                                                           PUBLISH

              IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT

                         _______________

                            No. 96-9249
                          _______________
                 D. C. Docket No. 2:94-CV-118-WCO


ELAN PHARMACEUTICAL RESEARCH CORPORATION,

                                                Plaintiff-Appellant,
                                                     Cross-Appellee,


                              versus


EMPLOYERS INSURANCE OF WAUSAU, a Wisconsin
corporation, WAUSAU UNDERWRITERS INSURANCE
COMPANY, a Wisconsin corporation

                                             Defendants-Appellees,
                                                  Cross Appellants.

                  ______________________________

          Appeals from the United States District Court
               for the Northern District of Georgia
                  ______________________________
                          (June 26, 1998)

Before TJOFLAT and BIRCH, and MARCUS*, Circuit Judges.


BIRCH, Circuit Judge,




     *
        Honorable Stanley Marcus was a U.S. District Judge for the
Southern District of Florida, sitting by designation as a member of
this panel, when this appeal was argued and taken under submission.
On November 24, 1997, he took the oath of office as a United States
Circuit Judge of the Eleventh Circuit.
     This diversity case requires us to determine the extent of an

insurer's duty, under Georgia law, to defend a claim of patent

infringement as an “advertising injury” covered in a pair of

commercial liability insurance policies. The appeal also presents the

questions of whether Georgia law permits an insured to recover

litigation expenses incurred before tendering notice to the insurer

and whether a parent company's liability for patent infringement falls

within insurance coverage for stockholder liability. The plaintiff-

appellant appeals the district court's decision to grant the insurer's

motion for summary judgment on the issues of pre-tender litigation

expenses and stockholder liability. The defendant-cross-appellant

appeals the district court's decision to grant the insured's motion for

summary judgment on the question of coverage under the

“advertising injury” clause of the policies. We AFFIRM.



                          BACKGROUND




                                  2
     Elan Corporation, Plc (“Plc”) is an Irish corporation engaged in

the manufacture and sale of pharmaceutical drugs.               Plaintiff-

appellant, Elan Pharmaceutical Research Corporation (“EPRC”), a

Georgia corporation, is one of a number of United States

subsidiaries of Plc. On July 9, 1992, Pfizer, Inc. (“Pfizer”) filed a

lawsuit against EPRC and Plc (collectively “Elan”) in the United

States District Court for the District of Delaware alleging that Elan

had infringed a patent licensed to Pfizer. The patent concerned a

formulation of nifedipine, a drug used to treat angina and

hypertension. Pfizer's complaint asserted that Elan had infringed its

patent rights by commercializing a competing version of the drug.

EPRC retained legal counsel to defend the Pfizer action and the

same legal counsel represented Plc in its special appearance to

contest personal jurisdiction in the Delaware district court.

     EPRC previously had purchased two commercial liability

insurance policies from Employers Insurance of Wausau and




                                  3
Wausau Underwriters Insurance Company2 (collectively “Wausau”):

a commercial general liability policy (the “CGL policy”) and a

commercial umbrella liability policy (the “CUL policy”). Both the CGL

and CUL policies provided a one-year period of coverage, from April

1, 1992 to April 1, 1993. On September 11, 1992, approximately

two months after Pfizer filed its complaint, EPRC notified Wausau of

the Pfizer suit and asked it to provide a defense in accordance with

the policies. On November 16, 1992, Wausau acknowledged notice

of the Pfizer lawsuit but denied any obligation to defend EPRC under

the policies. Wausau similarly denied two subsequent requests from

EPRC to reconsider its position.

     The Pfizer litigation terminated on February 4, 1993, when the

Delaware district court held that Pfizer, as a licensee, did not have

standing to assert the patent rights of its licensor. See Pfizer, Inc.

v. Elan Pharm. Research Corp., 812 F. Supp. 1352 (D. Del. 1993).

After the disposition of the Pfizer action, EPRC brought this claim

     2
       Both Employers Insurance of Wausau and Wausau Underwriters
Insurance Company are Wisconsin corporations.

                                   4
against Wausau in the Northern District of Georgia, seeking to

recover the costs of defending the lawsuit. On August 29, 1995, the

district court found that Wausau owed a duty to defend EPRC

against Pfizer's claims of patent infringement under the “advertising

injury” coverage of the CGL and CUL policies and entered summary

judgment in favor of EPRC. On August 8, 1996, the district court

entered partial summary judgment in Wausau's favor, finding that

the policies did not cover the litigation expenses EPRC incurred

before giving Wausau notice of the Pfizer suit on September 11,

1992 and that the policies did not cover Plc's litigation expenses

because Plc's conduct, rather than its status as EPRC's sole

shareholder, provided the basis for Pfizer's allegations of liability

against Plc. EPRC appeals the district court's 1996 order and

Wausau cross-appeals the district court's 1995 order.



                           DISCUSSION




                                 5
     The district court's summary judgment rulings in this case

involve the interpretation and application of the pertinent terms of the

insurance contracts. The construction of an insurance contract is

a question of law and is subject to de novo review. See LaFarge

Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1514-15 (11th Cir.

1997) (per curiam).     Our review of the district court's grant of

summary judgment is plenary and we apply the same legal

standards as those employed by the district court. Id. Summary

judgment is appropriate when no genuine issue of material fact

exists and the moving party is entitled to judgment as a matter of

law. See Fed. R. Civ. P. 56(c).



