International Diamond Importers, Inc. et al v. Med Art, Inc. et al

Filing 69

OPINION & ORDER: re: 56 MOTION to Dismiss filed by Med- Art Saglik Hizmetleri Ve Kuyumculuk San. Tic. Ltd. Sti., Med Art, Inc., Emil Guzelis. For the reasons stated above, the Court DENIES the Defendants' Motion to Dismiss for lac k of personal jurisdiction and forum non conveniens, without prejudice. The Court GRANTS Defendants' Motion to Dismiss the Copyright and Lanham Act claims, as well as the false advertising, unfair competition, and unjust enrichment claims. This resolves Docket No. 56. If Plaintiff wishes to file an Amended Complaint, they may do so by July 31, 2017. SO ORDERED, ( Amended Pleadings due by 7/31/2017.) (Signed by Judge Kimba M. Wood on 6/29/2017) (ama)

USDSSDNY
DOCUMENT
ELECTRONICALLY FILEP
DOC#: _ _ _ _ _ __
DATE FILED: (p - 2 °I - / t

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

-------------------------------------------------------)(
INTERNATIONAL DIAMOND
IMPORTERS, INC. d/b/a I.DJ. DESIGN,
INC. and MEIRA T. DESIGNS,
Plaintiff,

15-CV-4045 (KMW)
OPINION & ORDER

-againstMED ART, INC., et al.,
Defendants.

-------------------------------------------------------)(
KIMBA M. WOOD, United States District Judge:
International Diamond Importers, Inc. ("Plaintiff' or "IDI") brings this action against
Med Art, Inc. ("New York Zen Diamond"), Med-Art Saglik Hizmetleri Ve Kuyumculuk San.
Tic. Sti. ("Turkish Zen Diamond"), and Emil

Gtizeli~ ("Gtizeli~")

(collectively, "Defendants").

Plaintiff brings claims for copyright infringement, trademark infringement, and related state and
common law claims.
Defendants move to dismiss all claims pursuant to Federal Rules of Civil Procedure
12(b)(2) and 12(b)(6). Alternatively, Defendants move to dismiss under the doctrine offorum
non conveniens, 28 U.S.C. § 1404. For the reasons set forth below, Defendants' Motion to

Dismiss for lack of personal jurisdiction and for forum non conveniens is DENIED, without
prejudice. The Motion to Dismiss for failure to state a claim for copyright infringement, trade
dress infringement, false advertising, unfair competition, and unjust enrichment is GRANTED.
I.

Background and Procedural History

Plaintiff IDI is a New York-based designer, manufacturer, and seller of the Meira T
jewelry designs.

(Complaint~

14). The Meira T jewelry contains precious stones and metals; the

asymmetric designs feature "a disproportionate number of pendants." Id.~ 19. Plaintiff owns the

1

protectable trademark to the Meira T trade dress, as well as the copyrights to the Meira T jewelry
designs. Id.

ii 14. Plaintiff sells its jewelry at international trade shows, and markets its designs

online, in print advertisements, in magazines, and through word-of-mouth. Id.

~~

22-23.

Defendant Turkish Zen Diamond is a Turkish entity that manufactures and sells jewelry
with precious metals. Id.

ii~

7, 28. Defendant New York Zen Diamond is a New York

corporation that sells jewelry. Id.

ii 6; (Opp'n to Renewed MTD (Doc. No. ["Opp'n"] at 4).

Defendant Guzeli~ is the majority shareholder of both New York Zen Diamond and Turkish Zen
Diamond, (Guzeli~ Deel.

~ii

1, 14, 18), and is the CEO of both entities.

Plaintiff claims that Defendants manufactured, exhibited, and sold jewelry designs that
are substantially similar or identical to Plaintiffs Meira T jewelry designs. (Complaint ilil 27-28).
Specifically, Plaintiff alleges that Defendants exhibited infringing products at the 2015 Hong
Kong International Jewellery Show ("Hong Kong Show"), where many buyers attended,
including some from New York.

Id.~

28.

On April 27, 2016, this Court denied Defendants' Motion to Dismiss without prejudice,
and granted Plaintiff leave to conduct jurisdictional discovery. The Court now addresses
Defendants' Renewed Motion to Dismiss.
II.

Personal Jurisdiction

Defendants claim that this Court lacks personal jurisdiction over the foreign Defendants,
Turkish Zen Diamond and Guzeli~. Although Turkish Zen Diamond is a Turkish entity and
Guzeli~ resides in Istanbul, this Court has general jurisdiction over Turkish Zen Diamond, and

specific jurisdiction over both foreign Defendants.

