In Custom Hardware Engineering & Consulting, Inc. v. Assurance Company of America, 2009 WL 2431447 (Mo. App. E.D. Aug. 11, 2009), the court held that Assurance Company had no duty to defend its insured, Custom Hardware, under the personal and advertising injury coverage of its liability policy.

Assurance Company provided Custom Hardware with CGL insurance that afforded coverage against personal and advertising injury liability. The policy contained an exclusion for personal and advertising injury “caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal and advertising injury.’” 2009 WL 2431447, at *3.

Storage Technology Corporation (“StorageTek”) filed an action against Custom Hardware alleging that Custom Hardware had sent false and misleading marketing materials to customers and potential customers which intentionally misrepresented that Custom Hardware had a license to use StorageTek’s copyright-protected maintenance code in order to service StorageTek equipment. Assurance Company denied Custom Hardware’s request for coverage.

The court held that, under Missouri law, Assurance Company had no duty to defend Custom Hardware. The court determined that the factual allegations of StorageTek’s complaint “are premised only upon intentional conduct because: (1) they include phrases such as ‘deliberately, knowingly, willfully, maliciously, and oppressively,’ ‘willfully and with the intent to cause injury,’ and ‘willfully and knowingly’; and (2) they are devoid of any mention or implication of conduct grounded in negligence, recklessness, inadvertence, error, or mistake.” 2009 WL 2431447, at *5. On this determination, the court held that “the exclusion for ‘personal or advertising injury’ ‘caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict personal and advertising injury’ applied and precluded coverage in this case.” Id.