Erie Insurance Exchange v. Compeve Corporation

Illinois Official Reports
Appellate Court
Erie Insurance Exchange v. Compeve Corp., 2015 IL App (1st) 142508
Appellate Court ERIE INSURANCE EXCHANGE, Plaintiff-Appellee, v. COMPEVE
Caption CORPORATION and SLAVA PACKOVSKIS, Defendants-
Appellants.
District & No. First District, Fifth Division
Docket No. 1-14-2508
Filed May 8, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 13-CH-23607; the
Review Hon. Kathleen G. Kennedy, Judge, presiding.
Judgment Affirmed.
Counsel on David J.E. Roe, of Mount Prospect, for appellants.
Appeal
Bruce M. Lichtcsien, of Hinkhouse Williams Walsh LLP, of Chicago,
for appellee.
Panel JUSTICE GORDON delivered the judgment of the court, with
opinion.
Presiding Justice Palmer and Justice McBride concurred in the
judgment and opinion.
OPINION
¶1 Defendants, Compeve Corporation (Compeve) and Slava Packovskis, appeal from the trial
court’s entry of summary judgment in favor of plaintiff Erie Insurance Exchange (Erie). The
trial court found that Erie had no duty to defend defendants in a lawsuit filed against them by
Microsoft Corporation (Microsoft), which alleged that defendants violated Microsoft’s
intellectual property rights by selling computers loaded with unauthorized copies of
Microsoft’s software. For the reasons that follow, we affirm.
¶2 BACKGROUND
¶3 On October 18, 2013, Erie filed a complaint for declaratory judgment, alleging that
Compeve was the named insured on an insurance policy issued by Erie. Compeve and
Packovskis, Compeve’s owner, had been named in a lawsuit initiated by Microsoft in the
United States District Court for the Northern District of Illinois, in which Microsoft alleged
that Compeve installed counterfeit Microsoft software in the computers that it sells and that by
selling the counterfeit software, Compeve infringed upon Microsoft’s copyrights and
trademarks. Erie sought a declaratory judgment that under the terms and conditions of the
insurance policy, Erie had no obligation to defend or indemnify Compeve or Packovskis
against any of the allegations in the Microsoft litigation.1
¶4 The Microsoft complaint, filed on September 16, 2013, alleged that Compeve and
Packovskis “engaged in copyright and trademark infringement; false designation of origin[;]
false description and representation; and unfair competition.” Microsoft’s complaint alleged
that Compeve was engaged in the business of advertising, marketing, installing, offering, and
distributing computer hardware and software, “including purported Microsoft software.”
¶5 Paragraph 10 of Microsoft’s complaint alleged that “[d]efendants advertised, marketed,
installed, offered and distributed unauthorized copies of Microsoft software, infringing
Microsoft’s copyrights, trademarks and/or service mark.” Paragraph 11 alleged that “On
information and belief, Defendants advertise that the computers they sell come installed with
Microsoft software, and in their advertisements, Defendants misappropriate and/or infringe
Microsoft’s copyrights, advertising ideas, style of doing business, slogans, trademarks and/or
service mark.”
¶6 Microsoft’s complaint alleged that in March 2013, defendants sold a Microsoft
investigator several computers with unauthorized copies of Windows XP installed. In June
2013, Microsoft asked defendants to cease and desist from making and distributing infringing
copies of Microsoft software on computers. Nevertheless, in July 2013, defendants again sold
a Microsoft investigator several computers with unauthorized copies of Windows XP installed.
The complaint alleged that “[o]n information and belief, these are not isolated incidents.
Rather, Defendants have been and continue to be involved in advertising, marketing,
installing, offering, and/or distributing counterfeit and infringing copies of Microsoft’s
software and/or related components to unidentified persons or entities.” Microsoft alleged that
it “ha[d] been harmed by Defendants’ activities, including their advertising activities and
unauthorized use of Microsoft’s copyright protected material.”
1
The record indicates that the lawsuit between Microsoft and defendants was resolved through an
out-of-court settlement agreement in December 2013.
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¶7 The first count of Microsoft’s complaint, which is the only count relevant to the instant
appeal, was for copyright infringement. The count incorporated the allegations as set forth
above and alleged that “Defendants have infringed the copyrights in Microsoft’s software,
including but not limited to Microsoft Windows XP, by advertising, marketing, installing,
offering, and/or distributing infringing materials in the United States of America without
approval or authorization from Microsoft.”2
¶8 The insurance policy at issue in the instant case was an “Ultrapack Plus” policy with a
policy period of January 18, 2013, to January 18, 2014. The policy provided coverage for
“personal and advertising injury,” which was defined as:
“ ‘Personal and advertising injury’ means injury, including consequential ‘bodily
injury’, arising out of one or more of the following offenses:
***
g. Infringing upon another’s copyright, trade dress or slogan in your
advertisement’.”
