                              In the

United States Court of Appeals
               For the Seventh Circuit

No. 11-3566

P RO L INK H OLDINGS C ORPORATION,

                                                  Plaintiff-Appellant,
                                  v.

F EDERAL INSURANCE C OMPANY,
                                                 Defendant-Appellee.


             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
              No. 11 C 300—Ronald A. Guzmán, Judge.



      A RGUED A PRIL 17, 2012—D ECIDED A UGUST 3, 2012




 Before B AUER, K ANNE, and S YKES, Circuit Judges.
  K ANNE, Circuit Judge. In 2008, GPS Industries, Inc., and
GPS IT, LLC (collectively “GPS”), filed a lawsuit against
ProLink Holdings Corporation asserting claims of patent
infringement, slander of title, and unfair competition.
ProLink’s insurer, Federal Insurance Company, refused
to defend ProLink in the lawsuit because the com-
plaint’s allegations did not fall within the governing
policy, or in the alternative, were subject to various
2                                              No. 11-3566

exclusions within the policy. GPS and ProLink eventually
settled and ProLink now seeks a declaration that Federal
had a duty to defend the GPS lawsuit. The district court
granted Federal’s motion for judgment on the pleadings.
Because GPS’s allegations are not covered under the
policy, Federal did not have a duty to defend ProLink
and we affirm the judgment of the district court.


                    I. B ACKGROUND
   ProLink and GPS are business competitors, each manu-
facturing and selling GPS-based golf course distance
measurement and course management products. Rele-
vant to this litigation, GPS owns U.S. Patent No. 5,438,518
(“the ‘518 patent”) for a player positioning and distance
finding system. On July 16, 2008, GPS sued ProLink,
alleging that ProLink infringed and induced the infringe-
ment of the ‘518 patent by “making, using, leasing,
offering to sell, and/or selling devices incorporating the
inventions patented in the ‘518 patent.” (GPS Compl. at 5.)
In addition, GPS asserted claims of slander of title
and unfair competition against ProLink. Specifically, GPS
alleged that on June 30, 2006, ProLink falsely rep-
resented that it owned an exclusive license in perpetuity
under the ‘518 patent as part of an intellectual
property security agreement with Comerica Bank. This
agreement was recorded and allegedly encumbered GPS’s
title to the ‘518 patent. On August 17, 2007, ProLink
entered into a second intellectual property security agree-
ment, this time representing that it owned outright the
‘518 patent. Again, this agreement was recorded and
No. 11-3566                                              3

allegedly encumbered GPS’s title. The GPS complaint
alleges that ProLink knew that its representations were
false and that it does not own the ‘518 patent or any
associated rights. Further, “the ProLink Defendants
have continued to make false claims of license rights
and/or ownership interests in the ‘518 patent to investors
and to others within the golf industry, and have granted
security interests in the ‘518 patent to others.” (GPS
Compl. at 8.) According to GPS, ProLink’s actions slan-
dered GPS’s title to the ‘518 patent and constituted unfair
competition.
  Since 2003, ProLink was a named insured under Fed-
eral’s commercial general liability insurance policy (the
“Policy”). In late 2008, ProLink notified Federal of the
GPS lawsuit, provided a copy of the complaint, and
requested that Federal defend it in the ensuing litiga-
tion. By letter dated December 15, 2008, Federal informed
ProLink that it would not defend or indemnify ProLink
because GPS’s allegations did not satisfy the Policy’s
definition of “personal injury” and, even if they did, the
Policy’s Intellectual Property Laws or Rights Exclusion
or Expected or Intended Injury Exclusion would apply.
ProLink eventually settled GPS’s claims.
   On January 14, 2011, ProLink filed a declaratory judg-
ment action in district court, seeking to establish that
Federal breached its duty to defend ProLink in the GPS
litigation. ProLink cited and attached to its complaint
the most recent Policy, which provided coverage from
April 24, 2007, through April 24, 2008. On March 2,
Federal filed a motion for judgment on the pleadings,
4                                                 No. 11-3566

arguing that ProLink could not establish that any of
GPS’s allegations triggered coverage under the Policy.
ProLink responded to Federal’s motion and filed a cross-
motion for summary judgment on March 23. The district
court found in favor of Federal on October 14, citing the
Policy’s exclusion of coverage for “personal injury”
arising out of an offense committed before the beginning
of the policy period (“First Publication Exclusion”). The
district court held that ProLink’s claim failed because
the first alleged “personal injury” for which GPS sought
damages (June 2006) occurred outside of the Policy
period (April 2007 to April 2008), and thus, the exclu-
sion applied. Although ProLink asserted in its reply
brief that an identical Policy was in effect during the
preceding year, the court deemed this argument
waived. ProLink filed this timely appeal.


