Hershey - Motion For Summary Judgment
Hershey - Motion For Summary Judgment
TABLE OF CONTENTS
I. INTRODUCTION .............................................................................................................. 1
B. Because The Underlying Action Alleges “Advertising Injury,” Liberty Cannot Meet Its
Burden To Deny Coverage. .............................................................................................. 10
3. F’real’s Complaint alleges that Hershey uses its ideas and slogans in its
“advertisements.” .............................................................................................................. 15
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I. INTRODUCTION
This is an insurance coverage dispute. Liberty Mutual Fire Insurance
(“F’real”), in an action pending in the United States District Court for the District of
Delaware (the “Underlying Action”). As set forth below, F’real’s claims allege
phrases beginning with the word “REAL” and that this infringes on F’real’s “REAL
F’real’s claims fall squarely within the scope of Liberty’s coverage and, therefore,
judgment that Liberty is and has been obligated to defend Hershey in the Underlying
Action. Hershey also seeks partial summary judgment on Count III of the Complaint,
that Liberty is liable for breach of the insurance policy because it has failed to defend
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Defendant Liberty Insurance Corporation issued umbrella policies covering
Plaintiff, and has also denied coverage. Summary Judgment against Liberty
Insurance Corporation on Counts II and IV is not sought in this Motion.
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Hershey filed its Complaint on March 29, 2018, and it was served upon
Liberty on April 5, 2018. The Amended Complaint was filed on April 25, 2018.
Liberty timely answered the Amended Complaint on May 9, 2018. By Order dated
June 18, 2018, the Court provided for cross-motions for summary judgment no later
policies through Liberty for the period of time at issue in this case. (Id. ¶2.)
used to market the companies’ competing self-serve milkshake products, which are
and further claims or suggests it has ownership rights in these slogans. (Id. ¶4.)
F’real asserts that “[a] key part of f’real’s advertising to identify and distinguish its
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products is the prominent use of the word ‘REAL.’” (Id. ¶5.) The Complaint
explains that even the name “F’real” was chosen “to allude, in part, to the fact that
[F’real’s founder] was using authentic ingredients, such as milk and ice cream, in
his milkshake products, rather than the heavy stabilizers and thickening agents of his
competitors.” (Id. ¶6.) F’real’s Complaint goes on to allege that Hershey has
infringed upon its intellectual property by using similar advertising ideas and slogans
28. . . . Like f’real, the advertising signage makes repeated and prominent
use of the word “REAL” in capital letters, including multiple references
to “REAL ICE CREAM,” “REAL MILKSHAKES” and “REAL FAST.”
***
56. The use by Hamilton Beach, Hershey Creamery and Mills Brothers of
the “REAL ICE CREAM,” “REAL MILKSHAKES” and “REAL
FAST” marks for competing blending machines and milkshakes
constitutes a reproduction, copying, counterfeit and colorable imitation
of f’real’s federally registered “F’REAL” and “F’REAL” with swirl
marks in a manner that is likely to cause confusion or mistake or is likely
to deceive consumers.
***
59. The use by Hamilton Beach, Hershey Creamery and Mills Brothers of
the “REAL ICE CREAM,” “REAL MILKSHAKES” and “REAL
FAST” marks for competing blending machines and milkshakes
constitutes a reproduction, copying, counterfeit and colorable imitation
of f’real’s “F’REAL,” “F’REAL” with swirl and “REAL
MILKSHAKES ARE REAL BETTER” marks in a manner that is likely
to cause confusion or mistake or is likely to deceive consumers.
(Id. ¶7.)
Accordingly, the crux of F’real’s Complaint is that Hershey has infringed its
trademarks by including F’real’s ideas and slogans in Hershey’s signage and other
advertising. Much of discovery in the Underlying Action has centered on this other
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“advertising” alluded to in the Complaint: Hershey signage for the windows and
walls of retailers, the sales brochure for the Shake Shop Express, mailings to
customers and sales videos posted to its website and YouTube. (Id. ¶¶8–12.)
