Opinion ID: 615422
Heading Depth: 3
Heading Rank: 1

Heading: Advertising Ideas

Text: The district court determined that Dish had engaged in advertising activities, but held that it had not misappropriated advertising ideas. Dish, 734 F.Supp.2d at 1182, 1184. In so holding, the court adopted an unduly narrow interpretation of the relevant policy language. Critical to our analysis is the meaning of advertising, a term which the insurance policies at issue generally fail to define. [7] Colorado law, moreover, provides little guidance as to the proper interpretation of advertising ideas or style of doing business; only one case seems to define, at least partially, the latter phrase. In Tynan's Nissan, Inc. v. American Hardware Mutual Insurance Co., the Colorado Court of Appeals noted that a generic style of doing business must be related to advertising activities to constitute a covered style of doing business. 917 P.2d 321, 325 (Colo.App.1995). As the district court observed, this is no more than an acknowledgment of the causation requirement which forms the second part of the advertising injury test. Dish, 734 F.Supp.2d at 1183. Given the lack of Colorado authority on the topic, we look to other jurisdictions. In re Marriage of Ciesluk, 113 P.3d 135, 142 (Colo.2005). Following the same approach, the district court determined that [t]he generally accepted definition of advertising is the dissemination of information to promote a product. Dish, 734 F.Supp.2d at 1181. Dish proposes several broader definitions. In Hyman v. Nationwide Mutual Fire Insurance Co., advertising was defined as the action of calling something to the attention of the public. 304 F.3d 1179, 1188 (11th Cir.2002). The court in Amazon understood it to encompass any oral, written, or graphic statement made by the seller in any manner in connection with the solicitation of business. 85 P.3d at 977 (internal quotation marks omitted). Insurers, on the other hand, propose that advertising means only widespread distribution of promotional materials to the public at large. Ins. Resp. Br. at 29 (citing Hayward v. Centennial Ins. Co., 430 F.3d 989, 991 (9th Cir.2005)). They contrast this definition with that of solicitation, a one-on-one promotional activity which does not constitute advertising. Ins. Resp. Br. at 29. We need not definitively choose among these definitions because under any of them, the underlying complaint in this case can be read to potentially allege the misappropriation of advertising ideas. [8] The complaint asserts that Dish infringed one or more claims in each of twenty-three patents held by RAKTL. Insurers concede that some of these patents explicitly claim the technology's capacity for advertising. Ins. Resp. Br. at 60 (citing Aplt. App. at 2269, 2271, 2681). Further, Insurers concede that the patented technology could theoretically be used for advertising purposes. Id. at 39. The complaint, from the four corners of which the duty to defend must be determined, potentially alleges advertising simply because it provides no insight into what pay-per-view ordering and customer service functions entail. We cannot rule out the possibility that these activities involve not only the passive acceptance of sales requests, but also the active promotion of products through the dissemination of information, such as pricing and programming options. The functions patented by RAKTL conceivably allow Dish not only to sell the product a consumer calls up to purchase, but also to make upsell offers [9] tailored to the specific caller. When the technology's patented advertising capabilities are considered in conjunction with the vague factual assertions made in the complaint, the allegations are sufficiently broad to encompass distribution of promotional materials, dissemination of information to promote a product, or calling something to the attention of the public. Read liberally, the complaint generally alleges that Dish misappropriated a product: it allegedly used, made, sold, or offered for sale a telephone system patented by RAKTL. More specifically, however, the complaint may be read to allege actions that misappropriated patented advertising ideas, insofar as the product at issue was designed expressly for product promotion and dissemination of advertising information. Cf. Amazon, 85 P.3d at 977 (concluding that because Amazon's website exists for the purpose of promoting products for sale to the public.... [the underlying] complaint thus implicitly alleged that Amazon used its product in the course of advertising (emphasis added)). Thus, this case differs from the typical scenario in which the policy holder merely advertised a product it had already misappropriated. See, e.g., Simply Fresh Fruit, Inc. v. Cont'l Ins. Co., 94 F.3d 1219, 1223 (9th Cir.1996) (characterizing the plaintiffs' alleged infringement as the misappropriation of an automated process for slicing fruit, which use they then advertised to customers on factory tours). Instead, the complaint here alleges misappropriation of a product specifically designed, in part, for advertising purposes. Further, it potentially alleges that the technology was used for such purposes. Insurers insist that [a]s RAKTL does not contend that Dish actually used the technology for advertising purposes, Dish's theoretical ability to do so is irrelevant, Ins. Resp. Br. at 40 (emphasis in original). This, however, misapprehends the applicable legal standard. The question, under Colorado law, is not whether the complaint unequivocally spells out the specific advertising activities Dish engaged in, but rather whether the alleged facts even potentially fall within the scope of coverage. Constitution Assocs. v. New Hampshire Ins. Co., 930 P.2d 556, 563 (Colo.1996). It is not clear from the complaint whether or not Dish is alleged to have infringed advertising-related claims in RAKTL's patents by conveying promotional information. Nonetheless, Insurers have not met their heavy burden of proving that the underlying claim [cannot] fall within policy coverage. Cyprus, 74 P.3d at 301. We are particularly mindful, in this regard, of the Colorado Supreme Court's admonition that where there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded, the insurer must accept the defense of the claim. Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 613-14 (Colo.1999). Indeed, we recognize that in some instances, insurers will be found to have a duty to defend even though ultimately it may be determined that they have no duty to indemnify. Id. at 613. That this could conceivably be such an instance has no bearing on our analysis here; in the appeal presented, we do not address the duty to indemnify, which the parties agreed to litigate separately. Dish, 734 F.Supp.2d at 1175. Arguing that the complaint does not allege advertising injury, Insurers rely heavily on Discover. Ins. Resp. Br. at 36-41. In that case, the district court dealt with allegations of patent infringement which, as in this case, were brought by RAKTL. Discover, 527 F.Supp.2d at 811-16. The Discover court stated that merely using a technology with advertising capabilities does not transform the technology into an advertising idea. Id. at 824. Importantly, however, the Discover court had already looked beyond the complaint in the underlying case to determine that RAKTL had narrowed its allegations to claims which did not address advertising, product promotion, or the solicitation of business. Id. Thus, as the district court in this case noted, [ Discover ] is distinguishable from the complaint and arguments relating to this action. Dish, 734 F.Supp.2d at 1184. Citing Discover, however, Insurers argue that [c]ountless technologies could potentially be used to advertise: a cash register that prints coupons on the backs of receipts; a loudspeaker that announces in-store specials; a football stadium jumbotron that plays a beer commercial. Ins. Resp. Br. at 40. Insurers contend that telephone interface systems, like these other technologies, are not inherently advertising ideas because they also have non-promotional uses. Id. It bears mentioning that Insurers' examples might be more helpful if this were a patent infringement claim for the use of a telephone instead of the automated telephone interface systems actually at issue. But even so, nothing in the words advertising ideas suggests that the ideas must have no potential applications outside the field of advertising. Indeed, in Hyundai, the complaint alleged that the feature [at issue] constituted `making and using supply chain methods, sales methods, sales, systems, marketing methods, marketing systems, and inventory systems.' 600 F.3d at 1098 (emphasis omitted). Most of these are uses Insurers specifically argue do not constitute advertising. Ins. Resp. Br. at 31. In reaching our conclusion, we reject the district court's reasoning that Dish cannot have misappropriated advertising ideas because it did not incorporate patented technologies as a substantive element of its communications and interactions with customers. Dish, 734 F.Supp.2d at 1184. To the contrary, we consider it sufficient that Dish allegedly misappropriated a means of conveying content to and tailoring its interactions with its customers. Id. In Hyundai the Ninth Circuit dealt with a suit for the infringement of a patented technology which allowed potential customers to select and combine car options on Hyundai's website and then displayed customized vehicle images and pricing information. 600 F.3d at 1095. This feature, the court found, constituted the form of the advertisement. Id. at 1101. The actual substance of the advertisementthe specific car images and prices displayedwas created by Hyundai, not the patent holder. Similarly, in Amazon, the court decided that technology that provides a method by which consumers can download and listen to portions of pre-selected music over the Internet was an element of Amazon's advertisement. 85 P.3d at 976-77 (internal quotation marks omitted). Yet the actual music playedthat is, the substance of the advertisementwas not patented. Rather, it was the method of conveying that substance that Amazon infringed. Dish's customer service telephone system is likewise an advertising idea insofar as it constitutes the form for advertising material Dish conveys. [10] Hyundai, 600 F.3d at 1101. Thus, unlike the district court, we discern no basis for distinguishing the present case from Amazon and Hyundai. Dish, 734 F.Supp.2d at 1184. Like the district court, however, we are unpersuaded by Insurers' argument that any promotion Dish engaged in must be excluded from coverage as one-on-one solicitation simply because [a] telephone conversation is, with very limited exception, a two-party interaction. Ins. Resp. Br. at 32 (quoting Disk, 734 F.Supp.2d at 1182). In Hyundai the court acknowledged that the website feature at issue resembled solicitation, as opposed to broadly distributed advertising, given that [t]he patent's raison d'etre is to create customized proposals, specific to an individual user. Hyundai 600 F.3d at 1099 (emphasis in original). The court considered it critical, however, that the feature was not limited in the number of users who could access it and was intended for use by the public at large, even if the precise information conveyed to each user varies with user input. Id. at 1099-1100. The same logic applies to an interactive telephone system such as the one allegedly used by Dish. Certainly nothing in the complaint suggests that Dish's pay-per-view ordering and customer service functions are not available to the public at large. And indeed, the record reveals that one of the patents at issue, Patent 5,128,-984, was designed in part to remedy a concern that in association with an advertising campaign, inviting members of the general public to participate in a free contest or game by telephone may prompt an overwhelming response. Aplt.App. at 2654. Recorded promotions offered over the telephone may generally be heard only by one caller at a time over any given phone line. But as the Hyundai and Amazon courts acknowledged, internet advertisements do not become solicitation simply because they are not viewed by a multitude of potential customers simultaneously. Indeed, even a billboard advertisement on a public road may promote a product to only one driver at a time if traffic is light. It is the availability of an advertisement to the general public, as opposed to the number of people on the phone line at a given moment, that we consider dispositive. See Hyundai, 600 F.3d at 1099 (distinguishing Hameid v. Nat'l Fire Ins. of Hartford, 31 Cal.4th 16, 1 Cal.Rptr.3d 401, 71 P.3d 761 (2003), which reached a contrary conclusion, because the court there focused on the fact that the solicitations were limited to a discrete number of known potential customers (emphasis in original)). The complaint here can be read to allege that Dish's phone system made product and service information available to any member of the general public who called. This sufficiently alleges actions which potentially or arguably constitute a predicate offense, misappropriation of an advertising idea. Cyprus, 74 P.3d at 301.