                        II. A NALYSIS
  We review de novo the district court’s judgment on the
pleadings in favor of Federal and denial of ProLink’s
summary judgment motion. See Fail-Safe, LLC v. A.O. Smith
Corp., 674 F.3d 889, 892 (7th Cir. 2012). We construe all facts
and grant all reasonable inferences in favor of the party
against whom the motion under consideration was
made. Clarendon Nat’l Ins. Co. v. Medina, 645 F.3d 928,
933 (7th Cir. 2011).
  Federal and ProLink agree that Illinois law governs
the outcome of this diversity action. Thus, “[t]o deter-
mine if an insurer has a duty to defend the insured,
the court must compare the allegations in the underlying
No. 11-3566                                                5

complaint to the relevant provisions of the insurance
policy.” Universal Underwriters Ins. Co. v. LKQ Smart Parts,
Inc., 963 N.E.2d 930, 937 (Ill. App. Ct. 2011), leave to
appeal denied, 968 N.E.2d 89 (Ill. 2012); see also Amerisure
Mut. Ins. Co. v. Microplastics, Inc., 622 F.3d 806, 810 (7th
Cir. 2010). The insurer’s duty to defend arises if “the
facts alleged in the underlying complaint fall within, or
potentially within, the policy’s coverage.” Pekin Ins. Co. v.
Wilson, 930 N.E.2d 1011, 1017 (Ill. 2010). The allegations
of the underlying complaint and the policy terms are
construed liberally in favor of the insured, resolving
all ambiguities against the insurer. Amerisure, 622 F.3d
at 811. The insurer must defend the insured “even if the
allegations are groundless, false, or fraudulent” and “even
if only one of several theories is within the potential
coverage of the policy.” Gen. Agents Ins. Co. of Am. v.
Midwest Sporting Goods Co., 828 N.E.2d 1092, 1098 (Ill.
2005); see also Owners Ins. Co. v. Seamless Gutter Corp., 960
N.E.2d 1260, 1269 (Ill. App. Ct. 2011). In sum, “an insurer
may not justifiably refuse to defend a lawsuit against
its insured unless it is clear from the face of the under-
lying complaint that the allegations set forth in the com-
plaint fail to state facts that bring the case within, or
potentially within, the coverage of the policy.” Valley
Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 315
(Ill. 2006).
  The district court chose to enter judgment in favor of
Federal based on the First Publication Exclusion, noting
that ProLink did not timely inform the court that the
same Policy was in effect prior to 2007. But Federal’s
denial letter, which was part of the record, specifically
6                                               No. 11-3566

references the Policy, “issued for the policy periods of
April 24, 2006 to April 24, 2007 and April 24, 2007
to April 24, 2008,” and “continuously in force from May 18,
2003.” (Compl. Ex. 5 at 2.) Given that the 2006-2007
policy was referenced in the record before the district
court, we decline to rely upon the First Publication Ex-
clusion in reaching our decision. Instead, “we may
affirm a judgment on any ground the record supports
and the appellee has not waived.” Barton v. Zimmer, Inc.,
662 F.3d 448, 454 (7th Cir. 2011). Although the district
court did not address whether the underlying com-
plaint’s allegations fall within, or potentially within, the
Policy’s coverage, we find that they do not and will
affirm the judgment on this basis.
  In the Policy, Federal agrees to pay damages that ProLink
becomes legally obligated to pay for “personal injury.”
“Personal injury” is defined, in part, as:
    injury, other than bodily injury, property damage
    or advertising injury, caused by an offense of:
    . . . electronic, oral, written or other publication
    of material that:
    1.   libels or slanders a person or organization
         (which does not include disparagement of
         goods, products, property or services) . . . .
(Policy at 30.) Federal asserts that GPS’s allegations do
not satisfy this definition because the only thing alleged
is disparagement of property (the ‘518 patent). Because
disparagement of property is specifically excluded from
the definition of “personal injury,” Federal had no duty
No. 11-3566                                                  7

to defend ProLink. In contrast, ProLink argues that it is
reasonable to infer from the underlying complaint
that ProLink implicitly defamed and disparaged GPS,
not just its patent. This implicit defamation constitutes
libel or slander of an organization—a covered “personal
injury.”
  The parties agree that GPS’s asserted claims for relief,
slander of title and unfair competition, do not satisfy the
definition of “personal injury.” But “[t]he legal labels
used by a plaintiff in the underlying case are not
dispositive as to whether a duty to defend exists.” Conn.
Indem. Co. v. DER Travel Serv., Inc., 328 F.3d 347, 349 (7th
Cir. 2003) (citing Lexmark Int’l, Inc. v. Transp. Ins. Co., 761
N.E.2d 1214, 1221 (Ill. App. Ct. 2001)). ProLink believes
certain allegations in the complaint allege reputational
harm and state claims for implicit defamation. Specif-
ically, ProLink infers from the allegations of the com-
plaint that its alleged representations imply that GPS
does not own rights to the ‘518 patent and therefore
GPS must be misrepresenting its legal rights. “Claims
that GPS had no valid patent rights to assert against
ProLink slandered GPS by accusing it of being dishonest.”
(Appellant’s Br. at 10.) This implicit defamation, ProLink
argues, is covered, or at least potentially covered, under
the Policy.
  ProLink claims that this case is “nearly identical” to the
issues addressed in Nvidia Corp. v. Federal Insurance Co.,
No. 04 C 7178, 2005 WL 2230190 (N.D. Ill. Sept. 6, 2005)
(unpublished). In that case, the underlying complaint
alleged that Nvidia agreed to cooperate in a plan to create
8                                                 No. 11-3566