“Advertisement” was further defined as “a notice that is broadcast or published to the general
public or specific market segments about your goods, products or services for the purpose of
attracting customers or supporters.”
¶9 The policy excluded coverage for, inter alia:
“i. Infringement Of Copyright, Patent, Trademark Or Trade Secret
‘Personal and advertising injury’ arising out of the infringement of copyright,
patent, trademark, trade secret or other intellectual property rights. Under this
exclusion, such other intellectual property rights do not include the use of another’s
advertising idea in your ‘advertisement’.
However, this exclusion does not apply to infringement, in your ‘advertisement’, of
copyright, trade dress or slogan.”
¶ 10 On March 4, 2014, Erie filed a motion for summary judgment, claiming that it had no duty
to defend defendants because the underlying complaint did not allege a covered “personal and
advertising injury” claim. With respect to Microsoft’s claim of copyright infringement, which
is the only claim at issue in the instant appeal, Erie argued that the allegations in the complaint
were not sufficient to trigger coverage for “personal and advertising injury” because there were
only conclusory allegations that Compeve violated Microsoft’s copyright in advertising and
there were no allegations of a causal connection between Compeve’s alleged advertisement
and Microsoft’s damages.
¶ 11 On March 12, 2014, defendants also filed a motion for summary judgment. Defendants
pointed to several paragraphs in Microsoft’s complaint alleging copyright infringement
through advertising, including those quoted above. They claimed that the insurance policy
provided coverage for such advertising injury and that Erie had breached its duty to defend.
¶ 12 On July 23, 2014, the parties came before the trial court for a hearing on their
cross-motions for summary judgment. After hearing argument, the court found that the
allegations of the Microsoft complaint did not bring any of its claims within or potentially
2
Microsoft had a separate count concerning alleged trademark infringement of its name
“Microsoft” and logo. However, that count is not at issue in the instant appeal, as defendants focus only
on the copyright count.
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within the insurance policy’s coverage. With respect to the claim for copyright infringement,
the court found that “there must be a causal connection between the Defendants’ alleged
advertising activity and Microsoft’s alleged advertising injury and the allegations of the
underlying complaint are insufficient to make that connection directly or potentially.”
Therefore, the court found that Erie had no duty to defend or indemnify defendants in the
Microsoft action. Accordingly, the trial court granted Erie’s motion for summary judgment
and denied defendants’ motion for summary judgment. This appeal follows.
¶ 13 ANALYSIS
¶ 14 On appeal, defendants argue that the trial court erred in granting summary judgment in
Erie’s favor because Erie had a duty to defend defendants in the Microsoft litigation. A trial
court is permitted to grant summary judgment only “if the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of law.” 735
ILCS 5/2-1005(c) (West 2008). The trial court must view these documents and exhibits in the
light most favorable to the nonmoving party. Home Insurance Co. v. Cincinnati Insurance Co.,
213 Ill. 2d 307, 315 (2004). We review a trial court’s decision to grant a motion for summary
judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90,
102 (1992). De novo consideration means we perform the same analysis that a trial judge
would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578 (2011). “ ‘The
construction of an insurance policy and a determination of the rights and obligations
thereunder are questions of law for the court which are appropriate subjects for disposition by
way of summary judgment.’ ” Steadfast Insurance Co. v. Caremark Rx, Inc., 359 Ill. App. 3d
749, 755 (2005) (quoting Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.
2d 384, 391 (1993)).
¶ 15 “Summary judgment is a drastic measure and should only be granted if the movant’s right
to judgment is clear and free from doubt.” Outboard Marine Corp., 154 Ill. 2d at 102.
However, “[m]ere speculation, conjecture, or guess is insufficient to withstand summary
judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). A defendant
moving for summary judgment bears the initial burden of proof. Nedzvekas v. Fung, 374 Ill.
App. 3d 618, 624 (2007). The defendant may meet his burden of proof either by affirmatively
showing that some element of the case must be resolved in his favor or by establishing “ ‘that
there is an absence of evidence to support the nonmoving party’s case.’ ” Nedzvekas, 374 Ill.
App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). In other words,
there is no evidence to support the plaintiff’s complaint.
