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Sterngold Dental, LLC v. HDI Global Insurance Co.

United States District Court, D. Massachusetts

September 29, 2018

STERNGOLD DENTAL, LLC, Plaintiff,
v.
HDI GLOBAL INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          GEORGE A. O'TOOLE, JR. UNITED STATES DISTRICT JUDGE.

         The plaintiff, Sterngold Dental, LLC, (Sterngold) manufactures and sells dental products. It purchased a commercial liability insurance policy from the defendant, HDI Global Insurance Company (HDI), providing coverage against, among other things, “personal and advertising injury liability.” The policy was in effect for calendar year 2016.

         I. The Policy and Underlying Claim

         Pursuant to the policy, HDI agreed to “pay those sums that the insured becomes legally obligated to pay as damages because of ‘personal and advertising injury' to which this insurance applies, ” and to “defend the insured against any ‘suit' seeking those damages.” (Compl., Ex. A, Commercial Lines Policy, 20 (dkt. no. 1-1).) The policy defines “personal and advertising injury” in part as follows:

“Personal and advertising injury” means injury . . . arising out of one or more of the following offenses: . . .
f. The use of another's advertising idea in your “advertisement”; or
g. Infringing upon another's copyright, trade dress or slogan in your “advertisement”.

(Id. at 29.) The policy defines “advertisement” as “notice that is broadcast or published . . . about your goods, products or services for the purpose of attracting customers or supporters, ” including such notices “placed on the internet or on similar electronic means of communication.” (Id. at 27.)

         There is also a pertinent exception to the policy coverage. Section I(B)(2)(i) of the policy contains an intellectual property exclusion clause (“IP Exclusion”), which provides that, subject to certain limited exceptions, “This insurance does not apply to: . . . ‘Personal and advertising injury' arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights.” (Id. at 21.)

         In May 2016, Sterngold was sued by Intra-Lock International, Inc. (“Intra-Lock”), another company in the business of selling dental products (the “Intra-Lock Action”). The suit concerned Sterngold's purported infringement of Intra-Lock's patents and trademarks. Count III of Intra-Lock's complaint, the only claim relevant here, alleged that “OSSEO” marks used by Sterngold were infringing the registered “OSSEAN” trademark that Intra-Lock used for its patented version of the same product. Intra-Lock specifically alleged that “Sterngold had begun using the confusingly similar marks OSSEO™ and OSSEOs™ with osseointegrative dental implant coatings in internet advertising, ” and that its use of these marks “deceived third parties as to the affiliation, connection or association of Sterngold with [Intra-Lock] and as to whether or not [Intra-Lock] has anything to do with the origin, sponsorship, or approval of the goods.” Compl. ¶¶ 33- 34, Intra-Lock Int'l, Inc. v. Sterngold Dental, LLC, No. 16-cv-80699-WJZ (S.D. Fla. May 3, 2016), ECF No. 1.

         Sterngold tendered defense of the Intra-Lock Action to HDI. HDI denied coverage and refused to defend Sterngold. Sterngold and Intra-Lock ultimately settled the case. Shortly thereafter, Sterngold requested that HDI indemnify it for the damages it was obligated to pay in connection with the settlement and dismissal. HDI again refused.

         Sterngold commenced this action seeking a declaratory judgment that HDI had a duty to defend or indemnify it in the Intra-Lock Action, as well as damages.[1] HDI has responded by moving to dismiss the complaint for failure to state a claim. Fed.R.Civ.P. 12(b)(6).

         I.Discussion

         All Sterngold's claims are premised on its allegation that HDI breached its obligations under the policy because Count III of the Intra-Lock Action, for trademark infringement, triggered coverage. HDI responds that the Intra-Lock action did not allege an injury covered under the policy. The parties here do not dispute the general facts of the case or point to any ambiguity within the terms of the policy. Their ...


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