Court Opinion

ID: 2799683
Source: CourtListenerOpinion
Date Created: 2015-05-08 22:05:33.201501+00
Date Added: 2024-06-11T12:18:56.101845
License: Public Domain

2015 IL App (1st) 142508
                                              No. 1-14-2508
                                                                                       Fifth Division
                                                                                        May 8, 2015

     ______________________________________________________________________________

                                         IN THE
                             APPELLATE COURT OF ILLINOIS
                                     FIRST DISTRICT
     ______________________________________________________________________________

                                                    )
     ERIE INSURANCE EXCHANGE,                       )   Appeal from the Circuit Court
                                                    )   of Cook County.
           Plaintiff-Appellee,                      )
                                                    )   No. 13 CH 23607
     v.                                             )
                                                    )   The Honorable
     COMPEVE CORPORATION and SLAVA                  )   Kathleen G. Kennedy,
     PACKOVSKIS,                                    )   Judge Presiding.
                                                    )
           Defendants-Appellants.                   )
                                                    )
     ______________________________________________________________________________

               JUSTICE GORDON delivered the judgment of the court, with opinion.
               Presiding Justice Palmer and Justice McBride concurred in the judgment and opinion.

                                               OPINION

¶1         Defendants, Compeve Corporation (Compeve) and Slava Packovskis, appeal from the

        trial court’s entry of summary judgment in favor of plaintiff Erie Insurance Exchange (Erie).

        The trial court found that Erie had no duty to defend defendants in a lawsuit filed against

        them by Microsoft Corporation (Microsoft), which alleged that defendants violated

        Microsoft’s intellectual property rights by selling computers loaded with unauthorized copies

        of Microsoft’s software. For the reasons that follow, we affirm.
     No. 1-14-2508

¶2                                                BACKGROUND

¶3           On October 18, 2013, Erie filed a complaint for declaratory judgment, alleging that

         Compeve was the named insured on an insurance policy issued by Erie. Compeve and

         Packovskis, Compeve’s owner, had been named in a lawsuit initiated by Microsoft in the

         United States District Court for the Northern District of Illinois, in which Microsoft alleged

         that Compeve installed counterfeit Microsoft software in the computers that it sells and that

         by selling the counterfeit software, Compeve infringed upon Microsoft’s copyrights and

         trademarks. Erie sought a declaratory judgment that under the terms and conditions of the

         insurance policy, Erie had no obligation to defend or indemnify Compeve or Packovskis

         against any of the allegations in the Microsoft litigation. 1

¶4           The Microsoft complaint, filed on September 16, 2013, alleged that Compeve and

         Packovskis “engaged in copyright and trademark infringement; false designation of origin[;]

         false description and representation; and unfair competition.” Microsoft’s complaint alleged

         that Compeve was engaged in the business of advertising, marketing, installing, offering, and

         distributing computer hardware and software, “including purported Microsoft software.”

¶5           Paragraph 10 of Microsoft’s complaint alleged that “[d]efendants advertised, marketed,

         installed, offered and distributed unauthorized copies of Microsoft software, infringing

         Microsoft’s copyrights, trademarks and/or service mark.” Paragraph 11 alleged that “On

         information and belief, Defendants advertise that the computers they sell come installed with

         Microsoft software, and in their advertisements, Defendants misappropriate and/or infringe

         Microsoft’s copyrights, advertising ideas, style of doing business, slogans, trademarks and/or

         service mark.”

             1
                The record indicates that the lawsuit between Microsoft and defendants was resolved through an out-of-
     court settlement agreement in December 2013.

                                                              2
     No. 1-14-2508

¶6           Microsoft’s complaint alleged that in March 2013, defendants sold a Microsoft

         investigator several computers with unauthorized copies of Windows XP installed. In June

         2013, Microsoft asked defendants to cease and desist from making and distributing infringing

         copies of Microsoft software on computers. Nevertheless, in July 2013, defendants again sold

         a Microsoft investigator several computers with unauthorized copies of Windows XP

         installed. The complaint alleged that “[o]n information and belief, these are not isolated

         incidents. Rather, Defendants have been and continue to be involved in advertising,

         marketing, installing, offering, and/or distributing counterfeit and infringing copies of

         Microsoft’s software and/or related components to unidentified persons or entities.”

