Opinion
08 Cv. 7270(BSJ).
October 30, 2008
MEMORANDUM ORDER
Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), defendants E.I. DuPont de Nemours and Co. ("DuPont") and Rhodia S.A. ("Rhodia") (together, "Defendants") move to dismiss plaintiffs' (collectively, "Invista") claims for lack of subject matter jurisdiction. Because Invista has failed to assert a cognizable federal claim, the Court lacks subject matter jurisdiction and dismisses Invista's complaint. Defendants' motions are GRANTED.
BACKGROUND
Plaintiffs Invista S.a.r.l., Invista Technologies S.a.r.l., and Invista North America S.a.r.l. (collectively, "Invista") are Luxembourg corporations headquartered in Wichita, Kansas. Defendant DuPont is a Delaware corporation headquartered in Wilmington, Delaware. Defendant Rhodia is a French corporation. This dispute involves the use of technology arising from a French joint venture called Butachimie SNC, which was formed by corporate predecessors of Defendants. The lawsuit revolves around Invista's claims that Rhodia misappropriated from Butachimie a butadiene-based technology known as "Gen I," which is used to produce adiponitrile ("ADN"), an intermediate chemical ingredient for the manufacture of nylon 6.6; and that Rhodia intends to build a plant in Asia to produce ADN with this technology. DuPont and Invista disclosed the Gen I technology to Butachimie and certain Rhodia entities, subject to confidentiality restrictions in the Butachimie joint venture agreement documents (collectively, "JVA").
Invista seeks to enjoin Defendants from using and disclosing Invista's chemical process technology and from continuing to engage in other acts of allegedly unfair competition. Its allegations relate to Defendants' use of information held by the Butachimie joint venture in France and Rhodia's plans to use allegedly misappropriated trade secrets to build an ADN plant in China. Invista asserts twelve causes of action in all, two of which are federal.
Invista invokes this Court's subject matter jurisdiction under the Lanham Act. It claims that both Defendants have "engage[ed] in acts of misappropriation and wrongul use" of Invista's Gen I technology, constituting unfair competition under Section 44(h) of the Lanham Act and the Paris Convention. Complaint ¶ 95.
Against Rhodia, Invista alleges false advertising in violation of Section 43(a) of the Lanham Act, claiming that "Rhodia has met with and made statements to a number of current Invista ADN customers and potential customers that it has freedom to use the Gen I technology to build and operate a new ADN plant in Asia and that it is a co-holder of the technology." Id. ¶ 100. Invista alleges that these statements "are literally false and misleading and are designed to . . . and have in fact confused and deceived purchasers of ADN in the global marketplace" because "Rhodia does not own rights to the Gen I technology, but instead has misappropriated and stolen this technology from Invista and the Butachimie joint venture." Id. ¶ 100.
Under state law, Invista claims misappropriation and misrepresentation of trade secrets, unfair competition, breach of contract, tortuous interference with contract, conversion, breach of implied covenant of good faith and fair dealing, reimbursement of losses, and civil conspiracy, arise under state law.
DISCUSSION
A. Standard for 12(b)(1) Motion to Dismiss
"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. N.Y. 2000). Jurisdiction may not be favorably inferred; rather, Invista must show it affirmatively. See Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).
B. Invista's Federal Claims — the Lanham Act
a. 44(h) Claim — Against Both Defendants
Relying largely on caselaw from other circuits, Invista contends that the Paris Convention and Section 44(h) of the Lanham Act combine to provide a federal forum for its state law claims of unfair competition. The Court disagrees.
Section 44(h) entitles foreign nationals of countries that are party to certain international conventions with the United States the right to "effective protection against unfair competition." To guarantee this protection, Section 44(h) makes available "the remedies provided herein . . . so far as they may be appropriate in repressing acts of unfair competition." 15 U.S.C. § 1126(h). The Paris Convention requires that "foreign nationals . . . be given the same treatment in each of the member countries as that country makes available to its own citizens." Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633, 640 (2d Cir. 1956). As such, foreign nationals may seek protection in United States courts for violations of the Lanham Act. But the Second Circuit instructs that "the Paris Convention, as incorporated by Section 44 of the Lanham Act, creates no new cause of action for unfair competition. Any cause of action based on unfair competition must be grounded in the substantive provisions of the Lanham Act." Empresa Cubana del Tobaco v. Culbro Corp., 399 F.3d 462, 485 (2d Cir. 2005) (citation omitted).
