The rebirth of Tool: Recent developments in entertainment liability coverage

Two recent cases suggest that commercial liability policies may cover entertainment-related claims

The conventional wisdom is that commercial general liability (CGL) policies do not provide meaningful coverage for entertainment industry insureds with regard to much of their creative output. Indeed, coverage for intellectual property claims generally has been available in the CGL context only if the claims at issue arise out of an insured’s advertising activities, and, the scope of such coverage has continued to narrow with revisions to the standard-form CGL policy. Nonetheless, two recent cases have made it clear that there is still life left in advertising coverage provisions in this context.

The first is an opinion in an insurance dispute regarding the now-legendary litigation between Mattel and MGA Entertainment over Bratz. In February 2012, the Central District of California denied a motion for summary judgment filed by Crum & Forster Specialty Insurance Co. (C&F), which sought a determination that it had no obligation to defend MGA in the Bratz lawsuit. The C&F policies at issue provided coverage for advertising injury arising out of the “use of another’s advertising idea in [the insured’s] advertisement,” as well as the “[i]nfringement upon another’s copyright, trade dress or slogan in [the insured’s] advertisement.” The policies also contained, of relevance here, exclusions for advertising injury arising out of:

The court also held that the trade secret exclusion did not apply, since not all of the allegations concerning the theft of Mattel’s advertising applied to trade secrets. The court similarly held that the breach of contract exclusion did not apply, since not all of the claims arose from the breach of agreements with Mattel, and since the allegation of breach (as opposed to a finding of breach) was insufficient to trigger the exclusion.

The other noteworthy decision, issued in May 2012, stemmed from a dispute between the rock band Tool and an artist, Cameron De Leon, who claimed that Tool infringed on the copyrights in a variety of works that De Leon created for the band. The works were used on all sorts of Tool merchandise, on album covers, in videos and during concerts.

Contributing Author

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Edward Weiman

Edward E. Weiman is a partner in the Los Angeles office of Kelley Drye & Warren LLP. Mr. Weiman represents film and television companies and...

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