Opinion ID: 149882
Heading Depth: 3
Heading Rank: 1

Heading: IP exclusion.

Text: St. Paul contends that JLJ's slogans are not trademarked and therefore the claims are not covered because of the intellectual property (IP) exclusion. Insurers have the burden of proving that an exclusion applies. See, e.g. Ins. Corp. of Hanover v. Shelborne Assocs., 389 Ill. App.3d 795, 329 Ill.Dec. 138, 905 N.E.2d 976, 982 (2009). Insureds, in turn, have the burden to prove that an exception to an exclusion restores coverage. See, e.g., 17A G. COUCH, COUCH ON INSURANCE § 254:13 (2009). St. Paul's IP exclusion disallows coverage for injury or damage... that results from any actual or alleged infringement or violation of any of the following rights or laws: ... trade dress, ... trademark, other intellectual property rights or laws. An exception to the IP exclusion is unauthorized use of ... trademarked slogan ... of others in your advertising. St. Paul argues that, because the conduct the plaintiffs identify as making out a claim for infringement of slogan is all conduct that, in the language of St. Paul's policy, results from a trade dress claim, the IP exclusion precludes coverage. Under any authority we could find indicating when a non-covered claim may affect coverage for a covered claim based on the similarity of allegations, the fact that the trade dress allegations are a subset of those alleging infringement of slogan does not eliminate coverage under the policy. That is, unless a slogan infringement claim would not have arisen but for the trade dress violation claim (or necessarily arises out of the trade dress violation claim)clearly not the case herewe cannot find that the exclusion for trade dress claims excuses St. Paul from a duty to defend the underlying action. See, e.g., St. Paul Fire & Marine Ins. Co. v. Antel Corp., 387 Ill.App.3d 158, 326 Ill.Dec. 516, 899 N.E.2d 1167, 1176 (2008) (if an insurer relies on an exclusion, it must be clear and free from doubt that the exclusion applies); cf. Hugo Boss Fashions, Inc. v. Fed. Ins. Co., 252 F.3d 608, 623 n. 15 (2d Cir.2001) (New York law) (suggesting that the breach of contract exclusion might apply if, but for a breach of contract, there would be no advertising injury or other covered injury, but noting also that it was uncertain what was meant by the arising out of language of the exclusion); Cent. Mut. Ins. Co. v. StunFence, Inc., 292 F.Supp.2d 1072, 1081-82 (N.D.Ill.2003) (holding that knowledge of falsity exception did not preclude coverage because some of the claims were based on unintentional, rather than knowing, conduct). The district court properly found a duty to defend that was not affected by the IP exclusion. Additionally, the district court found, however, that even if the IP exclusion applies, the differences between trade dress and trademark have so narrowed that, if the IP exclusion applied, the exception for trademarked slogans likely did as well. It noted that what is or is not trademarked is a decision for the court in the underlying action. We agree with the district court that, even if the IP exclusion applied, the trademark exception would require St. Paul to defend the action given the uncertainty whether the court in the underlying action would have decided the slogan qualified as trademarkable. But, because St. Paul has not met its burden to prove that the IP exclusion applies in the first instance, we need not reach this alternative holding.