2

A. Legal Standard

On a motion to dismiss pursuant to Rule 12(b)(2), the plaintiff bears the burden to
establish personal jurisdiction. In particular, "[w]here the parties have conducted jurisdictional
discovery but have not held an evidentiary hearing, the plaintiffs allegations must be factually
supported, so that 'if credited ... would suffice to establish jurisdiction over the defendant."'

Chaikenv. VVPub. Corp., 119F.3d 1018, 1025(2dCir.1997);S.E.C. v. GonzalezdeCastilla,
2001 WL 940560, at *4 (S.D.N.Y. Aug. 20, 2001) (Sweet, J.). Following jurisdictional
discovery, a plaintiff must demonstrate that personal jurisdiction exists by a preponderance of the
evidence. Marine Midland Bank, NA. v. Miller, 664 F .2d 899, 904 (2d Cir.1981 ).
The Due Process clause of the Fourteenth Amendment allows a state to exercise general
personal jurisdiction over a non-resident defendant with whom it has certain contacts, as long as
it does not offend traditional notions of fair play and substantial justice. Calder v. Jones, 465
U.S. 783, 788 (1984). A court considers the relationship between the defendant, the forum, and
the litigation to determine whether minimum contacts exist. Chaiken, 119 F.3d at 1027 (quoting

Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)).
Additionally, exercising specific personal jurisdiction over a defendant is proper if they
"have contacts sufficient to satisfy both the [New York] long-arm statute and the due process
clause of the Fourteenth Amendment." Chaiken, 119 F.3d at 1025.
B. General Jurisdiction over Turkish Zen Diamond

A federal court sitting in New York has general jurisdiction over an entity when its
contacts within New York are so continuous and systematic as to render the corporation
essentially at home in New York. Goodyear Dunlop Tires Operations, SA. v. Brown, 131 S.Ct.
2846, 2851 (2011); Daimler AG v. Bauman, 134 S.Ct. 746, 749 (2014). The paradigmatic

3

examples of general jurisdiction over a corporation are in its place of incorporation and its
principal place of business. Turkish Zen Diamond is a Turkish limited liability company, and its
business address is in Istanbul, Turkey. (Renewed MTD at 3, 8 (Doc. No. 56)).
However, a corporation might still be at home in another forum state, rendering personal
jurisdiction appropriate in that forum. For example, if a foreign corporation has a subsidiary in
New York, and that subsidiary functions as a "mere department" of the foreign parent, the court
may have general jurisdiction over that foreign corporation. To determine if a subsidiary is a
department of its parent corporation, courts in this Circuit consider the following four factors,
known as the Beech test from Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751
F.2d 117 (2d Cir. 1984) ("Beech"): 1) common ownership; 2) financial dependence of the
subsidiary on the parent corporation; 3) the degree of interference in personnel selection and a
failure to observe corporate formalities; and 4) the degree of control the parent corporation
wields over the subsidiary's marketing and operational policies. Id. at 120-22. The "subsidiary"
need not be an actual subsidiary of the parent corporation to be a department of that entity;
rather, "nearly identical ownership interests must exist before one corporation can be considered
a department of another corporation for jurisdictional purposes." Id. at 120; see also SP V OSUS
Ltd. v. AJA LLC, 2016 WL 3039192, at *4 (S.D.N.Y. May 26, 2016) (Rakoff, J.) (finding a

corporation to be a department of another outside of the parent-subsidiary context).
i. Beech Factors
Under the Beech factors, this Court finds that New York Zen Diamond is a department of
Turkish Zen Diamond, and thus exercising general personal jurisdiction over it is proper.

4

1. Common Ownership
The Second Circuit has held that common ownership is the "essential" factor in analyzing
whether or not a corporation is a "mere department" of another. Beech, 751 F.2d at 120.
Although Guzeli~ has made conflicting statements about whether or not Turkish Zen
Diamond is the parent of New York Zen Diamond, Guzeli~'s ownership of both corporations
belies his claim of separation. Guzeli~ owns 92% of Turkish Zen Diamond's shares, and 100% of
New York Zen Diamond's shares. See, e.g., ES!, Inc. v. Coastal Corp, 61 F. Supp. 2d 35, 52
(S.D.N.Y. 1999) (McKenna, J.) (finding 90% common ownership to be sufficient).
Defendants argue that because Turkish Zen Diamond and New York Zen Diamond do
not hold ownership interests in one another, this Beech factor cannot apply. However, that is not
a requirement to satisfy the "essential" Beech factor. The Court finds that

Guzeli~'s

near-total

interest in both corporations demonstrates "nearly identical ownership interests." Jacobs v. Felix
Bloch Erben Verlag, 160 F. Supp. 2d 722, 734 (S.D.N.Y. 2001) (Sand, J.).

