CASE STUDIES

A Major Handbag Importer is sued for trademark infringement by a competitor who alleged that their design was copied which therefore negatively impacted their market share.

The Texas court put into effect a cease and desist order prohibiting the importer from selling any more product to customers in that state. Upon receipt of the Summons and Complaint, the Client forwarded the information to the Broker advising him to report the claim. The Broker notified the General Liability carrier (Chubb). Chubb denied coverage, citing the exclusion for Intellectual Property, which included claims as a result of infringement of copyright, trademark, and trade dress. The Client reached out to ICA, and upon our involvement, we requested all correspondence between the parties from inception. We discovered that the infringement allegation actually commenced 3 years earlier -- a crucial fact as the older Chubb policy did not contain an Intellectual Property exclusion. We advised the Client to resubmit the claim to Chubb, pointing out to Chubb that the earlier policy period, and the earlier, broader policy language should apply. The carrier was then forced to provide a defense and coverage for this Client, and it ultimately settled with the plaintiff for approximately $600,000. This analysis saved close to a million in defense costs and indemnity, yet the broker never saw this possibility.

After the good news wore off, the Client asked, “Why didn’t the Broker come up with this solution?” The Broker could not offer a satisfactory response. In ICA’s role as consultant, the sole consideration is the Client’s interest. Brokers find themselves in a catch 22 position, delicately balancing the relationship between the Client and the insurance company. However, because their bread is buttered by the insurance company, their pursuit of claims payment is not always in their Client’s best interests. ICA’s interests are always those of the Client. Period.