         Microsoft alleged that it “ha[d] been harmed by Defendants’ activities, including their

         advertising activities and unauthorized use of Microsoft’s copyright protected material.”

¶7           The first count of Microsoft’s complaint, which is the only count relevant to the instant

         appeal, was for copyright infringement. The count incorporated the allegations as set forth

         above and alleged that “Defendants have infringed the copyrights in Microsoft’s software,

         including but not limited to Microsoft Windows XP, by advertising, marketing, installing,

         offering, and/or distributing infringing materials in the United States of America without

         approval or authorization from Microsoft.” 2

¶8           The insurance policy at issue in the instant case was an “Ultrapack Plus” policy with a

         policy period of January 18, 2013, to January 18, 2014. The policy provided coverage for

         “personal and advertising injury,” which was defined as:

                      “ ‘Personal and advertising injury’ means injury, including consequential ‘bodily

                  injury’, arising out of one or more of the following offenses:

             2
              Microsoft had a separate count concerning alleged trademark infringement of its name “Microsoft” and
     logo. However, that count is not at issue in the instant appeal, as defendants focus only on the copyright count.

                                                              3
       No. 1-14-2508

                                                   ***

                          g. Infringing upon another’s copyright, trade dress or slogan in your

                       ‘advertisement’.”

          “Advertisement” was further defined as “a notice that is broadcast or published to the general

          public or specific market segments about your goods, products or services for the purpose of

          attracting customers or supporters.”

¶9           The policy excluded coverage for, inter alia:

                       “i. Infringement Of Copyright, Patent, Trademark Or Trade Secret

                       ‘Personal and advertising injury’ arising out of the infringement of copyright,

                 patent, trademark, trade secret or other intellectual property rights. Under this

                 exclusion, such other intellectual property rights do not include the use of another’s

                 advertising idea in your ‘advertisement’.

                       However, this exclusion does not apply to infringement, in your ‘advertisement’,

                 of copyright, trade dress or slogan.”

¶ 10         On March 4, 2014, Erie filed a motion for summary judgment, claiming that it had no

          duty to defend defendants because the underlying complaint did not allege a covered

          “personal and advertising injury” claim. With respect to Microsoft’s claim of copyright

          infringement, which is the only claim at issue in the instant appeal, Erie argued that the

          allegations in the complaint were not sufficient to trigger coverage for “personal and

          advertising injury” because there were only conclusory allegations that Compeve violated

          Microsoft’s copyright in advertising and there were no allegations of a causal connection

          between Compeve’s alleged advertisement and Microsoft’s damages.

                                                         4
       No. 1-14-2508

¶ 11         On March 12, 2014, defendants also filed a motion for summary judgment. Defendants

          pointed to several paragraphs in Microsoft’s complaint alleging copyright infringement

          through advertising, including those quoted above. They claimed that the insurance policy

          provided coverage for such advertising injury and that Erie had breached its duty to defend.

¶ 12         On July 23, 2014, the parties came before the trial court for a hearing on their cross-

          motions for summary judgment. After hearing argument, the court found that the allegations

          of the Microsoft complaint did not bring any of its claims within or potentially within the

          insurance policy’s coverage. With respect to the claim for copyright infringement, the court

          found that “there must be a causal connection between the Defendants’ alleged advertising

          activity and Microsoft’s alleged advertising injury and the allegations of the underlying

          complaint are insufficient to make that connection directly or potentially.” Therefore, the

          court found that Erie had no duty to defend or indemnify defendants in the Microsoft action.

          Accordingly, the trial court granted Erie’s motion for summary judgment and denied

          defendants’ motion for summary judgment. This appeal follows.

¶ 13                                           ANALYSIS

¶ 14         On appeal, defendants argue that the trial court erred in granting summary judgment in

          Erie’s favor because Erie had a duty to defend defendants in the Microsoft litigation. A trial

          court is permitted to grant summary judgment only “if the pleadings, depositions, and

          admissions on file, together with the affidavits, if any, show that there is no genuine issue as

          to any material fact and that the moving party is entitled to a judgment as a matter of law.”

