The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
The issue in this insurance coverage dispute is whether a claim that the insured has infringed a patent for a telephone call processing system constitutes a claim of "advertising injury." In 1998, Defendant, National Union Fire Insurance Company of Pittsburgh ("National Union"),*fn1 issued a Commercial Umbrella Insurance Policy to Morgan Stanley Dean Witter & Co. (now, "Morgan Stanley"). Under this policy, National Union undertook insurance obligations to Morgan Stanley and those subsidiaries in which Morgan Stanley had an ownership interest greater than 50% ("the Policy"). Among National Union's obligations were duties to pay and defend the insured against "advertising injury" claims, subject to certain exceptions and exclusions. In this action, Plaintiffs, Discover Financial Services LLC and Discover Bank (collectively, "Discover"),*fn2 assert that they are insured under the Policy and that National Union has a duty to defend and indemnify them in a patent infringement action currently pending against Discover in the Eastern District of Texas. See Ronald A. Katz Technology Licensing, L.P. v. Citibank, N.A., No. 5:05-CV-142-DF, (the "RAKTL Action.") Discover now seeks a declaration regarding National Union's duties and also seek damages on a breach of contract theory. The parties have filed cross motions for summary judgment on the issue of National Union's duty to defend Discover in the RAKTL Action. For the reasons set forth below, the court grants National Union's motion for summary judgment and denies Discover's motion.
A. National Union's Umbrella Insurance Policy
On October 1, 1998, National Union issued the Policy to Morgan Stanley. (See BE 357 88 80, Ex. 1.A. to Pl. LR 56.1 Stmt.) On October 1, 2001, National Union extended the Policy, which was set to expire on October 1, 2001, until October 1, 2002,as Policy No. BE 357 88 80. (Id. at Endorsement #0011.) The Policy provides that Morgan Stanley and "all subsidiaries, affiliates, related companies and joint ventures"-defined as "those companies or legal entities in which the named insured has 50% or more ownership interest and/or managing control"-qualify as "Named Insured." (Id. at Endorsement #001.) It is undisputed that the Discover entities are insured under the Policy: Andrew B. Weisman, the Executive Director of Risk and Insurance Management for Morgan Stanley, attested that Morgan Stanley has owned more than 50% of Discover Financial Services LLC and Discover Bank since 1997. (Pl. LR 56.1 Stmt. ¶ 11; Declaration of Andrew B. Weisman ¶¶ 2-3, Ex. 2 to Pl. LR 56.1 Stmt.)
The Policy, in relevant part, reads as follows:
We will pay on behalf of the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay by reason of liability imposed by law or assumed by the Insured under an Insured Contract because of Bodily Injury, Property Damage, Personal Injury or Advertising Injury that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world. The amount we will pay for damages is limited as described in Insuring Agreement III, Limits of Insurance. . . . .
A. We shall have the right and duty to defend any claim or suit seeking damages by the terms and conditions of this policy when: (1) [t]he applicable Limits of Insurance of the underlying policies listed in the Schedule of Underlying Insurance and the Limits of Insurance of any other underlying insurance providing coverage to the Insured have been exhausted by payment of claims to which this policy applies; or (2) [d]amages are sought for Bodily Injury, Property Damage, Personal Injury, or Advertising Injury covered by this policy but not covered by any underlying insurance listed in the Schedule of Underlying Insurance or any other underlying insurance providing coverage to the Insured.
B. When we assume the defense of any claim or suit: (1) [w]e will defend any suit against the Insured seeking damages on account of . . . Advertising Injury even if such suit is groundless, false or fraudulent, but we have the right to investigate, defend and settle the claim as we deem expedient.
E. Retained Limit We will be liable only for that portion of damages in excess of the Insured's Retained Limit which is defined as the greater of either: (1) [t]he total of the applicable limits of the underlying policies listed in the Schedule of Underlying insurance and the applicable limits of any other underlying insurance providing coverage to the Insured; or (2) [t]he amount stated in the Declarations as Self Insured Retention as a result of any one Occurrence not covered by the underlying policies listed in the Schedule of Underlying Insurance nor by any other underlying insurance providing coverage to the Insured; and then up to an amount not exceeding the Each Occurrence Limit as stated in the Declarations.