I.   Coverage for Advertising Injury

     First, we address Wausau's contention that the district court

erred when it granted summary judgment in EPRC's favor on the

issue of whether the CGL and CUL policies required Wausau to

defend the Pfizer lawsuit. We note that, under Georgia law, the duty

                                   6
to defend an insured is separate and independent from the

obligation to indemnify. See Penn-America Ins. Co. v. Disabled

Am. Veterans, Inc., 268 Ga. 564, 490 S.E.2d 374, 376 (1997).

Although an insurer need not indemnify an insured for a liability

the insured incurs outside the terms of the insurance contract, an

insurer must provide a defense against any complaint that, if

successful, might potentially or arguably fall within the policy's

coverage. Id. To determine whether an insurer owes its insured a

duty to defend a particular lawsuit, Georgia law directs us to

compare the allegations of the complaint, as well as the facts

supporting those allegations, against the provisions of the insurance

contract. See Great Am. Ins. Co. v. McKemie, 244 Ga. 84, 85-86,

259 S.E.2d 39, 40-41 (1979). As we construe the insurance contract

in this case, we are mindful of our obligation to carry out the parties'

true intentions. See Tennessee Corp. v. Hartford Accident and

Indem. Co., 463 F.2d 548, 551 (5th Cir. 1972) (applying Georgia

law). If the claim is only one of potential coverage, however, any

                                   7
“doubt as to liability and [the] insurer's duty to defend should be

resolved in favor of the insured.” Penn-America, 490 S.E.2d at 376

(quoting 7C John Alan Appleman, Insurance Law and Practice §

4684.01, at 98-100 (Walter F. Berdal ed., 1979)).

     Both of the insurance contracts at issue in this case contain a

provision insuring against liability for an “advertising injury” that

occurs during the policy period and in the course of advertising the

insured's goods, products, or services.1          The policies define

“advertising injury” to include injury arising out of patent infringement

committed in the course of the insured's “advertising activities.”2



     1
        The CGL, under Coverage B, states in pertinent part:
     We will pay those sums that the insured becomes legally
     obligated to pay as damages because of . . . “advertising
     injury” to which this coverage part applies. We will
     have the right and duty to defend any “suit” seeking
     those damages.
CGL § I(B)(1)(a); see also CUL § I(1)(c) (providing similar
coverage).
     2
        The CGL, as modified by an endorsement, provides:
     “Advertising injury” means injury . . . arising out of
     one or more of the following offenses committed in the
     course of “your advertising activities.”
          . . . .
          d.    Infringement   of   copyright,   title,
          trademark, patent or slogan.
CGL, Endorsement No. 5, § V(1) (emphasis added); see also CUL §
VI(1) (identical language).

                                   8
The contracts further define those advertising activities as “the wide

spread distribution of material promoting your goods, products or

services.” CGL, Endorsement No. 5, ¶ D(1); CUL § VI(20). To

fall within the coverage of the insurance policies, therefore, (1)

Pfizer's suit must have alleged a cognizable advertising injury; (2)

EPRC must have engaged in advertising activity; and (3) there

must have been some causal connection between the advertising

injury and the advertising activity. See e.g., New Hampshire Ins.

Co. v. R. L. Chaides Constr. Co., 847 F. Supp. 1452, 1455 (N.D.

Cal. 1994) (interpreting similar policy language).

     Pfizer's lawsuit asserted two claims of patent infringement in

connection with Elan's attempts to obtain the Food and Drug

Administration's (“FDA”) approval of Nifelan, Elan's nifedipine

product. In order to comprehend Pfizer's claims, a brief review of

the applicable patent regime is necessary. Federal law provides a

cause of action for patent infringement against “whoever without

authority makes, uses, offers to sell, or sells any patented invention

                                  9
. . . during the term of the patent therefor.” 35 U.S.C. § 271(a).

Section 271(e) creates an exemption for those who wish to make,

use, or sell a patented invention “solely for uses reasonably related

to the development and submission of information under a Federal

law which regulates the manufacture, use or sale of drugs . . . .” 35

U.S.C. § 271(e)(1).3 Section 271(e)(2), however, states that it shall

be an act of infringement to submit an application pursuant to a

number of specific sections of the Federal Food, Drug and Cosmetic

Act, “if the purpose of such submission is to obtain approval . . . to

engage in the commercial manufacture, use, or sale of a [patented]


     3
         Congress added § 271(e) to address a specific problem
caused by the intersection of FDA regulations and the patent laws.
Prior to the adoption of § 271(e), drug manufacturers who wished to
sell a generic version of a patented drug immediately upon the
expiration of the patent could not do so because of the lengthy
delay associated with obtaining the legally-required, pre-market
FDA approval of any such drug.   See Telectronics Pacing Sys., Inc.
v. Ventritex, Inc., 982 F.2d 1520, 1524 (Fed. Cir. 1992). Before
1984, these manufacturers could not conduct the clinical tests
necessary to submit their products for FDA approval before the
patent expired on the brand name drug without risking liability for
an infringing manufacture or use. Id. at 1524-25 (citing Roche
Prod. Inc. v. Bolar Pharm. Co., 733 F.2d 858 (Fed. Cir. 1984)). As
a result, generic versions of drugs could not become available on
the market until long after the patent on the brand name drug had
expired. Congress responded by amending the law to permit those
who wish to market a competing generic drug to make, use, and sell
that product as long as their efforts are reasonably related to
obtaining the required federal approvals. Id. at 1525.
                                 10
drug . . . before the expiration of such patent.”        35 U.S.C. §

271(e)(2).

