Case Name: TRI-STATE INSURANCE COMPANY v. B & L PRODUCTS, INC., d/b/a Bycin Industries, Inc.
Court: Arkansas Court of Appeals
Jurisdiction: Arkansas
Decision Date: 1998-03-11
Citations: 61 Ark. App. 78
Docket Number: CA 97-389
Parties: TRI-STATE INSURANCE COMPANY v. B & L PRODUCTS, INC., d/b/a Bycin Industries, Inc.
Judges: Meads, J., agrees.
Reporter: Arkansas Appellate Reports
Volume: 61
Pages: 78–88

Head Matter:
TRI-STATE INSURANCE COMPANY v. B & L PRODUCTS, INC., d/b/a Bycin Industries, Inc.
CA 97-389
964 S.W.2d 402
Court of Appeals of Arkansas Divisions II and III
Opinion delivered March 11, 1998
Wright, Lindsey & Jennings, by: James M. Moody, Jr., and J. Charles Dougherty, for appellant.
Bachelor, Newell & Oliver, by: C. Burt Newell, for appellee.

Opinion:
John F. Stroud, Jr., Judge.
This appeal arises from a summary judgment entered in a declaratory judgment action in Garland County, Arkansas, in favor of appellee, B&L Products, Inc., against appellant, Tri-State Insurance Company. We attempted to certify this appeal to the supreme court, but certification was refused. We affirm.
Appellant issued a commercial general liability (CGL) insurance policy to appellee in 1994. The policy provides coverage for any " ' [a] dvertising injury' caused by an offense committed in the course of advertising [appellee's] goods, products, or services." In 1995, a company called Geographies, Inc., filed the underlying copyright-infringement action against appellee in federal court in the State of Washington. The copyright action involves paper products produced by appellee that are known as "Koolnotes" and paper products produced by Geographies that are known as "Geo-Notes." Geographies learned that OfficeMax, a large retailer of office and school supplies, was selling appellee's Koolnotes, which according to Geographies were virtually identical to its GeoNotes.
Appellant refused to defend the underlying lawsuit on behalf of appellee, contending that the claim did not arise out of "advertising" as provided in the insurance policy. On March 8, 1996, appellee filed a complaint for declaratory judgment in the circuit court of Garland County, Arkansas, asking that the court declare that appellant must provide a full defense in the underlying copyright-infringement case and that appellant must fully indemnify appellee with respect to the underlying action, including costs, attorney's fees, expenses, and any judgment that might issue in the underlying action.
On October 7, 1996, appellant filed its motion for summary judgment, asserting that there were no genuine issues of material fact and that it was entitled to summary judgment as a matter of law. Appellee responded to the motion for summary judgment and filed its own countermotion for the same, agreeing that there were no genuine issues of material fact but asserting that it, rather than appellant, was entitled to summary judgment. The trial judge entered summary judgment in favor of appellee.
Appellant raises three points of appeal: (1) appellee failed to introduce in the declaratory judgment action the insurance policy and underlying copyright-infringement complaint as required by Rules 10(d) and 56(c) of the Arkansas Rules of Civil Procedure; (2) the underlying copyright-infringement complaint contains no allegation that appellee engaged in advertising activities; and (3) the underlying copyright-infringement complaint contains no allegation that appellee's copyright infringement was caused by advertising activities.
Under the first point, appellant argues that Rule 10(d) of the Arkansas Rules of Civil Procedure requires that a copy of the written instrument be attached as an exhibit to the pleading that asserts a claim or defense based upon the written instrument. Since appellee failed to attach the insurance policy and the underlying copyright-infringement complaint to its complaint for declaratory judgment, appellant argues that the trial court erred in granting summary judgment pursuant to Rule 56(c) of the Arkansas Rules of Civil Procedure. We disagree.
Neither party argued to the trial court that any pertinent language from the policy or the underlying complaint was missing. Moreover, in oral arguments before this court appellant's counsel was candid in responding to our questions on this point and acknowledged that the pertinent language from the policy and the underlying complaint was before us. In short, both parties moved for summary judgment in this case, alleging that there were no genuine issues of material fact, and both have acknowledged to this court that all pertinent provisions of the underlying complaint and insurance policy are before this court. We find no prejudicial error that would require us to reverse on this point. See Jefferson v. State, 328 Ark. 23, 941 S.W.2d 404 (1997).
