2015 IL App (1st) 142508 No. 1-14-2508 Fifth Division May 8, 2015
______________________________________________________________________________
IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________
) ERIE INSURANCE EXCHANGE, ) Appeal from the Circuit Court ) of Cook County. Plaintiff-Appellee, ) ) No. 13 CH 23607 v. ) ) The Honorable COMPEVE CORPORATION and SLAVA ) Kathleen G. Kennedy, PACKOVSKIS, ) Judge Presiding. ) Defendants-Appellants. ) ) ______________________________________________________________________________
JUSTICE GORDON delivered the judgment of the court, with opinion. Presiding Justice Palmer and Justice McBride concurred in the judgment and opinion.
OPINION
¶1 Defendants, Compeve Corporation (Compeve) and Slava Packovskis, appeal from the
trial court’s entry of summary judgment in favor of plaintiff Erie Insurance Exchange (Erie).
The trial court found that Erie had no duty to defend defendants in a lawsuit filed against
them by Microsoft Corporation (Microsoft), which alleged that defendants violated
Microsoft’s intellectual property rights by selling computers loaded with unauthorized copies
of Microsoft’s software. For the reasons that follow, we affirm. No. 1-14-2508
¶2 BACKGROUND
¶3 On October 18, 2013, Erie filed a complaint for declaratory judgment, alleging that
Compeve was the named insured on an insurance policy issued by Erie. Compeve and
Packovskis, Compeve’s owner, had been named in a lawsuit initiated by Microsoft in the
United States District Court for the Northern District of Illinois, in which Microsoft alleged
that Compeve installed counterfeit Microsoft software in the computers that it sells and that
by selling the counterfeit software, Compeve infringed upon Microsoft’s copyrights and
trademarks. Erie sought a declaratory judgment that under the terms and conditions of the
insurance policy, Erie had no obligation to defend or indemnify Compeve or Packovskis
against any of the allegations in the Microsoft litigation. 1
¶4 The Microsoft complaint, filed on September 16, 2013, alleged that Compeve and
Packovskis “engaged in copyright and trademark infringement; false designation of origin[;]
false description and representation; and unfair competition.” Microsoft’s complaint alleged
that Compeve was engaged in the business of advertising, marketing, installing, offering, and
distributing computer hardware and software, “including purported Microsoft software.”
¶5 Paragraph 10 of Microsoft’s complaint alleged that “[d]efendants advertised, marketed,
installed, offered and distributed unauthorized copies of Microsoft software, infringing
Microsoft’s copyrights, trademarks and/or service mark.” Paragraph 11 alleged that “On
information and belief, Defendants advertise that the computers they sell come installed with
Microsoft software, and in their advertisements, Defendants misappropriate and/or infringe
Microsoft’s copyrights, advertising ideas, style of doing business, slogans, trademarks and/or
service mark.”
1 The record indicates that the lawsuit between Microsoft and defendants was resolved through an out-of- court settlement agreement in December 2013.
2 No. 1-14-2508
¶6 Microsoft’s complaint alleged that in March 2013, defendants sold a Microsoft
investigator several computers with unauthorized copies of Windows XP installed. In June
2013, Microsoft asked defendants to cease and desist from making and distributing infringing
copies of Microsoft software on computers. Nevertheless, in July 2013, defendants again sold
a Microsoft investigator several computers with unauthorized copies of Windows XP
installed. The complaint alleged that “[o]n information and belief, these are not isolated
incidents. Rather, Defendants have been and continue to be involved in advertising,
marketing, installing, offering, and/or distributing counterfeit and infringing copies of
Microsoft’s software and/or related components to unidentified persons or entities.”
Microsoft alleged that it “ha[d] been harmed by Defendants’ activities, including their
advertising activities and unauthorized use of Microsoft’s copyright protected material.”
