On September 12, 2018, the Supreme Judicial Court interpreted for the first time the meaning of the CGL policy phrase “advertising idea” in an insurance dispute over advertising injury coverage.
The decision in Holyoke Mutual Insurance Company in Salem et al. v. Vibram, USA, Inc., arose over the question of whether two insurers, Holyoke Mutual and Maryland Casualty, had the duty to defend a suit brought by the family of a deceased Olympic marathoner over Vibram’s use of his name in advertising.
The Superior Court ruled the insurers did not have the duty to defend Vibram
The heirs of the late, famed marathon runner Abebe Bikila sued Vibram in Federal Court for improperly using the name “Bikila” to advertise Vibram’s running shoes.
Vibram’s insurers denied coverage on the ground that a provision in the policies covering the improper use of another’s advertising idea did not cover the claims raised in this action. A Superior Court judge granted the insurers’ motion for summary judgment on that ground. See Agency Checklists’ article of November 1, 2016, “Court Rules Commercial Use of a Person’s Name Not Within CGL’s Advertising Injury Coverage.”
The Supreme Judicial Court, however, concluded the allegations in the Bikila’s heir’s complaint were sufficient to trigger the insurers’ duty to defend under the provision of the policies covering the use of another’s advertising idea and reversed the allowance of the insurers’ motion for summary judgment.
A question of just how far CGL coverage for an advertising injury extends
Vibram, a producer of minimalistic shoes that simulate walking and running barefoot, purchased from Holyoke Mutual and Maryland Casualty liability policies, which, among other things, provided coverage for “personal and advertising injury liability.” With certain enumerated exceptions, the policies stated that the insurers had a duty to defend Vibram from any suit seeking damages for covered losses, particularly for claims seeking damages against Vibram for “advertising injury.”
Under the policies, ‘personal and advertising injury’ was defined to include:
- Oral or written publication, in any manner, of material that violates a person’s right of privacy,
- The use of another’s advertising idea in your ‘advertisement,’ (Emphasis added), or
- Infringing upon another’s copyright, trade dress or slogan in your ‘advertisement.’
Suit over the use of the name of an Olympic marathoner who won running barefoot
In 2015, the family of one Abebe Bikila, who had died in 1973, sued Vibram, seeking $15 million in damages, in the United States District Court in Tacoma, Washington.
Abebe Bikila was a legendary Ethiopian marathoner known for winning the 1960 Olympic Marathon with a record time. In 1964 Bikila became the first Olympian to win two consecutive gold medals in the marathon. Bikila won his second Olympic marathon by a margin of more than four minutes and set a world record.
Mr. Bikila died in 1973, as the result of complications from a serious 1968 motor vehicle accident that had left him paralyzed.
Mr. Bikila, however, is still remembered in the running world for his 1960 Olympics. He was a last-minute substitute for a member of the Ethiopian team who took sick. He arrived in Rome without adequate running shoes. Used to running barefoot in Ethiopia, Mr. Abebe decided a couple of hours before the race to run barefoot.
His record time in finishing the marathon first while running barefoot caused a sensation in the running world. There are awards and events named after him to this day. The New York Road Runners, the club that sponsors the New York Marathon, has had since 1978 an annual Abebe Bikila Award, awarded to a person for their contribution to long-distance running.
Suit alleged misuse of relative’s name by Vibram
The Bikila family’s complaint alleged that Vibram had misused their late relative’s name in advertising and promoting Vibram’s “‘FiveFingers’ line of minimalist running shoes. .. [that are designed] to mimic biomechanical properties of barefoot running while providing the protection of a conventional shoe.”
The complaint contends that Vibram’s “Bikila model shoes are named after Abebe Bikila and are intended to associate [Vibram’s] commercial footwear with Abebe Bikila’s legendary barefoot Olympic feats.”
The complaint alleges, in relevant part, that the Bikila family has “by their commercial uses, sponsorships, and promotion of historical and education events, and multimedia events emphasizing the cultural and athletic legacy of Abebe Bikila,. .. intentionally associated their family name with Abebe Bikila’s barefoot dedication to succeed under any circumstances.”
The Bikila family’s commercial uses of the name “Bikila” included, per the complaint:
- operating a sporting goods store bearing the name “Abebe Bikila”;
- publishing a book entitled “Triumph and Tragedy: A History of Abebe Bikila and his marathon career”;
- authorizing the use of “Abebe Bikila” in a Japanese commercial; and
- authorizing a feature film portraying the last years of Abebe Bikila’s life.
Further, the Bikila family has operated an Internet Web site “offer[ing] a comprehensive experience of the life and legacy of Abebe Bikila…contain[ing] pictures, videos, news events, and information on current races such as the Abebe Bikila International Marathon. .. held annually in Addis Ababa, which is sponsored by the Bikila family.”
