Cael Technologies (Pvt.) Ltd. v. Precise Voting, LLC. et al

Filing 51

MEMORANDUM AND ORDER: Plaintiff's 44 Motion to Dismiss Defendants' counterclaims is denied. Plaintiff may renew its arguments for dismissal on a motion for summary judgment at the close of discovery. Ordered by Judge Leonard D. Wexler on 12/5/2014. c/m by cm/ecf. (Mahon, Cinthia)

FILED
IN CLERK'S OFFICE
U S DISTRICT COURT E D NY

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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CEC 0 5 2014

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LONG ISLAND OFFICE

CAEL TECHNOLOGIES (PVT.) LTD.,
MEMORANDUM AND ORDER

cv 13-1470

Plaintiff,
-against-

(Wexler, J.)

PRECISE VOTING, LLC.,
PRECISE VOTING, LLC.,
VOTRITE, LLC.,
Defendants.

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APPEARANCES:
SABHARWAL & FINKEL, LLC
BY: ADAM D. FINKEL, ESQ.
Attorneys for Plaintiff
350 Fifth Avenue, 591h Floor
New York, New York 10118
CITTONE & CHINTA LLP
BY: HENRY JOSEPH CITTONE, ESQ.
PADMAJA CHINTA, ESQ.
Attorneys for Plaintiff
11 Broadway, Suite 615
New York, New York 10004
BARRY M. KRIVISKY, ESQ.
BY: BARRY M. KRIVISKY, ESQ.
Attorneys for Defendants
400 Garden City Plaza
Garden City, New York 11530

WE)(LER, District Judge:
Before the Court is the Plaintiff's motion to dismiss Defendants' counterclaims, pursuant
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to Federal Rules of Civil Procedure 12(b)(l) and 12(b)(6). Defendants oppose the motion. For
the following reasons, Plaintiff's motion is denied.

BACKGROUND
I.

The Facts Alleged in the Complaint
Plaintiff, Cael Technologies ("Cael"), is an Indian corporation that specializes in

providing customized software applications, software product development and other software
products and services. (Compl.

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1.) Defendants Precise Voting, a New York limited liability

company ("Precise New York"), and Precise Voting, a Delaware limited liability company
("Precise Delaware"), are in the business of manufacturing and marketing electronic voting
machines and services in the United States. (Compl.

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3-6.) Defendant VotRite is a wholly

owned subsidiary of Precise Voting and is a provider of electronic voting machines and services,
including rentals, in the United States. (Compl.

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9.)

In early 2005, Plaintiff was approached by an Indian company, SSW Information
Technology Services Private Limited ("WITS India"), to develop an electronic voting machine
system to be marketed worldwide, including in the United States, by the WITS Group Inc.
("WITS Group"). (Compl.

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17-18.) In May 2005, Plaintiff entered into an agreement with

WITS India for the development of a functional voting machine prototype for the United States
market. (Compl.

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19.) The Advanced Electronic Voting System ("AEVS") prototype was to be

made solely for marketing and demonstration purposes and not for sale. (Compl.
referred to the new voting system as "VotRite." (Compl.

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20.) Plaintiff

21.)

Around the same time, Plaintiff entered into an agreement with another Indian company,
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Analogic Technomatics Private Limited ("Analogic"), who was to provide the hardware box for
the AEVS prototype exclusively for Plaintiff and based solely on Plaintiff's specifications.
(Compl.

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21.) On or about June 28, 2005, Plaintiff delivered the functional AEVS prototype to

the WITS Group in New Jersey. (Compl.

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22.) Plaintiff subsequently delivered four more

functional AEVS prototypes to the WITS Group in New Jersey between late 2005 and August
2006, pursuant to purchase orders placed by the WITS Group. (Compl.

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23.)

In 2008, Plaintiff registered its copyright in the software and source code for the AEVS
prototype in India and was issued Certificate of Registration No. SW-3861/2008 entitled "Cael
Voting Systems Software." (Compl.
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28.) Plaintiff is the sole owner ofthis copyright. (Compl.

30.)
In or about September 2006, Plaintiff entered into another agreement with Analogic for

the manufacture of a close-to-production AEVS prototype, again using software exclusively
developed for Plaintiff and based solely on Plaintiff's specifications. (Compl.

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31.) Plaintiff

incorporated the copyrighted Cael Voting Systems Software into the AEVS prototype provided
by Analogic and gave it to Analogic for completion of the hardware. (Compl.

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32.) Analogic,

however, failed to deliver the close-to-production AEVS prototype to Plaintiff. (Compl.

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32.)

In or about early 2007, Plaintiff grew suspicious of Analogic and WITS India and
cautioned WITS India against using or reengineering its copyrighted Cael Voting Systems
Software through Analogic or anyone else. (Compl.

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34.) In July 2007, Plaintiff commenced

arbitration proceedings against Analogic in India for breach of its 2006 agreement and to prevent
Analogic from exploiting Plaintiff's copyrighted software. (Compl.

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35.) During these

proceedings, an interim injunction was issued against Analogic and material evidence was seized
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from Analogic, including hard drives. (Compl.

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35.)

In or about August 2012, Plaintiff received the confidential report of the Andrha Pradesh
Forensic Science Laboratories from the arbitrator. (Compl. ~ 36.) The report concluded that the
hard drives seized from Analogic contained Plaintiffs copyrighted Cael Voting Systems
Software. (Compl.

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36.)

In late 2012, Plaintiff began investigating the United States voting machines market.
(Compl.

