasonable defense costs. OSF specifically contended that Addamax's suit alluded to "personal injuries," including defamation, and "advertising injuries," inc luding unfair competition; and asserted that since both types of claims were listed in USF&G's general and excess liabilitypolicies, USF&G had a duty to defend. In a thoughtful opinion, the district court found both arguments unpersuasive and grantedUSF&G's motion for summary judgment. OSF appeals, arguing that both the personal injury and advertising injury clauses of the GCL triggered a duty to defend.

II. Interpreting the Policies Like most other jurisdictions, Massachusetts imposes a broadduty to defend on insurers: "[i]t is axiomatic that an insurance company's duty to defend is broader than its duty to indemnify." Boston Symphony Orchestra v. Commercial Union Ins. Co. , 545 N.E.2d 1156, 1158 (Mass. 1989). The Supreme Judicial Court (SJC) has observed that the duty to defend "is based on the facts al legedin the complaint and those facts which are kno wn by th e4 We follow the district court in defining "t o adumbrate" to

mean "'to give a sketchy representation of; outline br oadl y, omitting details (there was only time to adumbrate the plan)' or 'to suggest, indicate, or disclose partially and with a purposeful avoidance of precision (the meaning of the poem is adumbratedin its title).'" OSF, 2001 WL at *3 n.1 (quoting 1 Webster's Third New International Dictionary30 (1981)); see also Random House Webster's College Dictionary 19 (1992) (defining adumbrate to mean "to give a faint image or indication of; outline or sketch").

5 When the parties refer to "extrinsic facts," which they often do, we understand them to mean facts not referenced within the complaint. -7- insurer." Boston Symphony , 545 N.E.2d at 1158. Thus, the insurer must accept tender of a defense if the complaints state or adumbrate 4 a covered claim when read in light of extrinsi c facts 5 bearing some relev ance t o the allegations that the plaintiff did not specifically include in the complaint, but were nonetheless known or readily knowable by the insurer when the defense was tendered: [T]he question of the ini tial duty of a

liabilityinsurer to defend third-party actions against the insured is decided by matching the third-party complaint with the policyprovisions: if the allegations of the complaint are "reasonably susceptible" of an interpretation that they state or adumbrate a claimcovered by the policy terms, the insurer must undertake the defense. . . . Otherwise stated, the process is one of envisaging what kinds of losses may be proved as lying within the range of allegations of the complaint, and then seeing whether an y suc h loss fits the expectation of protective insurance reasonably generated by the terms of the policy.

Continental Cas. Co. v. Gilbane Bldg. Co. , 461 N.E.2d 209, 212 (Mass. 1984) (quoting Sterilite Corp. v. Continental Cas. Co. , 458 N.E.2d338, 340-41 (Mass. 1984) (citations andfootnote omitted)).-8- Determining whether complaints "adumbrate" a claim can be

a diffic ult interpretive exercise. OSF and USF&G advance widely varying accounts of how the court, applying Massachusetts law, is to analyze the com plaint s and facts extrinsic to them when "envisaging what kinds of losses may be proved as lying within the range of allegations of the complaint." Continental Cas. Co. , 458 N.E.2dat 212. USF&G argues that "even if facts exist extrinsic to the complaint which, if they were pleaded, wou ld trigger coverage . . . [t]here is no duty to defend" if the "allegations of the complaint are unambiguously outside the scope of policy coverage." OSF rejects this characterization of Massachusetts law andlargely rests its case on the proposition that USF&G had a duty to defend OSF because Addamax could have sued for a covered personal or advertising injury on the basis of facts outside the complaints that were "known or readily kno wable by the insurer." State Mutual Life Assurance Co. v. Lumbermen's Mutual Casualty Co. , 874 F. Supp. 451, 456 (D. Mass. 1995).

Massachusetts courts generally use extrinsic facts (such

as those set forth in demand letters to the insurer) to aid interpretation of the complaint, and not as independent factual predicates for a duty to defend. In attempting to "envisag[e] what kinds of losses may be p roved as lying within the range of allegations of the complaint," the insurer must examine the plaintiff's allegations in conjunction with facts that it knows or readily should know in order to determine whether coverage exists under the policy. Boston Symphony , 545 N.E.2d at 1158, 1160.-9-

However, the insured cannot, "in the absence of a complaint that requires c overag e, force its insurer to defend the insured by simply telling the insurer facts that would create coverage." Id. at 1160; see also Kilgore v. Resumix , 1998 Mass.Super. LEXIS 170 (finding no duty to defend where defamatory utterance was neither allegednor implied, and amendment of the complaint to state a defamation claim was a mere possibility).