Hershey Vice President of Sales Thomas Holder was asked during his deposition,
“Who determined the slogans that would be used in selling the Shake Shop Express
program?” (Id. ¶10.) F’real has also explored Hershey’s registration with the patent
and trademark office of the slogan “Real Ingredients. Real Ice Cream. Real Smiles,”
which it includes on all its products (Id. ¶13.) F’real has sought witnesses with
design of Hershey’s “advertising, including choice of the word ‘Real’ for use in . . .
(Count V) and Common Law Trademark Infringement (Count VI), and seeks
policies (collectively the “CGL Policies”) Liberty issued for the applicable policy
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1. Insuring Agreement
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2. Exclusions
Trade Dress Infringement claim, Liberty withdrew its defense, citing the trademark
By letter dated April 4, 2016, then counsel for Hershey wrote to Liberty to
provide “additional facts, information and case law,” explaining that F’real’s
infringed upon F’real’s slogan “REAL MILKSHAKES ARE REAL BETTER,” and
that these phrases and other prominent uses of the word “REAL” appear in Hershey’s
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advertising. (Id. ¶20.) Liberty has continued to deny coverage, incorrectly asserting
that (1) the F’real Complaint does not allege slogan infringement or even contain the
word “slogan”; and (2) there is no allegation that Hershey used an “advertisement”
Can Liberty meet its burden to demonstrate that F’real’s claims fall
definitively outside the scope of coverage?
any material fact and that the moving party is entitled to judgment as a matter of
law.” While genuine disputes of material fact must be resolved in favor of the party
opposing the motion, “when the moving party has carried its burden under Rule
56(c), its opponent must do more than simply show that there is some metaphysical
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
of law. See Kvaerner Metals Div. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa.
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declaratory judgment action.” Bowers v. Feathers, 671 A.2d 695, 6976 (Pa. Super.
1995).
VI. ARGUMENT
A. Liberty Is Obligated To Defend Hershey Unless It Proves That There Is
No Reasonable Interpretation Of The Policy That Would Allow
Coverage.
Where, as here, an insurer relies on a policy exclusion as the basis for its denial
of coverage and refusal to defend, the insurer has asserted an affirmative defense
and, accordingly, bears the burden of proving such defense. Frederick Mut. Ins. Co.
v. Ahatov, 274 F. Supp. 3d 273, 283 (E.D. Pa. 2017) (citing Erie Ins. Exch. v. Muff,
851 A.2d 919, 926 (Pa. Super. 2004)). An insurance company must cover its
insured’s defense costs “as long as the complaint comprehends an injury which may
be within the scope of the policy,” and “any doubts on this score are to be resolved
in favor of the insured.” Nationwide Ins. v. Zovalis, 52 F.3d 689, 694 (7th Cir. 1995)
(summarizing Pennsylvania law, citing nine Pennsylvania cases). “Since the insurer
agrees to absolve the insured of the burden of defending even those suits which have
no basis in fact, the obligation to defend arises whenever the complaint filed by the
injured party may potentially come within the coverage of the policy.” Phico. Ins.
Co. v. Presbyterian Med. Servs. Corp., 663 A.2d 753, 755 (Pa. Super. 1995). In
other words, “[a]s long as the complaint ‘might or might not’ fall within the policy’s
coverage, the insurance company is obliged to defend.” Am. & Foreign Ins. Co. v.
Jerry’s Sport Ctr., Inc., 2 A.3d 526, 541 (Pa. 2010); see also Redevelopment Auth.
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v. Ins. Co. of N. Am., 675 A.2d 1256, 1256 (Pa. Super. 1996) (“[I]f a complaint filed
against an insured may potentially come within the coverage of the policy, the
Pennsylvania employs the “four corners rule,” under which a court looks
coverage. Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 678 (3d Cir. 2016)
(citation omitted). However, the four corners rule “does not permit an insurer to
make its coverage decision with blinders on, disclaiming any knowledge of
outside the complaint, until the [plaintiff’s] claim is narrowed to one patently outside
the policy coverage, the insurer has a duty to defend claims against its insured.” Id.
at 678 (citation omitted). The factual allegations of the complaint, rather than the
particular cause of action alleged, determine the duty to defend. Mutual Benefit Ins.
