Court: Urban Outfitters excluded from insurance coverage

By Alysa Landry
Special to the Times

WASHINGTON, September 05, 2013

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T he Philadelphia-based Urban Outfitters may be on its own in the case against the Navajo Nation.

A federal judge in Philadelphia ruled last month that Urban Outfitters' insurance company need not defend it from claims that the retailer infringed on the Navajo Nation's trademarks.

Senior U.S. District Judge Thomas O'Neill Jr. ruled Aug. 19 that Hanover Insurance is not required to indemnify the retailer because the offending items were advertised and sold before insurance policies went into effect.

According to the ruling, Urban Outfitters began using the names "Navajo" and "Navaho" for products advertised in stores, catalogs and online as early as March 2009. More than 20 items, including clothing, jewelry, footwear, handbags, caps, scarves, gloves, underwear and flasks were marketed under the Navajo name.

Hanover Insurance, the Massachusetts-based insurance company providing commercial general liability and umbrella liability coverage for Urban Outfitters, sued the retailer in July 2012, seeking to avoid covering the defense against the Navajo Nation.

Hanover contended that its policies were not in effect when the retailer began marketing Navajo items. At the time of its suit, Hanover already had begun representing Urban Outfitters, but it sought a declaratory judgment releasing it from continued obligations.

According to court documents, Hanover's insurance policy went into effect July 7, 2010 and was afforded only for "personal and advertising injury that is committed during the policy period."


O'Neill ruled that, although the lawsuit was filed while the insurance policies were in effect, the "advertising injuries are alleged to have begun prior to the policy inception date and thus are excluded from coverage."

O'Neill also found that alleged injuries to the Navajo Nation that occurred when the policy was in effect stemmed from advertisements published as early as 2009. The alleged trademark infringements "may cause separate injuries, but they infringe upon the same trademarked word and thus cause advertising injuries to the Navajo Nation in the same way," he wrote.

"Because all the claims in the underlying action allege various injuries stemming from advertisements published prior to the policy inception date, those injuries are subject to the prior publication exclusion," O'Neill wrote. "Accordingly, the exclusion in the policy prevents Hanover from having to defend or indemnify Urban Outfitters against the underlying action."

The Nation in 2012 filed a lawsuit against Urban Outfitters, claiming the upscale clothing retailer violated trademark laws when it used the name "Navajo" on products. The company claims the term "Navajo" is generic and it is seeking a declaration of non-infringement and cancellation of the tribe's federal trademark registrations.

The two parties failed this summer to reach a settlement in mediation. Pretrial events are scheduled throughout 2014 and a trial is set for after May 1, 2015.

Urban Outfitters is an international retail company that markets and retails its merchandise in more than 200 stores and online. It reported sales of about $2.8 billion in 2012.