¶7 The first count of Microsoft’s complaint, which is the only count relevant to the instant
appeal, was for copyright infringement. The count incorporated the allegations as set forth
above and alleged that “Defendants have infringed the copyrights in Microsoft’s software,
including but not limited to Microsoft Windows XP, by advertising, marketing, installing,
offering, and/or distributing infringing materials in the United States of America without
approval or authorization from Microsoft.” 2
¶8 The insurance policy at issue in the instant case was an “Ultrapack Plus” policy with a
policy period of January 18, 2013, to January 18, 2014. The policy provided coverage for
“personal and advertising injury,” which was defined as:
“ ‘Personal and advertising injury’ means injury, including consequential ‘bodily
injury’, arising out of one or more of the following offenses:
2 Microsoft had a separate count concerning alleged trademark infringement of its name “Microsoft” and logo. However, that count is not at issue in the instant appeal, as defendants focus only on the copyright count.
3 No. 1-14-2508
***
g. Infringing upon another’s copyright, trade dress or slogan in your
‘advertisement’.”
“Advertisement” was further defined 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.”
¶9 The policy excluded coverage for, inter alia:
“i. Infringement Of Copyright, Patent, Trademark Or Trade Secret
‘Personal and advertising injury’ arising out of the infringement of copyright,
patent, trademark, trade secret or other intellectual property rights. Under this
exclusion, such other intellectual property rights do not include the use of another’s
advertising idea in your ‘advertisement’.
However, this exclusion does not apply to infringement, in your ‘advertisement’,
of copyright, trade dress or slogan.”
¶ 10 On March 4, 2014, Erie filed a motion for summary judgment, claiming that it had no
duty to defend defendants because the underlying complaint did not allege a covered
“personal and advertising injury” claim. With respect to Microsoft’s claim of copyright
infringement, which is the only claim at issue in the instant appeal, Erie argued that the
allegations in the complaint were not sufficient to trigger coverage for “personal and
advertising injury” because there were only conclusory allegations that Compeve violated
Microsoft’s copyright in advertising and there were no allegations of a causal connection
between Compeve’s alleged advertisement and Microsoft’s damages.
4 No. 1-14-2508
¶ 11 On March 12, 2014, defendants also filed a motion for summary judgment. Defendants
pointed to several paragraphs in Microsoft’s complaint alleging copyright infringement
through advertising, including those quoted above. They claimed that the insurance policy
provided coverage for such advertising injury and that Erie had breached its duty to defend.
¶ 12 On July 23, 2014, the parties came before the trial court for a hearing on their cross-
motions for summary judgment. After hearing argument, the court found that the allegations
of the Microsoft complaint did not bring any of its claims within or potentially within the
insurance policy’s coverage. With respect to the claim for copyright infringement, the court
found that “there must be a causal connection between the Defendants’ alleged advertising
activity and Microsoft’s alleged advertising injury and the allegations of the underlying
complaint are insufficient to make that connection directly or potentially.” Therefore, the
court found that Erie had no duty to defend or indemnify defendants in the Microsoft action.
Accordingly, the trial court granted Erie’s motion for summary judgment and denied
defendants’ motion for summary judgment. This appeal follows.
¶ 13 ANALYSIS
¶ 14 On appeal, defendants argue that the trial court erred in granting summary judgment in
Erie’s favor because Erie had a duty to defend defendants in the Microsoft litigation. A trial
court is permitted to grant summary judgment only “if the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter of law.”
735 ILCS 5/2-1005(c) (West 2008). The trial court must view these documents and exhibits
in the light most favorable to the nonmoving party. Home Insurance Co. v. Cincinnati
Insurance Co., 213 Ill. 2d 307, 315 (2004). We review a trial court’s decision to grant a
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motion for summary judgment de novo. Outboard Marine Corp. v. Liberty Mutual Insurance
Co., 154 Ill. 2d 90, 102 (1992). De novo consideration means we perform the same analysis
that a trial judge would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578
(2011). “ ‘The construction of an insurance policy and a determination of the rights and
obligations thereunder are questions of law for the court which are appropriate subjects for
disposition by way of summary judgment.’ ” Steadfast Insurance Co. v. Caremark Rx, Inc.,
359 Ill. App. 3d 749, 755 (2005) (quoting Crum & Forster Managers Corp. v. Resolution
Trust Corp., 156 Ill. 2d 384, 391 (1993)).
