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Foundation for Blood Research v. St. Paul Ins.
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MAINE SUPREME JUDICIAL COURT						Reporter of Decisions
Decision:	1999 ME 87
Docket: 	Fed-98-667
Argued:	May 5, 1999
Decided:	June 3, 1999

Panel: 	WATHEN, C.J., and CLIFFORD, RUDMAN,  ALEXANDER, and CALKINS, JJ.



FOUNDATION FOR BLOOD RESEARCH v. ST. PAUL MARINE AND FIRE INSURANCE CO.


CALKINS, J.

	[¶1]  	The United States District Court for the District of Maine
(Carter, J.), acting pursuant to 4 M.R.S.A. § 57 (1989) and M.R. Civ. P. 76B,
has certified the following question to this Court:
Does a duty to defend exist under the legal "comparison test" in
the context of the "advertising injury" or "personal injury"
provisions of the General Liability Policy issued by St. Paul for an
underlying third-party complaint which asserts claims of
inducing patent infringement when the complaint is devoid of
any concrete factual allegations describing the circumstances of
the alleged injury?
	[¶2]  St. Paul issued a commercial general liability policy to the
Foundation for Blood Research (FBR), a Maine corporation, which policy was
effective from October 5, 1996 to October 5, 1997.  In December 1996, the
Biomedical Patent Management Corporation (BPMC) filed a complaint
against FBR in the United States District Court for the Northern District of
California.  The complaint asserted, among other claims, inducement of
patent infringement.  	
	[¶3]  FBR furnished the complaint to St. Paul in a timely fashion and
demanded that St. Paul provide a defense.  St. Paul responded that it had no
duty to defend or indemnify FBR and refused the demand.  FBR eventually
settled the lawsuit with BPMC and filed the action against St. Paul for breach
of contract in the United States District Court for the District of Maine.  The
parties agree that Maine law governs this case.
	[¶4]  It is black letter law in this State that an insurer's duty to defend
is determined by comparing the allegations in the underlying complaint
with the provisions of the insurance policy.  See Gibson v. Farm Family Mut.
Ins. Co., 673 A.2d 1350, 1352 (Me. 1996).  This is the "comparison test."  If
the underlying complaint discloses a potential or a possibility for liability
within the coverage of the policy, the insurer has a duty to defend.  See id;
Travelers Indem. Co. v. Dingwell, 414 A.2d 220, 227 (Me. 1980).
	[¶5]  A crucial step in a duty to defend case is the examination of the
underlying complaint.  The complaint filed against FBR states:
7.On 25 February 1992, United States Patent 4,874,693
("the '693 Patent"), entitled "Method for assessing
placental dysfunction," was duly and legally issued to Mark
Bogart, Ph.D.  By assignment, Plaintiff now owns and holds
all rights to enforce the '693 patent, and is solely entitled
to recover for all past, present and future acts of
infringement.  A true and correct copy of the '693 patent
is attached hereto as Exhibit 1.

8.Defendant performs diagnostic services which infringe and
are continuing to infringe the '693 patent.

9.On information and belief, Plaintiff alleges that prior to
Defendant's acts of infringement, it was aware of the '693
patent and its application to the services performed by
Defendant.  On information and belief, therefore, 
Defendant's infringement is willful, making this an
exceptional case entitling Plaintiff to treble damages and
attorneys fees.

10.Defendant's infringement of Plaintiff's exclusive rights
under the '693 patent is damaging and will continue to
damage Plaintiff's business, causing irreparable harm for
which there is no adequate remedy at law.  Defendant's
infringement will continue unless enjoined by this Court.

11.Plaintiff has been injured by Defendant's infringing acts in
an amount not yet determinable.  Plaintiff seeks a
reasonable royalty and other forms of monetary damages.

* * *
CLAIM THREE - INDUCING LITERAL PATENT INFRINGEMENT
16.For its third claim, Plaintiff incorporates herein
paragraphs 1 through 11, inclusive.

