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Insurer not required to defend trademark infringement case

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Selective Insurance Co. of America was not required to defend a trademark infringement suit filed by a lighting company because its policy covered only slogan infringement, an appeals court said Thursday in upholding a lower-court ruling.

Minneapolis-based Smart Candle L.L.C., which sells light-emitting diode flameless candles and commercial lighting systems internationally, was sued in October 2011 by Windsor, England-based Excell Consumer Products Ltd. under the Lanham Act and charged with, among other things, infringing on Excell's name and trademark, according to Thursday's ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Selective Insurance Co. of America v. Smart Candle L.L.C.

Selective Insurance Co. insured Smart Candle between October 2010 and October 2012 for slogan or copyright infringement. When Selective sought coverage from Branchville, New Jersey-based Selective, the insurer said it had no duty to defend or indemnify Smart Candle because Excell claimed infringement of a “mark” or “trademark,” not a “slogan” or copyright.

Selective filed suit against Smart Candle in U.S. District Court in Minneapolis in April 2013, seeking a declaration that it had no duty to defend Smart Candle in the lawsuit, and Smart Candle counterclaimed for breach of contract.

The District Court ruled in Selective's favor, holding that Excell had “explicitly based its complaint on the improper use of 'Smart Candle as mark, trademark, trade name and name' and therefore no reasonable jury would conclude that Excell was suing for slogan infringement.” In September 2013, Excell won its suit against Smart Candle in the underlying case after a bench trial, according to the ruling.

A three-judge appeals court panel unanimously agreed with the District Court's ruling on the policy language.

“In some circumstances it is possible that a trademark could also be as slogan,” says the ruling,

“But that is not what happened here,” said the appeals panel in upholding the lower-court ruling.