¶ 15 “Summary judgment is a drastic measure and should only be granted if the movant’s right
to judgment is clear and free from doubt.” Outboard Marine Corp., 154 Ill. 2d at 102.
However, “[m]ere speculation, conjecture, or guess is insufficient to withstand summary
judgment.” Sorce v. Naperville Jeep Eagle, Inc., 309 Ill. App. 3d 313, 328 (1999). A
defendant moving for summary judgment bears the initial burden of proof. Nedzvekas v.
Fung, 374 Ill. App. 3d 618, 624 (2007). The defendant may meet his burden of proof either
by affirmatively showing that some element of the case must be resolved in his favor or by
establishing “ ‘that there is an absence of evidence to support the nonmoving party’s case.’ ”
Nedzvekas, 374 Ill. App. 3d at 624 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986)). In other words, there is no evidence to support the plaintiff’s complaint.
¶ 16 “ ‘The purpose of summary judgment is not to try an issue of fact but *** to determine
whether a triable issue of fact exists.’ ” Schrager v. North Community Bank, 328 Ill. App. 3d
696, 708 (2002) (quoting Luu v. Kim, 323 Ill. App. 3d 946, 952 (2001)). However, “[w]hen,
as in this case, parties file cross-motions for summary judgment, they concede the absence of
a genuine issue of material fact and invite the court to decide the questions presented as a
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matter of law.” Steadfast Insurance, 359 Ill. App. 3d at 755 (citing Continental Casualty Co.
v. Law Offices of Melvin James Kaplan, 345 Ill. App. 3d 34, 37-38 (2003)). We may affirm
on any basis appearing in the record, whether or not the trial court relied on that basis or its
reasoning was correct. Ray Dancer, Inc. v. DMC Corp., 230 Ill. App. 3d 40, 50 (1992).
¶ 17 In Illinois, the duties to defend and to indemnify are not coextensive, with the obligation
to defend being broader than the obligation to pay. International Minerals & Chemical Corp.
v. Liberty Mutual Insurance Co., 168 Ill. App. 3d 361, 366 (1988). In determining whether an
insurer has a duty to defend its insured, a court looks to the allegations in the underlying
complaint and compares them to the relevant provisions of the insurance policy. Outboard
Marine Corp., 154 Ill. 2d at 107-08. “If the facts alleged in the underlying complaint fall
within, or potentially within, the policy’s coverage, the insurer’s duty to defend arises.”
Outboard Marine Corp., 154 Ill. 2d at 108. However, if it is clear from the face of the
complaint that the allegations fail to state facts that bring the case within, or potentially
within, the policy’s coverage, an insurer may properly refuse to defend. United States
Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 73 (1991) (quoting State
Farm Fire & Casualty Co. v. Hatherley, 250 Ill. App. 3d 333, 336 (1993)). “[W]here an
exclusionary clause is relied upon to deny coverage, its applicability must be clear and free
from doubt because any doubts as to coverage will be resolved in favor of the insured.”
International Minerals & Chemical Corp., 168 Ill. App. 3d at 367. “[W]here the language of
an insurance policy is clear and unambiguous, it will be applied as written.” Hatherley, 250
Ill. App. 3d at 337. The construction of an insurance policy presents a question of law that is
reviewed de novo. Outboard Marine, 154 Ill. 2d at 108. As noted, de novo consideration
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means we perform the same analysis that a trial judge would perform. Khan, 408 Ill. App. 3d
at 578.
