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The Court of Appeal unlocks the carrier's obligation to defend the key maker's requirements for product disposition



Last week, a Colorado administrative court held that a general liability insurer must defend a demand for product breakdown, despite the fact that there is a substantial substantiation of intellectual property rights. The court made its judgment even if the alleged disparation meant representations of patent infringement. In that case, the court rejected the insurer's attempt to deny coverage where the "core of the dispute" fell within the privacy policy part of the policy and the insurer had not shown that the underlying claims "undoubtedly" fell into ambiguously formulated exclusion. Minute Key, Inc. v. Charter Oak Fire Insurance Company No. 1

: 16-cv-01850-JLK (August 11, 2017) sought a key supplier coverage under its general product breakdown policy, claiming that the vendor had made false patent infringement claims against a competitor. The insurer denied coverage on the grounds that the competitor's lawsuit – which partially claimed that the policyholder deviates from the competitor's products by making "false and objectively base claims of patent infringement" – was hampered by an exclusion of intellectual property rights that exclude cover for damages arising from an "actual or alleged violation "[patent]. "The parties submitted this threshold question to the court on summary judgment.

The court ruled on the policyholder, acknowledging that, according to Colorado, an insurer must comply with its obligation to defend unless it can establish that the allegations in the complaint are" solely "and" entirely " In the context of an exclusion, since the damage alleged in the disparagement trial arose "out of the violent misconduct of [the policyholder]not any offense", such damages were "wholly" within the policy's contribution margin for "personal injury" … caused by. [the] Oral or written publication … of materials such as … disparages a person's goods, products or services. "This duty of defense did not become detrimental to policy exclusion of intellectual property rights, where the court held where the allegedly harmful the misunderstanding in "the form of false claims of patent infringement" did not "unfold The Court found that the exclusion was ambiguous, which precludes a determination in the insurer's advantage. As a result, the insurer had breached its obligation under the policy when it declined to defend the product distribution targets.

The decision Minutesats highlights the breadth of the insurer's duty to defend (see previous posts on this topic here and here), including the important difference that an insured person only needs to demonstrate that the underlying claim can covered by the policy provision to trigger a defense while an insurer must prove that it can undoubtedly not . In fact, the only possibility of coverage is often sufficient to oppose an insurer's interpretation of the factual circumstances allegedly triggering one or more exceptions.

As with any coverage clause, the current specific facts and policies will be verified. But even where underlying claims refer to facts that can at least superficially involve some exclusions – as well as in the case of patent infringement in Miniman Key complainants should carefully examine each claim in the light of the specific wording of the exclusions to ensure that it does not is there any reasonable interpretation in favor of coverage, understand that courts are likely to interpret the duty to defend themselves liberally in the policyholder's advantage


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