Vibram argued that the Bikila complaint alleged sufficient facts to require insurers to defend
Vibram’s principal contention before the Supreme Judicial Court was that the Superior Court judge erred in concluding that the complaint did not assert a claim that it had used the Bikila family’s advertising idea when it advertised its running shoes.
According to Vibram, the advertising idea alleged in the complaint was the Bikila family’s intentional association of their family name with Abebe Bikila’s legacy and desirable qualities, and their use of the name “Bikila” to advertise the family’s running-related commercial ventures. Therefore, because the use of an “advertising idea” was within the scope of covered “advertising injur[ies]” covered by the policies, Vibram claimed that the insurers had a duty to defend it in the $15 million lawsuit brought against it by the Bikila heirs.
Supreme Judicial Court agrees undefined term “advertising idea” has a broad meaning
The Supreme Judicial Court’s decision started with the general question of whether the allegations in the complaint raise a claim that is potentially covered under the policies, thus triggering the insurers’ duty to defend Vibram.
In making that decision, the court restated the general principles of coverage for a legal defense under a liability policy:
- “It is settled that an insurer’s duty to defend is independent from, and broader than, its duty to indemnify;”
- “An insurer’s duty to defend the insured is triggered where the allegations in the complaint ‘are reasonably susceptible of an interpretation that states or roughly sketches a claim covered by the policy terms;’”
- “A liability insurer’s duty to defend is determined by comparing the allegations in the third-party complaint against the provisions of the insurance policy; and,
- “Any uncertainty as to whether the pleadings include or are reasonably susceptible to an interpretation that they include a claim covered by the policy terms is resolved in favor of the insured.”
In applying these principles to the Bikila complaint’s allegations, the court first noted that the policy term “advertising idea” had no definition in the policies in question. However, the court pointed to numerous decisions in other jurisdictions, since there were no Massachusetts decisions on point, that broadly defined an “advertising idea as:
- “an idea about the solicitation of business and customers;”
- “ideas in connection with marketing and sales and for the purpose of gaining customers;”
- “an idea for calling public attention to a product or business, especially by proclaiming desirable qualities so as to increase sales or patronage.”
The court then found it “not surprising that given this broad definition, courts have concluded that a wide variety of concepts, methods, and activities related to calling the public’s attention to a business, product, or service constitute advertising ideas.”
Court rules there is no question Vibram’s use of the name “Bikila” was an advertising idea
In making their decision, the court found, as an initial matter, that it was uncontested that Vibram’s use of “Bikila” to advertise its minimalist FiveFingers running shoes constituted an advertising idea. Vibram used the name of a legendary barefoot marathon runner for purposes of calling attention to its running shoes that simulated barefoot running.
In their complaint, the Bikila family asserted that through “their commercial uses, sponsorship, and promotion of historical and educational events,” they “intentionally associated their family name with Abebe Bikila’s barefoot dedication to succeed under any circumstances.” The name Bikila appears to have been prominently used in each of these running-related ventures, including operating a sporting goods store named after Bikila; sponsoring the annual “Abebe Bikila International Marathon”; operating an Internet Web site to promote that annual marathon as well as Bikila’s life and legacy; publishing and selling a book bearing Bikila’s name; permitting Abebe Bikila to be featured in a commercial; and authorizing a feature-length film about him.
Accordingly, the Court concluded that the complaint reasonably might be interpreted as claiming that the Bikila family intentionally created a connection between their family name and Abebe Bikila’s legacy and desirable qualities for purposes of using “Bikila,” and everything it conveyed, to attract customers to their running-related commercial ventures.
Insurers’ argument that complaint only related to Abebe Bikila’s right of publicity rejected
The insurers argued that the complaint raised claims related only to Abebe Bikila’s right of publicity, and not an advertising idea. They argued that because the Bikila family did not use the name Bikila to market a particular product or service, the name Bikila did not develop a “secondary meaning” or an association among consumers between a product or service and its source.
The Court found that such an interpretation unnecessarily narrowed the term given that an advertising idea focuses on how the public’s attention is being drawn to a business or product and not necessarily on the business or product itself.
The Court, in rejecting the insurers’ position saw no reason to narrow the scope of “advertising idea” by incorporating the secondary meaning requirement proposed by the insurers.
Reversal of Superior Court decision with an order requiring insurers to defend the Bikila lawsuit for Vibram
Based on their analysis, the court reversed the Superior Court grant of summary judgment in favor of the insurers and remanded the case to the Superior Court for entry of a judgment declaring that the insurers are obligated to pay Vibram’s reasonable costs for defending the underlying action.
As mentioned in the Agency Checklists’ article of June 6, 2017, “Court Rules Insurers Cannot Recover Paid Defense Costs When No Coverage Found,” as of the date of a Superior Court decision rejecting the insurers’ claim for reimbursement for defense costs paid under their reservation of rights had totaled $1,272,212.57.
