Hartford wins false advertising coverage disputePosted On: Apr. 12, 2017 2:39 PM CST
A unit of Hartford Financial Services Inc. does not have to defend a policyholder against false advertising claims because the alleged disparagement of another company’s products was by “implication,” a federal appeals court ruled Tuesday.
The case involved supplement manufacturer West Bloomfield, Michigan-based Vitamin Health Inc., which produced a supplement intended to reduce the risk of age-related macular degeneration, an eye disease causing vision loss. The product competed with another eye health supplement produced by Bausch & Lomb, in Rochester, New York.
Bausch & Lomb sued Vitamin Health in 2013 alleging patent infringement and later amended to suit to allege false advertising, too, charging that Vitamin Health's product contained less zinc than the amount recommended in the National Eye Institute’s second Age-Related Eye Disease Study, meaning that Vitamin Health's advertising of the product as being AREDS 2-compliant was "false and/or likely to mislead or confuse customers."
Vitamin Health sought coverage under the personal and advertising injury section of liability policies it bought from Hartford Casualty Insurance Co.
The policies cover “oral, written or electronic publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services,” court records show.
Vitamin Health argued that coverage should apply because Bausch & Lomb claimed that Vitamin Health’s mislabeling of its products harmed Bausch & Lomb. “In other words, Vitamin Health argues that it is alleged to have disparaged Bausch & Lomb by implication,” the court ruling says.
In upholding a lower court decision, the U.S. 6th Circuit Court of Appeals in Cincinnati, Ohio, ruled: “In the underlying action, Bausch & Lomb alleged that Vitamin Health made false and misleading statements about its own products. The district court was therefore correct in holding that the underlying action could not be interpreted to include an explicit disparagement claim.”
Vitamin Health and The Hartford did not respond to requests for comment.