          735 ILCS 5/2-1005(c) (West 2008). The trial court must view these documents and exhibits

          in the light most favorable to the nonmoving party. Home Insurance Co. v. Cincinnati

          Insurance Co., 213 Ill. 2d 307, 315 (2004). We review a trial court’s decision to grant a

                                                       5
       No. 1-14-2508

          motion for summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance

          Co., 154 Ill. 2d 90, 102 (1992). De novo consideration means we perform the same analysis

          that a trial judge would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578

          (2011). “ ‘The construction of an insurance policy and a determination of the rights and

          obligations thereunder are questions of law for the court which are appropriate subjects for

          disposition by way of summary judgment.’ ” Steadfast Insurance Co. v. Caremark Rx, Inc.,

          359 Ill. App. 3d 749, 755 (2005) (quoting Crum & Forster Managers Corp. v. Resolution

          Trust Corp., 156 Ill. 2d 384, 391 (1993)).

¶ 15         “Summary judgment is a drastic measure and should only be granted if the movant’s right

          to judgment is clear and free from doubt.” Outboard Marine Corp., 154 Ill. 2d at 102.

          However, “[m]ere speculation, conjecture, or guess is insufficient to withstand summary

          judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). A

          defendant moving for summary judgment bears the initial burden of proof. Nedzvekas v.

          Fung, 374 Ill. App. 3d 618, 624 (2007). The defendant may meet his burden of proof either

          by affirmatively showing that some element of the case must be resolved in his favor or by

          establishing “ ‘that there is an absence of evidence to support the nonmoving party’s case.’ ”

          Nedzvekas, 374 Ill. App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325

          (1986)). In other words, there is no evidence to support the plaintiff’s complaint.

¶ 16         “ ‘The purpose of summary judgment is not to try an issue of fact but *** to determine

          whether a triable issue of fact exists.’ ” Schrager v. North Community Bank, 328 Ill. App. 3d
696, 708 (2002) (quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). However, “[w]hen,

          as in this case, parties file cross-motions for summary judgment, they concede the absence of

          a genuine issue of material fact and invite the court to decide the questions presented as a

                                                       6
       No. 1-14-2508

          matter of law.” Steadfast Insurance, 359 Ill. App. 3d at 755 (citing Continental Casualty Co.

          v. Law Offices of Melvin James Kaplan, 345 Ill. App. 3d 34, 37-38 (2003)). We may affirm

          on any basis appearing in the record, whether or not the trial court relied on that basis or its

          reasoning was correct. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).

¶ 17         In Illinois, the duties to defend and to indemnify are not coextensive, with the obligation

          to defend being broader than the obligation to pay. International Minerals & Chemical Corp.

          v. Liberty Mutual Insurance Co., 168 Ill. App. 3d 361, 366 (1988). In determining whether an

          insurer has a duty to defend its insured, a court looks to the allegations in the underlying

          complaint and compares them to the relevant provisions of the insurance policy. Outboard

          Marine Corp., 154 Ill. 2d at 107-08. “If the facts alleged in the underlying complaint fall

          within, or potentially within, the policy’s coverage, the insurer’s duty to defend arises.”

          Outboard Marine Corp., 154 Ill. 2d at 108. However, if it is clear from the face of the

          complaint that the allegations fail to state facts that bring the case within, or potentially

          within, the policy’s coverage, an insurer may properly refuse to defend. United States

          Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991) (quoting State

          Farm Fire & Casualty Co. v. Hatherley, 250 Ill. App. 3d 333, 336 (1993)). “[W]here an

          exclusionary clause is relied upon to deny coverage, its applicability must be clear and free

          from doubt because any doubts as to coverage will be resolved in favor of the insured.”

          International Minerals & Chemical Corp., 168 Ill. App. 3d at 367. “[W]here the language of

          an insurance policy is clear and unambiguous, it will be applied as written.” Hatherley, 250
Ill. App. 3d at 337. The construction of an insurance policy presents a question of law that is

          reviewed de novo. Outboard Marine, 154 Ill. 2d at 108. As noted, de novo consideration

                                                       7
       No. 1-14-2508

          means we perform the same analysis that a trial judge would perform. Khan, 408 Ill. App. 3d

          at 578.