Co. v. Haver, 725 A.2d 743, 745 (Pa. 1999). Moreover, ambiguity in an insurance
policy “must be construed against the insurer and in favor of the insured; any
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generally, the policies provide that this exclusion does not apply to infringement
public or specific market segments about your goods, products, or services for the
F’real’s Complaint alleges that Hershey uses F’real’s advertising ideas and
infringes its slogans – specifically F’real’s prominent use of the word and concept
“REAL” in its advertising and its slogans such as “Blend a F’REAL…for REAL,”
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Ramara, 814 F.3d at 677; see also Lebas Fashion Imports of USA v. ITT Hartford
Ins. Group, 59 Cal. Rptr. 2d 36, 44-45 (Ct. App. 1996) (phrase “advertising idea” is
Court have offered various definitions of the term. For example, the Third
Circuit suggested that “advertising idea” is “an idea about the solicitation of business
and customers.” Green Mach. Corp. v. Zurich-Am. Ins. Grp., 313 F.3d 837, 839 (3d
Cir. 2002). The Pennsylvania Superior Court, citing a 1944 Pennsylvania Supreme
Court decision that did not involve insurance coverage, described “advertising idea”
as “an idea for advertising that is ‘novel and new,’ and ‘definite and concrete,’ such
that it is capable of being identified as having been created by one party and [used]
by another.” Sorbee Int’l Ltd. v. Chubb Custom Ins. Co., 735 A.2d 712, 714 (Pa.
Super. Ct. 1999) (quoting Thomas v. R.J. Reynolds Tobacco Co., 38 A.2d 61, 64 (Pa.
1944)). Still other courts have defined “advertising idea” as “an idea for calling
qualities so as to increase sales or patronage.” Atl. Mut. Ins. Co. v. Badger Med.
Supply Co., 528 N.W.2d 486, 490 (Wis. Ct. App. 1995); see also Hyman v.
Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1188 (11th Cir. 2002) (defining
the public”). Under any of these definitions, there can be no doubt that F’real’s
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As set forth above, F’real alleges that it has developed a distinctive advertising
concept, a key part of which is the prominent use of the word “REAL” to convey the
the term “REAL” in its advertising to solicit customers and “increase sales or
BETTER.” Moreover, F’real points to Hershey’s prominent use (like F’real) of the
word “REAL” in the phrases “REAL ICE CREAM,” “REAL MILKSHAKES,” and
“REAL FAST” for Hershey’s competing products as infringing. (See also id. ¶13
Real Ice Cream. Real Smiles.”).) Accordingly, rather than merely alleging
as an advertising idea, which F’real alleges it developed, and thus F’real’s claims
“slogan” should be interpreted in accordance with its plain and ordinary meaning.
In this regard, the Oxford Dictionary of English defines “slogan” as “a short and
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(3d ed. 2014). Another dictionary defined “slogan” as a “‘distinctive cry, phrase, or
Cincinnati Ins. Co. v. Zen Design Grp., Ltd., 329 F.3d 546, 556 (6th Cir. 2003)
(quoting Random House Unabridged Dictionary 1800 (2d ed. 1993)) (Michigan
law); see also id. at 556 n. 10 (“Other definitions for slogan include: (1) ‘A brief
attention-getting phrase used in advertising or promotion’; and (2) ‘[A] phrase used
1120 (1999))); cf. Hugo Boss Fashions, Inc. v. Fed. Ins. Co., 252 F.3d 608, 618 (2d
itself”).
