An E&O insurer is facing a coverage lawsuit after declining to defend a digital advertising company in a trademark infringement case.
Ad.com Interactive Media, Inc., a California-based advertising network also known as AdMedia, filed suit on March 4, 2026, in the US District Court for the Central District of California against Gemini Insurance Company. The case centers on whether Gemini wrongfully refused to step in and cover Ad.com's defense in a trademark lawsuit brought by Shopnomix LLC and Pronomix.AI LLC late last year.
The underlying action, filed in November 2025, accused Ad.com of using trademarks identical to those owned by the Nomix Group to market competing advertising and technology services. The claims included trademark infringement under the Lanham Act, unfair competition, and cybersquatting. Ad.com tendered its defense to Gemini in December 2025. The insurer turned it down the following month.
According to the filing, Gemini's reason for the denial was straightforward - it said the trademark suit was "related" to an earlier Shopnomix lawsuit filed before the current policy took effect, one that had never been reported under a prior policy. Ad.com pushes back on that, arguing the two cases rest on different claims and different facts, and should not be treated as connected.
The coverage fight turns on the policy's definition of "wrongful act," which includes "any negligent act, error or omission or breach of professional duty, or media injury" tied to the insured's professional services. Ad.com contends that language is broad enough to cover the trademark allegations it is now defending against.
There is also a policy endorsement in play. According to the filing, the policy requires Gemini to defend claims involving alleged intentional misconduct until that intent is actually proven through an admission, judgment, or adjudication. The Shopnomix suit accuses Ad.com of willful infringement, but Ad.com argues that allegation alone does not let Gemini off the hook.
The filing also raises a well-known principle under California insurance law - the notice-prejudice rule. In short, an insurer in California cannot walk away from a claim simply because notice came late. It must show it was actually harmed by the delay. Ad.com alleges Gemini has made no such showing.
The suit brings three causes of action: a request for declaratory relief on the duty to defend, breach of contract, and breach of the implied covenant of good faith and fair dealing. Ad.com says it has already spent more than $75,000 on its own defense and is seeking full reimbursement along with prejudgment interest.
No determination has been made on the merits. The case remains in its early stages.
For insurers and claims teams, it is a useful reminder of the risks that come with "related claims" denials, particularly in states where the notice-prejudice rule limits an insurer's ability to lean on timing-based defenses. It also highlights the growing intersection between professional liability coverage and intellectual property disputes in the digital economy.
Case: Ad.com Interactive Media, Inc. v. Gemini Insurance Company, Case No. 2:26-cv-02300 (C.D. Cal.)