¶ 18 As an initial matter, the parties disagree as to which party has the burden of proving
whether Erie had a duty to defend defendants. Our supreme court has “long established that
the burden is on the insured to prove that its claim falls within the coverage of an insurance
policy.” Addison Insurance Co. v. Fay, 232 Ill. 2d 446, 453 (2009). “Once the insured has
demonstrated coverage, the burden then shifts to the insurer to prove that a limitation or
exclusion applies.” Addison, 232 Ill. 2d at 453-54. Thus, defendants would bear the initial
burden of proving coverage, but Erie would bear the burden of proving that the exclusion for
“Infringement Of Copyright, Patent, Trademark Or Trade Secret” applies. In the case at bar,
however, there was an exception to the exclusion, which operated to restore coverage, and it
is this exception that is at issue. The question, then, is which party has the burden of proving
whether or not this exception applies. Unsurprisingly, Erie argues that defendants have the
burden of proving that the exception applies and coverage should be restored, while
defendants argue that Erie has the burden of proving that the exception does not apply and
the exclusion controls.
¶ 19 Neither the parties nor our research has revealed an Illinois court that has answered this
question. However, the Seventh Circuit, applying Illinois law, has stated that while insurers
have the burden of proving that an exclusion applies, “[i]nsureds, in turn, have the burden to
prove that an exception to an exclusion restores coverage.” Santa’s Best Craft, LLC v. St.
Paul Fire & Marine Insurance Co., 611 F.3d 339, 347 (7th Cir. 2010). In making its
statement, the Seventh Circuit relied on a treatise indicating that “[t]here is some uncertainty
concerning the proper allocation of the burden of proof as to the applicability of an exception
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which, in effect, restores the coverage taken away by the exclusion. The trend clearly
appears, however, to place the burden on insureds to prove that an exception to an exclusion
applies to restore coverage.” 17A Steven Plitt et al., Couch on Insurance § 254:13 (3d ed.
2014).
¶ 20 In the case at bar, however, we have no need to resolve this question. Regardless of
which party bears the burden, we are required to examine the allegations of the Microsoft
complaint in order to determine whether the facts alleged fall within, or potentially within,
the policy’s coverage. See Outboard Marine Corp., 154 Ill. 2d at 107-08. As noted, this is a
question of law that is reviewed de novo. Outboard Marine, 154 Ill. 2d at 108. Furthermore,
even when the insurer bears the burden of proving that an exclusion applies, “where an
exclusionary clause is relied upon to deny coverage, its applicability must be clear and free
from doubt because any doubts as to coverage will be resolved in favor of the insured.”
International Minerals & Chemical Corp., 168 Ill. App. 3d at 367. Thus, it makes no
difference to our analysis whether Erie or defendants bear the burden of proof in the instant
case. As such, we turn to the merits of the parties’ arguments.
¶ 21 In the case at bar, the trial court granted Erie’s motion for summary judgment, finding
that “there must be a causal connection between the Defendants’ alleged advertising activity
and Microsoft’s alleged advertising injury and the allegations of the underlying complaint are
insufficient to make that connection directly or potentially.” On appeal, defendants argue that
Illinois law imposes a causal connection requirement only in patent cases, not in copyright
cases as in the instant case. We do not find this argument persuasive.
¶ 22 Under Illinois law, there are three elements required to trigger advertising injury
coverage: (1) Compeve “must have been engaged in advertising activity during the policy
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period when the injury occurred”; (2) Microsoft’s allegations “must raise a potential for
liability under one of the offenses listed in the policies”; and (3) “there must be a causal
connection between the alleged injury and the advertising activity.” Lexmark International,
Inc. v. Transportation Insurance Co., 327 Ill. App. 3d 128, 137 (2001); Greenwich Insurance
Co. v. RPS Products, Inc., 379 Ill. App. 3d 78, 86-87 (2008). It is only this last element that
defendants challenge in the instant case.
