Appellant insureds sought review of an order of the Marin County Superior Court, California, granting summary judgment in favor of respondent insurance company in an action for breach of an insurance contract and breach of the covenant of good faith and fair dealing.
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In an insurance action, the insureds claimed an insurer was obligated to defend them under the insurance policy’s advertising injury coverage after they were sued in federal court for trade dress infringement. Trademark infringement was among the policies’ predicate offenses defining advertising injury. However, to raise a potential for coverage, the underlying complaint had to show that the insureds’ advertising caused the third party’s injury. Trade dress infringement was caused by the advertising of the insureds’ product using the infringing trade dress of another company. With this evidence of a potential for coverage, the insurer’s duty to defend attached.
The summary judgment was reversed. On remand, the superior court was directed to enter an order granting the insurer’s motion for summary adjudication as to the insureds’ cause of action for breach of the covenant of good faith and fair dealing and to conduct further proceedings consistent with the opinion.