On March 22, 2019, a federal judge in Michigan found in Alticor Global Holdings, Inc. v. America Int’l Specialty Lines Ins. Co., that claims of copyright infringement by several major record labels are potentially covered under liability policies issued by AIG. Alticor involved a claim for coverage stemming from suits by a group of entertainment companies against Amway, “accusing it of infringing hundreds of copyrighted sound recordings.” Amway sought coverage from its umbrella insurer, AIG. AIG claimed that the personal injury and advertising injury coverage did not apply because “coverage extends only to advertisements of a Named Insured,” i.e., Amway, and the underlying suit related to advertisements of Amway independent business owners.
Based on the plain language of the policy, the court rejected AIG’s argument. The court relied on the broad definition of advertisement, which the policy 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.” The court said this definition was not limited only to communications by Amway, but instead, also encompassed communications by entities other than Amway: “It encompasses communications by others to the general public or specific market segments about “[Amway’s] goods, products, or services for the purpose of attracting customers or supporters.” Accordingly, the court found that the advertising injury coverage could apply to the copyright infringement allegations. Whether the policy actually provided coverage for the underlying suits was left for the next phase of the litigation between Amway and its insurers.
The decision is a good reminder as to the breadth of coverage afforded under typical advertising injury coverage provisions. This breadth of coverage is particularly important at the duty to defend stage, where even a potential for coverage is sufficient to trigger the insurer’s duty to defend or reimburse defense costs.