¶ 23 Contrary to defendants’ assertion, these elements are not found solely in patent
infringement cases but have been applied to other intellectual property claims as well. For
instance, the Lexmark court applied these elements in considering whether advertising injury
coverage had been triggered for claims of “ ‘misappropriation of advertising ideas or style of
doing business,’ ‘disparagement of [the underlying plaintiff’s] goods, products, or services,’
and ‘infringement of slogan.’ ” Lexmark, 327 Ill. App. 3d at 138. Likewise, in Greenwich, we
applied the elements to claims of unfair competition and trademark infringement in addition
to considering the patent infringement claim. Greenwich, 379 Ill. App. 3d at 87. Thus, the
trial court correctly found that there must be a causal connection between Microsoft’s alleged
injury and defendants’ advertising activity.
¶ 24 Furthermore, we do not find persuasive defendants’ argument that the policy language at
issue does not require a causal connection, as was the case in other cases that imposed a
causal connection requirement. The Erie policy defined “personal and advertising injury” as:
“injury, including consequential ‘bodily injury’, arising out of one or more of the
following offenses:
10 No. 1-14-2508
g. Infringing upon another’s copyright, trade dress or slogan in your
Defendants acknowledge in their brief that “[t]he policy states that there has to be an
infringement of the copyright in the advertisement” (emphasis omitted), but nevertheless
argue that “there is nothing in the policy that requires a causal connection.” They reach this
result by parsing the language of cases in which a causal connection has been required.
Specifically, defendants quote the language of the insurance policy at issue in International
Insurance Co. v. Florists’ Mutual Insurance Co., 201 Ill. App. 3d 428, 431 (1990), which
provided that an advertising injury included “ ‘libel, slander, defamation; infringement of
copyright, title or slogan; piracy, unfair competition, idea misappropriation or invasion of
rights of privacy; which arise out of YOUR advertising activities.’ ” Defendants claim that
“[a]s the policy is written in that case, the copyright infringement would have to arise out of
the advertising activity and therefore, that [led] the court to interpret the policy as requiring a
causal connection.”
¶ 25 Defendants’ citation of International Insurance Co. does nothing to explain why the
policy language in that case leads to a different result than in this case. In both cases, the
injury needs to be tied to the advertisement. Under the Erie policy, a “personal or advertising
injury” is an injury arising out of infringing upon another’s copyright “in your
‘advertisement’.” (Emphasis added.) The express language of the policy requires that the
injury must arise from copyright infringement that is contained in the advertisement in order
for there to be an advertising injury. Thus, the policy’s language requires a connection
between the injury and the advertisement. The same connection between the injury and the
advertisement is again set forth in the language of the exception that operates to restore
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coverage: “this exclusion does not apply to infringement, in your ‘advertisement’, of
copyright, trade dress or slogan.”
¶ 26 Moreover, International Insurance Co. is the only case defendants cite in their argument
that the Erie policy uses language different than that interpreted by courts imposing a causal
connection requirement. However, the Erie policy contains identical language to the
insurance policy at issue in Greenwich, which, as noted, imposed a requirement of a causal
connection between the alleged injury and the advertising activity. See Greenwich, 379 Ill.
App. 3d at 83 (“ ‘Personal and advertising injury’ means injury, including consequential
‘bodily injury’, arising out of one or more of the following offenses *** c. Infringing upon
another’s copyright, trade dress or slogan in your ‘advertisement’.”). Thus, the trial court
properly found that a causal connection between Microsoft’s injury and Compeve’s
advertisement was required.
¶ 27 Defendants next argue that if we find that a causal connection was required, we should
also find that such a connection was alleged in the Microsoft complaint. We do not find this
argument persuasive. While Microsoft included allegations involving defendants’
advertising, those allegations were conclusory. For instance, paragraph 10 of Microsoft’s
complaint alleged that “[d]efendants advertised, marketed, installed, offered and distributed
unauthorized copies of Microsoft software, infringing Microsoft’s copyrights, trademarks
and/or service mark.” Paragraph 11 alleged that “On information and belief, Defendants
advertise that the computers they sell come installed with Microsoft software, and in their
advertisements, Defendants misappropriate and/or infringe Microsoft’s copyrights,
advertising ideas, style of doing business, slogans, trademarks and/or service mark.” In the
count specifically concerning copyright infringement, Microsoft alleged that “Defendants
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have infringed the copyrights in Microsoft’s software, including but not limited to Microsoft
Windows XP, by advertising, marketing, installing, offering, and/or distributing infringing
materials in the United States of America without approval or authorization from Microsoft.”
