In an order today, Judge Berman ruled that insurance company USF&G was not obligated to reimburse Ashley Reed Inc. for a $30 million judgment against it for selling counterfeit Fendi bags.  The USF&G policy insured against “Advertising Injury,” which Judge Berman ruled was separate from the company’s actual counterfeiting of the bags.

Defendants have failed to meet their burden of demonstrating coverage under the Policies because the Ashley Reed Defendants’ liability in the Fendi (and BCF) Actions was not based upon the “advertising” of counterfeit Fendi products.  Rather, their liability was premised upon their “offering for sale and selling certain [counterfeit] fashion accessories.”  As the Second Circuit has held, “[a] complaint does not claim an advertising injury if it alleges only the manufacture, importation, and sale of infringing goods without claiming harm arising from advertising.”