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Kim Seng Co. v. Great American Insurance Co. of New York

November 13, 2009

KIM SENG COMPANY, CROSS-COMPLAINANT, CROSS-DEFENDANT AND APPELLANT,
v.
GREAT AMERICAN INSURANCE CO. OF NEW YORK ET AL., CROSS-DEFENDANTS, CROSS-COMPLAINANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of the County of Los Angeles, Kenneth R. Freeman, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC353925).

The opinion of the court was delivered by: Mosk, J.

CERTIFIED FOR PUBLICATION

INTRODUCTION

The insurers and the insured dispute whether the insurers providing advertising injury coverage had a duty to defend the insured in a trademark infringement action and to indemnify the insured in connection with that action. The trial court granted summary judgment in favor of the insurers based on the prior publication exclusion in the applicable policies.

On appeal, the insured asserts that the insurers had a duty to defend it in the underlying trademark infringement action because of the possibility that the prior publication exclusion did not apply based on the following theories: (i) the prior publication exclusion does not apply to a trademark infringement but rather is limited to libel, slander, and invasion of privacy claims; (ii) the word "material" used in the policy definition of "advertising injury" renders the prior publication exclusion inapplicable to the trademark infringement claims in this case; and (iii) the prior publication exclusiondoes not apply becausethe trademarked words in question used prior to the policy period were used with different words and a new logo during the term of the policy. We hold that the prior publication exclusion applies to the trademark infringement claims in this case.

BACKGROUND

A. Underlying Action

In 2005, Derek and Constance Lee Corporation dba Great River Food (Great River), an Asian food wholesaler, sued Kim Seng Company (Kim Seng), another Asian food wholesaler, for, inter alia, trademark violations. The action, which had been commenced in the Los Angeles Superior Court, was removed to the United States District Court for the Central District of California. Great River alleged that Kim Seng‟s use of the term "Que Huong" (Vietnamese for "hometown," "native land," "country" or "fatherland") on food products infringed the Great River trademark, "Que Huong," that Great River used for its Vietnamese-style frozen meats.

In 1997, Kim Seng had registered the trademark "Que Huong" for rice noodles, rice sticks, sauces, and fish sauces in the United States Patent and Trademark Office (USPTO).*fn1 In the trademarkapplication, Kim Seng‟s president stated Kim Seng had used the mark in interstate commerce at least as early as March 1993. In 2000, Kim Seng had registered with the USPTO a bearded farmer logo trademark "Old Man Que Huong Brand" for rice noodles, rice sticks, and vermicelli. Kim Seng‟s president stated in that application that Kim Seng had used the mark in interstate commerce at least as early as January 1988. During the period between October 6, 1997, and October 6, 1998-the relevant period of the insurance policies-Kim Seng commenced using the trademarks "Bun Tuoi Hieu Que Huong Brand," "Bun Que Huong Dac Biet," and a trademarked logo that included a water buffalo and the words "Que Huong."

Great River, which alleged that it had been manufacturing and distributing Asian food products under the "Que Huong" trademark since 1986, alleged that Kim Seng infringed its trademark "Que Huong" (registered by its predecessorin the USPTO in 1997) by Kim Seng‟s use of the "Que Huong" and "Old Man Que Huong Brand" marks and sought, inter alia, to enjoin the use by Kim Seng of "Que Huong" or any confusingly similar mark.*fn2 The jury found that Kim Seng did not infringe Great River‟s trademark with respect to Kim Seng‟s "Old Man Que Huong Brand" trademark but that Kim Seng‟s "Que Huong" only trademark did constitute an infringement of Great River‟s trademark. The jury also found that Great River suffered no damages and that Kim Seng did not willfully infringe any trademark. The United States District Court judge granted Great River‟s motion for a permanent injunction, enjoining use of the term the "Que Huong" in connection with Asian food products sold, distributed, or advertised in the United States. Both parties appealed, and the appeal is still pending in the Ninth Circuit Court of Appeals.*fn3

B. Coverage Action

Great American Insurance Company of New York (formerly known as American National Fire Insurance Company) insured Kim Seng under a primary commercial liability policy, effective October 6, 1997, through October 6, 1998. The policy covers "advertising injury" and provides per occurrence and general aggregate limits of $1,000,000 each. American Alliance Insurance Company (now Great American Alliance Insurance Company) issued an umbrella policy also insuring Kim Seng under a commercial liability policy, effective April 14, 1998, through October 6, 1998, that covers "advertising injury" and provides per occurrence and general aggregate limits of $1,000,000 each over a defined limit. The umbrella policy‟s schedule of underlying insurance includes the primary commercial liability policy. (The insurers, related companies, are collectively referred to as Great American.)

The primary policy advertising injury coverage provides: "We will pay those sums that the Insured becomes legally obligated to pay as damages because of . . . "advertising injury‟ to which this insurance applies." The policy defines "advertising injury" as follows:

"1. "Advertising injury‟ means injury arising out of one or more of the following offenses:

"a. oral or written publication of material that slanders or libels a person or organization or disparages a person‟s or organization‟s goods, products or services;

"b. oral or written publication of material that violates a person‟s right of privacy;

"c. misappropriation of advertising ideas or style of doing business; or "d. infringement of ...


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