Court: Massachusetts Supreme Judicial Court; September 12, 2018; Massachusetts; State Supreme Court
An insurance coverage dispute arises between Vibram USA, Inc. and two insurers, Holyoke Mutual Insurance Company and Maryland Casualty Company, regarding several general commercial liability policies. The heirs of marathon runner Abebe Bikila sued Vibram in Federal court for allegedly misusing Bikila's name in their advertising for running shoes. Vibram sought defense from the insurers, who denied coverage, claiming the policy provision for improper use of another's advertising idea did not apply. However, they agreed to fund the defense under a reservation of rights and later filed a declaratory action in Superior Court, asserting they were not obligated to defend Vibram. The Superior Court granted summary judgment in favor of the insurers. On appeal, the court concluded that the allegations in the underlying complaint were sufficient to invoke the insurers' duty to defend under the policy's coverage for advertising injury. As a result, the insurers are obligated to defend Vibram, and the court reversed the summary judgment decision.
Factual background: Between 2009 and 2011, Vibram purchased policies from the insurers that provided coverage for personal and advertising injury liability, including claims for 'advertising injury' as defined in the policies. The specific concern in this case relates to clause (f), which addresses the use of another's advertising idea in advertisements, although the term 'advertising idea' is not defined.
In 2015, during the policy period, the Bikila family filed the underlying complaint in the United States District Court, alleging Vibram misused Abebe Bikila's name in promoting their 'FiveFingers' shoes, which are associated with Bikila's Olympic achievements and barefoot running legacy. The complaint highlights the Bikila family's efforts to link their name with Abebe Bikila's dedication and success through various commercial and promotional activities.
The Bikila family utilizes the name "Bikila" commercially through various means, including operating a sporting goods store named 'Abebe Bikila,' publishing a book about Abebe Bikila's life, authorizing its use in a Japanese commercial, and permitting a feature film about his later years. They also manage a website dedicated to Abebe Bikila’s life, which includes multimedia content and promotes the annual Abebe Bikila International Marathon in Addis Ababa.
The complaint presents four legal claims: a violation of the Washington Personality Rights Act, accusations under the Washington Consumer Protection Act, a false designation and Federal unfair competition claim under the Lanham Act, and a claim of unjust enrichment against Vibram for using Abebe Bikila's name without authorization.
In a related coverage dispute, the insurers initially denied their duty to defend Vibram but later agreed to fund the defense with a reservation of rights. They subsequently sought a declaration in Superior Court that they were not obligated to defend Vibram, arguing that the claims in the complaint were not covered by their policies. Conversely, Vibram counterclaimed for a declaration of coverage. The motion judge ruled in favor of the insurers, stating that the complaint only addressed personality rights, which are excluded by the policies.
However, the reviewing court emphasized that the assessment of the insurer's duty to defend is broader than its duty to indemnify. It established that the duty to defend is triggered when allegations in the complaint can be interpreted as potentially covered by the policy, regardless of the ultimate merit of the claims. The court's standard for evaluating the motion judge's summary judgment decision is de novo, meaning they independently review the record and legal questions presented.
A liability insurer's obligation to defend is determined by assessing the allegations in a third-party complaint against the insurance policy provisions, requiring only a possibility that the claim falls within coverage. The underlying complaint does not need to specifically articulate a claim matching the policy language. The focus is on the potential losses that could arise from the allegations and whether they align with the insurance coverage expectations. Any ambiguity in the pleadings regarding coverage is resolved in favor of the insured.
In the case at hand, Vibram contends that the complaint asserts a claim for using the Bikila family's advertising idea in its running shoe advertisements. This idea involves the family's association with Abebe Bikila's legacy and the use of the name 'Bikila' for their commercial ventures. Vibram argues that such use qualifies as a covered 'advertising injury' under the insurance policies, which do not define 'advertising idea'. The interpretation begins with the policy's plain language, considering the reasonable expectations of an insured person. Ambiguities in policy language are construed in favor of the insured, especially regarding exclusions asserted by the insurer. The court has yet to define 'advertising idea' in this context, though other jurisdictions have attempted interpretations.