The language of Boston Symphonyundercuts OSF's position that facts extrinsic to the plai ntif f's allegations in the

co mplain ts, uncovered at any stage of the underlying action, can independentlytrigger a duty to defend that does not arise from the allegations of the complaints, however sketchily stated. Indeed, the SJC envisioned a limited role for extrinsic facts in liability insurance cases: "We hold only that an insurer must give consideration to facts outside the complaint when it considers the

a llegations in the complaint to determine if coverage exis ts. " Boston Symphony , 874 F. Supp. at 456. This holding is consistent with prior Massachusetts decisions emphasizing that "there is no duty to defendif , at the time the claims were advanced , the insurer cou ld rea sonably have concluded that no aspect of the claims . . . fell within the scope of coverage." Millipore Corp.

v. Travelers Indem. Co. , 115 F.3d 21, 3 5 (1st Cir. 1997) (citing PolaroidCorp. v. Travelers Indem. Co. , 610 N.E.2d 912, 916 (Mass. 1993)) (emphasi s a dded). Thus, while the insurer can generally determine its dut y to defend after the plaintiff submits the initial version of his complaint, the duty to defend may-10-

occasionallyarise during a later phase in the underlying action if the plaintiff obtains leave to amend and adds allegations that trigger coverage. Consequently, "until there is an unalterable determination as to the nature of the underlying claim, any declaration of rights concerning the insurer's duty to defend cannot be conclusive." Lumbermen's Mut. Cas. Co. v. Belleville Indus., Inc. , 555 N.E.2d 568, 575 (Mass. 1990).

We therefore treat the extrinsic facts known or readily knowable to USF&G as an aid to interpreting the Addamax complaints. We do not cons ide r them as independent grounds for a duty to defend. Functioning in this limited role, extrinsic facts work in tandem with the "adumbrate" standard to add substance and meaning to skeletal claims only adumbrated in the complaint. These facts, brought to the insurer's attention in a timely fashion by the insured, aid the insurer's informed review of the tender of defense by painting a fuller picture of the underlying action.

However, extrinsic facts can also be misusedby insureds seeking to transform a skeletal claim in the underlying complaint into an allegation argu abl y covered by the liability policy but unrelatedto an ac tual claim in the complaint. Employed in this way, extrinsic facts could s tretch the terms of the liability policyto enco mpas s lawsuits beyond the contemplation of the parties when they contractedfor the insurance. Hence, we must be mindful of the SJC's admonition in Boston Symphonythat the insured cannot, "in the absence of a complaint that requires coverage, force its insurers to defend the insured by simply telling the-11-

i nsurer facts that would create coverage." Boston Symphon y , 54 5 N.E.2d at 1160.

We now discuss each of the two contested clauses of the policies in turn.

III. Advertising Injury

OSF argues that Ad dama x's suit was covered under the "advertising injury" provisions of the primary and excess insurance policies in effect at the time of OSF's announcement of the selection of Secureware. T he pivotal definition in the Primary Policy reads as follows:

"Advertising Injury" means injury arising out of an offense committed during t he policy period occurring in the course of the named insured's advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan.

The Umbrella Poli cy providing excess coverage similarly covers damages resulting from:

Advertising injury--mean[ing] injury arising out of one or more of th e following acts committed during the policy period by or for the Named Insured in any advertisem ent , publicity article, broadcast or telecast: (a) libel, slander or defamation; (b) infringement of cop yright or of title or o f slogan; (c) piracyor unfair competition or idea misappropriation under an implied contract; (d) invasion of the right of privacy. Of all the acts listed in the advertising injury provisions of the two policies, only "unfair comp e tition" is6 OSF argues that the "multiple reasonable meanings for the

