In Vistelar, LLC v. Cincinnati Specialty Underwriters Insurance Co. (2019AP633), the Court of Appeals District I held that the insurer did not have a duty to defend against claims of trademark infringement because the policy prohibited coverage for known losses.

Vistelar and Verbal Judo entered into a licensing agreement wherein Vistelar could use Verbal Judo’s intellectual property. In 2013, the agreement expired, and Verbal Judo did not renew the agreement. Verbal Judo then sent a letter asking Vistelar to cease and desist use of its intellectual property. In July 2017, Verbal Judo sued Vistelar, alleging trademark infringement.

Vistelar tendered its defense to its insurer Cincinnati. Cincinnati denied coverage, arguing that Vistelar knew the alleged injuries to Verbal Judo began to occur before the policy period, which commenced in August 2016.

The court agreed that Cincinnati did not have a duty to defend because the policy had provisions excluding coverage for a “known loss.” Under the policy, Cincinnati would not provide coverage if Vistelar was “aware…of a condition from which injury is substantially certain to occur.” Since Verbal Judo sent the cease and desist letter in 2013, the court found that Vistelar was aware of potential injury and liability before its Cincinnati policy began in 2016. Therefore, the “known loss” provision in the policy applied, and Cincinnati had no duty to defend.