Insurance Coverage For Patent Infringement Claims

Courts across the country, and particularly in California, have long been reluctant to construe standard commercial general liability (“CGL”) insurance policies to provide coverage for patent infringement lawsuits. However, the Ninth Circuit's recent decision in Hyundai Motor v. Nat. Union Fire Ins., ___ F.3d ___ , 2010 WL 1268234 (9th Cir. 2010), suggests that, at least when the patented invention is itself a method of advertising, an insurer will owe a duty to defend a patent infringement lawsuit under the “advertising injury” provisions of many standard CGL policies. This development is particularly significant for two reasons. First, the court found that the duty to defend arose out of language that appears in many standard liability insurance policy forms, especially at the excess layers. Second, it interpreted the policy under the law of California, which often serves as the leader in significant developments nationwide in insurance coverage litigation.