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37.) During this investigation, Plaintiff discovered that Defendants were marketing an

electronic voting system very similar to Plaintiffs Voting Systems Software. (Compl.

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37.)

Defendants' voting machines include the same major features as Plaintiffs copyrighted Voting
Systems Software, use the same acronym as that of Plaintiffs proposed prototype- "AEVS"and Defendants formed a susbsidiary using the same name intended to be used by Plaintiff for its
voting system- "VotRite." (Compl.

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39-41.)

Plaintiff alleges that Defendant Precise Voting gained access to Plaintiffs copyrighted
Voting Systems Software through Analogic or the WITS Group. (Compl.

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38.) Plaintiff bases

this belief on a 2007 online article in which Precise Voting states that through an entity known as
Bright Software Development, Inc., it decompiled a source code that was originally developed by
an Indian programmer who "disappeared" mid-project, for use in its electronic voting machines.
(Compl.

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38 and Ex. B, annexed thereto.) According to Plaintiff, Defendants copied,

decompiled and modified Plaintiffs copyrighted Voting Systems Software and registered it with
the United States Copyright Office in 2006 as its own software with the title "Voting Machine
Software." (Compl.

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42; Kapsis Aff.

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6.)

Plaintiff commenced this action on March 20, 2013, alleging copyright infringement.
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Defendants moved to dismiss the Complaint, pursuant to Federal Rule of Civil Procedure
12(b)(6), on the grounds that Plaintiffs copyright infringement claim is time-barred. The Court
granted Defendants' motion in part, dismissing as time-barred any claims of copyright
infringement based on acts taken by Defendants prior to March 20, 2010. Defendants thereafter
filed their Answer containing six counterclaims, five of which Plaintiff now seeks to dismiss.

II.

The Counterclaims
Defendants allege that they are the owners of the AEVS and VOTRITE trademarks and

have been since 2006.

(Counterclaim~~

6-7.) Defendants further allege that Plaintiffs past use

of its trademarks, as well as any future use in the United States, will impair Defendants' rights in
those trademarks, as well as deceive and mislead the public into thinking a connection exists
between Plaintiff and Defendants. Accordingly, Defendants assert the following six
counterclaims: (1) for a declaratory judgment of copyright non-infringement; (2) trademark
infringement and (3) false designation of origin, pursuant to the Lanham Act, 15 U.S.C. §§
1114(1), 1125(a)(1)(A); and (4) deceptive practices, (5) false advertising, and, (6)
misappropriation of trademarks, pursuant to New York state law. Plaintiff does not seek to
dismiss the counterclaim for a declaratory judgment of copyright non-infringement.

III.

Legal Standard
"A motion to dismiss a counterclaim is evaluated under the same standard as a motion to

dismiss a complaint." Revonate Mfg., LLC v. Acer Am. Corp., No. 12 Civ. 6017, 2013 WL
342922, at *2 (S.D.N.Y. Jan. 18, 2013). "To survive a motion to dismiss, a [counterclaim] must
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contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its
face."' Ashcroft v. Iqbal,_ U.S._, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). "Facial plausibility" is achieved when the "the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556).
In considering Defendants' counterclaims, the Court must accept as true all factual
allegations in the pleadings and draw all reasonable inferences in the non-moving party's favor.
See Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007). Nevertheless, the
factual allegations contained in the counterclaims "must be enough to raise a right of relief above
the speculative level." Twombly, 550 U.S. at 555. If the counterclaimant has "not nudged [its]
claims across the line from conceivable to plausible," the counterclaim must be dismissed. Id. at
570.

IV.

Disposition of the Motion
Court employ the same standard when evaluating claims for trademark infringement and

false designation of origin under the Lanham Act. See Twentieth Century Fox Film Corp. v.
Marvel Enters .. Inc., 220 F. Supp. 2d 289, 297 (S.D.N.Y. 2002). The same standard also applies
to trademark claims brought pursuant to New York common law. See Lorillard Tobacco Co. v.
Jamelis Grocery, Inc., 378 F. Supp. 2d 448, 456 (S.D.N.Y. 2005). In this regard, to state a claim
under the Lanham Act, a party must demonstrate: (1) "that it has a valid mark entitled to
protection," and (2) that the [opposing party's] use of that mark is likely to cause confusion."
Time, Inc. v. Petersen Publ'g Co. LLC, 173 F.3d 113, 117 (2d Cir. 1999).
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The crux of Defendants' counterclaims are that by shipping the various AEVS prototypes
into the United States in 2005 and 2006, Plaintiff infringed and misappropriated Defendants'
trademarks, causing public deception and injury. Defendants further allege that any similar
actions by Plaintiff in the future will continue to infringe its trademarks. While the
counterclaims may not be pleaded in great detail, the Court finds that they satisfy the plausibility
standard enunciated in Iqbal and Twombly and are sufficient to survive a motion to dismiss.
Accordingly, Plaintiffs motion to dismiss Defendants' counterclaims is denied. Plaintiff
may, however, renew its arguments on a motion for summary judgment once discovery is
completed.

CONCLUSION
For the foregoing reasons, Plaintiffs motion to dismiss Defendants' counterclaims is
denied. Plaintiff may renew its arguments for dismissal on a motion for summary judgment at
the close of discovery.

SO ORDERED:
Dated: Central Islip, New York
December)(, 2014

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s/ Leonard D. Wexler
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ONARD D. WEXLER ...
United States District Judge

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