RE: Insured's Trademark Infringement - Our Ref No. A-000

To Whom It May Concern:

Continental Enterprises (“Continental”) has been engaged by Jack Daniel's Properties, Inc. (“JCPI”) to help protect the intellectual property associated with JCPI distinctive trademarks. Continental has discovered that your insured has infringed upon the intellectual property of JCPI. Our investigation has revealed that your insured has advertised and distributed merchandise that bears images of or designs that are identical to confusingly similar to JDPI's trademarks without authorization from JDPI.

The unauthorized use of a protected trademark or design is a violation of both state and federal law. You insured's use of a JDPI trademark in in the merchandise violates United States Code Title 15, §1114, the Lanham Act. The Lanham Act provides that any person who, without the consent of the registrant, uses a trademark “in connection with the sale…or advertising of any goods or services” where such use is likely to cause confusion, mistake, deception, is in violation of federal law. Furthermore, 15 U.S.C. §1117 provides that for a violation of intellectual property rights, the owner of a protected trademark may recover damages and costs, your insured's profits. And attorney fees. Additionally, the Lanham Act enables the trademark owner to recover treble damages for the use of a counterfeit mark.

Your insured's actions violated JDPI's intellectual property rights and may be covered by your insured's business or commercial liability policy. Generally, commercial general liability policies advertising injuries that consist of “misappropriation of advertising ideas or style of doing business”, and “infringement of copyright, title, or slogan.” See 23 Hamlin L. Rev. 345. Under this definition, your insured's activities are an advertising injury that would be covered.

Courts have broadly applied the advertising injury provision to all forms of disputes, including trademark infringement. Id. “The owner of a trademark has the exclusive right to use a trademark as a symbol to attract the public.” Volkswagenwerk Aktiengesellschaft v. Tatum, 344 F.Supp 235 (1972). Furthermore, “the right of the trademark owner is the right to be protected with respect to…its use as a medium of advertisement.” Coca-Cola Co. v. Gemini Rising, Inc., 175 USPO 56, 60 (1972). Clearly, you insured's unlicensed use of JDPI's intellectual property in its advertisement of the infringing merchandise is a “misappropriation of advertising ideas”.

Ultimately, the unauthorized use of the intellectual property of JDPI, or those images confusingly similar thereto, causes purchasers to patronize businesses and purchase related merchandise and services under the mistaken belief that it is authorized or related to JDPI. As such, your insured could be liable for treble damages under the Lanham Act.

In the interest of expediency, JDPI is willing to forego the pursuit of treble damages and settle this matter for a check or money order for $4, 750.00, made payable to Jack Daniel's Enterprises, Inc. This payment represents an amount sufficient to compensate Jack Daniel's (sic) for the damage done to it through your insured's unauthorized actions. It also represents the minimum amount that we would expect to be awarded by a court, if we are forced to resolve this matter through litigation. Once JDPI is in receipt of the check or money order, we will execute and forward to you and your insured a release for the infringement addressed by this letter.

The foregoing is not intended as a waiver or compromise of any of JDPI's rights or claims, all of which are expressly reserved.

Sincerely,

Darlene Seymour
General Counsel