Insurer Not Liable for Trademark Infringement Coverage, Court Rules

A Nebraska federal court has ruled that Ohio Security Insurance Co. and Ohio Casualty Insurance Co., affiliates of Shook client Liberty Mutual Insurance, are not required to pay for trademark infringement allegations against insured former franchisees of The Maids International Inc. (TMI).

The former TMI franchisees, which operated as Maids on Call, held a policy with Ohio Security Insurance Co. to protect the company from claims of "personal and advertising injury." One franchisee sent a "retirement letter" to Maids on Call customers informing them that the TMI franchise locations were closing and directing them to Two Sisters Cleaning Services, a company owned by the franchisee's daughters. TMI filed a lawsuit alleging Maids on Call infringed its trademarks, and Maids on Call sought defense support from Ohio Security, which declined to defend the company. Maids on Call sued, asserting that its policy required the insurer to pay.

Representing the insurer, Shook attorneys argued that the policy covered defamation claims rather than the trademark allegations at issue. The court determined that the underlying lawsuit did not explicitly or implicitly allege defamation, finding that "[t]he retirement letter simply suggests that customers would receive the same high level of service with Two Sisters that they did with TMI." Without any claim covered by the policy with Ohio Security, the insurer is not required to defend the former franchisees, the court held.

Maids on Call LLC v. Ohio Sec. Ins. Co., No. 17-0252 (D. Neb. 2018).