     Count I of Pfizer's complaint alleged that Elan infringed Pfizer's

patent by filing a New Drug Application (the “NDA”) for FDA approval

of a patented drug in the manner described in section 271(e)(2), i.e.,

for the purpose of engaging in commercial sales before the

expiration of Pfizer's patent. Both parties, however, agree that

Count I of Pfizer's complaint did not implicate Wausau's insurance

policies. Count II of the complaint alleged that Elan filed the NDA

based on certain clinical studies, and that those clinical studies were

“not solely for a use reasonably related to the development and

submission of information for the Nifelan NDA, but were for the

purpose of commercializing Nifelan . . . .” Pfizer Comp. ¶ 32. Count

II further alleged that the studies themselves constitute an infringing

use of Pfizer's patent and that the studies fell outside the protection

of section 271(e)(1). See id. ¶ 33. Elan argues that Count II of the




                                  11
complaint brought the Pfizer law suit within the confines of the CGL

and CUL policies.

     Wausau concedes that its policies include coverage for suits

alleging patent infringement, as an enumerated advertising injury,

committed in the course of the insured's advertising activities. We,

therefore, begin our analysis by considering whether the

commercialization of the clinical studies described in Count II of

Pfizer's complaint amounts to advertising activity, as defined in

the contracts. Courts have differed over precisely what type of

conduct constitutes advertising activity. A number of courts have

defined the term expansively to include even individual sales

pitches to individual consumers; but other courts have defined it

more narrowly. Compare John Deere Ins. Co. v. Shamrock Ind.,

Inc., 696 F. Supp. 434, 440 (D. Minn. 1988) (relying on Black's

Law Dictionary for the proposition that the solicitation of one

person's business constitutes advertising), aff'd 929 F.2d 413 (8th

Cir. 1991) with First Bank and Trust Co. v. New Hampshire Ins.

                                12
Group, 124, N.H. 417, 418, 469 A.2d 1367, 1368 (1983) (“the

mere explanation of bank services to a couple in a private office

cannot be considered 'advertising'”). Although Georgia's courts

have yet to voice an opinion in this debate, it appears that the facts

of this case meet even the narrowest readings of advertising activity

advanced in the cases that Wausau cites in its briefs.

     As noted above, the CGL and CUL policies define “advertising

activity” as the widespread distribution of material promoting Elan's

goods, products, or services. Unambiguous terms of an insurance

contract are to be understood in their “plain, ordinary, and popular

sense.” Horace Mann Ins. Co. v. Drury, 213 Ga. App. 321, 322, 445

S.E.2d 272, 274 (1994).      A plain and ordinary reading of the

definition of advertising activity in Wausau's policies would include

an insured's dissemination of information to promote a product or

service. Black's Law Dictionary defines advertising in a manner that

would include such dissemination of information:




                                 13
     Any oral, written, or graphic statement made by the seller
     in any manner in connection with the solicitation of
     business . . . .

Black's Law Dictionary 54, (6th ed. 1990). Moreover, the courts that

have considered the issue of advertising activity in similar contexts

have defined it in terms that include the dissemination of information

to promote a product. See e.g., Smartfoods, Inc. v. Northbrook

Property & Cas. Co., 35 Mass. App. Ct. 239, 243-44, 618 N.E.2d

1365, 1368 (1993) (“advertising means a public announcement to

proclaim the qualities of a product . . . . Wide dissemination of

information is typically the objective of advertising.”) (citations

omitted).

     Count II of Pfizer's complaint accuses Elan of using the clinical

studies at issue to “commercialize” Nifelan in the United States. As

Wausau admits, the common definition and usage of the term

“commercialize” includes developing commerce in a particular item.4

     4
        The term “commercialize” also appears to be a term of art
in this particular area of practice before the FDA.       Federal
regulations prohibit the commercialization of an investigational
device being sold to generate testing data for FDA approval “by
charging the subjects or investigators . . . a price larger than

                                 14
The dissemination of clinical studies to develop a market for one of

Elan's products, therefore, appears to fall well within the definition of

advertising activity provided in the insurance policies and in the case

law. Moreover, even if Wausau credibly could argue that Pfizer's

complaint did not alert it to the fact that Elan's advertising activities

were potentially or arguably at issue, thus triggering Wausau's duty

to defend, the record shows that when asked in an interrogatory to

clarify Count II of its complaint, Pfizer specifically cited Elan's

advertising of its Nifelan product in the United Kingdom and Canada

as giving rise to their cause of action.5 Although Elan provided

Pfizer's response to this interrogatory to Wausau in its second




that necessary to recover costs of manufacture, research,
development, and handling.” 21 C.F.R. § 812.7(b);        see also
Telectronics, 982 F.2d at 1523 n.2 (discussing this regulation in
the context of a § 271(e)(1) case). Since there has never been any
suggestion, either in Pfizer's complaint or the record in this
case, that Elan ever sold Nifelan, the regulation appears to have
no application to this case.
     5
        Georgia law does not permit an insurer to rely on the
allegations of the complaint to deny coverage when the facts that
the insurer knows or can ascertain show that the claim is within
the coverage of the policy. See Loftin v. United States Fire Ins.
Co., 106 Ga. App. 287, 296, 127 S.E.2d 53, 59 (1962).

