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August 2011

Aroa Marketing, Inc. v. Hartford Insurance Company of the Midwest ? Right of Publicity is Intellectual Property Right Subject to Policy's Exclusion Precluding Personal and Advertising Injury Coverage

(August 23, 2011) __ Cal.App.4th ___; 11 C.D.O.S. 10837

Aroa Marketing, Inc. ("Aroa") appealed an order sustaining a demurrer to its complaint without leave to amend against its insurer, Hartford Insurance Company of the Midwest ("Hartford").  Aroa alleged Hartford breached its duty to defend and indemnify Aroa in an underlying lawsuit brought by model Tara Radcliffe ("Radcliffe") hired by Aroa to film an exercise video.  Radcliffe alleged statutory and common law misappropriation of her likeness, breach of contract, unjust enrichment, and unfair competition.

Radcliffe alleged Aroa improperly used her image and likeness to sell and market products unrelated to the exercise equipment feature for which she was hired.  Aroa failed to pay Radcliffe for this unauthorized use of her image.  Radcliffe alleged Aroa's actions directly injured her "in that her image and likeness was, and still is [sic], being associated with and taken as endorsement of the AROA brand and its products such that it diminished her marketability and publicity value as a professional actor and model."  Radcliffe also alleged she was deprived of her right to publicity.

Hartford issued a Commercial General Liability policy to Aroa covering damages for "bodily injury," "property damage" or "personal and advertising injury" arising out of Aroa's business. "Personal and advertising injury" was defined to include "oral or written or electronic publication of material that violates a person's right of privacy."  The policy contained an exclusion for "personal and advertising injury" arising out of "any violation of any intellectual property rights, such as copyright, patent, trademark, trade name, trade secret, service mark, or other destination of origin or authenticity."  Hartford declined Aroa's tender of the lawsuit based on this exclusion and other grounds.

In response to Aroa's breach lawsuit, Hartford filed a demurrer asserting the Radcliffe lawsuit did not fall within the scope of the policy's coverage.  It argued Radcliffe asserted a violation of her right to publicity rather than a covered "right of privacy" claim.  Hartford also argued the intellectual property rights exclusion applied.  The trial court sustained the demurrer without leave to amend.

Aroa appealed on both issues and contended the trial court abused its discretion in denying leave to amend.  The Court of Appeal affirmed.

The Court of Appeal rejected Hartford's argument Radcliffe's claims were distinct from a right of privacy and thus, outside the scope of coverage.  The Court cited the California Supreme Court decision Comedy III Productions, Inc. v. Gary Saderup, Inc., (2001) 25 Cal.4th 387, which noted the common law right of publicity derived from the law of privacy which encompassed Radcliffe's claims.  Because coverage provisions are to be interpreted broadly and California courts treat right of publicity claims as a subset of privacy claims, Radcliffe's claims fall within the insurance policy's coverage for right of privacy claims.

The Court agreed with Hartford the intellectual property rights exclusion applied.  Per Comedy III Productions, the right of publicity, like copyright, protects a form of intellectual property that society deems to have social utility.  The Court rejected Aroa's argument the exclusion did not apply because the right of publicity was not listed in the exclusion.  The Court held the exclusion, even read narrowly, included right to publicity claims and the list of exemplar rights was expressly non-exhaustive.

The Court also rejected Aroa's argument that Radcliffe's common law misappropriation of likeness claim implicated more than her right of publicity because her claims were, or could have been, based upon an injury to Radcliffe's feelings or her peace of mind. The Court noted Radcliffe did not seek damages for misappropriation that injured her feelings, but rather sought compensation for the unauthorized use of her likeness and filed the lawsuit only after Aroa failed to pay her.

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This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.

This and other case bulletins, as well as other publications of Gordon & Rees LLP, may be found at www.gordonrees.com.

 

Insurance

Ana R. Hartman
Arthur Schwartz


Insurance
Intellectual Property

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