¶ 18         As an initial matter, the parties disagree as to which party has the burden of proving

          whether Erie had a duty to defend defendants. Our supreme court has “long established that

          the burden is on the insured to prove that its claim falls within the coverage of an insurance

          policy.” Addison Insurance Co. v. Fay, 232 Ill. 2d 446, 453 (2009). “Once the insured has

          demonstrated coverage, the burden then shifts to the insurer to prove that a limitation or

          exclusion applies.” Addison, 232 Ill. 2d at 453-54. Thus, defendants would bear the initial

          burden of proving coverage, but Erie would bear the burden of proving that the exclusion for

          “Infringement Of Copyright, Patent, Trademark Or Trade Secret” applies. In the case at bar,

          however, there was an exception to the exclusion, which operated to restore coverage, and it

          is this exception that is at issue. The question, then, is which party has the burden of proving

          whether or not this exception applies. Unsurprisingly, Erie argues that defendants have the

          burden of proving that the exception applies and coverage should be restored, while

          defendants argue that Erie has the burden of proving that the exception does not apply and

          the exclusion controls.

¶ 19         Neither the parties nor our research has revealed an Illinois court that has answered this

          question. However, the Seventh Circuit, applying Illinois law, has stated that while insurers

          have the burden of proving that an exclusion applies, “[i]nsureds, in turn, have the burden to

          prove that an exception to an exclusion restores coverage.” Santa’s Best Craft, LLC v. St.

          Paul Fire & Marine Insurance Co., 611 F.3d 339, 347 (7th Cir. 2010). In making its

          statement, the Seventh Circuit relied on a treatise indicating that “[t]here is some uncertainty

          concerning the proper allocation of the burden of proof as to the applicability of an exception

                                                       8
       No. 1-14-2508

          which, in effect, restores the coverage taken away by the exclusion. The trend clearly

          appears, however, to place the burden on insureds to prove that an exception to an exclusion

          applies to restore coverage.” 17A Steven Plitt et al., Couch on Insurance § 254:13 (3d ed.

          2014).

¶ 20         In the case at bar, however, we have no need to resolve this question. Regardless of

          which party bears the burden, we are required to examine the allegations of the Microsoft

          complaint in order to determine whether the facts alleged fall within, or potentially within,

          the policy’s coverage. See Outboard Marine Corp., 154 Ill. 2d at 107-08. As noted, this is a

          question of law that is reviewed de novo. Outboard Marine, 154 Ill. 2d at 108. Furthermore,

          even when the insurer bears the burden of proving that an exclusion applies, “where an

          exclusionary clause is relied upon to deny coverage, its applicability must be clear and free

          from doubt because any doubts as to coverage will be resolved in favor of the insured.”

          International Minerals & Chemical Corp., 168 Ill. App. 3d at 367. Thus, it makes no

          difference to our analysis whether Erie or defendants bear the burden of proof in the instant

          case. As such, we turn to the merits of the parties’ arguments.

¶ 21         In the case at bar, the trial court granted Erie’s motion for summary judgment, finding

          that “there must be a causal connection between the Defendants’ alleged advertising activity

          and Microsoft’s alleged advertising injury and the allegations of the underlying complaint are

          insufficient to make that connection directly or potentially.” On appeal, defendants argue that

          Illinois law imposes a causal connection requirement only in patent cases, not in copyright

          cases as in the instant case. We do not find this argument persuasive.

¶ 22         Under Illinois law, there are three elements required to trigger advertising injury

          coverage: (1) Compeve “must have been engaged in advertising activity during the policy

                                                       9
       No. 1-14-2508

          period when the injury occurred”; (2) Microsoft’s allegations “must raise a potential for

          liability under one of the offenses listed in the policies”; and (3) “there must be a causal

          connection between the alleged injury and the advertising activity.” Lexmark International,

          Inc. v. Transportation Insurance Co., 327 Ill. App. 3d 128, 137 (2001); Greenwich Insurance

          Co. v. RPS Products, Inc., 379 Ill. App. 3d 78, 86-87 (2008). It is only this last element that

          defendants challenge in the instant case.