Microsoft also alleged that it “ha[d] been harmed by Defendants’ activities, including their
advertising activities and unauthorized use of Microsoft’s copyright protected material.”
¶ 28 The facts as alleged in the complaint do not establish any sort of connection between
copyright infringement in the advertisement and Microsoft’s alleged injury. They merely
allege, in a conclusory fashion, that Microsoft was harmed by defendants’ advertising
activities. Indeed, as Erie points out, the complaint does not even allege any facts that a
Compeve advertisement itself infringed on Microsoft’s copyright, as is required for coverage
under the insurance policy. Such allegations are not sufficient to demonstrate an advertising
injury, and our state and federal courts have reached this conclusion several times.
¶ 29 For instance, in Greenwich, we considered whether an allegation of patent infringement
fell within the insurance policy’s definition of advertising injury which, as noted, is identical
to that in the case at bar. We noted that “something more than the mere advertisement of an
infringing product is required to bring such action within the scope of coverage. [Citations.]
The advertisement must instruct or explain to the purchaser exactly how to recreate or
reassemble the product into one that infringes a patent.” Greenwich, 379 Ill. App. 3d at 86.
We found that “[c]ount I of [the underlying] amended complaint (that RPS manufactured and
sold allegedly infringing products) does not allege that RPS provided any detailed
instructions to its customer on how to infringe the patent.” Greenwich, 379 Ill. App. 3d at 86.
Accordingly, we found the argument that the “act of advertising infringing products” fell
within the definition of advertising injury to be unpersuasive. Greenwich, 379 Ill. App. 3d at
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86. See also Konami (America) Inc. v. Hartford Insurance Co. of Illinois, 326 Ill. App. 3d
874, 880 (2002) (in the context of patent infringement claims, “something more is required
for this type of infringement than the mere advertising of a product”).
¶ 30 While defendants correctly point out that patent and copyright are different concepts,
Greenwich is nevertheless instructive to our analysis in the instant case because it stands for
the proposition that in order for there to be an advertising injury, “something more than the
mere advertisement of an infringing product is required to bring such action within the scope
of coverage.” Greenwich, 379 Ill. App. 3d at 86. Furthermore, the Seventh Circuit has
reached the same conclusion with respect to a claim of copyright infringement. In Skylink
Technologies, Inc. v. Assurance Co. of America, 400 F.3d 982, 983 (7th Cir. 2005),
Chamberlain, the maker of a garage door opener with “rolling code” technology, claimed that
Skylink infringed Chamberlain’s copyright by selling a transmitter and keypad that were
“designed to get around” Chamberlain’s technology. Specifically, Chamberlain alleged that
Skylink “ ‘has made, imported, offered to the public, provided and otherwise trafficked in a
Model 39 universal transmitter and a Model 89 keypad that *** (c) are marketed by Skylink
for use in circumventing [Chamberlain’s] technological measure’ ” in violation of section
1201(a) of the Copyright Act of 1976 (17 U.S.C. § 1201(a) (2000)). Skylink, 400 F.3d at 985.
The Seventh Circuit found that the copyright infringement claim did not constitute an
advertising injury under the insurance policy, noting:
“[T]he real harm Chamberlain alleges results from the fact that the Skylink
transmitter and keypad circumvent the rolling code technology, not from the way the
products are packaged. Again, Chamberlain does not object to Skylink’s marketing of
its products except to the extent that they claim to use the rolling code technology. It
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is that failure to use the technology, not the advertisement, that caused the alleged
injury.” Skylink, 400 F.3d at 986.
