The central issue in this case was whether or not allegations by a competitor of harm done to it by unfair business practices of an insured were within the scope of "advertising injury" to which broad form comprehensive general liability coverage, carried by the insured, applied. The case was a complex one, involving underlying action, several insurers and other parties. Our concern is solely with the described coverage and its application to the alleged offense.

The insured was a major florists' association "engaged in the business of advertising and promoting floral services, and providing a national clearinghouse for floral delivery services." It was alleged that the insured association and associates had "entered into contracts and engaged in a conspiracy to restrain trade in the business of providing floral directory, advertising, facilities, and clearinghouse services" to subscribing florists. The competing florists' association claimed that the insured association, under its rules, required its member florists, "on threat of fine and loss of membership," to process all of its advertised floral arrangements only through its clearinghouse, unless a customer specified otherwise. A trial court finding that the insured's policy did not cover the allegations was appealed.

The appeal court noted that the covered offense identified as "advertising injury" was defined in the policy to mean ". . . .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." (Italics ours.)

It was argued in support of coverage that the alleged injury to the competing association and various florists triggered a duty for the insurer to defend "because the injury, unfair competition, was causally connected to advertising activity." It was asserted that the pertinent rules of the insured association were adopted and enforced to protect its advertising investment. While it was acknowledged that it was not alleged that an injury was directly caused by advertising activity, "the complaint did allege an injury sufficiently related to advertising to satisfy the language of the policy specifying injuries which arise out of advertising activity."

The appeal court concluded that the facts of the case did not trigger a duty to defend on the part of the insurance company. It determined that the development of rules by the association to protect its advertising investment was not "causally connected" to the alleged injury. The trial court judgment was affirmed in favor of the insurance company.

(INTERNATIONAL INSURANCE COMPANY, Plaintiff, Appellant v. FLORISTS' MUTUAL INSURANCE COMPANY, Defendant, Appellee. Illinois Appellate Court, First District, Fourth Division. No. 1-89-2203. June 29, 1990. CCH 1990 Fire and Casualty Cases, Paragraph 2739.)