17.Defendant has induced the literal infringement of the '693
patent by intentionally causing other persons to perform
acts which constitute literal infringement of the '693
patent, despite Defendant's actual knowledge that such
acts constitute literal infringement [of] the '693 patent.
The complaint contains three other claims:  literal patent infringement;
patent infringement under the doctrine of equivalents; and inducing patent
infringement under the doctrine of equivalents.
	[¶6]  As the federal court notes in its certified question "the
complaint is devoid of any concrete factual allegations describing the
circumstances of the alleged injury."  The lack of concrete allegations in the
underlying complaint, however, is not fatal to a duty to defend claim.  See
Dingwell, 414 A.2d at 227.   For example, when an underlying complaint
states in general and simple terms that the defendant negligently operated a
motor vehicle and thereby caused injury to the plaintiff, a negligence claim
is stated even though there are no concrete factual allegations concerning
the circumstances of the negligence.  Even without the concrete factual
allegations a court can compare the complaint with the motorist's
automobile insurance policy to see if negligence while operating is a covered
occurrence.  In the case at hand, even though there are no concrete factual
allegations regarding the inducement of patent infringement, there is
enough in the complaint to apprise any reader that there is a claim of
inducing patent infringement.
	[¶7]  A further step in a duty to defend case is the examination of the
insurance policy to determine if there is coverage for the claim.  This
insurance policy does not expressly include coverage for inducement of
patent infringement.  In fact, the policy makes no mention whatsoever of
patent infringement or inducing patent infringement.  The only provisions
of the policy that arguably include coverage are those for "personal injury"
and "advertising injury:"   
Personal injury liability.  We'll pay amounts any protected person
is legally required to pay as damages for covered personal injury
that:

results from your business activities, other than
advertising, broadcasting, publishing or telecasting done
by or for you; and 

is caused by a personal injury offense committed while this
agreement is in effect.

Advertising injury liability.  We'll pay amounts any protected
person is legally required to pay as damages for covered
advertising injury that:

results from the advertising of your products, work or
completed work; and

is caused by an advertising injury offense committed while
this agreement is in effect.
The policy also contains the following definitions:
Personal injury means injury, other than bodily injury or
advertising injury, caused by a personal injury offense.

Personal injury offense means any of the following offenses:
·False arrest, detention or imprisonment.
·Malicious prosecution.
·Wrongful entry or wrongful eviction.
·Invasion of the right of private occupancy of a room,
dwelling or premises that a person occupies.
·Libel or slander.
·Making known to any person or organization written or
spoken material that belittles the products, work or
completed work of others.
·Making known to any person or organization written or
spoken material that violates an individual's right of
privacy.
·Interfering with the rights provided to a person by a
Patients' Bill of Rights or any similar law.
Advertising injury means injury, other than bodily or personal
injury, caused by an advertising injury offense.

