Category Archives: Counterfeiting

Second Circuit Holds Phishing Email Using PHP Script is Covered “Computer Fraud”

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Scams from business compromise emails (BECs) have been labeled by the FBI as a “$5 billion” problem. Sometimes known as “CEO Fraud,” BECs are where an email, purportedly coming from a high-ranking company official or vendor, instructs an employee to wire a sum of money to a bank account, or instructs the employee to wire money owed to a new bank account. The company thereafter authorizes and wires the money to the new account, which is controlled by fraudsters. The fraudsters then withdraw the money before the fraud is discovered.

On July 6, 2018, the United States Court of Appeals for the Second Circuit, in Medidata Solutions, Inc. v. Federal Ins. Co., 17-2492 (July 6, 2018), became the first U.S. Court of Appeals to determine that a BEC perpetrated using a PHP script as a spoofing tool implicates “computer fraud” coverage under a crime policy. Read More

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March Madness: A Man’s Advertisement Is His Castle (Or Converting Coverage B Into IP Insurance)

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Two and-a-half months into 2015, and we are having a different kind of march madness for Coverage B advertising injury decisions.  The latest is Mid-Continental Cas. Co. v. Kipp Flores Architects, LLC, — Fed. App’x –, 2015 WL 795822 (5th Cir. Feb. 26, 2015), where the United States Court of Appeals for the Fifth Circuit held that a house is an advertisement for purposes of the duty to indemnify under Coverage B.

The background facts for the case are straightforward and unremarkable.  Plaintiffs, Kipp Flores Architects (“KFA”) is an architecture firm that designs homes and licenses its designs to builders.  The insured, Hallmark Design Homes (“Hallmark”) built a large number of homes using KFA’s designs without a license.  KFA sued Hallmark for copyright infringement, seeking damages under the Copyright Act.  Id. at *1.  KFA alleged that: Read More

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A Picture Is Worth a Thousand Words — and a Duty to Defend

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Every now and then, a decision comes along that could have a broad impact in coverage, even if the court that issued the decision ostensibly wishes otherwise.  Selective Ins. Co. of SE v. Creation Supply, Inc., 2015 WL 522247 (Ill. Ct. App. Feb. 9, 2015), is one of those cases.  It is well settled that, for intellectual property cases, the sale of an infringing product in of itself does not implicate coverage under “personal and advertising injury.”  Nor should it.  Yet, should the mere presence of a placard on a shelf display in a store alter that analysis?  In Creation Supply, the court thought so.

The facts of the case are straightforward.  Underlying plaintiffs filed a lawsuit alleging that the insured, Creation Supply, infringed their trademarks by copying their brand of “COPIC” double-ended, alcohol-based colored markers.  According to the lawsuit, the insured’s brand of markers, called “MEPXY” markers, possessed the same squarish bodies and end-caps as the COPIC markers, thereby making the two brands look alike.  Id. at *1.  Plaintiffs contended that Creation Supply’s copy-cat design caused consumer confusion in violation of the Lanham Act.  Id. Read More

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Product Disparagement and The Duty To Defend: Swift Distribution Affirmed; Charlotte Russe Disapproved

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June 13, 2014.  In the November 2, 2012 issue of The Coverage Inkwell, I discussed the California Court of Appeal decision in Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 148 Cal. Rptr. 3d 679 (Cal. Ct. App. 2012), noting its importance because (1) it provided a reminder as to why claims of “passing off” should not constitute trade libel to implicate coverage under general liability policies, and (2) its sharp criticism of Travelers Prop. & Cas. Co. v. Charlotte Russe Holding, Inc., 144 Cal. Rptr. 3d 12 (Cal. Ct. App. 2012).  Charlotte Russe had held that allegations of placing fashionable apparel in a markdown display constituted trade disparagement to implicate a duty to defend.

Yesterday, the Supreme Court of California affirmed Swift Distribution and scaled back product disparagement claims for implicating a duty to defend under Coverage B of general liability policies.  Hartford Cas. Ins. Co. v. Swift Distribution, Inc., — P.3d –, 2014 WL 2609753 (Cal. June 12, 2014).  The decision also disapproves Charlotte Russe and should call into doubt other decisions that broadly construe trade libel and product disparagement to implicate a duty to defend in product knock-off and passing-off litigation. Read More

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