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(Article from Insurance Law Alert, May 2016)

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A Michigan federal district court ruled that an insurer had no duty to defend or indemnify infringement and false advertising claims because they did not allege disparagement within the scope of advertising injury coverage.  Vitamin Health, Inc. v. Hartford Cas. Ins. Co., 2016 WL 2622353 (E.D. Mich. May 9, 2016).

Bausch & Lomb sued Vitamin Health alleging patent infringement and false advertising based on Vitamin Health’s advertisements for vision-related supplements.  Vitamin Health’s insurer, Hartford, refused to defend or indemnify, arguing that the underlying complaint did not state a claim for product disparagement.  The court agreed and granted Hartford’s summary judgment motion.

The court ruled that the underlying complaint could not be read to allege that Vitamin Health disparaged Bausch & Lomb’s products.  The complaint alleged that Vitamin Health misrepresented the content of its own products, not its competitors’ products.  The court rejected the notion that Vitamin Health “implicitly disparaged” Bausch & Lomb’s products by creating a false comparison between the two companies’ products.  In so ruling, the court distinguished cases in which false advertising claims were held to allege disparagement because they contained assertions of product superiority, and therefore implied that competitors’ products were inferior.  The court also held that even assuming the claims were within the scope of advertising injury, coverage was barred by intellectual property and failure to conform exclusions.