¶ 23         Contrary to defendants’ assertion, these elements are not found solely in patent

          infringement cases but have been applied to other intellectual property claims as well. For

          instance, the Lexmark court applied these elements in considering whether advertising injury

          coverage had been triggered for claims of “ ‘misappropriation of advertising ideas or style of

          doing business,’ ‘disparagement of [the underlying plaintiff’s] goods, products, or services,’

          and ‘infringement of slogan.’ ” Lexmark, 327 Ill. App. 3d at 138. Likewise, in Greenwich, we

          applied the elements to claims of unfair competition and trademark infringement in addition

          to considering the patent infringement claim. Greenwich, 379 Ill. App. 3d at 87. Thus, the

          trial court correctly found that there must be a causal connection between Microsoft’s alleged

          injury and defendants’ advertising activity.

¶ 24         Furthermore, we do not find persuasive defendants’ argument that the policy language at

          issue does not require a causal connection, as was the case in other cases that imposed a

          causal connection requirement. The Erie policy defined “personal and advertising injury” as:

                 “injury, including consequential ‘bodily injury’, arising out of one or more of the

                 following offenses:

                                                      ***

                                                         10
       No. 1-14-2508

                          g. Infringing upon another’s copyright, trade dress or slogan in your

                       ‘advertisement’.”

          Defendants acknowledge in their brief that “[t]he policy states that there has to be an

          infringement of the copyright in the advertisement” (emphasis omitted), but nevertheless

          argue that “there is nothing in the policy that requires a causal connection.” They reach this

          result by parsing the language of cases in which a causal connection has been required.

          Specifically, defendants quote the language of the insurance policy at issue in International

          Insurance Co. v. Florists’ Mutual Insurance Co., 201 Ill. App. 3d 428, 431 (1990), which

          provided that an advertising injury included “ ‘libel, slander, defamation; infringement of

          copyright, title or slogan; piracy, unfair competition, idea misappropriation or invasion of

          rights of privacy; which arise out of YOUR advertising activities.’ ” Defendants claim that

          “[a]s the policy is written in that case, the copyright infringement would have to arise out of

          the advertising activity and therefore, that [led] the court to interpret the policy as requiring a

          causal connection.”

¶ 25         Defendants’ citation of International Insurance Co. does nothing to explain why the

          policy language in that case leads to a different result than in this case. In both cases, the

          injury needs to be tied to the advertisement. Under the Erie policy, a “personal or advertising

          injury” is an injury arising out of infringing upon another’s copyright “in your

          ‘advertisement’.” (Emphasis added.) The express language of the policy requires that the

          injury must arise from copyright infringement that is contained in the advertisement in order

          for there to be an advertising injury. Thus, the policy’s language requires a connection

          between the injury and the advertisement. The same connection between the injury and the

          advertisement is again set forth in the language of the exception that operates to restore

                                                        11
       No. 1-14-2508

          coverage: “this exclusion does not apply to infringement, in your ‘advertisement’, of

          copyright, trade dress or slogan.”

¶ 26         Moreover, International Insurance Co. is the only case defendants cite in their argument

          that the Erie policy uses language different than that interpreted by courts imposing a causal

          connection requirement. However, the Erie policy contains identical language to the

          insurance policy at issue in Greenwich, which, as noted, imposed a requirement of a causal

          connection between the alleged injury and the advertising activity. See Greenwich, 379 Ill.

          App. 3d at 83 (“ ‘Personal and advertising injury’ means injury, including consequential

          ‘bodily injury’, arising out of one or more of the following offenses *** c. Infringing upon

          another’s copyright, trade dress or slogan in your ‘advertisement’.”). Thus, the trial court

          properly found that a causal connection between Microsoft’s injury and Compeve’s

          advertisement was required.

