Hartford unit wins defense cover suit against tech firm

A federal appeals court has upheld a ruling in favor of a Hartford Insurance Group unit and held the insurer was not obligated to defend an information technology management company in trademark litigation because of policy endorsements that precluded coverage.

Reston, Virginia-based Synaptek Corp. was sued in litigation charging it with alleged trademark infringement and violations of state unfair competition law in connection with its advertising and marketing, according to Tuesday’s ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Synaptek Corp. v. Sentinel Insurance Co.

When its insurer, Hartford Insurance Group unit Sentinel, refused to defend the company, Synaptek filed suit against it in U.S. District Court in Alexandria, Virginia, seeking a declaration its policy covered the claims in the underlying trademark dispute and so required Sentinel to provide a defense.

The District Court ruled in Sentinel’s favor, which was upheld by a unanimous three-judge appeals court panel. Endorsements in two sections of the insurance policy, the business liability and the technology sections, precluded coverage, said the ruling.

A business liability endorsement “makes clear that coverage applies only to three of the offenses listed in the Business Liability Section – false arrest, malicious prosecution and wrongful eviction – and precludes coverage for all other offenses,” said the ruling.

Given the endorsement’s “clear and unambiguous language,” the District Court correctly concluded the section did not provide coverage for the claims in the underlying trademark dispute, the ruling said.

The ruling said also the policy’s technology section “applies by its terms only to claims for ‘glitches’ in technology services ‘performed by others,’” said the ruling. The underlying claims in the trademark dispute, however, centered on Synaptek’s marketing of its “own products and services,” said the ruling, in affirming the lower court’s judgment.

Attorneys in the case could not immediately be reached for comment.