The term "advertising idea" is broadly defined by the United States Courts of Appeals, particularly the Third and Eighth Circuits, as encompassing concepts related to soliciting business and marketing to attract customers. This includes ideas aimed at drawing public attention to products or businesses, especially through highlighting desirable qualities to increase sales. Courts have recognized that a wide range of methods and activities can qualify as advertising ideas, including logos, brand names, advertising strategies, and promotional concepts. However, an "advertising idea" does not include concepts that are merely advertised for sale without a direct connection to marketing. Coverage under advertising injury claims is limited to those instances where the idea relates specifically to marketing efforts, rather than manufacturing or production activities. Claims related to wrongful appropriation of products for sale do not trigger coverage unless they involve the use of an idea specifically for soliciting business.
The Superior Court judge concluded that the Bikila family did not use the name 'Bikila' as an advertising idea, leading to a misunderstanding of the complaint's claims against Vibram. The judge interpreted the allegations as relating solely to the infringement of Abebe Bikila's personality rights, which are not covered by the insurance policies. However, it is acknowledged that Vibram's use of 'Bikila' to promote its minimalist FiveFingers running shoes qualifies as an advertising idea, as it leverages the legacy of Abebe Bikila, a renowned barefoot marathon runner, to attract attention to its products. The Bikila family has actively used the name in various commercial contexts, such as sponsoring marathons, operating a sporting goods store, promoting a website, publishing a book, and allowing Abebe Bikila to appear in a commercial, all of which establish a connection between their name and Abebe Bikila's legacy. Thus, the complaint can be reasonably interpreted as claiming that the Bikila family used the name 'Bikila' to promote their running-related ventures, similar to Vibram's use. The judge's error lies in failing to recognize the family's advertising efforts. The insurance policies stipulate coverage for claims related to advertising injuries, including the allegation that Vibram's use of 'Bikila' infringed on the Bikila family's advertising idea. The insurers' argument that the claims pertain solely to Abebe Bikila's right of publicity and not an advertising idea is countered by the established commercial use of the name by the Bikila family, which supports Vibram's expectation of coverage under the policies.
Insurers argued that cases discussing advertising ideas typically involve trademark infringement claims, citing a precedent that illustrates this point. However, the court found no authority requiring that an advertising idea must possess secondary meaning or align with trademark law principles. The court emphasized that advertising ideas are concerned with attracting public attention to a business or product rather than the product itself. It referenced a case where the term 'fullblood' was deemed an advertising idea without secondary meaning considerations. The court rejected the insurers' narrow interpretation and noted that even if a secondary meaning were required, the Bikila family’s intentional connection of their name to running-related ventures sufficed, as it conveyed a desirable quality. Consequently, the court reversed the summary judgment favoring the insurers and remanded the case for a judgment declaring the insurers responsible for covering Vibram's defense costs. The decision clarified that the distinction between Vibram USA and its affiliate, Vibram FiveFingers, LLC, was not pertinent, and the variety in insurance policy language was irrelevant to this appeal. The court did not address the parties' arguments regarding potential recoupment of defense costs under a reservation of rights.
Abebe Bikila, initially an alternate runner for the Ethiopian national team, ran the Olympic marathon barefoot due to an inability to secure properly fitting running shoes, becoming the only athlete to win an Olympic marathon gold medal without shoes. He later won the 1964 marathon shortly after an appendectomy. Following a 1969 car accident that left him paralyzed, he died from related complications. The complaint against Vibram's parent company involves a 2010 trademark registration for 'Bikila' and alleges violations of the Washington Consumer Protection Act, claiming unfair trade practices that harmed the Bikila family's reputation and rights. The insurance policy in question contains an exclusion for claims related to intellectual property infringement, but it does allow for coverage of advertising idea misuse. Various case precedents illustrate broad definitions of 'advertising idea.' The Bikila family's claims, including potential misappropriation of publicity rights, suggest possible coverage under the policy's provision for advertising ideas. Ambiguities in coverage interpretation favor the insured, as established in legal precedents.
