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In a recent case, ISS Research, LLC v. Federal Ins. Co., Num. 3:10-cv-41 (W.D.N.C.), US District Judge Graham Mullen granted Defendant’s Summary Judgment motion against insured muscle-building company ISS Research, LLC.  The order upholds an “intellectual property” exclusion in a commercial liability insurance policy issued by Federal Insurance to ISS Research.

The underlying case for which the insured sought coverage was a Rights of Publicity case in which ISS Research’s use of a photograph of ex-football player and model, Paul Green, in a magazine advertisement for Plaintiff’s nutrition bars resulted in a lawsuit against Plaintiff and an individual photographer. Green filed suit in California after allegedly discovering that Plaintiff was using a photograph from an unrelated photo shoot in a national advertisement without his consent or authorization. The Complaint against Plaintiff contained claims for common law misappropriation of likeness, statutory misappropriation of likeness under California Civil Code §3344, and unjust enrichment. The insurance company refused to defend or indemnify the insured in the lawsuit, and ISS Research in turn sued to recover for costs related to the original lawsuit.

The dispute boiled down to the question of whether or not the concept of “likeness,” which was mis-appropriated and gave rise to the underlying case, would include a photograph. Ordinarily, the plaintiff argued, the plain and ordinary meaning of term “likeness” does not include a photograph, and California law makes a distinction between a likeness and a photograph.* The defense and the Judge disagreed with that distinction, because other courts (including North Carolina) consider a photograph to be a kind of likeness.

In the order, the Judge explains that the insurance contract at issue imposes a duty on the insurer to indemnify the insured for any judgments and to defend the insured against any claims that fall within the language of the policy and, while it is the burden of the insured to establish that a loss comes within the scope of the policy’s coverage, it is the burden of the insurer to show “that an exclusion is applicable.” Should the language indicate that the policy “creates a clear exclusion,” then that language controls.  According to the discussion of the case, the commercial liability insurance policy in this case clearly excludes infringement or violation of “any intellectual property law or rights,” so that the policies clearly exclude coverage for damages related to the misappropriation of a likeness.  Therefore, Defendant had no obligation to defend or indemnify Plaintiff in the California lawsuit brought by Mr. Green.

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* The statute applies to the unauthorized use of a person’s “name, voice, signature, photograph, or likeness…” Cal. Civ. Code §3344(a).