                                   15
request for a defense, Wausau maintained its position that Pfizer's

lawsuit fell outside the policies.

     Wausau urges that the record in the Pfizer action demonstrates

that Elan's use of the clinical studies in this case did not amount to

a “wide spread distribution” as required by the insurance policies.

In support, Wausau cites Fox Chem. Co. v. Great Am. Ins. Co., 264

N.W.2d 385, 386 (Minn. 1978), for the proposition that a

corporation's internal distribution of a pamphlet to educate the

corporation's sales force did not constitute an advertising activity

because the insured had not engaged in a widespread distribution

of this material to the public and had not included it in direct mailings

to the corporation's customers.6          Id. at 386. The Fox court,

however, found it significant that the insured had not reproduced the




     6
        The Fox case is one of the few that Wausau cites that does
not focus on the relatively narrow question of whether sales
pitches to individuals constitute advertising.       Although the
majority of the cases appear to hold that these sales pitches do
not constitute advertising activity, such authority does little to
help us resolve the questions presented in this appeal.

                                     16
pamphlet outside the company in “the general media or trade

publications.” Id. (emphasis added).

     In this case, the record shows that Elan distributed the

information in question outside its own corporate structure in a

number of fora with an eye towards developing interest in its

products and services. See R3-13, Exh. B, Mulligan Decl. ¶¶ 13-18

(describing Elan's promotion of Nifelan).          Significantly, Elan

discussed its Nifelan product in trade journals, using clinical studies

to promote its version of the drug.7 See e.g., R4-16, St. Peter Aff.,

Exh. E.     Elan also made the Nifelan product a part of its

presentations to security analysts as part of its efforts to promote the

drug as a potential source of significant revenue and profit for the

company. These external distributions of the clinical studies to

     7
       Wausau's contention that Elan was not engaged in advertising
activity because the clinical data did not promote a “good,
product, or service” is unpersuasive. Pfizer's complaint clearly
concerns the commercialization of Nifelan, the product Elan hoped
would compete with Pfizer's drug. Moreover, the fact that the FDA
had not then approved Nifelan for sale in the United States does
not detract from our conclusion that Elan's efforts to promote the
drug were advertising activities. In April 1992, Elan publically
announced that the FDA's approval of Nifelan was imminent and
engaged in a campaign to drum up interest in the drug to begin
sales immediately upon approval.

                                  17
promote commercial interest in Nifelan are different in kind than the

internal distribution at issue in Fox. Moreover, the publication of the

clinical studies to promote Nifelan in the trade press presents the

very case that the Fox court used as a counter example to show

what would constitute “advertising activity.”

     Wausau also emphasizes the fact that Elan never distributed

the information to the general public and argues that without such a

public distribution, the dissemination of clinical studies cannot

constitute advertising. We find this argument unpersuasive. As an

initial matter, we note that the insurance contracts contain no

express requirement that the insured must direct its advertising

activity either towards the general public or actual consumers.

Moreover, Wausau's argument would have us ignore the reality of

how drugs make their way to market. Identifying and contacting the

target market for a prescription drug certainly will require marketing

strategies and solutions that differ from the tactics used for products




                                  18
that have a more ubiquitous appeal.8      A number of courts have

considered the relative size of the target audience in their analyses

of what constitutes a widespread distribution (and hence advertising

activity) in this context. In R. L. Chaides, for example, the district

court explained that as long as the insured directed its efforts at

influencing a significant portion of its client base, the advertising

activity requirement was satisfied, regardless of the size of the

audience. See 847 F. Supp. at 1456.9




     8
        Beer producers, for example, find it effective to advertise
their wares with television commercials during the Superbowl, when
they expect a large segment of their target market to be watching.
A drug manufacturer, however, may find such a strategy
unproductive. We would expect the target audience for Nifelan to
be far narrower and more discrete than that for Budweiser, and what
amounts to a “widespread distribution of materials” necessarily
will be far more circumscribed for Elan than for the Anheuser-Busch
Corporation.
     9
        The R.L. Chaides court noted that:
          Advertising activity must be examined in the context
     of the overall universe of customers to whom a
     communication may be addressed; to hold otherwise would
     effectively preclude small businesses . . . from ever
     invoking their rights to coverage for advertising injury
     liability . . . . This court . . . concludes here, that
     where the advertising audience is small but nonetheless
     constitutes all or a significant portion of the insured's
     client base, the advertising activity element is
     satisfied.
847 F. Supp. at 1456.