'unfair competition’ offense which have long been known to insurers evidence that the term is . . . ambiguous," and cites New Castle Co unty, Delaware v. Nat’l Union Fire Ins. Co. , 243 F.3d 742, 745 (7th Cir. 2001) (observing that this "single phrase, whi ch -12- invokedby OSF as an underlying cause of the advertising injuries adumbratedin the Addamax complaints. In interpreting the phrase "unfair competition," we note that courts are ge neral ly obliged to construe ambiguous terms in an insurance contract in favor of the insured. See Kenneth H. York & John W. Whelan, Insurance Law 41, 42 (2d ed. 1988) (discussing the do ctr ine of contra profere ntum ); Mass. Bay Transp. Auth. v. Allianz Ins. Co. , 597 N.E.2d439 (Mass. 1992) (recognizing the doctrine in Massachusetts law). Yet this rule does not operate here because the phrase "unfair competition" as used in the USF&G policies is not ambiguous. See Mass. Bay Transp. Auth. , 59 7 N.E .2d at 441 (declining to follow the d octrine of contra proferentumbecause the relevant policy language was not ambiguous). As the district court found, the term "unfair competition" in the policies "refer[s] to conduct that causes confusion on the part of consumers," such as palming off or passing off. OSF , 2001 WL 129887 8 at * 6 ; see also American Bar Association Section of Litigation, Model Jury Instructions: Bus iness Torts Litigation § 4.01[3] (1996). It is settled in Massachusetts th at "t he gravamen of an unfair competition claim is the likelihood of

consumer confusio n as to the source of the goods or services." DatacommInterface, Inc. v. Computerworld, Inc. , 489 N.E.2d 185, 191 (Mass. 1986). 6insurance companies have consistently refused to define, and that

has generated literally hundreds of lawsuits, with widely varying results, cannot, under our application of commonsense, be term ed unambiguous."). Id. However, New Castle County addressed the phrase "invasion of the right of private occupancy," id. , not the phrase "unfair competition" at issue here. -13- Given the well-settled meaning of the term "unfai r competition" in Massachusetts law, the le a ding case in the Commonwealth interpreting the phrase "unfair competition" in a general commercial liabilit y i nsurance policy not surprisingly limits the injury to "palming off." See Smartfoo ds, I nc. v. Northbrook Prop. & Cas. Co. , 618 N.E.2d1365, 1368 (Mass.App.Ct. 1993) ("Unfair competition, i n its common law signification, implies palming off."). Palming off is "'an attempt by one person to induce customers t o b elieve that his products are actually those of another.'" Kazmaier v. Wooten , 761 F.2d46, 52 (1st Cir. 1985) (quoting Remco Industries v. Toyomenka, Inc. , 286 F. Supp. 948, 954 (S.D.N.Y. 1968), aff'd , 397 F.2d 977 (2d Cir. 1968). By contrast, Addamax blames OSF for not using Addamax software in its operating system, and attributes this decision to an illegal scheme of monopolization and price-fixing. Whereas pa lming off involves the illi cit id entification or association of the defendant's product with the plaintiff's, Adda max 's major grievance is that OSF disassociateditself from Addamax, thereby foreclosing the company's participation in a large segment of the UNIX software market. Thus the Addamax complaint is no t reasonablysusceptible of an interpretation that it indicated or adumbrated a claim for unfair competition.7 The one exception, Keating v. National Union Fire Insurance

Co. , 754 F. Supp. 1431 (C.D. Cal. 1990), has since been reversed by th e Nin th Circuit on appeal. See Keating v. National Union Fire Insurance Co. , 995 F.2d 154 (1991). -14- Massachusetts's decision to construe the advertising injuryof unfair competition in a general commercial liabilit y insurance policy as equivalent in scope to the s tate common law tort of the same name reflect s the approach of a majority of jurisdictions. See Atlantic Mut. Ins. Co. v. Biotech Corp. , 857 F. Supp. 423, 429 (E.D. Pa. 1994) (collecting cases); S tandar d Fire Ins. Co. v. People's Church of Fresno , 985 F.2d 446 (9th Cir. 1993); Gencor Indus., Inc. v. Wausau Underwriters Ins. Co. , 857 F. Supp. 1560 (M.D. Fla. 1994); Pine Top Ins. Co. v. Public Util. Dist. No. 1 , 676 F. Supp. 212 (E.D. Wa sh. 1987) ; QSP, Inc. v. Aetna Cas. and Sur. Co. , 773 A.2d 906 (Conn. 2001); Bank of the West v. Superior Court , 833 P.2d545 (1992). In fact, at the time OSF and USF&G signed the relevan t ins urance contracts, "all federal court decisions [but one had] been consis tent in their

su pport of the common law definition" of unfair competiti on a s "'palming off' or 'passing off,' that is, usurping the commercial advantage of another by deceptively substituting one's own goods for those of the competitor." Terri D. Keville, Advertising InjuryCoverage: An Overview , 65 S. Cal. L. Rev. 919 , 954 (1992). 7

OSF nonetheless contends that Addamax's complaint triggereda duty to defend under the advertising injury clauses of the policies because several claims in the Addamax complaint-- including antitrust, Chapter 93A, and interference with business-15-

relations claims--convey "unfair competition" in common parlance. The district court acknowledged that, "In a general sense, [such] violations might be thought of as a species of 'unfair competition' because they entail methods of competition that are illegal andthus unfair." OSF , 2001 WL 1298878, at *7. However, it ultimately found OSF's argument unpersuasive becau se the insuran ce con tract is a legal document, and parties signing it should"expect that a legal term us ed in the policy will be accordedthe meaning that the courts have given it." Id. We agre e. A treatise on the topic reinforces the district court' s analysis: In its general sense, "unfair competition" is

definedas "all dishonest or fraudulent rivalr y i n trade and commerce" (Black's Law Dictionary), thus encompassing a potentially large number of different offenses. . . . However, the definition of unfair competition quoted above goes on t o s tate that the term "is particularly appliedto the practice of endeavoring to substitute one's own goods or products in the markets for those of another having an established rep uta tion and extensive sales, by means of imitating or counterfeiting the name, title, size, shape, or distinctive peculiarities of the article, or the shape, co lor , label, wrapper, or general appearance of the package

. . . the imitation being carried far enough t o m islead the general public or deceive an unwarypurchaser, and yet not amounting to an absolute counterfeit or to the infringement of a trade-mark or trade-name." In this more limitedmeanin g, which seems more likely to be applicable in the context of advertising in jury, unfair competition is much the sam e as . . . misappropriation of adv ertising ideas or style of doing business.8 Looselytranslated, noscitur a sociis means "it is known from

its associates." As a canon o f con struction, it means that "the meaning of a word is or may be known from the accompanying words." Black's Law Dictionary1060 (6th ed. 1990). -16- JeffreyW. Stempel, Law of Insurance Contract Disputes § 14.06, at 14-22 (2d ed. 2001) (quoting Donal d S. Malecki and Arthur L. Flitner, Commercial General Liability 69-70 (6th ed., 1998)).

The relevant sections of the policies define covered "advert ising injuries" as those arising out of "libel, slander, defamation, violat ion of right of privacy, piracy, unfair competition, or infringement of co pyright, title or slogan" (in the general policy) a nd "(a ) libel, slander or defamation; (b) infringement of copyright or of title or of slogan; (c) piracyor unfair competition or idea mi s appropriation under an implied

c ontra ct; (d) invasion of the right of privacy" (in the excess policy). Appl ying the interpretive principle of noscitur a sociis 8 to language in an almost identical GCL policy, the Seventh Circuit observed that:

Aword sometimes picks up meaning from its neighbors; and all the other terms in the list of wrongs insured under the rubric of "advertising injury" concern the misuse of inf ormation, as be fits the wor d "advertising." Piracy and the infringement of copyrights, titles (presumably of books, songs, products, services, and so forth), and slogans (advertising and other) are simply different forms of theft (broadly conceived) of information. And defamation involves the u se of false information, while invasion of the right of privacy the use of true, though sometimes misleading or offensi ve , information. Libel andslander are the two halves of defamat ion. . . . [I]f tortious interference [and similar claims are] covered bythe polic y, th e policy has a bulge not9 OSF argues tha t the Addamax litigation is covered by the

policybecause the eighth "claim for relief" in Addamax's complaints a ccus e OSF of "Unfair Methods of Competition in Violation of the Massachusetts Unfair Trade Practices Act." As the district court pointed out, "Massachusetts courts construe the term 'unfair competition' in a liabilit y insu rance policy not only to signify that common law tort, but also to distinguish it from the statutorycause of action for unfair business practices under Chapter 93A." OSF , 2001 WL 1298878, at *6 (citing Smartfoods, Inc. v. Northbrook Prop. & Cas. Co. , 618 N.E.2d 1365, 1368 (Mass. App. Ct. 1993)). Addamax w as su ing for violation of Chapter 93A, not for common law unfair competition. Cf. Graham Resources, Inc. v. Lexington Insurance Co. , 625 S o. 2d 716, 721 (La. Ct. App. 1993) (obs erv ing that "in all of the out-of-state cases we have reviewed," courts have ruled that unfair competition in context of -17- easyto make sense of or to attribute to the deliberate choice of the parties. Curtis-Universal, Inc. v. Sheboygan Emergency Med. Servs. , 43 F.3d 1119, 1124 (7th Cir. 1994).

The terms surrounding "unfair competition" in the advertising injurypr ovisions of the USF&G policies exclusively denote communicative harms (injuries that occur as a direct result of c ommun ication), not illegal courses of conduct that merely involve communication. We are not persuaded by the appellant's attempt to apply the latter gloss to the term, just as the Seventh Circuit was unmoved by the same tactic in Curtis-Universal : "[W]e findit highly implau sible to suppose that 'unfair competition' in a list of torts otherwise concerned mainly with harmful speech in various forms (defamation, invasion of the right of privacy, copyright infringement) would sweep under the policy a gene ral, albeit only prima facie , liability for antitrust damages" and other causes of action n ot constituted by communicative harms. Id. at 1123. 9insurance coverage for advertising injury does not refer to conduct

prohibited by statute). -18- IV. Personal Injury The only terms in the "personal injury" sections of the two policies that possibly pertain to Addamax's suit are ha rms caused by communication. The harms are defined as

injuryarising out of one or m ore of the fol l owing offenses committed during the policyperiod . . . (3) a publicatio n o r utterance (a) of a libel or slander or other defamatoryor disparaging material, or (b) a publication or uttera nce in violation of an individual's right of p rivacy; except public ati ons or utterances in the course of or related to advertising, br o adcasting, publishing or telecasting activities conductedby or on behalf o f the named insuredshall not be deemedpersonal injury. The Umbrella Policy providing excess coverage similarly covers damages from

inju ry ar ising out of . . . (b) the publication or utterance of a li bel or slander or other defamatory or disparaging material or a publication or utte ran ce in violation of an individual's right of privacy; except publications or utterances in the course of or re lat ed to advertising activities. Addamax makes no reference to a claim for defamation or disparagement in either of its complaints or in its initial demand letter to OSF. Nonetheless, OSF argues that the complaints, consideredin light of extrinsic evidence either provided to or readilyknowable by USF& G, "adumbrate" defamation and disparagement claims. See Continental Cas. Co. , 461 N.E.2d at 212 ("if the allegations of the complaint are 'reasonably susceptible'-19-

of an interpretation that they state or adumbrate a claimcovered by the policy terms, the insurer must undertake the defense").

Man euvering within the interpretive boundaries of the "adumbrate" standard, see supra note 3, OSF insists that liability coverage is triggered under the personal injury provisions of its policies on the theory that A dd amax's "damages[] allegedly occurred, at least in part, because the communications [by OSF] to [its] Sponsors and Members about the selection of Secureware

as superior lowered Addamax in rank and estimation." OSF further contends that such "allegedly false statements . . . [could] prejudice the plaintiff in the conduct of its business . . . [and therefore] are sufficient to state a claim for disparagement as to products anddefamation as to the source of these goods under Massachusetts law."

As noted, OSF's pe rson al injury coverage extends to liabilityfrom injuries arising out of "ot her d efamatory or disparaging material," and not just to liability for "defamation" and"disparagement" actions themselves. Interpreting this phrase in a similar GCL policy, the SJC observed that "[d]isparage means, among other things, 'to lower in rank and esti matio n by actions

or words,' or 'to speak slightingly of.'" Boston Symphon y , 54 5 N.E.2dat 1158 (quoting Webster's New International Dictionary of the English Language 750 (2d ed. 1959)).

OSF contends that all of Addamax's claims--including its antitrust, Cha pter 93A, and tortious interference claims--were based(at least in par t) on wor ds and actions of OSF that-20-

explicitlyor implicitly lowered Addamax in rank and estimation. OSF's initial tender of the defense arguably alerted USF&G to the publication of disparaging and defamatory materials in various forms: 1) OSF advertisements promoting the RFT process generally, 2) the RFT process itself, 3) a "Security Rationale document" that identifiedAddamax and Secureware as the two companies competing in the Security RF andjustified OSF's selection of the Secureware product, 4) additiona l advertising after the completion of the SecurityRFT announcing the selection of Secureware and touting the impartiality of the RFT process, a nd 5) other unspecified publications referred to in Addamax's complai nt la uding the superior c apabilities of Secureware. OSF's re-tender of the defense through this declaratory judgment action disclosed a sixth

source of defamatory or disparaging materials--rumors of Addamax's impending bankruptcy in the wake of its loss to Secureware in the RFT. We assume arguendo that these facts, identified in the Addamax complaints or extrinsic to them, constituted "disparaging

or d efamatory material" in the Boston Symphony sense o f diminishing Addamax's reputation. We further assum e that USF&G

can be charged with knowledge of all the extrinsic facts cited by OSF. USF&G does not argue (with respect fo OSF) that re-tender of the defense through this declaratory judgment action violated particular notice requirements in the USF&G policies. See Transamerica Ins. Co. v. Norfolk and D edhamMut. Fire Ins. Co. , 279 N .E.2d686, 689 (Mass. 1972); see also Hoppy's Oil Serv. ,-21-

Inc. , v. Insurance Co. of North America , 783 F. Supp. 1505, 1509 (D. Mass. 1992) ("No duty to defend or to participate in a defense

can arise before the insurer has notice of the s u it against the in sured, or at least of the underlying claim and the likeli hoo d of suit."). Moreover, Massachusetts law imposes a broad duty to investigate on liability insurers after the insured has tendered

a defense. See Mass. Gen. La ws ch. 17 6D, § 3(9) (1998) ("An unfair claim settlement practice shall consist of...(d) [r]efusing to pay claims without conducting a reasonable investigation based upon all available information"). Nevertheless, we conclude that these extrinsic facts, viewed as aids in the interpretation of the Addamax complaints, did not trigger a duty to defend because Addamax was not alleging that the material cited by OSF caused its injuries. See Ekco Group, Inc. v. Travelers Indem. Co. , 273 F.3d 409, 415 (1st Cir. 2001) ("There must be some causal c onnec tion running from the offense . . . to the injury."); Knoll Pharm. Co.

v. Automobile Ins. Co. , 152 F. Supp. 2d 1026, 1038 (N.D. Ill. 2001) ("The causal connection between the insured's activities and the alleged injury is the salient factor in determining a duty to defend."). Significantly, the USF&G policies only provide coverage for "injur[ies] arising out of . . . defamatory or disparaging material . . . c ommit ted [or created] during the policy period" (emphasis added). In terpre ting identical language in the "advertising injur y" clause of a similar policy, the Second Circu it re cently held that "the relevant causation issue with10 We do not r ead the phrase "whether the advertising did in

fact contribute materially to the injury" as predicating an insurer's duty to defend on the facts proven at trial. Indeed, we couldnot read the phrase that way. The Supreme Judicial Court has observedthat "[t]he obligation of an insurer to defend is not, and cannot be, determined by reference to the facts proven at trial. Rather, the duty to defend is based on the facts alleged in the complaint..." Boston Symphony , 545 N.E.2d at 1158. As used in the R.C. Bigelowdecision, the phrase "in fact" simply emphasizes that the insured cannot trigger a duty to defendunless the acts alleged in the underlying complaint that supposedly fall within the coverage of the liability policy are further alleged by the plaintiff in that action to have contributed materially to the injury.

11 We see no reason to cons true the phrase "arising out of" diff eren tly in the advertising injury and personal injury provisions of the USF&G policies. -22- regardto insurance coverage is not whether 'the injury could have taken place without the advertising,' but 'whether the advertising didin fact 10 contribute materially to the injury.'" R.C. Bigelow

v. Lib. Mut. Ins. Co. , 287 F.3d 242, 248 (2d Cir. 2002) (quoting Frog, Switch, & Mfg. Co. v. Travelers Ins. Co. , 193 F.3d 742, 750 n.8 (3d Cir. 1999)). 11

We conclude that Massachusetts courts would impose a similar "material contribution" requirement when construing this language in a commercial general liability insurance policy. Cf. Eagle-Picher Indus., Inc. v. LibertyMut. Ins. Co. , 829 F.2d227, 248 (1st Cir. 1987) (predicting the SJC's response to a choice-oflaw question that the court had yet to address directly). To determine the level of causation implicated by the phrase "arising out of" in a liability insurance policy under Massachusetts law,

we have previously looked to Massachusetts cases construing this phrase in the automobile insurance context. See Merchants Ins.-23-

Co. of New Hampshire, Inc. v. USF&G , 143 F.3d5 (1st Cir. 1998). In Merchants Ins. Co. , the parties disputed whether the insurer's duty to d efe nd was triggered under a policy provision that expandedthe definition of an "insured" to "the person or organization shown in the Schedule . . . but only with respect to liability arising o ut of 'your work' for that insured by or for you." Id. at 9 (emphasis added). To determine the meaning of the phrase "arising out of", we relied heavi ly on the SJC's opinion in Rischitelli v. Safety Ins. Co. , 671 N.E.2d 1243 (Mass. 1996), where the cour t sou ght to determine whether the insured's automobile insurance policy covered injuries that he sustained when another motorist physically attackedhimafter their vehicles

were involved in an accident. We observed in Merchants Ins. Co. that [t]he Massachusetts Supreme Judic i al Court

confirmedi n Rischitelli : "The expression 'ari sin g out of' indicates a wider range of causation than the concept of proximate causation in tort law." B y way of further explanation, Rischitelli went on to say: "However, the e xpr ession does not refer to all circumstances in which the inj ury would no t h ave occurred 'but for' the involvement of a motor vehicle." Merchants Ins. Co. , 143 F.3d at 9-10.

The SJC recently reaffirmed its interpretat ion of the phrase "arising out of" in Rischitelli . See Ruggerio Ambulance Serv., Inc. v. National Grange Mut. Ins. Co. , 724 N.E.2d 295, 299 (Mass. 2000) ("The expression 'arising out of' indicates a wider range of causation than the concept of proximate causation in tort law . . . Howe ver, the expression does not refer to all-24-

circumstances in which the injury would not hav e occu rred 'but for' the involvement of a motor vehicle." ( citing Rischitelli , 671 N.E.2d at 1245.)). As noted above, the "co ntribute materially" standard similarl y connotes a range of causation

narrower than "but-for causation": "[T]he relevant causation issue with regard to insurance coverage is not whether the 'the injury couldhave taken place withou t t he advertising' [but-for causation], but wheth e r the advertising did in fact contribute materiallyto the injury." R.C. Bigelow , 287 F .3d at 248 (citations omitted) (emphasis in original). Consequently, the "contribut e m aterially" causation requirement set forth in R.C. Bigelow appears to fit comfortably within the Ruggerio parameters.

There is no claim for defamation or disparagement in the Addamax complaints, and no reliance on defamatory or disparaging

ma terials circulated by OSF as a cause of injury. Indeed , th e complaints pursue a different theme entirely by focusing on OSF's structure andactivities while largely ignoring its words. This presentation begin s with the complaints' portrayal of the consortiumas the singular force in the market for UNIX operating system software: "Addamax's market consisted of OSF's Sponsors

as well as smaller computer vendors and system integrators, the

over whelming majority of whomare non-voting Members of OSF . " Complaint at 12, Addamax v. Open Software Foundation , 964 F. Supp. 549 (D. Mass. 1997) (emphasis added); see also First Amended Complaint at 9-10, 17, 34.-25- Addamax subsequently chronicles t h e diminishing purchasing power of vendors outside the OSF membership group, and asserts that a software producer's failure to successfully market its product to OSF was tantamount to foreclosure from the entire market. "Whereas previously . . . Addamax had a potential market of numero us co mputer vendors, . . . the formation of OSF has causeda consolidation of that market into one dominant customer, i.e. OSF. As a result, the software developers, such as Addamax, that are not selected by the cartel are foreclosed from th e market." Id. at 14-15; see also First Amended Complaint at 22-23. Not surprisingly, the complaints attribute Addamax's injuries solelyto the p urcha sing decisions of OSF members without mentioning vendors outside the OSF group:

O S F and its Sponsors . . . have foreclosed Addamax fromselling its B1st product to the more than 70% of the UNIX operating system market representedby OSF andits membership . Accordingly , Addamax has been injured in its busine ss and property through the loss of millions of dollars in p ast , present, and future pr ofi ts, by loss of customers and potential customers, by loss of goodwill, and bythe prospective destruction of its business. Complaint at 22, 25, 30 (emphasis added); see also First Amended Complaint at 20-21, 25, 30-31, 34.

The noteworthy a bse nce of any defamation or disparagement claim against O S F is consistent with Addamax's understanding of the UNIX software market as memorializedin the complaints. If v endors outside the OSF membership group were a minimal presence in the market for UNIX operating system software,12 The absence of a substantial consumer base with the capacity

to alter its purchasing behavior in response to disparaging or defamatorymaterial distinguishes this case from Knoll Pharm. Co. , 152 F. Supp. 2d at 1026 (N.D. Ill. 2001), which OSF relies heavily upon in its brief. In Knoll , the insured sold a synthetic thyroid hormone that it promoted as be ing superior to competing generic drugs on the basis that there was "no proven bio equiva lent product." Id. at 1030. The district court ruled that the insured was entitled to coverage under their liability policy, noting inter alia that such disparaging and misleading remarks by the insuredmay have induced plaintiffs (purchasers of health and m edical supplies) to substantially overpay for the ins ured' s thyroiddrug when they could have purchased a cheaper generic drug with the equivalent biological composition. -26- anydisparaging or defamat ory m aterials published by OSF (which by that time had already decided to bundle Secureware's product into OSF/1) c o uld not have materially contributed to Addamax's injuries. No extrinsic facts or documents proff er ed by OSF contradict Addamax's characterization of OSF in its complaints as

a monopsonist in the market for UNIX operating system software,

or allude to the presence of a significant consumer base outside of OSF's membership. 12 Therefore, even if we assum e t hat every extrinsic fact referenced by OSF was properly brought to USF&G's attention when OSF tendered the defense, OSF cannot demonstrate that thes e fac ts "contribute[d] materially" to the injuries allegedby Addamax in its compla i nt. R.C. Bigelow , 287 F.3d at 248. At worst, these extrins ic fac ts suggest that OSF's publication of disparaging materials and propagation of bankruptcy

ru mor s adversely impacted Addamax's business relationships with the comparatively small number of computer vendors outside the OSF membership group. Even construing these facts in the light most-27-

favorable to OSF, the financial impact of OSF's word s pales in comparison to the economic effect of its deeds, which foreclosed Addamax f rom 7 0% of the entire market for its UNIX operating sys temsoftware. Indeed, by its own terms in the complain ts , Addamax dismisses losses from vendors outside OSF as immaterial: "[T]he software developers, such as Addamax, that are not selected by the cartel are foreclosed from the market." Complaint at 14- 15; see also First Amended Complaint at 22-23 . Accordingly, we conclude that any injuries resulting from the publication of the "extrinsic facts" cited by OSF are not sufficiently material to

s a tisfythe "arising under" requirement in the personal injury provisions. R.C. Bigelow , 287 F.3d at 248.

V. Conclusion Determining whether complaints state a claimfor a given

cause of action is a relatively straightforward matter; determining whether theyadumbrate, or faintly sketch, a claimis

a more difficult interpretive question. However, there is a discernible line between adumbrat ion i n a complaint and the mischaracterization of a complaint by an insured relying creativelyon extrinsic facts. Although OSF may detect a sketch

or suggestion of covered claims in Addamax's complaints, and the extrinsic facts cited, we do not. We therefore conclud e tha t USF&G was not obliged to defend the Addamax action.

Affirmed.