¶ 31 The district court for the northern district of Illinois has also recently considered this
issue and has reached the same conclusion. In Lemko Corp. v. Federal Insurance Co., No. 12
C 03283, 2014 WL 4924403, at *8 (N.D. Ill. Sept. 30, 2014), the district court considered
whether the underlying complaint by Motorola alleged an advertising injury based on
copyright infringement. Interpreting the identical policy language as that present in the case
at bar, the district court found that the underlying complaint did not allege that Lemko
infringed Motorola’s copyrights in any Lemko advertisement. Lemko, 2014 WL 4924403, at
*9. The court noted:
“It is true that the Motorola complaint asserts in general terms that Lemko used
proprietary information it repurposed from Motorola in products that it marketed but
that does not equate to ‘advertising’ within the meaning of the policy. Motorola’s
allegations pertain to the theft and use of the technology in Lemko products, not in
any ‘advertisement.’ Advertising a product that, in turn, incorporates misappropriated
or infringing content, is not the same as an advertisement that itself infringes a
copyright by disclosing the copyrighted content.” (Emphases in original.) Lemko,
2014 WL 4924403, at *9.
While both Lemko and Skylink are federal cases and, therefore, are not binding upon this
court, we find their reasoning persuasive to the issues present in the instant case.
¶ 32 In the case at bar, Microsoft’s complaint is aimed at the installation of unauthorized
Microsoft products in Compeve’s computers. The complaint does not allege that any
copyrighted information was contained in a Compeve advertisement, nor does it allege, in
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more than conclusory fashion, that the contents of Compeve’s advertisement harmed
Microsoft. To establish copyright infringement, there must be copying. See, e.g., Incredible
Technologies, Inc. v. Virtual Technologies, Inc., 400 F.3d 1007, 1011 (7th Cir. 2005) (“To
establish copyright infringement, a plaintiff must prove ‘(1) ownership of a valid copyright,
and (2) copying of constituent elements of the work that are original.’ ” (quoting Feist
Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361 (1991))). There is no
allegation of any copying within the advertisement itself, only that Compeve advertised that
it was selling Microsoft’s products. As noted, “[a]dvertising a product that, in turn,
incorporates misappropriated or infringing content, is not the same as an advertisement that
itself infringes a copyright by disclosing the copyrighted content.” (Emphasis in original.)
Lemko, 2014 WL 4924403, at *9. Microsoft’s complaint does not allege that Microsoft’s
copyright was infringed in Compeve’s advertisement, nor does it allege any connection
between Microsoft’s injury and the copyright infringement in the advertisement.
Accordingly, we cannot find that the trial court erred in granting summary judgment in Erie’s
favor.
¶ 33 As a final matter, we note that Erie raised a number of issues before the trial court as to
other exclusions that it argued applied to the copyright infringement count, as well as to the
other counts of the Microsoft complaint. However, defendants only argue the issues
concerning the count for copyright infringement in their brief on appeal, noting that “if a duty
to defend the copyright infringement allegation exists, Erie was under a duty to defend the
entire complaint.” While defendants claim in their reply brief that they “did not waive [their]
right to contest additional grounds on which the Policy excludes coverage,” it is well settled
that points not argued on appeal are waived. Lebron v. Gottlieb Memorial Hospital, 237 Ill.
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2d 217, 253 (2010); Ill. S. Ct. R. 341(h)(7) (eff. Feb. 6, 2013) (“Points not argued [in the
appellant’s brief] are waived and shall not be raised in the reply brief, in oral argument, or on
petition for rehearing.”). Accordingly, we do not consider any other bases for finding or
excluding coverage.
¶ 34 CONCLUSION
¶ 35 The trial court properly entered summary judgment in Erie’s favor where the Microsoft
complaint did not allege an “advertising injury” under the terms of the insurance policy.
¶ 36 Affirmed.