Mez Industries, Inc. v. Pacific National Insurance

This case presents the question of whether a liability insurer providing coverage for “advertising injury” is required to defend its insured in an action charging the insured with inducement of patent infringement. When the respondent, Pacific National Insurance Company (Pacific) refused to provide such a defense to the appellant, Mez Industries, Inc. (Mez), Mez filed this action for declaratory relief and breach of contract. The trial court sustained Pacific’s demurrer without leave to amend and thereafter entered a judgment of dismissal.

Because we conclude that the advertising injury provisions of Pacific’s policy did not provide coverage to Mez for inducement of patent infringement and, in any event, such coverage would have been precluded by Insurance Code section 533, we conclude that no potential for coverage existed as a matter of law and thus no duty to defend ever arose. The trial court ruled correctly and we therefore affirm.

Factual and Procedural Background

Mez is engaged in the business of manufacturing, distributing and selling components used for the connection of joints in airflow conduction systems (such as central heating and air conditioning…