Affirming the district court on different and narrower grounds, the Seventh Circuit parted company with that by agreeing that no exclusions relied upon by the district court barred a defense. Although the district court had suggested that fact allegations sufficient to evidence disparagement might also implicate defamation, the court disagreed with this aspect of the district court's ruling.
There are no allegations that ProLink ever mentioned GPS in its undertakings. Further, the injuries GPS complains of are slander of title and encumbrance of GPS's title to the ′518 patent. Thus, unlike Nvidia, every allegation in the GPS complaint speaks to disparagement of property, which is not covered under the Policy, rather than disparagement of GPS as an organization.
Id at 832.
The court specifically rejected applicability of the "first publication" exclusion because Federal was admittedly on risk in the prior year in which coverage was provided, as well as the next year thereafter.