Insurer Forced to Split|Defense Costs in NFL Case

(CN) - The 9th Circuit upheld an order forcing an insurance company to split the $900,000 cost of defending a retailer accused of making and selling counterfeit NFL jerseys.

NFL Properties sued All Authentic for allegedly advertising fake Pittsburgh Steelers jerseys online. The shirts said "Steel Curtain" across the back and listed the numbers of four Steelers players, "using the same style of numbering and lettering as appears on the authentic Pittsburgh Steelers' NFL Uniform Design Jerseys," according to the lawsuit.

All Authentic Corp. called on its insurers, Hudson Insurance and Colony Insurance, to pay the defense costs.

Colony refused, claiming its policy didn't cover trademark infringement, though it covered "advertising injury," including copyright and slogan infringement.

Only Hudson agreed to defend All Authentic and racked up more than $900,000 in defense costs. It sued Colony in 2007, claiming the other insurer should have split the costs, because All Authentic faced potential liability for trade dress and slogan infringement -- claims that would have been covered under Colony's policy.

A federal judge in Los Angeles agreed and ordered Colony to pick up half the defense tab.

The three-judge panel in Pasadena, Calif., affirmed on appeal, saying Colony had a duty to defend All Authentic in the NFL lawsuit.

"Because the NFL complaint potentially stated a cause of action for slogan infringement, Colony had a duty to defend All Authentic in the NFL action, and Hudson is entitled to equitable contribution," Judge Robert Beezer wrote.

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