What’s in a Label? Coverage for Advertising Injury?

The 2nd Circuit recently found that the sale of counterfeit branded goods was not covered as advertising injury under a commercial general liability policy. In USF&G v. Fendi Adele S.R.L., 823 F.3d 146 (2nd Cir. 2016), applying New York law, upheld the district court’s ruling that the commercial general liability policy issued by USF&G did not cover sales of counterfeit goods because the sale of counterfeit goods did not qualify as an advertising injury. The court found that the sale and resulting injury of counterfeit goods was not, itself, an advertisement of the counterfeit goods. The court drew a distinction between the act of placing a counterfeit branded label on a handbag and the act of actually soliciting customers through advertisements.