On June 11, 2013, in CGS Industries, Inc. v. Charter Oak Fire Insurance Co., the US Court of Appeals for the Second Circuit held that the insurer did not have a duty to indemnify the insured for claims in an underlying trademark infringement action, but that there was sufficient legal uncertainty about the scope of insurance coverage to require the insurance company to defend the insured. The claim involved the rear pocket stitching design on jeans, and the court's decision turned on how it construed the terms "title" and "slogan" within the meaning of the insurance policy.

In 2009, Five Four Clothing sued Walmart for trademark infringement alleging that jeans CGS supplied to Walmart used Five Four's rear pocket stitching design. After CGS was later named as a defendant, CGS asked Charter to defend it under its liability insurance coverage for advertising injury offenses, which the policy defined to include infringement of "copyright, title or slogan." Charter refused to defend, and CGS sued Charter for breach of its duty to defend.

In opinions issued November 16, 2010 and, following further discovery, April 15, 2011 on the parties' motions for summary judgment, the district court held that Charter:

The parties then stipulated to damages of almost $400,000, which included $250,000 that CGS had agreed to pay to settle the underlying action plus CGS's costs to defend the action, but Charter reserved its right to appeal the district court's rulings on all issues but reasonableness of the defense costs and settlement amount.

Charter appealed to the Second Circuit, arguing in the alternative that:

The Second Circuit held that Charter was liable for CGS's defense costs but not the settlement amount, ruling that:

The Second Circuit noted that under New York law, the insurer's duty to defend is broader than the obligation to indemnify and that even where there is no duty to indemnify an insurer may have a duty to defend a claim until insurability is determined. In this context, the Second Circuit construed both "slogan" and "title" as used in the policy to determine whether the underlying complaint alleged a covered offense and, if so, whether there was any reasonable basis for disagreement as to the meaning of the policy.

The Second Circuit found its decision in Hugo Boss Fashions, Inc. v. Federal Insurance Co. to control on the meaning of "slogan." Specifically, the court defined the term to mean a phrase used to promote or advertise a house mark or product mark, as opposed to the actual house or product mark itself. Because the pocket stitching is clearly and unambiguously not a phrase, the Second Circuit concluded that Charter had no duty to defend or indemnify CGS to the extent that the complaint rested on a claim of infringement of a slogan.

In construing "title," the Second Circuit found the vast majority of federal cases to support an interpretation that, where a list of covered offenses includes infringement of copyright and slogan but not trademark infringement, title means the name or appellation of a product and does not cover design elements such as pocket stitching that may serve as a trademark. Therefore, the court found no duty to indemnify. However, the Second Circuit also noted that there are a handful of federal cases that define "title" in a way that could arguably include a design or symbol similar to the pocket stitching in this case. The court found that this legal uncertainty gave rise to at least a temporary duty to defend.

Notably, in reversing the district court's decision on the duty to indemnify, the Second Circuit construed the terms "title" and "slogan" more narrowly than the lower court. The Second Circuit also resolved ambiguity on the meaning of title in the circuit. Therefore, at least in the Second Circuit, it may be more difficult for policyholders to obtain coverage for similar claims.