a new company which would “cripple” VisionTek, the
underlying plaintiff. Id. at *1. As part of this plan, Nvidia’s
director of sales advised others that VisionTek “did not
have the legal right to sell [its] inventory,” based on
allegations that VisionTek’s products were sold without
appropriate software licenses. Id. at *1, 12. According
to the underlying complaint, these statements caused
irreparable damage to VisionTek’s reputation. Id. at *1. But
the complaint only stated a claim of “product disparage-
ment,” not defamation. See id. at *2. Under a policy
similar to the one at issue in this case, covering “per-
sonal injury” including “oral or written publication of
material that slanders or libels a person or organization,”
id. at *1, Federal denied coverage and refused to defend
or indemnify Nvidia, id. at *2. The district court held
that the underlying complaint’s allegations, that VisionTek
did not have the right to sell its inventory and sold
such products without the appropriate licenses,
“impugn the seller’s integrity, honesty, and business
ethics, [and] are seen as putative defamation claims
under Illinois law.” Id. at *12. In addition, Nvidia’s
alleged campaign to publicly disparage VisionTek trig-
gered the duty to defend because “damage to a party’s
reputation through the utterance of false communica-
tions about that party can constitute potential defama-
tion.” Id. at *13.
  ProLink believes this case is analogous to Nvidia and
the outcome should be the same. Notwithstanding the
nonbinding nature of the case, ProLink overlooks key
distinctions between the allegations in the VisionTek and
GPS complaints. For instance, VisionTek specifically
No. 11-3566                                               9

alleged that Nvidia told others that VisionTek did not
have the legal right to sell its products. This statement
clearly implicates slander of a person or organization, as
required by the Policy. That is, the statement expressly
defames VisionTek. In contrast, the GPS complaint
merely alleges that ProLink claimed rights in and owner-
ship of the ‘518 patent. 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.
  Many of the cases ProLink cites in support of its posi-
tion are distinguishable from the facts of this case for
the same reason as Nvidia. See, e.g., Cincinnati Ins. Co. v.
E. Atl. Ins. Co., 260 F.3d 742, 745 (7th Cir. 2001)
(applying Illinois law, allegations that the insured
falsely notified the underlying plaintiff’s clients about
the underlying plaintiff’s practices suggested claims
of defamation and disparagement of services); Miranda
v. Cal. Capital Ins. Co., No. A126778, 2011 WL 1168064, at
*6 (Cal. Ct. App. Mar. 29, 2011) (unpublished) (ap-
plying California law, allegation that the insured inten-
tionally transferred inferior cows to a purchaser and
represented that the cows were from the underlying
plaintiff’s herd “was potentially defamatory, sufficient
to trigger a duty to defend”); Amerisure Ins. Co. v.
Laserage Tech. Corp., 2 F. Supp. 2d 296, 304 (W.D.N.Y.
1998) (applying Illinois law, defamation claim existed
10                                              No. 11-3566

where the underlying complaint alleged that the
insured informed customers that the underlying plain-
tiffs infringed upon two patents and “such customers
act at their own risk in purchasing products from [the
underlying plaintiffs]”). In these cases, the underlying
complaints specifically alleged that the insured made
an express statement about the underlying plaintiff.
Accordingly, these allegations could be considered
claims of slander of a person or organization. Not so
here, where ProLink’s representations concerned only
its own rights to the ‘518 patent and never identified GPS
or accused GPS of any wrongdoing. Accord Novell, Inc. v.
Vigilant Ins. Co., 421 F. App’x 872, 875-76 (10th Cir. 2011)
(unpublished) (applying Utah law, it was “too great a
stretch” to find an implicit defamation claim in what
was “merely an ownership dispute concerning copy-
rights”). Because the underlying complaint’s allegations
concern only disparagement of property, which is not
covered under the Policy, Federal did not have a duty
to defend ProLink in the GPS litigation.


                    III. C ONCLUSION
  For the foregoing reasons, we A FFIRM the judgment of
the district court.




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