Under the second point, appellant argues that the term "advertising" includes only promotional activities that are directed to the public at large; that it does not include a salesperson's one-on-one solicitation for sales; and that the underlying complaint in the Washington case did not allege that appellee engaged in "advertising" activities. We disagree.
The pertinent policy language provided coverage against any " ' [a] dvertising injury' caused by an offense committed in the course of advertising [appellee's] goods, products, or services." The term "advertising injury" is defined in the policy as:
[an] injury arising out of one or more of the following offenses: (a) Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; (b) Oral or written publication of material that violates a person's right of privacy; (c) Misappropriation of advertising ideas or style of doing business; or (d) Infringement of copyright, title or slogan.
The term "advertising" is not defined in the policy, and we have found no Arkansas cases defining the term in the context of a CGL policy.
Appellee's product promotion was not aimed at the general public, but rather at a small, targeted market of large retailers. Appellant contends that appellee's one-on-one sales solicitation cannot constitute "advertising" because it is not aimed at the public at large. Appellant acknowledges in its reply brief, however, that "some dictionaries include definitions of 'advertising' that require public dissemination and other definitions that do not." In attempting to give this term its plain, ordinary, and popular meaning in the context of this case, members of this court have also viewed the term differently. We therefore regard the term as ambiguous in the context of this case and construe it against the appellant as the drafter of the policy. Hartford Fire Ins. Co. v. Carolina Cas. Ins., 52 Ark. App. 35, 914 S.W.2d 324 (1996). Construing the term "advertising" in the manner urged by the dissent would mean that appellee could never recover under this provision of the insurance policy because its product market is a relatively small group of large retailers, not the public at large. Accordingly, under the circumstances presented in this case, we find no error in the trial court's finding that the manner in which appellee promoted its product falls within the meaning of the term "advertising" under the policy, even though the product advertising was not aimed at the public at large.
Moreover, appellant acknowledges that the pleadings in the underlying action generally determine an insurance company's duty to defend. Madden v. Continental Cas. Co., 53 Ark. App. 250, 922 S.W.2d 731 (1996). An insurer must defend the case if there is any possibility that the injury or damage may fall within the policy coverage. Id. It is the allegations made against the insured, however groundless, false, or fraudulent such allegations may be, that determine the duty of the insurer to defend the litigation against its insured. Id.
Paragraph nine of the underlying copyright-infringement complaint provided in pertinent part:
On information and belief, since at least as early as July 13, 1995, B&L, with full knowledge of Geographies' rights, has been infringing Geographies' copyrights in and relating to the Subject Works by using, reproducing, displaying, distributing, marketing, and offering for sale unauthorized copies of each of the Subject Works. Among other things, B&L has been manufacturing, distributing, and offering to sell memo pads under the mark KOOLNOTES which are copies of the Subject Works .
The prayer for relief in the underlying complaint provided in pertinent part:
[That appellee] be enjoined from . . . marketing, offering, selling, disposing of, licensing, leasing, transferring, displaying, advertising, reproducing, developing, or manufacturing any work derived or copied from any of the Subject Works .
We find no error in the trial court's finding that the underlying complaint contained sufficient allegations of appellee engaging in "advertising" activities.
Under its last point, appellant argues that the underlying complaint contains no allegation that appellee's copyright infringement was caused by advertising activities. Appellant argues that coverage only extends to an advertising injury that is "caused by an offense committed in the course of advertising [the insured's] goods, products or services," and that the policy's causation requirement was not satisfied in this case because the in-person sales talk, even if regarded as "advertising," was not the cause of the alleged copyright infringement.
Paragraph nine of the underlying complaint alleges that appellee "has been infringing Geographies' copyrights in and relating to the Subject Works by using, reproducing, displaying, distributing, marketing, and offering for sale unauthorized copies of each of the Subject Works." (Emphasis added.) The prayer for relief asks that appellee "be enjoined from . . . marketing, offering, selling, disposing of, licensing, leasing, transferring, displaying, advertising, reproducing, developing, or manufacturing any work derived or copied from any of the Subject Works . . . ."
Once again, we find no error in the trial court's finding that the underlying complaint contained sufficient allegations that appellee's copyright infringement was caused by its advertising activities.
Affirmed.
Meads, J., agrees.
Robbins, C.J., and Arey, J., concur.
Jennings and Roaf, JJ., dissent.