## Facts

- Intouch Group sued Amazon in federal court, alleging Amazon used Intouch’s patented interactive technology to let customers preview music on Amazon’s website.
- Amazon tendered the suit to Atlantic Mutual (primary CGL insurer) and American Dynasty (excess insurer); both refused to defend.
- Amazon sued American Dynasty; the dispute settled with American Dynasty reimbursing defense costs and receiving an assignment of Amazon’s claims against Atlantic Mutual.
- As assignee, American Dynasty sued Atlantic Mutual, alleging Atlantic Mutual owed a duty to defend because the complaint potentially alleged covered “advertising injury.”
- Atlantic Mutual’s policy covered “advertising injury” caused by an offense committed in the course of advertising, including “misappropriation of advertising ideas or style of doing business.”
- The trial court granted summary judgment to Atlantic Mutual (no duty to defend); American Dynasty appealed.

## Issues

1. Whether allegations that Amazon used patented technology to provide online music previews could potentially constitute “advertising injury” as “misappropriation of advertising ideas or style of doing business” committed in the course of advertising, triggering the insurer’s duty to defend.

## Decision

- The appellate court reversed.
- The court held the complaint’s allegations could conceivably fall within “advertising injury” coverage.
- Because coverage was at least possible, Atlantic Mutual owed a duty to defend.
- The case was remanded with instructions to enter summary judgment for American Dynasty.

## Legal Principles

- An insurer’s duty to defend is broader than its duty to indemnify and arises if the complaint alleges any facts that could impose liability within policy coverage.
- The duty to defend is excused only when the claim is clearly not covered; ambiguities are construed to trigger the duty to defend.
- If the complaint alone does not determine the duty to defend, the insurer must consider extrinsic facts.
- “Advertising injury” coverage requires (1) allegations within the policy’s definition and (2) a causal connection between the alleged injury and the insured’s advertising activities.
- “Misappropriation of advertising ideas” includes wrongful taking of another’s manner of advertising or an idea concerning solicitation of customers.

## Conclusion

The court held that allegations of patent infringement involving an interactive product-preview method used to market goods online could potentially amount to “misappropriation of advertising ideas” in the course of advertising, requiring the primary CGL insurer to defend.


Amazon.com Int’l, Inc. v. Am. Dynasty Surplus Lines Ins. Co., 85 P.3d 974 (Wash. Ct. App. 2004)