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Selective Ins. Co. v. Smart Candle, LLC

Smart Candle, LLC, sells light-emitting diode (LED) flameless candles and commercial lighting systems internationally. On October 31, 2011, Excell Consumer Products sued Smart Candle under the LanhamAct alleging that, among other things, Smart Candle’s use of the trade name and trademark “Smart Candle” infringed rights that Excell had over use of that name and trademark. Excell sought a permanent injunction against Smart Candle’s use of the name, trademark, and domain name “"

Selective Insurance Company insured SmartCandle between October 18, 2010, and October 18, 2012, and during that period the Excell suit had commenced. Smart Candle requested that Selective defend Smart Candle in that suit, but Selective disclaimed coverage under the policy. Selective pointed to relevant portions of the policy that cover “personal and advertising injury,” which the policy defines asinjury resulting from, among other things, “Infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’” Excluded from that coverage of “personal and advertising injury,” however, is any injury “arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.” The exclusion clarifies that it “does not apply to infringement in your ‘advertisement’ of copyright, trade dress or slogan.” Because the policy required Selective to defend only suits claiming infringement of “copyright, trade dress[,] or slogan,” Selective insisted, Selective had no duty to defend Smart Candle against Excell’s suit for infringement of the “Smart Candle” trademark.

. . .

Smart Candle argues that it is entitled to indemnification for its costs to defend against Excell’s claims because, Smart Candle insists, Excell’s lawsuit was arguably based on Smart Candle’s use of the phrase “Smart Candle” as a slogan or as both a trademark and a slogan. Smart Candle asserts that the record contains ample evidence of its use of that phrase as a slogan: “Smart Candle” (the phrase) purportedly was used to “educate[] its customers” that Smart Candle (the company) “expresses a characteristic, position or stand, or goal to be achieved.” That goal, Smart Candle urges, is “to promote a line of battery-operated candles as a safe, economical alternative to a real wax candle.”

We disagree with Smart Candle. . . .

Smart Candle also asserts that Selective was required to look beyond Excell’s complaint to determine whether there was an “arguable” claimofslogan infringement before denying coverage. Smart Candle says Selective admitted it reviewed Smart Candle’s website before denying coverage when Selective denied an allegation in Smart Candle’s counter-complaint that Selective did not conduct any investigation.

This secondary argument deserves little attention. . . .

We affirm the district court’s grant ofsummary judgment in favor of Selective.

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