A CNA Financial Corp. unit is obligated to defend a roadway maintenance and repair company in patent infringement litigation under the “personal and advertising injury” provision in its commercial general liability policy, says a federal appeals court in reversing a lower court ruling.

Tomball, Texas-based Uretek (USA) Inc. sued competitor Mount Airy, North Carolina-based Applied Polymerics Inc. for patent infringement, according to Friday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Uretek (USA) Inc. v. Continental Casualty Co.

Applied asserted a counterclaim against Uretek, and Uretek asked Continental, a unit of Chicago-based CNA, to defend it against Applied’s claims in that counterclaim, which the insurer refused.

Uretek then filed suit against Continental in U.S. District Court in Houston in December 2013, seeking a declaratory judgment it was entitled to a defense, damages for breach of contract and punitive damages. The District Court granted Continental summary judgment dismissing the case.

A unanimous three-judge panel reinstated the case on appeal. Uretek’s CGL policy provides coverage for personal and private injury in cases where there is material that disparages an organization, said the ruling.

According to Uretek, Applied alleged that Uretek made statements to Allied customers or potential customers that Allied could not undertake to work on various projects without infringing on a Uretek patent, said the ruling.

“A statement to a competitor’s customer that the competitor is undertaking work that it has no legal right to undertake disparages that competitor and the services it offers by clear implication,” said the ruling.

“Resolving all reasonable disputes about the term disparage in favor of the insured and interpreting the complaint liberally, as we must, we conclude that the term is sufficiently broad to include Applied’s allegations.

“It follows that the suit against Uretek alleged a ‘personal and advertising injury’ and thus fell within the scope of Continental’s duty to defend,” said the ruling, in reversing the lower court ruling and remanding the case for further proceedings.