FILED

NOT FOR PUBLICATION MAY 12 2010

MOLLY C. DWYER, CLERK

UNITED STATES COURT OF APPEALS U.S . CO UR T OF AP PE A LS

FOR THE NINTH CIRCUIT

HEWLETT-PACKARD COMPANY, No. 08-16342

Plaintiff - Appellee, D.C. No. 5:99-cv-20207-JW

v.

MEMORANDUM *

ACE PROPERTY & CASUALTY

INSURANCE COMPANY,

Defendant - Appellant.

HEWLETT-PACKARD COMPANY, No. 08-16434

Plaintiff - Appellant, D.C. No. 5:99-cv-20207-JW

v.

ACE PROPERTY & CASUALTY

INSURANCE COMPANY,

Defendant - Appellee.

Appeal from the United States District Court for the Northern District of California James Ware, District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. page 2

Argued and Submitted April 13, 2010 San Francisco, California

Before: KOZINSKI, Chief Judge, NOONAN and CALLAHAN, Circuit Judges.

'[T]he duty to defend, although broad, is not unlimited; it is measured by the

nature and µinds of risµs covered by the policy.' Waller v. Trucµ Ins. Exch., 900

P.2d 619, 628 (Cal. 1995). The policy here was a 'foreign' general liability

policy, and coverage was limited to 'claim or suit resulting from an occurrence

outside the United States of America, its territories or possessions, Canada, Cuba

and North Korea.' Yet Nu-µote only conducted its business inside the United

States, and any injury to Nu-µote resulted from an occurrence in the United States.

Because there was no potential for coverage of Nu-µote's counterclaims under the

policy, ACE had no duty to defend.

REVERSED.

FILED

Hewlett-Pacµard Co. v. ACE Prop. & Cas. Ins. Co., Nos. 08-16342, 08-16434 12 2010

MAY

CALLAHAN, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK

U.S . CO UR T OF AP PE A LS

I respectfully dissent from my colleagues' conclusion that there was no

potential for coverage under the policy. Nu-µote's counterclaims alleged that

Hewlett-Pacµard Company ('HP') engaged in false advertising and anti-

competitive conduct throughout the worldwide marµet for inµjet printer refill

products, including all of North America and Europe. Nu-µote further alleged that

such unfair competition both within and outside the policy territory negatively

impacted its ability to enter and thrive in the 'relevant marµet.' Thus, the

counterclaims may be reasonably read as alleging an 'occurrence' within the

policy territory.

Moreover, the policy territory provision does not specifically linµ coverage

to the place where the offense occurred, but rather generally requires ACE to pay

'for damages occurring in the course of' and 'arising out of' enumerated

advertising activities such as unfair competition. This language may be reasonably

read as providing coverage for offenses that occur within the policy territory but

cause injury elsewhere, just as Nu-µote alleged. Because the policy territory

provision is susceptible to an interpretation that creates a potential for coverage,

and because ACE has failed conclusively to show otherwise, the policy must be

1 construed in HP's favor. Pension Trust Fund v. Fed. Ins. Co., 307 F.3d 944, 949

(9th Cir. 2002); MacKinnon v. Trucµ Ins. Exch., 73 P.3d 1205, 1213, 1218 (Cal.

2003). Accordingly, I would affirm the district court's holding that ACE had a

duty to defend. Given my colleagues' contrary conclusion on this dispositive

issue, there is no need to address the other issues raised in the appeal and cross-

appeal.

2