                                 19
     Similarly, we find it insignificant that Elan directed its efforts at

doctors, hospitals, and other health professionals through the trade

press rather than at actual consumers. Given that physicians, who

prescribe drugs to their patients, often serve as a conduit between

drug manufacturers and consumers, it is hardly surprising that Elan

would focus its efforts on medical professionals rather than taking

out an advertisement in a newspaper of general circulation.10 We

find it significant that the language in question appears in

commercial general liability and commercial umbrella liability

policies, of the sort a wide variety of companies rely upon. The

language at issue is general and permits ready application in

different situations to reflect this reality.    We will not import a

limitation on coverage for advertising activities, namely that the

     10
        As one commentator has observed:
     [C]ommunications intended to induce the doctors to
     prescribe a pharmaceutical manufacturer's drugs for the
     doctors' patients would constitute “advertising” even
     though the communications were never observed by the
     ultimate consumers, the patients . . . [just as] a cereal
     manufacturer's   Saturday    morning   commercials    are
     “advertising” even though they are aimed at children, not
     their parents who actually buy the product . . . .
Jan T. Chilton, Expanding Boundaries of the Advertising Injury
Coverage, 620 PLI/Comm 165, 175 (1992) (citations omitted).

                                   20
distribution of material in question address the general public or the

final consumer, when such a limitation would not fit the reasonable

expectations of the different types of businesses that have

purchased similar coverage.        Accordingly, we find that the

distribution of information in this case satisfies the advertising

activity requirement in Wausau's policies.

     Having determined that Count II of Pfizer's complaint set forth

an enumerated advertising injury and that Elan was engaged in

advertising activity, we must address whether the injury and the

activity were sufficiently related to support coverage under the

policies. Although Georgia's courts have not yet had occasion to

address the causal connection required in this context, Wausau

points us to persuasive authority from other jurisdictions that

requires the insured to show a significant causal connection

between the injury alleged in the suit and the insured's advertising

activities. In a representative case, the California Supreme Court,

interpreting policy language very similar to that at issue here,

                                 21
explained that such a causal connection was necessary to avoid the

conclusion that any harmful act committed by a defendant who

advertised in any fashion would fall under the grant of coverage.

Such an expansive reading of the coverage would contradict both

the reasonable expectations of the insured and the language of the

insurance contract in question, which limited coverage to injuries

likely to occur in connection with advertising activity.11 See Bank of

the West v. Superior Court of Contra Costa County, 2 Cal. 4th 1254,

1274-77, 833 P.2d 545, 558-60, 10 Cal. Rptr. 2d 538, 551-54

(1992).   To provide an example, the Bank of the West court

explained that a claim for patent infringement did not occur in the

course of advertising activities even though the insured had

advertised the infringing product, because the patent holder based

its claim of infringement on the insured's sale or importation of the



     11
       The California Supreme Court examined a contract that, much
like the insurance contracts at issue in this case, limited the
types of injury contemplated as “advertising injury” to those that
might occur in advertising--such as libel, slander, and copyright
infringement. See Bank of the West, 2 Cal. 4th at 1276, 833 P.2d
at 560, 10 Cal. Rptr. 2d at 553.

                                 22
infringing product rather than on its advertisement. Id. at 1275, 833

P.2d at 559, 10 Cal. Rptr. 2d at 552. A federal district court,

purporting to apply Georgia law (albeit without the benefit of

controlling authority), recently made a similar ruling in the copyright

context. See Robert Bowden, Inc. v. Aetna Cas. and Sur. Co., 977

F. Supp. 1475 (N.D. Ga. 1997). In that case, the insured argued

that it illegally copied the plaintiff's computer software (and thus

infringed the copyright at issue) because it needed the software to

construct an advertising campaign. Rejecting coverage under the

advertising injury clause, the district court held that “an insured's

advertising must have been the cause of whatever injury is alleged

in the underlying suit.” Id. at 1480.

     Elan does not contest the contractual requirement that the

patent injury must have occurred within the scope of its advertising

activities but argues that the patent infringement alleged in Count II

of Pfizer's complaint provides the required causal connection.

Pfizer's complaint, particularly its use of the term “commercialize,”

                                  23
gives rise to a number of varied interpretations.12 The most natural

reading of the complaint, particularly its allegation that the clinical

studies themselves, standing apart from Elan's filing of the NDA, are

infringing uses that fall outside the protection of section 271(e)(1),

however, is as a claim for infringement under section 271(a). In

1992, when Pfizer filed its complaint, it was an open question of

federal patent law whether the subsequent dissemination of clinical

studies and information developed for the purpose of obtaining FDA

approval for a drug or medical device deprived a defendant of the

protections of section 271(e)(1) and therefore gave rise to an action

under section 271(a).13      Under such a theory of liability, the



     12
        We, for example, could, as Wausau suggests, read Pfizer's
complaint to state a claim under 271(e)(2) because the use of the
term “commercialize” evokes the forbidden purpose of that section,
namely, the commercial manufacture, use, or sale of a patented
device before the expiration of the patent. Given the complaint's
isolation of the studies from Elan's filing of the NDA, however,
section 271(e)(2) appears inapplicable. See also supra note 4.
     13
        A number of cases before the    Telectronics opinion had
suggested that such a theory of liability was viable. See Ortho
Pharm. Corp. v. Smith, 18 U.S.P.Q.2d (BNA) 1977, 1992 (E.D. Pa.
1990), aff'd, 959 F.2d 936 (Fed. Cir. 1992); Scripps Clinic &
Research Found. v. Genentech, Inc., 666 F. Supp. 1379, 1396-97
(N.D. Cal. 1987), modified, 678 F. Supp. 1429 (N.D. Cal. 1988),
aff'd in part and rev'd in part, 927 F.2d 1565 (Fed. Cir. 1991).

