Ecology Works, Inc. v. Essex Insurance

MEMORANDUM **

On November 8, 1999, Ecology Works obtained a commercial general liability policy from Essex Insurance which included advertising injury coverage. 1 Alkaline *715 Corp. sued Ecology alleging that Ecology’s use of the phrase “DUSTMITEX” in advertising Ecology’s anti-dust mite product violated the Lanham Act and state law because it was confusingly similar to Alkaline's trademark “MITE-X.” Ecology appeals the district court’s order denying its motion for summary judgment and granting the cross motion of Essex on the issue of whether Essex owed Ecology a duty to defend the Alkaline suit. The district court had jurisdiction pursuant to 28 U.S.C. § 1332 ; we have jurisdiction pursuant to 28 U.S.C. § 1291 . We reverse the entry of summary judgment in favor of Essex and remand for entry of summary judgment in favor of Ecology.

The facts are known to the parties and will be addressed on insofar as necessary to explain our decision. In its order granting summary judgment to Essex, the district court focused on an interrogatory answer Ecology filed in the underlying action to find that Ecology’s first use of the DUSTMITEX name predated its coverage under the Essex policy.…

dissenting.

Because the pokey’s first-publication exclusion bars any potential for coverage, I respectfully dissent.

In a declaratory action for duty to defend, “[t]o prevail, the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within the policy coverage; the insurer must prove it cannot.” Montrose Chem. Corp. v. Superior Court, 6 Cal.4th 287, 295 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 (1993) (emphasis omitted).

We first compare the allegations of the third-party complaint with the terms of the policy to determine whether there is a duty to defend. Montrose, 6 Cal.4th at 295 , 24 Cal.Rptr.2d 467 , 861 P.2d 1153 . The complaint filed by Alkaline on January 25, 2001, alleged that Ecology’s use of the “Dustmitex” mark in advertising violated the Lanham Act and state law because it was confusingly similar to Alkaline’s trademark “Mitex.” Because the insurance policy that Ecology purchased from Essex covers “advertising injury” committed during the policy period, I agree with the majority that the Alkaline complaint raises the…