Source: http://openjurist.org/329/f3d/546/cincinnati-insurance-co-v-zen-design-group-ltd
Timestamp: 2013-12-11 11:46:02
Document Index: 68984152

Matched Legal Cases: ['§ 1332', '§ 1291', '§ 1125', '§ 1114', '§ 1125', '§ 1125']

329 F3d 546 Cincinnati Insurance Co v. Zen Design Group Ltd | OpenJurist
329 F. 3d 546 - Cincinnati Insurance Co v. Zen Design Group Ltd	Home329 f3d 546 cincinnati insurance co v. zen design group ltd
329 F3d 546 Cincinnati Insurance Co v. Zen Design Group Ltd 329 F.3d 546
The CINCINNATI INSURANCE CO., Plaintiff-Appellant,v.ZEN DESIGN GROUP, LTD., and Sun Yu, Defendants-Appellees.
No. 02-2034.
Decided and Filed May 27, 2003.
Lance R. Mather (argued and briefed), Smith, Haughey, Rice & Roegge, Grand Rapids, MI, for Plaintiff-Appellant.
Mark A. Cantor (briefed), Brooks & Kushman, Southfield, MI, Eric R. Little (argued and briefed), Gauntlett & Associates, Irvine, CA, for Defendants-Appellees.
Plaintiff-Appellant Cincinnati Insurance Company ("Cincinnati") brought an action for declaratory judgment against Defendants-Appellees Zen Design Group, Ltd. ("Zen Design") and Sun Yu ("Yu"), the president and owner of Zen Design (collectively "Zen"). Although Zen was a holder of a business insurance policy from Cincinnati, Cincinnati argued that it had no duty to defend or indemnify Zen in a suit brought against Zen by Armament Systems and Procedures, Inc. ("ASP") alleging, among other things, trademark and trade dress infringement. Both parties filed motions for summary judgment: Cincinnati desired a declaration that it had no duty to defend under its policy on any of ASP's claims, while Zen sought for Cincinnati to assume the defense of the ASP action. Because nearly all of ASP's claims against Zen were not covered under the policy, except for the possible claim of alleged infringement of slogan, the district court granted Cincinnati's summary judgment motion on indemnification for all claims other than the infringement of slogan claim. However, the district court granted Zen's motion for partial summary judgment because Zen's policy with Cincinnati covered infringement of slogan actions and one of ASP's claims against Zen possibly raised an infringement of slogan claim thus triggering Cincinnati's duty to defend. Cincinnati timely appealed the district court's decision.
On appeal, Cincinnati argues that the district court erred in its determination that Cincinnati had an obligation to defend the ASP action. Cincinnati asserts that the phrase "The Wearable Light"1 was not a slogan but was another name for ASP's light emitting diode ("LED"). In response, Zen argues that three of ASP's claims against it activate the coverage provisions of the policy, namely, infringement of slogan, misappropriation of advertising idea or style of doing business, and disparagement. We AFFIRM the district court's decision to grant Zen's partial summary judgment motion declaring that Cincinnati has a duty to defend on the infringement of slogan claim and thereby has a duty to defend the whole ASP case.2
The district court had jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Zen Design is a Michigan corporation with its principal place of business in Michigan, and Yu is a Michigan resident. Cincinnati is an Ohio insurance corporation with its principal place of business in Ohio. "In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977). Here, the object of the litigation is the defense of the ASP lawsuit brought against Zen. Zen has incurred over $100,000 in legal fees and expenses by defending the ASP action. Appellees' Unopposed Mot. to Expedite Appeal at 3. Although Cincinnati's complaint failed to assert the necessary amount in controversy for diversity jurisdiction, jurisdiction is proper because "the value of the object of the litigation" exceeds $75,000. Hunt, 432 U.S. at 347, 97 S.Ct. 2434.
