have reviewed the motion of Starbucks for leave to serve
an Amended Complaint together with the Amended
Complaint, the policy of insurance maintained with
this Company, and relevant law. By this letter we must
reiterate our advice to you that no coverage exists
under the policy for the Amended Complaint and we must withdraw
from the defense of this matter when and if the motion
for leave to serve the Amended Complaint is granted
and the Amended Complaint becomes the operative pleading
Amended Complaint contains the same allegations as the
original Complaint with respect to trademark
dilution, trademark infringement, and violation of
federal and New York State laws relating to your
use of the name "Charbucks," which plaintiff Starbucks
alleges is confusingly similar to its trademarked name.
The Amended Complaint, however, seeks only
injunctive relief and attorneys' fees and does not set forth
a demand for money damages. The Starbucks' motion papers
expressly state that Starbucks seeks in the Amended
Complaint to withdraw its demand for money damages.
The basic insuring clause of the "Personal Injury and Advertising Injury" coverage of the policy provides that this Company:
will pay those sums of the insured becomes equally obligated to pay
as damages because of "personal injury" or "advertising injury" to which
this insurance applies. We have the right and duty to defend any suit seeking
those damages, (emphasis applied)
As you know, we agreed to provide you with a defense with respect to the original Complaint on the basis that it sought damages, in part, based on allegations of
trademark infringement which potentially fell within the "personal injury" and "advertising injury" coverage of the policy.
Pursuant to the insuring clause, quoted above, however, our obligations with respect to indemnification and defense are triggered by allegations of your legal liability for "damages" arising from covered claims. As the Amended Complaint no longer seeks "damages," the Amended Complaint does not fall within the insuring clauses of the policy, either with respect to our obligation to indemnify or our obligation to defend.
The remaining claims seeking injunctive relief and attorneys' fees do not constitute "damages" as that term is used in the policy of insurance.
Accordingly, we must adhere to our determination to withdraw from your defense if and when the Amended Complaint becomes the operative pleading in this matter.
In that regard, at the time the Amended Complaint becomes the operative pleading, it will be necessary for you to either assume responsibility for payment of the fees of defense counsel, or make arrangements to substitute other counsel.
Should you have questions concerning any of the foregoing, please do not hesitate to contact the undersigned.
NORTHERN INSURANCE COMPANY