In full, Section 44(h) reads as follows: "Protection of foreign nationals against unfair competition. Any person designated in subsection (b) of this section as entitled to the benefits and subject to the provisions of this Act shall be entitled to effective protection against unfair competition, and the remedies provided herein for infringement of marks shall be available so far as they may be appropriate in repressing acts of unfair competition." 15 U.S.C. § 1126(h).
Invista grounds its claims in state law, not in any substantive provision of the Lanham Act. The Paris Convention, as incorporated by Section 44(h), merely requires "national treatment" of foreign plaintiffs — it gives them the same rights and protections, under the Lanham Act, as United States citizens.Id. at 485. It follows that, like American citizens, foreign plaintiffs must invoke an independent basis of federal jurisdiction, in order to maintain an unfair competition claim in federal court. "Because an American citizen cannot obtain a federal forum for state claims absent an independent basis for federal jurisdiction, an alien cannot either." BP Chems. Ltd. V. Yankuang Group Boyang Foreign Economic Trade Co., No. CV 03-08167 PA (JTLx), Slip Op. (C.D. Cal. Mar. 23, 2004). Consequently, Invista has failed to plead a valid claim under Section 44(h) of the Lanham Act because it cannot invoke an independent basis for federal jurisdiction.
Invista also argues that, because diversity jurisdiction would allow a domestic plaintiff to sue a foreign defendant under state law in federal court, in keeping with the notion of national treatment, Invista should be able to do the same. But national treatment does not alter the requirements of diversity jurisdiction — national treatment merely requires that Invista be subject to the same standard as a domestic plaintiff, and Invista has not met that standard.
b. 43(a) Claim — Against Rhodia
Section 43(a) of the Lanham Act provides two grounds upon which a plaintiff may assert a claim: (1) false designation under Section 43(a)(1)(A) and (2) false advertising under Section 43(a)(1)(B). Invista alleges that Rhodia's misrepresentations of its freedom to use the Gen I technology constitute false advertising, in violation of Section 43(a)(1)(B) of the Lanham Act. "[I]n connection with any goods or services," 43(a)(1)(B) prohibits misrepresentation, "in commercial advertising or promotion," of "the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services or commercial activities." 15 U.S.C. § 1125(a)(1)(B). Invista asserts that Rhodia's representations that it has the right to use the Gen I technology to build and operate a new ADN plant in Asia are "literally false and misleading and are designed to confuse and deceive" because "Rhodia does not own rights to the Gen I technology, but instead has misappropriated and stolen this technology from Invista and the Butachimie joint venture." Complaint ¶¶ 100, 101. In essence, Invista alleges that Rhodia misrepresents its ownership of the Gen I technology.
"In construing the Lanham Act," the Supreme Court has "been careful to caution against misuse or over-extension of trademark and related protections into areas traditionally occupied by patent or copyright." Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34 (2003). In keeping with that caution, "a process for creating a product [does not] constitute `goods' under Section 43(a) of the Lanham Act." Hans-Jurgen Laube Oxidwerk HJL AG v. KM Europa Metal AG, No. 96 Cv 8147 (PKL), 1998 WL 148427, at *2 (S.D.N.Y. March 27, 1998) (see also digiGAN Inc. v. iValidate, Inc., No. 02 Cv 420 (RCC), 2004 WL 203010 (S.D.N.Y. Feb. 3, 2004) (dismissing false advertising claim where plaintiffs alleged that defendants advertised products embodying technology protected by plaintiff's patent). While Rhodia's alleged statements were made in connection with the "goods" of ADN, its alleged misrepresentations relate to the Gen I technological process, rather than any "goods or services" within the meaning of Section 43(a).