Courts of appeals have jurisdiction pursuant to 28 U.S.C. § 1291, "when an appeal is taken from a final decision of the district court." Williams v. Kentucky, 24 F.3d 1526, 1542 (6th Cir.1994) (internal quotation omitted). The question presented to the district court in this case was whether Cincinnati had a duty to defend or indemnify Zen in the underlying ASP action. The district court granted summary judgment in part in favor of Cincinnati, stating that Cincinnati had no duty to indemnify Zen on any of ASP's claims against Zen, except for the slogan infringement advertising injury. Joint Appendix ("J.A.") at 116 (Dist.Ct.Op.). With respect to ASP's potential slogan infringement claim, the district court denied Cincinnati's motion for summary judgment and granted Zen's partial summary judgment motion, declaring that Cincinnati had a duty to defend the entire action because a duty to defend against one claim, slogan infringement, invokes a duty to defend against all claims. J.A. at 117 (Dist.Ct. J.). Cincinnati appealed from the grant of partial summary judgment in favor of Zen and the partial denial of summary judgment as to Cincinnati. Although, a denial of summary judgment ordinarily is not a final appealable decision, Hoover v. Radabaugh, 307 F.3d 460, 465 (6th Cir.2002), the district court's decision here was a final decision because it "resolved all disputed questions between the parties." City of Chicago v. Atchison, Topeka & Santa Fe Ry. Co., 357 U.S. 77, 83, 78 S.Ct. 1063, 2 L.Ed.2d 1174 (1958).
Zen is in the business of designing handheld LED lighting devices. One of Zen's signature creations is the Starlight&#8482; flashlight. These devices are "small flashlights designed to provide illumination in a variety of situations where light is needed quickly and easily." Appellees' Br. at 12. This flashlight was designed "to have features distinct from other flashlights, such as shape, materials used, and overall appearance." J.A. at 380 (Yu's Declaration).
From December 13, 1999 through December 13, 2002, Zen had a Businessowners Package Policy (the "policy") provided by Cincinnati. The terms of the policy cover business liability and provide Zen with coverage for "those sums that the insured becomes legally obligated to pay as damages because of ... `advertising injury' to which this insurance applies." J.A. at 51 (Compl., Attach.2). Cincinnati has "the right and duty to defend the insured against any `suit' seeking those damages." Id. The policy states that the coverage extends to an advertising injury "caused by an offense committed in the course of advertising your goods, products or services." Id. In the definitions section "advertising injury" is defined as any injury arising out of:
d. Infringement of copyright, title or slogan. J.A. at 64 (Compl., Attach.2). In addition, the policy defines "advertising" as "an advertisement, publicity article, broadcast or telecast." Id.
On September 14, 2000, ASP, a competitor of Zen, sued Zen and several other parties. ASP's complaint stated causes of action for: (1) trade dress infringement under 15 U.S.C. § 1125(a); (2) trademark infringement under 15 U.S.C. § 1114(1)(a); (3) unfair competition under 15 U.S.C. § 1125(a); (4) dilution under 15 U.S.C. § 1125(c); (5) common law unfair competition, and (6) violation of Wisconsin's Fraudulent Representations Act. In the complaint, brought in federal district court in Wisconsin, ASP asserted that it marketed and advertised its LED handheld flashlights using the widely-recognized trademarks "WEARABLE LIGHT" and "SAPPHIRE." J.A. at 133 (ASP Compl. ¶ 11). ASP not only claimed that Zen and others infringed on these trademarks but also asserted that Zen copied the shape and trade dress of its handheld flashlights in order to capitalize on ASP's name and business good will.
In October 2000, Zen tendered the defense of this action to Cincinnati and Cincinnati denied its responsibility for defense and indemnification coverage. In a response letter to Zen, Cincinnati cited this court's opinion in Advance Watch Co. v. Kemper National Insurance Co., 99 F.3d 795 (6th Cir.1996), for the proposition that the claims in the underlying action against Zen were not covered by the policy and therefore Cincinnati had no duty to defend against it. Thereafter, Cincinnati filed a complaint in the U.S. District Court for the Eastern District of Michigan on July 27, 2001, seeking a declaratory judgment that it had no duty to defend or indemnify Zen in the ASP action. Cincinnati's complaint also requested costs and attorney fees. On November 8, 2001, Zen filed a motion for partial summary judgment requesting a declaration that Cincinnati had breached its contractual duty to defend Zen as well as seeking costs and attorney fees for Cincinnati's failure to defend the underlying action as provided in the insurance policy. On November 9, 2001, Cincinnati filed a cross-motion for summary judgment seeking a declaration that it had no duty to defend or indemnify Zen from the claims in the ASP suit.
Before the district court, Zen's primary argument was that because ASP's action raised an advertising injury based on misappropriation of advertising ideas or style of doing business, Cincinnati was obligated to defend the action and indemnify Zen for any damages awarded. Zen also relied on two other injuries contained in the ASP complaint, disparagement and infringement of slogan, as justification for requiring Cincinnati to provide a