¶ 16 “ ‘The purpose of summary judgment is not to try an issue of fact but *** to determine
whether a triable issue of fact exists.’ ” Schrager v. North Community Bank, 328 Ill. App. 3d
696, 708 (2002) (quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). However, “[w]hen, as
in this case, parties file cross-motions for summary judgment, they concede the absence of a
genuine issue of material fact and invite the court to decide the questions presented as a matter
of law.” Steadfast Insurance, 359 Ill. App. 3d at 755 (citing Continental Casualty Co. v. Law
Offices of Melvin James Kaplan, 345 Ill. App. 3d 34, 37-38 (2003)). We may affirm on any
basis appearing in the record, whether or not the trial court relied on that basis or its reasoning
was correct. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
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¶ 17 In Illinois, the duties to defend and to indemnify are not coextensive, with the obligation to
defend being broader than the obligation to pay. International Minerals & Chemical Corp. v.
Liberty Mutual Insurance Co., 168 Ill. App. 3d 361, 366 (1988). In determining whether an
insurer has a duty to defend its insured, a court looks to the allegations in the underlying
complaint and compares them to the relevant provisions of the insurance policy. Outboard
Marine Corp., 154 Ill. 2d at 107-08. “If the facts alleged in the underlying complaint fall
within, or potentially within, the policy’s coverage, the insurer’s duty to defend arises.”
Outboard Marine Corp., 154 Ill. 2d at 108. However, if it is clear from the face of the
complaint that the allegations fail to state facts that bring the case within, or potentially within,
the policy’s coverage, an insurer may properly refuse to defend. United States Fidelity &
Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991) (quoting State Farm Fire &
Casualty Co. v. Hatherley, 250 Ill. App. 3d 333, 336 (1993)). “[W]here an exclusionary clause
is relied upon to deny coverage, its applicability must be clear and free from doubt because any
doubts as to coverage will be resolved in favor of the insured.” International Minerals &
Chemical Corp., 168 Ill. App. 3d at 367. “[W]here the language of an insurance policy is clear
and unambiguous, it will be applied as written.” Hatherley, 250 Ill. App. 3d at 337. The
construction of an insurance policy presents a question of law that is reviewed de novo.
Outboard Marine, 154 Ill. 2d at 108. As noted, de novo consideration means we perform the
same analysis that a trial judge would perform. Khan, 408 Ill. App. 3d at 578.
¶ 18 As an initial matter, the parties disagree as to which party has the burden of proving
whether Erie had a duty to defend defendants. Our supreme court has “long established that the
burden is on the insured to prove that its claim falls within the coverage of an insurance
policy.” Addison Insurance Co. v. Fay, 232 Ill. 2d 446, 453 (2009). “Once the insured has
demonstrated coverage, the burden then shifts to the insurer to prove that a limitation or
exclusion applies.” Addison, 232 Ill. 2d at 453-54. Thus, defendants would bear the initial
burden of proving coverage, but Erie would bear the burden of proving that the exclusion for
“Infringement Of Copyright, Patent, Trademark Or Trade Secret” applies. In the case at bar,
however, there was an exception to the exclusion, which operated to restore coverage, and it is
this exception that is at issue. The question, then, is which party has the burden of proving
whether or not this exception applies. Unsurprisingly, Erie argues that defendants have the
burden of proving that the exception applies and coverage should be restored, while defendants
argue that Erie has the burden of proving that the exception does not apply and the exclusion
controls.
¶ 19 Neither the parties nor our research has revealed an Illinois court that has answered this
question. However, the Seventh Circuit, applying Illinois law, has stated that while insurers
have the burden of proving that an exclusion applies, “[i]nsureds, in turn, have the burden to
prove that an exception to an exclusion restores coverage.” Santa’s Best Craft, LLC v. St. Paul
Fire & Marine Insurance Co., 611 F.3d 339, 347 (7th Cir. 2010). In making its statement, the
Seventh Circuit relied on a treatise indicating that “[t]here is some uncertainty concerning the
proper allocation of the burden of proof as to the applicability of an exception which, in effect,
restores the coverage taken away by the exclusion. The trend clearly appears, however, to
place the burden on insureds to prove that an exception to an exclusion applies to restore
coverage.” 17A Steven Plitt et al., Couch on Insurance § 254:13 (3d ed. 2014).
