Insurer Off Hook in ‘Buckyballs’ IP Dispute

(CN) - An insurer did not have to provide legal defense in an intellectual property dispute brought by the estate of late master inventor Buckminster Fuller, a California appeals court held.

Buckminster "Bucky" Fuller is best known for creating the geodesic dome. He held 28 patents and wrote 28 books on a wide range of subjects.

In 2012, his estate filed a federal complaint in San Francisco against Maxfield & Oberton Holdings, the creators of Buckyballs - a set of 216 rare earth magnets arranged in a cube that can be rearranged into other shapes.

Maxfield & Oberton allegedly touted Buckyballs as the world's most popular desk toy. Fuller's estate claimed the company even acknowledged in a press release that its toy was "inspired and named after famous architectural engineer and inventor, R. Buckminster Fuller."

The estate sought an injunction and damages for unfair competition, invasion of privacy, name appropriation and unfair business practices.

Maxfield & Oberton moved to dismiss all causes of action, arguing among other things that Buckyballs are named after a carbon molecule, not Buckminster Fuller.

In 1985, scientists named a newly discovered molecule Buckminsterfullerene after its resemblance to Fuller's geodesic dome.

Several months after the Fuller estate sued, Alterra Excess and Surplus Insurance Company filed a declaratory relief action in San Francisco Superior Court, seeking an order that it had no duty to defend Maxfield in the action due to a policy exclusion for injuries caused by copyright, trademark and intellectual-property infringements.

While the lawsuits were pending, the U.S. Consumer Product Safety Commission filed a complaint against Maxfield to stop the company from making Buckyballs, which the commission called a "substantial product hazard."

After several back-and-forth motions between the Fuller estate, Alterra, and Maxfield, the superior court entered a judgment that "Alterra has no obligation to defend or indemnify Maxfield." The estate appealed to the California Court of Appeals.

Contrary to the estate's claim that the intellectual property exclusion in the disputed insurance policy is "hopelessly ambiguous," a panel for the First Appellate District found the exclusion to be "conspicuous, plain, and clear."

Writing for the panel in a ruling issued Monday, Judge James Richman rejected the estate's claim that the exclusion in the insurance policy must specify the types of excluded intellectual property, because the estate did not show prior case-law supporting that argument.

"It is noteworthy that every California case that has discussed the exclusion (or one like it) has found it applicable, without any concern that it was not clear or conspicuous," Richman wrote in the 23-page opinion. "Also noteworthy is the fact that in its opposition below the estate did not even make a similar argument, arguing only that the exclusion was 'hopelessly ambiguous.'"

And while the Fuller estate claimed Bucky's name cannot be bought and sold - and therefore isn't intellectual property under the policy - the three-judge panel noted that the estate has both registered and licensed Bucky's image numerous times, including to Apple for its "Think Different" ad campaign.

Judges J. Anthony Kline and Therese Stewart joined Richman in affirming the superior court's decision.

After Maxfield went out of business in 2012, the Fuller estate settled with the company's successor - MOH Liquidating Trust - for an undisclosed sum.

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