Insurers Must Defend Hyundai in Patent Case

(CN) - Two insurance companies must defend Hyundai against patent infringement claims, the 9th Circuit ruled, because the car maker's policy covered "advertising injury."

Hyundai was sued by patent holding company Orion IP over two items on its Web site: a build-your-own-vehicle feature and a parts catalogue.

The car manufacturer turned to National Union Fire Insurance Company and American Home Assurance Company to help cover its defense costs, claiming the allegations concerned its advertising methods.

But the insurers refused to defend Hyundai, rejecting its claim that the allegations constitute "advertising injury" under the coverage policy.

Hyundai defended itself and lost, with a jury ordering it to pay Orion $34 million for patent infringement.

Hyundai then sued the insurers in district court, but again lost. The federal judge agreed with insurers that the patent claims weren't a covered advertising injury.

On appeal, a panel of the 9th Circuit in Pasadena, Calif., reversed. It said the infringement claims constitute allegations of "misappropriation of advertising ideas for the purposes of the insurance policy."

Judge Susan Graber cited the Washington Appeals Court's finding that "the infringement occurred in the advertising itself" in Amazon.com v. American Dynasty Surplus Lines Insurance Co.

The 9th Circuit reversed summary judgment for the insurers and remanded.

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