¶ 20 In the case at bar, however, we have no need to resolve this question. Regardless of which
party bears the burden, we are required to examine the allegations of the Microsoft complaint
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in order to determine whether the facts alleged fall within, or potentially within, the policy’s
coverage. See Outboard Marine Corp., 154 Ill. 2d at 107-08. As noted, this is a question of law
that is reviewed de novo. Outboard Marine, 154 Ill. 2d at 108. Furthermore, even when the
insurer bears the burden of proving that an exclusion applies, “where an exclusionary clause is
relied upon to deny coverage, its applicability must be clear and free from doubt because any
doubts as to coverage will be resolved in favor of the insured.” International Minerals &
Chemical Corp., 168 Ill. App. 3d at 367. Thus, it makes no difference to our analysis whether
Erie or defendants bear the burden of proof in the instant case. As such, we turn to the merits of
the parties’ arguments.
¶ 21 In the case at bar, the trial court granted Erie’s motion for summary judgment, finding that
“there must be a causal connection between the Defendants’ alleged advertising activity and
Microsoft’s alleged advertising injury and the allegations of the underlying complaint are
insufficient to make that connection directly or potentially.” On appeal, defendants argue that
Illinois law imposes a causal connection requirement only in patent cases, not in copyright
cases as in the instant case. We do not find this argument persuasive.
¶ 22 Under Illinois law, there are three elements required to trigger advertising injury coverage:
(1) Compeve “must have been engaged in advertising activity during the policy period when
the injury occurred”; (2) Microsoft’s allegations “must raise a potential for liability under one
of the offenses listed in the policies”; and (3) “there must be a causal connection between the
alleged injury and the advertising activity.” Lexmark International, Inc. v. Transportation
Insurance Co., 327 Ill. App. 3d 128, 137 (2001); Greenwich Insurance Co. v. RPS Products,
Inc., 379 Ill. App. 3d 78, 86-87 (2008). It is only this last element that defendants challenge in
the instant case.
¶ 23 Contrary to defendants’ assertion, these elements are not found solely in patent
infringement cases but have been applied to other intellectual property claims as well. For
instance, the Lexmark court applied these elements in considering whether advertising injury
coverage had been triggered for claims of “ ‘misappropriation of advertising ideas or style of
doing business,’ ‘disparagement of [the underlying plaintiff’s] goods, products, or services,’
and ‘infringement of slogan.’ ” Lexmark, 327 Ill. App. 3d at 138. Likewise, in Greenwich, we
applied the elements to claims of unfair competition and trademark infringement in addition to
considering the patent infringement claim. Greenwich, 379 Ill. App. 3d at 87. Thus, the trial
court correctly found that there must be a causal connection between Microsoft’s alleged
injury and defendants’ advertising activity.
¶ 24 Furthermore, we do not find persuasive defendants’ argument that the policy language at
issue does not require a causal connection, as was the case in other cases that imposed a causal
connection requirement. The Erie policy defined “personal and advertising injury” as:
“injury, including consequential ‘bodily injury’, arising out of one or more of the
following offenses:
***
g. Infringing upon another’s copyright, trade dress or slogan in
your ’advertisement’.”
Defendants acknowledge in their brief that “[t]he policy states that there has to be an
infringement of the copyright in the advertisement” (emphasis omitted), but nevertheless argue
that “there is nothing in the policy that requires a causal connection.” They reach this result by
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parsing the language of cases in which a causal connection has been required. Specifically,
defendants quote the language of the insurance policy at issue in International Insurance Co. v.
Florists’ Mutual Insurance Co., 201 Ill. App. 3d 428, 431 (1990), which provided that an
advertising injury included “ ‘libel, slander, defamation; infringement of copyright, title or
slogan; piracy, unfair competition, idea misappropriation or invasion of rights of privacy;
which arise out of YOUR advertising activities.’ ” Defendants claim that “[a]s the policy is
written in that case, the copyright infringement would have to arise out of the advertising
activity and therefore, that [led] the court to interpret the policy as requiring a causal
connection.”
¶ 25 Defendants’ citation of International Insurance Co. does nothing to explain why the policy
language in that case leads to a different result than in this case. In both cases, the injury needs
to be tied to the advertisement. Under the Erie policy, a “personal or advertising injury” is an
injury arising out of infringing upon another’s copyright “in your ‘advertisement’.” (Emphasis
added.) The express language of the policy requires that the injury must arise from copyright
infringement that is contained in the advertisement in order for there to be an advertising
injury. Thus, the policy’s language requires a connection between the injury and the
advertisement. The same connection between the injury and the advertisement is again set
forth in the language of the exception that operates to restore coverage: “this exclusion does
not apply to infringement, in your ‘advertisement’, of copyright, trade dress or slogan.”