Defendants contend that this claim amounts to a repackaged false designation of origin claim arising under Section 43(a)(1)(A). While that section covers claims of misrepresentations about the origin of products sold in the marketplace, it does not protect "the person or entity that originated the ideas or communications that `goods' embody or contain." Dastar, 539 U.S. at 32. Section 43(a)(1)(A) protects "the producer of the tangible goods that are offered for sale," rather than "the author of any idea, concept or communication embodied in those goods." Id. at 37.
The Gen I technology at issue is not the "goods" being offered for sale. Rather, the Gen I technology is analogous to an idea or concept embodied in the ADN that Rhodia intends to produce. And courts in this District have applied the same analysis to false advertising claims under Section 43(a)(1)(B). "[T]he holding inDastar that the word `origin' in 43(a)(1)(A) refers to producers, rather than authors, necessarily implies that the words `nature, characteristics, [and] qualities' in 43(a)(1)(B) cannot be read to refer to authorship." Antidote International Films, Inc. v. Bloomsbury Publishing, PLC, 467 F.Supp. 2d 394 (S.D.N.Y. 2006) (dismissing false advertising claim alleging misrepresentations relating to authorship of a novel); see also Thomas Publishing Co., LLC v. Technology Evaluation Centers, Inc., No. 06 Cv 14212 (RMB), 2007 WL 2193964 (S.D.N.Y. July 27, 2007) (dismissing false advertising claim "premised upon the assertion that Defendant passed off Plaintiff's work as its own," where defendant misrepresented itself as the developer, creator or owner of materials comprising a software directory, because "a failure to attribute authorship to Plaintiff does not amount to misrepresentation of `the nature, characteristics, qualities or geographic origin' of . . . [Defendant's] goods.").
None of Invista's allegations relate to the "nature, characteristics [or] qualities" of Rhodia's ADN or the process by which it manufactures the ADN. These allegations reduce to Rhodia's alleged passing off of Invista's work — its Gen I technology — as Rhodia's own. Dastar bars such a claim, however it is framed. As a result, Invista's false advertising claim is dismissed.
c. Extraterritorial Application
The Lanham Act has "no extraterritorial application;" its protections "are limited in application to within the United States." Vanity Fair Mills, 234 F.2d at 644. Defendants argue that the dispute at issue is overwhelmingly extraterritorial in nature — that the Lanham Act does not grant this Court the jurisdiction to determine, on behalf of foreign plaintiffs, the rights and liabilities under trade secret law of a French company and an American company with respect to the planned development of a manufacturing plant in China. See Roquette Am., Inc. v. Amylum N.V., No. 03 Cv 0434, 2004 WL 1488384, at *6 (dismissing Lanham Act claim for lack of subject matter jurisdiction because the "gravamen of this Complaint is a dispute between European rivals . . . that arose in Europe. Despite some arguable minor connections to the United States, the crucial acts of unfair competition all took place in Europe."). Because Invista has failed to plead a valid Lanham Act claim, however, the Court need not address these arguments.
C. Supplemental Jurisdiction
"When all bases for federal jurisdiction have been eliminated . . . the federal court should ordinarily dismiss the state claims." Bhd. Of Locomotive Eng'rs Div. 269 v. Long Island R.R. Co., 85 F.3d 35, 39 (2d Cir. 1996) (citation omitted). Because the Court has dismissed Invista's federal claims, it declines to exercise supplemental jurisdiction over the remaining state law claims. Accordingly, Invista's claims for misappropriation and misrepresentation of trade secrets, unfair competition, breach of contract, tortuous interference with contract, conversion, breach of implied covenant of good faith and fair dealing, reimbursement of losses, and civil conspiracy are dismissed without prejudice.
CONCLUSION
For the reasons set forth above, Defendants' motions to dismiss are GRANTED. Invista's complaint is dismissed, with prejudice as to its federal claims and without prejudice as to its state law claims. The Court grants Invista's request for leave to amend its complaint to allege diversity jurisdiction over DuPont.
SO ORDERED: