2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-20-2002

Green Machine Corp v. Zurich Amer Ins Grp

Precedential or Non-Precedential: Precedential

Docket No. 01-3635

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Recommended Citation

"Green Machine Corp v. Zurich Amer Ins Grp" (2002). 2002 Decisions. Paper 802.

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PRECEDENTIAL 

 Filed December 20, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 01-3635 

GREEN MACHINE CORPORATION, 

 Appellant 

v. 

THE ZURICH-AMERICAN INSURANCE GROUP, as 

succeessor to THE MARYLAND COMMERCIAL 

INSURANCE GROUP; VALIANT INSURANCE COMPANY 

On Appeal From the United States District Court 

For the Eastern District of Pennsylvania 

(D.C. No. 99-cv-03048) 

District Judge: Honorable Mary A. McLaughlin 

Argued November 4, 2002 

Before: BECKER, Chief Judge, McKEE and Hill*, 

Circuit Judges. 

(Filed: December 20, 2002) 

_________________________________________________________________ 

* Honorable James Hill, United States Circuit Judge for the Eleventh 

Circuit, sitting by designation. 

 

 JOSEPH E. VAUGHAN, ESQ. 

 (Argued) 

 JUSTIN S. WALKER, ESQ. 

 Vaughan, Duffy & Connors, LLP 

 102 Pickering Way 

 Suite 200 

 Exton, PA 19341 

 Attorney for Appellant 

 R. BRUCE MORRISON (Argued) 

 DANIEL G. SANDERS 

 Marshall, Dennehey, Warner, 

 Coleman & Goggin 

 1845 Walnut Street 

 16th Floor 

 Philadelphia, PA 19103 

 WALTER F. KAWALEC, III 

 Marshall, Dennehey, Warner, 

 Colemen & Goggin 

 200 Lake Drive East 

 Woodland Falls Corporate Park 
 Suite 300 

 Cherry Hill, NJ 08002 

 Attorneys for the Appellees, The 

 Zurich American Insurance Company 

 and Valiant Insurance Company 

 LAURA A. FOGGAN, ESQ. 

 JOHN C. YANG, ESQ. 

 Wiley Rein & Fielding LLP 

 1776 K Street, NW 

 Washington, DC 20006 

 Attorneys for Amicus Curiae, 

 Complex Insurance Claims Litigation 

 Association 

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OPINION OF THE COURT 

HILL, Circuit Judge. 

Green Machine Corporation appeals the entry of 

summary judgment against it on the issue of ZurichAmerican Insurance Group’s duty to defend and indemnify 

it in an underlying patent infringement action. For the 

following reasons, we affirm. 

I. 

In 1995, Chiuminatta Concrete Concepts, Inc. and its 

principals ("Chiuminatta") filed suit in a California federal 

district court against Green Machine Corporation ("Green 

Machine") and others. Among other things, Chiuminatta 

alleged that Green Machine’s manufacture, sale and 

promotion of certain concrete-cutting saws infringed and 

induced others to infringe Chiuminatta’s products and 

methods patents. In November of 1996, the California 

district court entered judgment for Chiuminatta, and Green 

Machine appealed. 

In July of 1997, Green Machine sought insurance 

coverage for Chiuminatta’s patent infringement claims 

under a policy of general liability insurance issued to Green 

Machine by Zurich-American Insurance Group ("Zurich"). 

Green Machine maintained that Chiuminatta’s claims fell 

within the "advertising injury" coverage provided by 

Zurich’s policy. Zurich denied Green Machine’s request for 

coverage in June of 1998. 

Shortly thereafter, the Court of Appeals for the Federal 

Circuit reversed the district court’s judgment as to the 

product patent, holding that Green Machine’s manufacture, 

sale, and use of its concrete-cutting saw did not infringe 

the product patents of Chiuminatta. See Chiuminatta 

Concrete Concepts, Inc. v. Cardinal Industries, Inc. , 145 F.3d 

1303 (Fed. Cir. 1998). The Federal Circuit, however, 

affirmed the district court’s judgment that Green Machine’s 
sales demonstrations encouraged cutting concrete using a 

method patented by Chiuminatta, thereby both violating 

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and inducing others to violate Chiuminatta’s methods 

patent. Id. 1 

In May of 1999, Green Machine filed a three count 

complaint in state court seeking a declaration that Zurich 

was required to defend and indemnify it in the underlying 

Chiuminatta patent action. Zurich removed the action to 

the United Stated District Court for the Eastern District of 

Pennsylvania, where the parties filed cross-motions for 

summary judgment. 

In August of 2001, the Pennsylvania district court 

granted Zurich’s motion for summary judgment and denied 

Green Machine’s cross-motion. The court held that 

Chiuminatta’s complaint did not allege an "advertising 

injury" and, consequently, Zurich had no duty to defend 

Green Machine in the lawsuit. We review this conclusion of 

law de novo. Township of Center, Butler County, 

Pennsylvania v. First Mercury Syndicate, Inc., 117 F.3d 115, 

117 (3d Cir. 1997). The district court had diversity 

jurisdiction of this case pursuant to 28 U.S.C.S 1332, and 

we have appellate jurisdiction under 28 U.S.C. S 1291. 

II. 

Zurich’s duty to defend and indemnify Green Machine is 

contained in Section I (B) of the policy which provides the 

following: 

 We will pay those sums that the insured becomes 

 legally obligated to pay as damages because of 

 "personal injury" or "advertising injury" to which this 

 insurance applies. 

Zurich denied coverage to Green Machine based upon its 

position that the allegations in the underlying lawsuit do 

not state a claim for advertising injury. Under the policy, an 

advertising injury, among other things, is one arising out of 

the "misappropriation of advertising ideas or style of doing 

business."2 Green Machine contends that Chiuminatta’s 

_________________________________________________________________ 

1. The case was remanded and remains pending. 

2. The parties agree that this is the relevant definition of advertising 

injury for purposes of this action. 

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claims can appropriately be viewed as both of these types 

of advertising injury. 

A. Misappropriation of An Advertising Idea 
We have recently held that "to be covered by the policy, 

allegations of . . . misappropriation have to involve an 

advertising idea, not just a nonadvertising idea that is 

made the subject of advertising." Frog, Switch & Mfg. Co. v. 

Travelers Ins. Co., 193 F.3d 742, 748 (3d Cir. 1999). 

Misappropriating advertising ideas is the wrongful taking of 

an idea about the solicitation of business and customers. Id.3 

In this case, there are no such allegations.4 

Chiuminatta’s complaint alleges that Green Machine 

infringed its concrete-cutting patents by creating similar 

products or copying certain patented methods. There is no 

allegation that Green Machine took any of Chiuminatta’s 

marketing, promotional, or advertising materials or ideas. 

The only connection between Chiuminatta’s claim and 

advertising is that Chiuminatta also alleges that, after 

Green Machine "stole" its patented method of cutting 

concrete, it advertised that method to others, thereby 

inducing them to infringe the patent as well. 

Advertising injury is not, however, the same thing as 

advertising per se. Advertising injury is the 

misappropriation of another’s advertising idea or concept. 

Green Machine argues that "Chiuminatta’s advertising 

concept [was] to solicit its relevant market to cut concrete 

using its patented method" (emphasis added). Thus, 

Chiuminatta’s advertising idea which Green Machine 

contends it was accused of misappropriating was to 

advertise. Under this theory, any competitor of 

Chiuminatta’s who advertises -- no matter what the 

content of that advertising -- has misappropriated 

_________________________________________________________________ 

3. In view of our recent explanation of "advertising injury" in Frog, 

Switch, we decline Green Machine’s invitation to hold that this term is 

ambiguous as a matter of law. 

4. In determining the existence of coverage, the factual allegations of the 

underlying complaint against the insured are to be taken as true and 

liberally construed in favor of the insured. Biborosch v. Transamerica Ins. 

Co., 412 Pa. Super. 505, 603 A.2d 1050, 1052 (Pa. Super. 1992). 

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Chiuminatta’s advertising idea to advertise. This is not 

what we mean by advertising injury since, were that the 

meaning, there could be no advertising without injury. 

Allegations that Green Machine stole a patented method for 

cutting concrete and also advertised the results of that 

theft, does not convert the underlying theft into"advertising 

injury." Id. at 744. 

B. Misappropriation of Style of Doing Business 

Green Machine also asserts that Chiuminatta’s complaint 

can be fairly read to allege advertising injury by way of 

misappropriation of "style of doing business." Style of doing 

business has routinely been characterized as referring to a 
company’s "comprehensive manner of operating its 

business." Hyman v. Nationwide Mut. Fire Ins. Co., 304 

F.3d 1179, 1188 (11th Cir. 2002) (citing Novell, Inc. v. 

Federal Ins. Co., 141 F.3d 983, 986 (10th Cir. 1998) 

(collecting cases). Green Machine contends that 

Chiuminatta’s patented method for cutting concrete is its 

"manner of operating its business" and, therefore, its style 

of doing business.5 

We have already rejected this overly broad view. In Frog, 

Switch, we explained that "style of doing business" is "a 

plan for interacting with consumers and getting their 

business." Id. at 749-50. Style of doing business, therefore, 

refers to a company’s marketing approach, not its 

production or product. Chiuminatta’s method of cutting 

concrete is like a "product."6 It is not a marketing strategy 

_________________________________________________________________ 

5. Green Machine states that "[f]rom the allegations of the Chiuminatta 

Complaint, it is clear that [Chiuminatta’s]‘business’ is the uncured or 

‘soft’ concrete cutting business and that its‘comprehensive manner’ of 

operating within that business is to manufacture saws and to use those 

saws in a certain manner (i.e., to cut concrete in a certain claimed 

hardness range as defined in the 675 Patent)." 

6. We do not agree with Green Machine that Chiuminatta’s method of 

cutting concrete is "trade dress" which may constitute an advertising 

injury if misappropriated. See Frog, Switch, 193 F.3d at 748; see also 

Hyman v. Nationwide Mutual Fire Insurance Co., 304 F.3d 1179 (11th 

Cir. 2002). Chiuminatta’s patented method for cutting concrete is 

Chiuminatta’s "product." This method is not merely packaging, labeling, 

or marketing designed to make the real product readily identifiable to 

consumers. Hyman, 304 F.3d at 1189. 

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or a "plan for interacting with consumers and getting their 

business."7 Chiuminatta alleges not that Green Machine 

copied its marketing strategy or style of attracting 

customers, but that Green Machine copied its patented 

method for cutting concrete in order to sell its own saws, 

thereby inducing others to infringe on the patented method 

as well. These allegations do not state a claim for 

misappropriation of Chiuminatta’s marketing style used to 

sell its concrete-cutting method, but rather for theft of the 

underlying method itself. 

III. 

Misappropriation of an advertising idea is the wrongful 

taking of an idea concerning the solicitation of business 

and customers. Misappropriation of a style of doing 

business is the wrongful taking of a company’s plan for 

interacting with consumers and getting their business. 

There are no such allegations in the underlying action 

which forms the basis for Green Machine’s request for 

coverage under its policy of insurance with Zurich 

American. Accordingly, the judgment of the District Court 

denying coverage will be affirmed. 
A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

7. We are not persuaded by Green Machine’s argument that the meaning 

of "style of doing business" depends upon whether we are dealing with 

a method patent or a product patent, or direct infringement as opposed 

to induced infringement. Green Machine’s theory is that when the patent 

at issue is for a method of doing something, that method is its style of 

doing business. We can think of no principled reason why this should be 

so, and Green Machine has cited no authority in support of its theory. 

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