¶ 26 Moreover, International Insurance Co. is the only case defendants cite in their argument
that the Erie policy uses language different than that interpreted by courts imposing a causal
connection requirement. However, the Erie policy contains identical language to the insurance
policy at issue in Greenwich, which, as noted, imposed a requirement of a causal connection
between the alleged injury and the advertising activity. See Greenwich, 379 Ill. App. 3d at 83
(“ ‘ “Personal and advertising injury” means injury, including consequential “bodily injury”,
arising out of one or more of the following offenses *** c. Infringing upon another’s copyright,
trade dress or slogan in your ‘advertisement”.’ ”). Thus, the trial court properly found that a
causal connection between Microsoft’s injury and Compeve’s advertisement was required.
¶ 27 Defendants next argue that if we find that a causal connection was required, we should also
find that such a connection was alleged in the Microsoft complaint. We do not find this
argument persuasive. While Microsoft included allegations involving defendants’ advertising,
those allegations were conclusory. For instance, paragraph 10 of Microsoft’s complaint
alleged that “[d]efendants advertised, marketed, installed, offered and distributed unauthorized
copies of Microsoft software, infringing Microsoft’s copyrights, trademarks and/or service
mark.” Paragraph 11 alleged that “On information and belief, Defendants advertise that the
computers they sell come installed with Microsoft software, and in their advertisements,
Defendants misappropriate and/or infringe Microsoft’s copyrights, advertising ideas, style of
doing business, slogans, trademarks and/or service mark.” In the count specifically concerning
copyright infringement, Microsoft alleged that “Defendants have infringed the copyrights in
Microsoft’s software, including but not limited to Microsoft Windows XP, by advertising,
marketing, installing, offering, and/or distributing infringing materials in the United States of
America without approval or authorization from Microsoft.” Microsoft also alleged that it
“ha[d] been harmed by Defendants’ activities, including their advertising activities and
unauthorized use of Microsoft’s copyright protected material.”
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¶ 28 The facts as alleged in the complaint do not establish any sort of connection between
copyright infringement in the advertisement and Microsoft’s alleged injury. They merely
allege, in a conclusory fashion, that Microsoft was harmed by defendants’ advertising
activities. Indeed, as Erie points out, the complaint does not even allege any facts that a
Compeve advertisement itself infringed on Microsoft’s copyright, as is required for coverage
under the insurance policy. Such allegations are not sufficient to demonstrate an advertising
injury, and our state and federal courts have reached this conclusion several times.
¶ 29 For instance, in Greenwich, we considered whether an allegation of patent infringement
fell within the insurance policy’s definition of advertising injury which, as noted, is identical to
that in the case at bar. We noted that “something more than the mere advertisement of an
infringing product is required to bring such action within the scope of coverage. [Citations.]
The advertisement must instruct or explain to the purchaser exactly how to recreate or
reassemble the product into one that infringes a patent.” Greenwich, 379 Ill. App. 3d at 86. We
found that “[c]ount I of [the underlying] amended complaint (that RPS manufactured and sold
allegedly infringing products) does not allege that RPS provided any detailed instructions to its
customer on how to infringe the patent.” Greenwich, 379 Ill. App. 3d at 86. Accordingly, we
found the argument that the “act of advertising infringing products” fell within the definition of
advertising injury to be unpersuasive. Greenwich, 379 Ill. App. 3d at 86. See also Konami
(America) Inc. v. Hartford Insurance Co. of Illinois, 326 Ill. App. 3d 874, 880 (2002) (in the
context of patent infringement claims, “something more is required for this type of
infringement than the mere advertising of a product”).
¶ 30 While defendants correctly point out that patent and copyright are different concepts,
Greenwich is nevertheless instructive to our analysis in the instant case because it stands for
the proposition that in order for there to be an advertising injury, “something more than the
mere advertisement of an infringing product is required to bring such action within the scope of
coverage.” Greenwich, 379 Ill. App. 3d at 86. Furthermore, the Seventh Circuit has reached the
same conclusion with respect to a claim of copyright infringement. In Skylink Technologies,
Inc. v. Assurance Co. of America, 400 F.3d 982, 983 (7th Cir. 2005), Chamberlain, the maker
of a garage door opener with “rolling code” technology, claimed that Skylink infringed
Chamberlain’s copyright by selling a transmitter and keypad that were “designed to get
around” Chamberlain’s technology. Specifically, Chamberlain alleged that Skylink “ ‘has
made, imported, offered to the public, provided and otherwise trafficked in a Model 39
universal transmitter and a Model 89 keypad that *** (c) are marketed by Skylink for use in
circumventing [Chamberlain’s] technological measure’ ” in violation of section 1201(a) of the
Copyright Act of 1976 (17 U.S.C. § 1201(a) (2000)). Skylink, 400 F.3d at 985. The Seventh
Circuit found that the copyright infringement claim did not constitute an advertising injury
under the insurance policy, noting:
“[T]he real harm Chamberlain alleges results from the fact that the Skylink transmitter
and keypad circumvent the rolling code technology, not from the way the products are
packaged. Again, Chamberlain does not object to Skylink’s marketing of its products
except to the extent that they claim to use the rolling code technology. It is that failure
to use the technology, not the advertisement, that caused the alleged injury.” Skylink,