A. Advertising Injury means injury arising solely out of your advertising activities as a result of one or more of the following offenses: . . .
(3) [m]isappropriation of advertising ideas or style of doing business. . . . .
H. Occurrence means: . . . (3) [a]s respects Advertising Injury, an offense committed in the course of advertising your goods, products and services that results in Advertising Injury. All damages that arise from the same or related injurious material or act shall be considered as arising out of one Occurrence, regardless of the frequency or repetition thereof, the number and kind of media used and the number of claimants.
This insurance does not apply to: . . . .
R. Bodily Injury, Property Damage, Personal Injury or Advertising Injury arising out of or by reason of: (1) [t]he purchase, sale, offer of sale, or solicitation of any security, debt, bank deposit or financial interest or instrument . . . .
(BE 357 88 80, at 1-5, 7, 10.)
On July 19, 2005, Ronald A. Katz Technology Licensing, L.P. ("RAKTL") sued Discover for patent infringement. (Pl. LR 56.1 Stmt. ¶¶ 13-14; Def. LR 56.1 Stmt. ¶¶ 7-8.) In its amended complaint filed on December 16, 2005, RAKTL alleged that Discover infringed RAKTL's patents for "interactive call processing" systems. Specifically, RAKTL claimed that Discover "operated automated telephone systems, including without limitation the Discover Bank and Discover Card automated customer service systems," which are systems "that allow their customers to perform banking, credit card, and other functions over the telephone," and that Discover infringed (or induced others to infringe) patents belonging to RAKTL by "making, using, offering to sell, and/or selling" these automated telephone systems in the United States. (RAKTL Am. Compl. ¶ 68, Ex. 1.C. to Def. LR 56.1 Stmt.)*fn3 RAKTL requested injunctive relief, an accounting for damages, and an award of treble damages to remedy Discover's alleged patent infringement. (Def. LR 56.1 Stmt. ¶ 13.)*fn4
According to RAKTL's amended complaint, RAKTL acquired from Ronald A. Katz a number of patents in the field of "interactive call processing" in the 1990s. (RAKTL Am. Compl. ¶ 33, Ex. C to Pl. LR 56.1 Stmt.) Fifteen patents are identified in RAKTL's amended complaint ("the patents in suit"). Of these patents, one is for a "Statistical Analysis System for Use with Public Communication Facility," one is for a "Telephonic Interface Control System," one is for "Multiple Format Telephonic Interface System," six are for a "Telephonic Interface Statistical Analysis System," four are for a "Telephonic Interface Call Processing System with Call Selectivity," one is for a "Multiple Format Telephonic Interface Control System," and one is for a "Voice-Data Telephonic Interface Control System." (Id. ¶ 66; Def. LR 56.1 Stmt. ¶ 10.)
RAKTL alleged that the patents in suit "teach inventions dating from the mid 1980s to early 1990s, involving the integration of telephone systems with computer systems," and that they "teach and claim a variety of methods and systems enabling telephone callers to exchange information with computer systems through a telephone network." (Def. LR 56.1 Stmt. ¶ 15.)*fn5 RAKTL further stated that the inventions "typically focus on activities and structures of the interface system," which "achieve valuable security, control, and efficiency in automated telephone systems." (Id.)
National Union describes the specifications set forth in thirteen of the fifteen patents as follows:
* "Statistical Interface" - this specification "teaches a variety of inventions enabling secure and efficient transactions and data processing based on interactions with callers. For example, callers may enter identification information over the telephone and complete sales orders or perform other transactions or services, with or without operator assistance."
* "Call Selectivity" - this specification "teaches the use of different 'call modes,' such as toll-free calls and area-code calls, to selectively accommodate and control interactive formats."
* "Conditional Interface" - this specification "teaches the use of 'call data signals', signals identifying called telephone and/or calling telephone numbers, to control callers' access to interactive format."
* "Conditional Interface Plus" - this specification "builds upon the 'Conditional Interface' specification, with additional disclosure ...