                                  24
dissemination of the data in a company's advertising would give rise

to an action for patent infringement, because the dissemination

would retroactively deprive the protected use of the patented drug

to collect the data of its exemption. Construed this way, Pfizer's

lawsuit provided the necessary causal connection between the

alleged patent infringement and Elan's advertising activities,

because without and until that activity took place, the clinical studies

at issue would have been exempt.14 Moreover, Pfizer essentially

confirmed this reading of its claims during discovery by stating that

the use of the clinical studies to advertise Nifelan in the United


     14
          Contrary to Wausau's arguments, the Ninth Circuit's
decision in Iolab Corp. v. Seaboard Sur. Co. , 15 F.3d 1500 (9th
Cir. 1994), supports this result. In that case, the insured was
found liable for patent infringement for engaging in sales of a
patented device. The patent holder overcame a § 271(e)(1) defense
by proving that the insured's sales were for profit rather than to
elicit data for FDA approval, in part, by citing the insured's
efforts to advertise the device.       Contrary to the insured's
arguments and as the Iolab court found, however, the insured's
liability depended on the sales of the device, not the advertising
of the device. Id. at 1506-07. Accordingly, the Iolab court found
that the insured's advertising of the patented device was not an
element of the claim and therefore could not provide the requisite
link to advertising activity to support coverage under the policy.
Id. at 1507. In this case, however, Elan never sold Nifelan and
Pfizer relied on the non-exempt use of the patented drug in Elan's
advertising activities to assert liability. Elan's advertising,
therefore, was a necessary element of Pfizer's claim, and Iolab,
therefore, supports our decision in this case.

                                  25
Kingdom and Canada provided the factual basis for Count II of its

complaint. Although the United States Court of Appeals for the

Federal Circuit subsequently held that the dissemination of such

data outside the FDA process and the data's use for fund raising and

other business purposes was either an exempt use under section

271(e)(1) or did not constitute an infringing use under section

271(a), see Telectronics, 982 F.2d at 1523, when Pfizer filed its

complaint this remained an open issue. As a result, we find that the

allegations of Count II of Pfizer's complaint adequately set out a

sufficient causal connection between advertising activities and the

advertising injury of patent infringement.15

     15
        We reject Wausau's argument that an insured cannot show the
required causal connection between the advertising injury of patent
infringement and its advertising activity unless the plaintiff's
complaint alleges that the advertising itself infringes the patent.
Although such a restriction has some appeal in the context of
copyright or trademark infringement, both commonly found in
advertising injury clauses, see Advance Watch Co. v. Kemper Nat'l
Ins. Co., 99 F.3d 975, 806-07 (6th Cir. 1994), it is difficult to
comprehend how an advertisement could ever infringe a patent. See
e.g., Bradshaw v. Igloo Prod. Corp., 912 F. Supp. 1088, 1100-01
(N.D. Ill.) (advertising an infringing product does not constitute
an infringing use), aff'd in relevant part, 101 F.3d 716 (Fed. Cir.
1996). But see Union Ins. Co. v. Land and Sky, Inc., 247 Neb. 696,
703, 529 N.W.2d 773, 777-78 (1995) (suggesting that an
advertisement that advocated infringement of a patented device
might support liability for inducing patent infringement under 35
U.S.C. § 271(b)). Advertising techniques are not patentable and,

                                 26
     Finally, we note that the district court correctly determined that

the patent infringement charged in Count II of Pfizer's complaint took

place within the time and place restrictions described in Wausau's

policies. As explained above, the 1989 filing of the NDA gave rise

to the allegations of Count I, but the record shows that the

commercialization of Nifelan that gave rise to Count II took place

during the policies' coverage period of April 1992 to April 1993.16

Similarly, Count II of Pfizer's complaint alleges that Elan

commercialized Nifelan in the United States, which falls within the




even if an insured gave away free samples of an infringing product
as part of a promotion, the patent infringement would arise out of
its manufacture of the product, not the advertising activity.
Wausau's argument, therefore, asks us to construe the contract in
a way that makes the enumeration of patent infringement as an
advertising injury an illusory benefit. Cf. National Union Fire
Ins. Co. v. Siliconix, Inc., 729 F. Supp. 77, 80 (N.D. Cal. 1989);
see also Schafer Properties v. Tara State Bank, 220 Ga. App. 378,
381, 469 S.E.2d 743, 746 (1996) (“the favored construction will be
that which gives meaning and effect to all the terms of the
contract over that which nullifies and renders meaningless part of
the document.”).
     16
       Significantly, although Wausau contests the characterization
of these efforts as “advertising activities,” it does not contest
EPRC's assertions that it promoted Nifelan at conferences in April,
May, and June of 1992 or that EPRC published articles regarding
Nifelan in the trade press during the same time period.

                                  27
coverage territory of Wausau's policies.17 Pfizer, in an interrogatory

response, also explained that Elan's advertising of its product in the

United Kingdom and Canada gave rise to Count II of the complaint.

