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Surgin Surgical Instrumentation Inc. v. Truck Insurance Exchange6/23/1998
19 Cal.App.4th 320 that there is no potential for liability for patent infringement claims under a policy covering "advertising injury," Truck argues it had no duty to defend against Alcon's lawsuit and cannot be liable for bad faith in failing to do so. (Id. at p.327.)
Truck is correct in its assertion that patent infringement claims are not covered under a policy for advertising injury . Nevertheless, " n insurer must defend a case which potentially seeks damages in the coverage of the policy. (Aetna Casualty & Surety Co. v. Superior Court, supra, 19 Cal.App.4th at pp. 320, 327.) "It is by now a familiar principle that a liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. [Citation.] As [the Supreme Court] said in Gray [(1966) 65 Cal.2d 263], `the carrier must defend a suit which potentially seeks damages within the coverage of the policy.' [Citation.]" (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.)
Surgin is insured for advertising liability, which is defined by the policy as "(1) libel, slander or defamation; [ ] (2) Infringement of copyright or of title or of slogan; [ ] (3) Piracy or unfair competition or idea misappropriation under an implied contract; [ ] (4) Invasion of right of privacy; [ ] (5) committed or alleged to have been committed in any advertisement, public article, broadcast or telecast and arising out of the named insured's advertising activities."
Alcon's cross-complaint alleged that Surgin made intentionally false and misleading statements in its advertisements that one of its products had been FDA approved, when in fact, it had not. That cause of action falls within the policy definition of advertising injury . As such, Truck had a duty to defend, even if, as it contends, the bulk of the defense to be waged was for non-covered losses. (Aetna Casualty & Surety Co. v. Superior Court, supra, 19 Cal.App.4th at p. 327.)
The judgment is reversed. The entry of default is stricken as is the order striking Truck's answer to the complaint. The trial court may, in its discretion, impose a reasonable monetary sanction for Truck's previous discovery abuse. Each party to bear its own costs on appeal.
CERTIFIED FOR PUBLICATION.
WE CONCUR:
SILLS, P. J.
RYLAARSDAM, J.
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