No advertising injury insurance coverage for trade secret misappropriation claims arising from business meeting

A breakfast meeting with clients held to announce the opening of a competing business did not constitute "advertising." Thus, trade secret misappropriation claims arising from that meeting were not covered by an advertising injury CGL policy. That was the conclusion of the Fourth District California Court of Appeal in a decision issued on April 15, 2005, Rombe Corporation v. Allied Insurance Company,. Cal. App. 4th Dist., 4/15/05, 05 C.D.O.S. 3195.

In holding that there was no insurance coverage, the Rombe court followed the California Supreme Court's decision in Hameid v. National Fire Ins. of Hartford, 31 Cal. 4th 16 (2003). The Rombe court held that under Hameid, "advertising" does not include in-person solicitations like the breakfast business meeting at issue in this case. This outcome was not changed, the court held, by a definition in the insurance policy at issue stating that language in the policy defining advertisement as "a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters." The court held:

"Contrary to appellant's argument, this definition, while not considered by the court in Hameid, did not expand the scope of the policy's advertising coverage to include personal promotion or solicitation of business." . . .

As we interpret the AMCO policy, the reference to "specific market segments," is only a means of relieving an insured of the burden of showing that its advertising was directed to the general public, as opposed to some defined market, such as medical professionals, racing car enthusiasts, or horse breeders. The term "specific market segments" does not relieve an insured of the burden of demonstrating that it was engaged in relatively wide dissemination of its advertisements even if the distribution was focused on recipients with particular characteristics or interests.