Advertising injury offense means any of the following offenses:
·Libel or slander.
·Making known to any person or organization written or
spoken material that belittles the products, work or
completed work of others.
·Making known to any person or organization written or
spoken material that violates an individual's right of
privacy.
·Unauthorized taking or use of any advertising idea,
material, slogan or title of others.
This policy also includes a statement that St. Paul will defend the insured
against "any claim or suit for covered injury or damage."
	[¶8]  The claim of inducing patent infringement is a statutory claim. 
One who induces another to infringe a patent is liable to the patentee.  The
statute specifically states:  "Whoever actively induces infringement of a
patent shall be liable as an infringer."  35 U.S.C. § 271(b) (1994).  A plaintiff
who claims that a defendant induced patent infringement must prove two
elements:  (1) the defendant knowingly induced a third party to infringe;
and (2) the third party actually infringed the patent.  See H.B. Fuller Co. v.
National Starch and Chem. Corp., 689 F. Supp. 923, 943 (D. Minn. 1988). 
Inducing patent infringement can be committed by conduct "as broad in
scope as the range of actions by which one may cause, urge, encourage or aid
another to infringe."  Burlington Indus., Inc. v. Exxon Corp., 379 F. Supp.
754, 757 (D. Md. 1974).  Thus, there are numerous possible ways of
inducing patent infringement.  For example, a defendant could tell a third
party that a particular device was so obvious that it was not patentable or
that any patent on it was invalid.  If that third party then produced that
device without license from the patentee, the defendant could be liable for
inducement of patent infringement.
	[¶9]  In this case St. Paul obligated itself in the policy to defend FBR
when a personal injury offense or an advertising injury offense causes injury. 
A "personal injury offense" is defined in part as "making known to any
person or organization written or spoken material that belittles the
products, work or completed work of others."  A "personal injury offense"
must result from the insured's business activities.  An "advertising injury
offense" is similarly defined in part as "making known to any person or
organization written or spoken material that belittles the products, work or
completed work of others," but it must arise from an advertising activity. 
From these definitions it would seem that any acts of FBR, from either its
business activities or its advertising activities, which belittled a product of
another and which then led a third party to infringe the patent would be
covered.  
	[¶10]  There is some dispute as to what "belittle" means.  FBR argues
that the ordinary or dictionary definition of "belittle" is applicable.  A
dictionary definition of "belittle" is:  "1.  To represent or speak of as small
or unimportant; disparage.  2.  To cause to seem less or little."  The American
Heritage Dictionary 169 (2d coll. ed. 1982).  St. Paul contends that the word
refers to the tort of belittlement.  Belittlement is one of several terms for
the tort commonly known as trade libel.  See Microtec Research, Inc. v.
Nationwide Mut. Ins. Co., 40 F.3d 968, 972 (9th Cir. 1994).{1}  St. Paul argues
that because the offense of "making known to any person or organization
written or spoken material that belittles the products, work or completed
work of others" is included in a list that contains other torts, such as libel
and slander, "belittle" must be interpreted to refer to the tort of
belittlement.  The list of "offenses," however, does not use the term "tort,"
and with the possible exception of "libel" and "malicious prosecution" the
list uses phrases with common words easily understood by nonlawyers.  
	[¶11]  The use of the term "belittle" in this insurance policy has two
possible interpretations.  A policy is ambiguous if it is reasonably susceptible
of differing interpretations.  See Apgar v. Commercial Union Ins. Co., 683
A.2d 497, 498 (Me. 1996) (citation omitted).  In determining whether the
contract is ambiguous, it is evaluated as a whole and must be construed in
accordance with the intention of the parties.  See id. (citation omitted). 
When applying these rules of construction, we view the language from the
perspective of an average person, untrained in either the law or insurance. 
See Peerless Ins. Co. v. Wood, 685 A.2d 1173, 1174 (Me. 1996).  It is
unlikely that an average person, or even most lawyers, would interpret the
word "belittle" to mean the archaic tort of belittlement.{2}  Thus, to most
people the meaning would be the ordinary meaning "to make little of."  See
St. Paul Fire & Marine Ins. Co. v. Medical X-Ray Ctr., P.C., 146 F.3d 593, 595
(8th Cir. 1998) (holding "belittles" not limited to belittlement under South
Dakota law); but see Microtec Research, 40 F.3d at 972 (holding "belittle"
means trade libel).
	[¶12]  We have often said that "[i]nsurance policies are liberally
construed by the court in favor of the insured and any ambiguity in the
contract is resolved against the insurer."  Wood, 685 A.2d at 1174 (citation
omitted).  Therefore, we interpret the term "belittle" in its ordinary
meaning, and we do not confine its meaning to the tort of belittlement.
	[¶13]  It is possible that FBR induced patent infringement by belittling
to a third party the patent belonging to BPMC.  When we compare the
underlying complaint to the terms of the insurance policy, we find "the
complaint could give rise to any set of facts that would establish coverage." 
Northern Sec. Ins. Co. v. Dolley, 669 A.2d 1320, 1322 (Me. 1996). 
Therefore, St. Paul has a duty to defend.  In summary, the underlying
complaint alleges, in general but sufficient terms, a claim for inducing
patent infringement; that claim includes a potential scenario of belittling to
a third party the validity of a patent of another; the policy covers injury or
damage resulting from making known to third parties material that belittles
the work of others; and the policy requires St. Paul to defend actions for
covered injury or damage. 
	[¶14]  We answer the question posed to us by the United States
District Court in the affirmative.
                  
Attorney for plaintiff: James B. Haddow, Esq., (orally) Petruccelli & Martin, LLP P O Box 9733 Portland, ME 04104-5033 Attorney for defendant: James D. Poliquin, Esq., (orally) Norman, Hanson & DeTroy, LLC P O Box 4600 Portland, ME 04112-4600
FOOTNOTES******************************** {1} . Other variations on the name of the tort include disparagement of property, slander of goods, and commercial disparagement. See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 128, at 963 (5th ed. 1984). The elements of trade libel are generally publication by the defendant of the disparaging words, falsity, malice, lack of privilege, and special damages. See Annotation, Disparagement of the Quality of Intangible Property, 74 A.L.R.3d 298, 301 (1976). {2} . We have been unable to locate any reported Maine or New England cases discussing the tort of belittlement.