sufficient to trigger an insurer’s duty to defend. For example, the Sixth Circuit
concluded that the phrase “The Wearable Light”, which appeared separate from the
phrase’ used by the manufacturer to promote its product,” as well as “[a] brief
556-57 (quotation omitted). Allegations that the insured used the same phrase for
its products “are arguably allegations of slogan infringement.” Id. at 557. Similarly,
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in Hudson Ins. Co. v. Colony Ins. Co., the Ninth Circuit concluded that the
phrase “used to promote fan loyalty to the [Pittsburgh] Steelers.” 624 F.3d 1264,
1268 (9th Cir. 2010) (California law) (quotations omitted). Cf. Santa’s Best Craft,
LLC v. St. Paul Fire & Marine Ins. Co., No. 04 C 1342, 2004 WL 1730332, at *3,
7-8 (N.D. Ill. July 30, 2004) (Illinois law) (applying different policy language, but
Technology”, “String Stays Lit even if a bulb is loose or missing!” and “worry-free
lighting” implicated duty to defend), aff’d, 611 F.3d 339 (7th Cir. 2010); Finger
Furniture Co., Inc. v. Travelers Indem. Co. of Conn., No. Civ.A. H-01-2797, 2002
WL 32113755, at *10 (S.D. Tex. Aug. 19, 2002) (Report & Recommendation)
(Texas law) (holding “TRUE VALUE” could be a “title or slogan”, the infringement
. . . for REAL” and “REAL Milkshakes, REAL Good” as its “advertising slogans,”
and its phrase “REAL MILKSHAKES ARE REAL BETTER” is just as much an
“advertising slogan.” (SUMF ¶4.) Like the phrases in the foregoing cases, these
“catchword[s] or catch phrase[s]” are “short and striking memorable phrases used in
advertising” and, therefore, meet any reasonable definition of “slogan.” F’real uses
such phrases to promote its products and convey a sense of “authentic ingredients.”
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F’real then alleges that Hershey infringes these slogans by using the identical slogan
“REAL MILKSHAKES,” as well as the phrases “REAL ICE CREAM” and “REAL
FAST” in its “advertising” to promote its own competing products. (SUMF ¶7; see
also id. ¶10 (asking Hershey Vice President Holder during his deposition, “Who
determined the slogans that would be used in selling the Shake Shop Express
slogan infringement and, therefore, fall within the scope of Liberty’s coverage.
F’real’s Complaint alleges that Hershey uses its ideas and slogans in
its “advertisements.”
In its supplemental letter outlining the basis for its denial of coverage, Liberty
asserts that Hershey’s use of the offending phrases and ideas do not meet the policy
infringed a f’real trademark in ‘a paid announcement’ nor is there any allegation that
on which are printed and published Hershey’s slogans for the purpose of attracting
for its competing milkshakes. (Id.) Although the Complaint does not allege
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Construing the Complaint liberally in Hershey’s favor, as this Court must under
Pennsylvania law, see Ramara, 814 F.3d at 673, F’real potentially alleges
Hershey places not only at the point of sale, but also at other areas of customer
locations, and on the sides of its ice cream delivery trucks, (SUMF ¶¶8, 12) – F’real
infringement. In that regard, F’real has clearly interpreted its own Complaint to
advertising video postings on its website and to YouTube, and sales brochures
“advertising, including choice of the word ‘REAL’ for use in . . . advertising.” (Id.
¶14 (emphasis added).) Hershey’s “use” of the allegedly infringing slogans and
ideas includes printed and published “freezer wraps,” “flavor strips,” posters,
window graphics, banners, electronic menus, gas hose graphics, t-shirts, signs,
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Indeed, F’real sought discovery of Hershey’s “advertising expenditures,” (SUMF
¶14), and the fact is Hershey paid to have these signs printed, published and
distributed for purposes of advertising its products to the public. (Id. ¶12.)
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“freezer translites,” brochures, catalogs, “mobile cart wraps,” “sell sheets,” and
slogans at issue in this case. Under the CGL Policies’ broad definition, and with any
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VII. CONCLUSION
For these reasons, Hershey requests that the Court enter an order granting
summary judgment in its favor on Count I, for declaratory judgment, and partial
Respectfully Submitted,
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Although it is F’real’s claims for trademark infringement (Counts V and VI) in the
Delaware Action that trigger coverage under the CGL Policies, Liberty’s duty to
defend extends to all claims in the Delaware Action, not just covered claims. Post
v. St. Paul Travelers Ins. Co., 691 F.3d 500, 517 (3d Cir. 2012). As such, Hershey
is seeking reimbursement and payment of costs incurred to defend all claims in the
Delaware Action.
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CERTIFICATE OF SERVICE
I hereby certify that on September 14, 2018, the foregoing Brief in Support
of its Motion for Partial Summary Judgment is being filed through and is being