¶ 27         Defendants next argue that if we find that a causal connection was required, we should

          also find that such a connection was alleged in the Microsoft complaint. We do not find this

          argument persuasive. While Microsoft included allegations involving defendants’

          advertising, those allegations were conclusory. For instance, paragraph 10 of Microsoft’s

          complaint alleged that “[d]efendants advertised, marketed, installed, offered and distributed

          unauthorized copies of Microsoft software, infringing Microsoft’s copyrights, trademarks

          and/or service mark.” Paragraph 11 alleged that “On information and belief, Defendants

          advertise that the computers they sell come installed with Microsoft software, and in their

          advertisements, Defendants misappropriate and/or infringe Microsoft’s copyrights,

          advertising ideas, style of doing business, slogans, trademarks and/or service mark.” In the

          count specifically concerning copyright infringement, Microsoft alleged that “Defendants

                                                     12
       No. 1-14-2508

          have infringed the copyrights in Microsoft’s software, including but not limited to Microsoft

          Windows XP, by advertising, marketing, installing, offering, and/or distributing infringing

          materials in the United States of America without approval or authorization from Microsoft.”

          Microsoft also alleged that it “ha[d] been harmed by Defendants’ activities, including their

          advertising activities and unauthorized use of Microsoft’s copyright protected material.”

¶ 28         The facts as alleged in the complaint do not establish any sort of connection between

          copyright infringement in the advertisement and Microsoft’s alleged injury. They merely

          allege, in a conclusory fashion, that Microsoft was harmed by defendants’ advertising

          activities. Indeed, as Erie points out, the complaint does not even allege any facts that a

          Compeve advertisement itself infringed on Microsoft’s copyright, as is required for coverage

          under the insurance policy. Such allegations are not sufficient to demonstrate an advertising

          injury, and our state and federal courts have reached this conclusion several times.

¶ 29         For instance, in Greenwich, we considered whether an allegation of patent infringement

          fell within the insurance policy’s definition of advertising injury which, as noted, is identical

          to that in the case at bar. We noted that “something more than the mere advertisement of an

          infringing product is required to bring such action within the scope of coverage. [Citations.]

          The advertisement must instruct or explain to the purchaser exactly how to recreate or

          reassemble the product into one that infringes a patent.” Greenwich, 379 Ill. App. 3d at 86.

          We found that “[c]ount I of [the underlying] amended complaint (that RPS manufactured and

          sold allegedly infringing products) does not allege that RPS provided any detailed

          instructions to its customer on how to infringe the patent.” Greenwich, 379 Ill. App. 3d at 86.

          Accordingly, we found the argument that the “act of advertising infringing products” fell

          within the definition of advertising injury to be unpersuasive. Greenwich, 379 Ill. App. 3d at

                                                       13
       No. 1-14-2508

          86. See also Konami (America) Inc. v. Hartford Insurance Co. of Illinois, 326 Ill. App. 3d
874, 880 (2002) (in the context of patent infringement claims, “something more is required

          for this type of infringement than the mere advertising of a product”).

¶ 30         While defendants correctly point out that patent and copyright are different concepts,

          Greenwich is nevertheless instructive to our analysis in the instant case because it stands for

          the proposition that in order for there to be an advertising injury, “something more than the

          mere advertisement of an infringing product is required to bring such action within the scope

          of coverage.” Greenwich, 379 Ill. App. 3d at 86. Furthermore, the Seventh Circuit has

          reached the same conclusion with respect to a claim of copyright infringement. In Skylink

          Technologies, Inc. v. Assurance Co. of America, 400 F.3d 982, 983 (7th Cir. 2005),

          Chamberlain, the maker of a garage door opener with “rolling code” technology, claimed that

          Skylink infringed Chamberlain’s copyright by selling a transmitter and keypad that were

          “designed to get around” Chamberlain’s technology. Specifically, Chamberlain alleged that

          Skylink “ ‘has made, imported, offered to the public, provided and otherwise trafficked in a

          Model 39 universal transmitter and a Model 89 keypad that *** (c) are marketed by Skylink

          for use in circumventing [Chamberlain’s] technological measure’ ” in violation of section

          1201(a) of the Copyright Act of 1976 (17 U.S.C. § 1201(a) (2000)). Skylink, 400 F.3d at 985.

          The Seventh Circuit found that the copyright infringement claim did not constitute an

          advertising injury under the insurance policy, noting:

                 “[T]he real harm Chamberlain alleges results from the fact that the Skylink

                 transmitter and keypad circumvent the rolling code technology, not from the way the

                 products are packaged. Again, Chamberlain does not object to Skylink’s marketing of

                 its products except to the extent that they claim to use the rolling code technology. It

                                                      14
       No. 1-14-2508

                 is that failure to use the technology, not the advertisement, that caused the alleged

                 injury.” Skylink, 400 F.3d at 986.

