Ninth Circuit Rules Defense of Trade Secrets Claim not Covered by Insurance

In Hayward v. Andresen Color of San Francisco Inc., the Ninth Circuit Court of Appeals ruled that the defendant insurer was not required to provide insurance coverage to a plaintiff in connection with a claim of misappropriation of trade secrets. The trial court had initially ruled that the policy exclusion for infringement or violation of trade secrets did "not necessarily comprehend all confidential business information, such as marketing ideas."

After the California Supreme Court decided Hameid v. National Fire Insurance of Hartford, 71 P.3d 761 (Cal. 2003), the Ninth Circuit was constrained to rule that advertising injury - covered under the policy - was limited to widespread promotion to the public at large, and not the essentially one-on-one solicitation of customers from a misappropriated list, as alleged in the case at issue.