Although coverage for advertising injuries in the United Kingdom

requires a sale or activity traceable to the broader coverage territory,

that limitation does not apply to Canada, which falls within the

policies' primary coverage territory. We conclude that Count II of

Pfizer's complaint against Elan gave rise to an arguable or potential

claim against Wausau's commercial liability policies and, therefore,

obligated Wausau to provide EPRC a defense. Accordingly, we


     17
        As defined in the Wausau policies:
     4.   “Coverage territory” means:
          a.   The United States of America . . . ,
               Puerto Rico and Canada.
          . . . .
          c.   All parts of the world if:
               (1) The injury or damage arises out
                    of:
                    (a) Goods or products made or
                         sold   by   you   in   the
                         territory described in a.
                         above; or
                    (b) The    activities    of   a
                         person whose home is in
                         the territory described
                         in a. above but is away
                         for a short time on your
                         business; . . . .
CGL § V(4).

                                  28
affirm the district court's decision to grant summary judgment against

Wausau on this question.



II   Wausau's Liability for Pre-Tender Litigation Expenses

     Elan contends that the district court erred by granting summary

judgment to Wausau on the question of pre-tender litigation

expenses. The parties agree that Pfizer filed its complaint against

Elan on July 9, 1992 and that EPRC did not notify Wausau of the

lawsuit until September 11, 1992. During that two-month period,

Elan retained counsel and began to defend the lawsuit, incurring

$519,682.05 in defense expenses. The district court held that

Wausau was not liable for these pre-tender expenses as a matter of

Georgia law. Elan does not argue that the district court neglected a

material issue of contested fact, but rather contends that the district

court misapplied the law to the uncontested facts. We disagree.

     The only Georgia case that addresses the issue of an insurer's

liability for the costs of a legal defense incurred before the insured

                                  29
tenders notice of the lawsuit is O'Brien Family Trust v. Glen Falls

Ins. Co., 218 Ga. App. 379, 461 S.E.2d 311 (1995). In that case, an

insured trust, without notifying the insurer, began to defend a lawsuit

with its own counsel and at its own expense. After approximately

four years, the trust gave the insurer written notice of the lawsuit and

the insurer, without reserving its rights, opted to take over the suit

and quickly settled it. The trust then sought to recover from the

insurer the legal expenses it had incurred over the previous four

years. The Georgia Court of Appeals noted that the insurance policy

at issue required the trust to give the insurer written notice of a claim

as soon as possible and immediately to forward to the insurer any

papers filed in any lawsuit against the trust. Id. at 380, 461 S.E.2d

at 313. The policy, however, was silent on the issue of pre-tender

legal expenses. Id. at 380-81, 461 S.E.2d at 313. The court held

that the policy did not permit the trust to recover its expenses from

the insurer, explaining that:




                                   30
          Such a construction would render contractual
          terms necessary to trigger . . . [the insurer's]
          performance under the policy meaningless.

Id. at 381, 461 S.E.2d at 313.

     Wausau's CGL and CUL policies contain language similar to

the policy at issue in O'Brien in all salient respects. The policy is

silent on the issue of pre-tender expenses but includes terms that

require the insured to provide notice of potential claims “as soon as

practicable” and to forward all papers connected with lawsuits

“immediately.”18 Elan argues that bad facts make bad law and

valiantly attempts to distinguish O'Brien on the facts. The O'Brien

court, however, did not rest its ruling on the admittedly extreme facts




     18
        The CGL provides:
     b.   If a claim is made or “suit” is brought against any
          insured, you must:
          . . . .
          (2) Notify us as soon as practicable.
          You must see to it that we receive written notice
          of the claim or “suit” as soon as practicable.
     c.   You and any other involved insured must:
          (1) Immediately send us copies of any demands,
               notices, summonses or legal papers received in
               connection with the claim or “suit” . . . .
CGL § IV(2).

                                  31
before it, but rather announced a rule of general applicability.19

Regardless of whether the O'Brien opinion might be criticized as bad

law, as a federal court sitting in diversity, the district court had no

choice but to apply it. See Erie R.R. Co. v. Tompkins, 304 U.S. 64,

58 S. Ct. 817, 82 L. Ed. 1188 (1938). Applying that rule to this case,

we hold that EPRC did not trigger Wausau's duty to defend until it

tendered notice of the Pfizer lawsuit on September 11, 1992 and

that, as a result, Wausau is not liable for the litigation expenses Elan

incurred before that date.

     Our holding above that Wausau subsequently breached its duty

to defend cannot serve to expand the scope of Wausau's liability.

See Colonial Oil Indus. v. Underwriters, 268 Ga. 561, 563, 491

S.E.2d 337, 339 (1997) (“when the insurer breaches the contract by


     19
        The unusual facts before the O'Brien court may account for
the fact that no other court appears to have applied the rule
announced in that case. In most cases where the insured fails to
tender notice in a reasonable time the insurer will assert the late
notification defense and avoid liability entirely.       See e.g.,
Canadyne-Georgia Corp. v. Continental Ins. Co., 999 F.2d 1547 (11th
Cir. 1993) (affirming summary judgment in insurer's favor on
similar facts). It is only in cases such as the one sub judice, in
which the insured's tender of notice is presumably not so late as
to avoid the insurer's duty to defend, that the issue arises.

                                  32
wrongfully refusing to provide a defense, the insured is entitled to

receive only what it is owed under the contract–the cost of the

defense.”). Although the insurer in the O'Brien case honored its duty

to defend without reservation despite the four year delay, there is no

indication that the court based its ruling on that fact. The O'Brien

court's legal decision that the provision of notice to the insurer

triggers the duty to defend compels our conclusion that the

obligation does not include expenses incurred before that

notification. We affirm the district court's partial grant of summary

judgment on this issue.