400 F.3d at 986.
¶ 31 The district court for the northern district of Illinois has also recently considered this issue
and has reached the same conclusion. In Lemko Corp. v. Federal Insurance Co., No. 12 C
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03283, 2014 WL 4924403, at *8 (N.D. Ill. Sept. 30, 2014), the district court considered
whether the underlying complaint by Motorola alleged an advertising injury based on
copyright infringement. Interpreting the identical policy language as that present in the case at
bar, the district court found that the underlying complaint did not allege that Lemko infringed
Motorola’s copyrights in any Lemko advertisement. Lemko, 2014 WL 4924403, at *9. The
court noted:
“It is true that the Motorola complaint asserts in general terms that Lemko used
proprietary information it repurposed from Motorola in products that it marketed but
that does not equate to ‘advertising’ within the meaning of the policy. Motorola’s
allegations pertain to the theft and use of the technology in Lemko products, not in any
‘advertisement.’ Advertising a product that, in turn, incorporates misappropriated or
infringing content, is not the same as an advertisement that itself infringes a copyright
by disclosing the copyrighted content.” (Emphases in original.) Lemko, 2014 WL
4924403, at *9.
While both Lemko and Skylink are federal cases and, therefore, are not binding upon this court,
we find their reasoning persuasive to the issues present in the instant case.
¶ 32 In the case at bar, Microsoft’s complaint is aimed at the installation of unauthorized
Microsoft products in Compeve’s computers. The complaint does not allege that any
copyrighted information was contained in a Compeve advertisement, nor does it allege, in
more than conclusory fashion, that the contents of Compeve’s advertisement harmed
Microsoft. To establish copyright infringement, there must be copying. See, e.g., Incredible
Technologies, Inc. v. Virtual Technologies, Inc., 400 F.3d 1007, 1011 (7th Cir. 2005) (“To
establish copyright infringement, a plaintiff must prove ‘(1) ownership of a valid copyright,
and (2) copying of constituent elements of the work that are original.’ ” (quoting Feist
Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991))). There is no
allegation of any copying within the advertisement itself, only that Compeve advertised that it
was selling Microsoft’s products. As noted, “[a]dvertising a product that, in turn, incorporates
misappropriated or infringing content, is not the same as an advertisement that itself infringes a
copyright by disclosing the copyrighted content.” (Emphasis in original.) Lemko, 2014 WL
4924403, at *9. Microsoft’s complaint does not allege that Microsoft’s copyright was
infringed in Compeve’s advertisement, nor does it allege any connection between Microsoft’s
injury and the copyright infringement in the advertisement. Accordingly, we cannot find that
the trial court erred in granting summary judgment in Erie’s favor.
¶ 33 As a final matter, we note that Erie raised a number of issues before the trial court as to
other exclusions that it argued applied to the copyright infringement count, as well as to the
other counts of the Microsoft complaint. However, defendants only argue the issues
concerning the count for copyright infringement in their brief on appeal, noting that “if a duty
to defend the copyright infringement allegation exists, Erie was under a duty to defend the
entire complaint.” While defendants claim in their reply brief that they “did not waive [their]
right to contest additional grounds on which the Policy excludes coverage,” it is well settled
that points not argued on appeal are waived. Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d
217, 253 (2010); Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013) (“Points not argued [in the
appellant’s brief] are waived and shall not be raised in the reply brief, in oral argument, or on
petition for rehearing.”). Accordingly, we do not consider any other bases for finding or
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excluding coverage.
¶ 34 CONCLUSION
¶ 35 The trial court properly entered summary judgment in Erie’s favor where the Microsoft
complaint did not allege an “advertising injury” under the terms of the insurance policy.
¶ 36 Affirmed.
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