## Facts

- Greg Simms and North Georgia Development Partnership sued Edward L. White and others involved in apartment development and construction, alleging they took and used plaintiffs’ architectural and business plans and related intellectual property to build apartment complexes.
- The underlying complaint asserted claims and theories framed as theft, conversion, unjust enrichment, conspiracy, quantum meruit/assumpsit, common-law copyright, federal copyright infringement, and unfair business practices, based on defendants’ alleged use of plaintiffs’ plans, designs, “trade dress,” and specifications.
- White and certain other defendants were insured under liability policies issued by State Farm Fire and Casualty Insurance Company (State Farm).
- State Farm filed this federal declaratory-judgment action in the Northern District of Georgia seeking a declaration that it had no duty to defend or indemnify the insureds in the underlying lawsuit.
- State Farm argued the policies’ “property damage” coverage applied to tangible property, and that the alleged injury in the underlying suit was to intangible rights (copyrighted design and related intellectual property), not to tangible property.
- White argued that, even if copyright infringement itself was not covered, the architectural plans existed as physical documents and therefore involved tangible property within the policies’ coverage.
- State Farm moved for summary judgment through multiple, substantially similar motions that the court addressed together.

## Issues

1. Whether alleged theft, conversion, and use of architectural plans stated “property damage” to “tangible property” under State Farm’s liability policies when the claimed value flowed from copyrighted design content.
2. Whether copyright infringement and related intellectual property claims constitute covered “property damage” or instead allege injury to intangible rights outside the policies’ scope.
3. Whether State Farm owed a duty to defend and indemnify the insureds where the underlying complaint sought damages tied to misuse of copyrighted designs rather than physical harm to, or loss of use of, the paper plans themselves.

## Decision

- The court granted State Farm’s summary-judgment relief in substantial part and entered declaratory relief limiting coverage.
- The court treated the copyrighted design and related intellectual property interests as intangible and not “tangible property” for purposes of “property damage” coverage.
- The court recognized that the physical embodiment of the plans (the paper copies) could qualify as tangible property, but any covered loss tied to that physical medium was limited to the nominal value of the paper/document itself, not the economic value of the design or profits from its use.
- Because the underlying action primarily sought recovery for misuse and exploitation of the architectural designs and copyrights, State Farm had no duty to defend or indemnify the insureds for those intellectual-property-based allegations.

## Legal Principles

- The duty to defend in a coverage action is determined by comparing the policy’s insuring terms with the allegations of the underlying complaint.
- “Property damage” coverage that requires injury to, or loss of use of, “tangible property” does not extend to harm to copyright, design, and similar intellectual property rights.
- A work that is physically embodied in a document can involve tangible property only as to the physical medium; the intellectual content and the value derived from copyright ownership remain intangible.
- Where the underlying complaint seeks damages measured by the value of intellectual property (or gains from its exploitation), that alleged injury is not transformed into covered “property damage” merely because the ideas were recorded on paper.

## Conclusion

State Farm Fire and Casualty Insurance Company v. White holds that, although paper copies of architectural plans may be tangible property, the copyrighted design and related intellectual property interests reflected in those plans are intangible and not covered as “property damage”; accordingly, State Farm was entitled to declaratory relief that it owed no defense or indemnity for the underlying claims seeking damages for infringement and misuse of the plaintiffs’ designs, beyond at most the limited physical value of any paper plans.


State Farm Fire and Casualty Insurance Company v. White, 777 F. Supp. 952 (1991)