¶ 31         The district court for the northern district of Illinois has also recently considered this

          issue and has reached the same conclusion. In Lemko Corp. v. Federal Insurance Co., No. 12

          C 03283, 2014 WL 4924403, at *8 (N.D. Ill. Sept. 30, 2014), the district court considered

          whether the underlying complaint by Motorola alleged an advertising injury based on

          copyright infringement. Interpreting the identical policy language as that present in the case

          at bar, the district court found that the underlying complaint did not allege that Lemko

          infringed Motorola’s copyrights in any Lemko advertisement. Lemko, 2014 WL 4924403, at

          *9. The court noted:

                 “It is true that the Motorola complaint asserts in general terms that Lemko used

                 proprietary information it repurposed from Motorola in products that it marketed but

                 that does not equate to ‘advertising’ within the meaning of the policy. Motorola’s

                 allegations pertain to the theft and use of the technology in Lemko products, not in

                 any ‘advertisement.’ Advertising a product that, in turn, incorporates misappropriated

                 or infringing content, is not the same as an advertisement that itself infringes a

                 copyright by disclosing the copyrighted content.” (Emphases in original.) Lemko,

                 2014 WL 4924403, at *9.

          While both Lemko and Skylink are federal cases and, therefore, are not binding upon this

          court, we find their reasoning persuasive to the issues present in the instant case.

¶ 32         In the case at bar, Microsoft’s complaint is aimed at the installation of unauthorized

          Microsoft products in Compeve’s computers. The complaint does not allege that any

          copyrighted information was contained in a Compeve advertisement, nor does it allege, in

                                                       15
       No. 1-14-2508

          more than conclusory fashion, that the contents of Compeve’s advertisement harmed

          Microsoft. To establish copyright infringement, there must be copying. See, e.g., Incredible

          Technologies, Inc. v. Virtual Technologies, Inc., 400 F.3d 1007, 1011 (7th Cir. 2005) (“To

          establish copyright infringement, a plaintiff must prove ‘(1) ownership of a valid copyright,

          and (2) copying of constituent elements of the work that are original.’ ” (quoting Feist

          Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991))). There is no

          allegation of any copying within the advertisement itself, only that Compeve advertised that

          it was selling Microsoft’s products. As noted, “[a]dvertising a product that, in turn,

          incorporates misappropriated or infringing content, is not the same as an advertisement that

          itself infringes a copyright by disclosing the copyrighted content.” (Emphasis in original.)

          Lemko, 2014 WL 4924403, at *9. Microsoft’s complaint does not allege that Microsoft’s

          copyright was infringed in Compeve’s advertisement, nor does it allege any connection

          between Microsoft’s injury and the copyright infringement in the advertisement.

          Accordingly, we cannot find that the trial court erred in granting summary judgment in Erie’s

          favor.

¶ 33         As a final matter, we note that Erie raised a number of issues before the trial court as to

          other exclusions that it argued applied to the copyright infringement count, as well as to the

          other counts of the Microsoft complaint. However, defendants only argue the issues

          concerning the count for copyright infringement in their brief on appeal, noting that “if a duty

          to defend the copyright infringement allegation exists, Erie was under a duty to defend the

          entire complaint.” While defendants claim in their reply brief that they “did not waive [their]

          right to contest additional grounds on which the Policy excludes coverage,” it is well settled

          that points not argued on appeal are waived. Lebron v. Gottlieb Memorial Hospital, 237 Ill.
16
       No. 1-14-2508

          2d 217, 253 (2010); Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013) (“Points not argued [in the

          appellant’s brief] are waived and shall not be raised in the reply brief, in oral argument, or on

          petition for rehearing.”). Accordingly, we do not consider any other bases for finding or

          excluding coverage.

¶ 34                                          CONCLUSION

¶ 35         The trial court properly entered summary judgment in Erie’s favor where the Microsoft

          complaint did not allege an “advertising injury” under the terms of the insurance policy.

¶ 36         Affirmed.

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