Trade Dress Suit Evidenced Disparagement Where Consumers “Steered Towards” Insured’s Copycat Products

Michael Taylor Designs, Inc. v. Travelers Prop. Cas. Co. of Am., ___ F. Supp. 2d ___, 2011 WL 221658, at *6 (N.D. Cal. Jan. 20, 2011)

The court found two grounds for evidencing disparagement coverage. First, that there were express allegations that the reputation of goods was harmed by MTD’s conduct. Second, the court reasoned:

The complaint . . . explained that the alleged purpose of those brochures was to entice customers interested in Rosequist’s products into MTD’s showrooms, where they would then be “steered instead” to the imitation products. The term “steered” fairly implies some further statements, presumably oral, were being made by MTD personnel to convey the information that the imitation products were the Rosequist furniture depicted in the brochures.

The Court noted that the new theory of slander of goods in the amended complaint may have added some factual specificity to the early allegations, such as the substitution of the phrase “sales employees orally told potential customers . . .” to the previous term “steered,” but making the same point explicitly that was previously implicit was not such a change in character that precluded the defense under the previous fact allegations.

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