III   Wausau's Liability for Elan Plc's Defense Costs

      Finally, we address the district court's ruling that Wausau is not

liable for the costs of defending Plc in the Pfizer litigation. As noted

above, EPRC purchased the CGL and CUL policies at issue in this

case. An endorsement to the policies, however, includes coverage

for EPRC's shareholders, as additional insureds, but only to the

                                   33
extent of their liability as stockholders. The parties agree that Plc,

as EPRC's sole shareholder, is an “additional insured” under the

policies. The only question before us, then, is whether Pfizer's

complaint sought damages from Plc by virtue of its status as a

stockholder of EPRC.

     Although Georgia's courts do not appear to have interpreted

the precise coverage limitation at issue here, the parties have

advanced persuasive authority on the point. In CertainTeed Corp.

v. Federal Ins. Co., 913 F. Supp. 351, 354 (E.D. Pa. 1995), for

example, a district court applying Pennsylvania and Minnesota law

considered a parent company's claim for coverage under its

subsidiary's insurance policy that contained the following language:

“Your stockholders are also insureds but only with respect to their

liability as stockholders.” Although the court held that the parent

company did not qualify as a stockholder under the facts of the case,

the court also explained that the policy did not cover claims

asserting liability based on the stockholder's conduct, either alone

                                 34
or in concert with the insured.       Id. at 357.   Instead, the court

explained that: “The policy language reflects coverage for a

stockholder when its status as a stockholder–not its own

conduct–makes it liable for conduct of the named insured.” Id.20

     Although Pfizer's complaint did assert that EPRC is a wholly-

owned subsidiary of Plc, neither the complaint nor the facts

supporting it laid out a claim that Plc's status as EPRC's sole

stockholder was a basis for liability. Instead, the complaint alleged

that EPRC or Plc engaged in conduct that infringed Pfizer's patent.

     20
          Although we have found no controlling Georgia authority
on this question, the Georgia Supreme Court has strictly applied
coverage limitations based on the insured's particular role under
corporate law.   See Shelby Ins. Co. v. Ford, 265 Ga. 232, 454
S.E.2d 464 (1995). In Shelby, the insured had purchased a policy
that covered her individual liability “only with respect to the
conduct of a business of which you are the sole owner.” Id. at 232,
454 S.E.2d at 465. The insured was the sole owner of a corporation
that ran a child-care business.     When a child, injured on the
premises of the child-care center, sued the corporation and the
individual insured, the court deferred to the corporate form and
held that the insurer owed neither the corporation nor the
individual a defense. The court explained that the corporation was
not a named insured under the policy and that because the
corporation, not the individual insured, conducted the child-care
business, the insurance policy did not cover liability that the
individual incurred while employed in that business. Id. at 233-
34, 454 S.E.2d at 465-66. The court, relying on Georgia corporate
law and the precise language of the insurance policy, ignored the
plain reality that the individual insured owned and operated both
the corporation and the child-care business and, therefore, denied
coverage.


                                 35
As in the CertainTeed case described above, there is no allegation

that Plc is liable for damages to Pfizer because of an alter ego

relationship with EPRC or because of its status as EPRC's sole-

shareholder.21    As a result, we agree with the district court's

conclusion that the costs of defending Elan, Plc in the Pfizer suit fall

outside the coverage of Wausau's policies.



                           CONCLUSION

     Elan asks us to reverse the district court's order of August 8,

1996, limiting Wausau's liability to the cost of defending EPRC in the

Pfizer suit after September 11, 1992. Wausau asks us to reverse

the district court's August 28, 1995 order finding that Wausau owed


     21
        Elan argues that Pfizer did assert a theory of alter ego
liability against Plc as part of its arguments in support of the
district court's personal jurisdiction over Plc, an Irish
corporation.   We need only note that Wausau's policies do not
provide coverage for EPRC's stockholders to the extent that a
plaintiff may establish jurisdiction in a particular forum by
virtue of the shareholder relationship.      The contract language
clearly limits coverage to suits alleging that the stockholder's
liability arises out of the relationship. Our review of Pfizer's
arguments during this portion of the litigation reveals that,
contrary to Elan's assertions, Pfizer made no argument that Plc's
liability depended upon the shareholder relationship. Accordingly,
we find Elan's argument on this point to be without merit.

                                  36
Elan a duty to defend the Pfizer lawsuit.       After comparing the

language of Wausau's CGL and CUL policies to Pfizer's allegations

against Elan, and examining the facts underlying Pfizer's complaint,

we conclude that Wausau did owe a duty to defend EPRC against

the lawsuit. We hold that Pfizer's allegations of patent infringement

through the commercialization of clinical studies regarding Nifelan

fell within the “advertising injury” coverage in the policies. We hold,

however, that EPRC did not trigger Wausau's duty to defend until it

tendered notice to Wausau on September 11, 1992, and that, as a

result, Wausau is only liable for the costs of defending the lawsuit

after that date. Finally, we hold that Wausau did not owe a duty to

defend Plc in Pfizer's lawsuit because the complaint made no claim

of shareholder liability against Plc. We AFFIRM the district court as

to both its 1995 order granting summary judgment in EPRC's favor

and its 1996 order granting partial summary judgment in Wausau's

favor.




                                  37
38