2. Financial Dependence
Although common ownership between a parent and its alleged department is "essential"
to the department test, courts must also consider the remaining three Beech factors. Ginsberg v.
Government Properties Trust. Inc., 2007 WL 2981683, at *8 (S.D.N.Y. 2007) (Haight, J.). The

second Beech factor is the subsidiary's financial dependence on the parent corporation, for
example, if the parent provides a no-interest loan, or controls the subsidiary's finances. See
Beech, 751 F.2d at 121-22.

Similar to the defendant in Beech, New York Zen Diamond is "wholly dependent upon
[Turkish Zen Diamond's] financial support to stay in business." Id at 121.

Guzeli~

stated in his

deposition that he funded the initial capital investment in New York Zen Diamond, in order to

5

increase Turkish Zen Diamond's New York sales. (Gilzeli~ Depo. Tr., 30: 11-23; 34: 8-16; 40: 25). Turkish Zen Diamond provides 99% of New York Zen's products for sale, (Opp'n at 11), and
earns profits from those sales. (Renewed MTD at 10). Guzeli~ regularly reviews New York Zen
Diamond's financial records. (Opp'n at 11, Guzeli~ Renewed MTD Deel. at~ 4).
Defendants argue that New York Zen Diamond and Turkish Zen Diamond are not
financially interdependent, because they maintain different bank accounts. (Renewed MTD at
10). However, a corporation need not use the same bank account to be financially reliant on
another.
The Court finds that the second factor weighs in favor of Plaintiff.
3. Personnel Selection
The third Beech factor is the degree of interference in the selection of a subsidiary's
personnel, and a failure to observe corporate formalities. See Beech, 751 F.2d at 121 (listing
examples of when officers were transferred between the parent and its subsidiary, or when the
parent paid the salaries of those common officers).
New York Zen Diamond has two employees, Ali K. Kucukselim and Mehmet T. Furtun,
who are also its officers and directors. (See Opp'n at 6 (describing the various positions Mr.
Kucukselim has listed in the company's biennial statements)).
Guzeli~,

the sole officer and director of Turkish Zen Diamond, is listed as the CEO of

New York Zen Diamond on state records, as well as on recent biennial statements. (Opp'n at 12).
Plaintiff alleges that

Guzeli~

has admitted to being the "boss" of both entities. Id. Defendants

rebut, conclusorily, stating that "Turkish Zen Diamond does not interfere in the selection of NY
Zen Diamond's executive personnel or otherwise fail to observe NY Zen Diamond's corporate
formalities," (Renewed MTD at 10), without demonstrating what those formalities are, or

6

explaining why

Guzeli~

is listed as New York Zen Diamond's CEO in recent filings. Thus, the

Court finds that the third factor weighs in favor of Plaintiff.
4. Marketing and Promotional Activities
The fourth and final Beech factor is the parent's control over the marketing and
operational policies of the subsidiary. See Beech, 751 F.2d at 122 (examples include a parent
listing the subsidiary as a branch on its letterhead, or the parent preparing the subsidiary's
marketing material).
Plaintiff highlights that New York Zen Diamond's social media pages are maintained by
Turkish Zen Diamond. Both entities are referred to as a singular unit: "a leader in diamond
jewellery [sic] in Turkey" with a "sales office" in New York. (Opp'n at 13). There exists no
meaningful separation between the two entities in their promotions; often, "Zen Diamond" is
advertised as attending a trade show, without differentiating between Turkish Zen Diamond and
New York Zen Diamond. Id. The fourth Beech factor weighs in favor of Plaintiff, as well.
In sum, all four Beech factors overwhelmingly demonstrate that New York Zen Diamond
operates as a department of Turkish Zen Diamond; thus, exercising general jurisdiction over
Turkish Zen Diamond is proper.
C. Specific Jurisdiction over Turkish Zen Diamond and

Giizeli~

The Court also has specific personal jurisdiction over both Turkish Zen Diamond and
Guzeli~.

A federal court sitting in New York may exercise specific personal jurisdiction over an

out-of-state defendant when that defendant "has sufficient contacts with the forum state to satisfy
the requirements of due process." Best Van Lines, Inc. v. Walker, 490 F.3d 239, 244 (2d Cir.
2007).

7

1.

Long-Arm Jurisdiction under CPLR § 302(a)(3)

Plaintiff contends that Defendants are subject to specific jurisdiction under subsection
(a)(3) of New York's long-arm statute, 35 N.Y.C.P.L.R. § 302 (McKinney). Under that
subsection, this Court has jurisdiction over a non-domiciliary who: (3) "commits a tortious act
without the state causing injury to person or property within the state, ... if he (i) regularly does
or solicits business, or engages in any other persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should
reasonably expect the act to have consequences in the state and derives substantial revenue from
interstate or international commerce." Section 302(a) also confers jurisdiction over individual
corporate officers who supervise and control an infringing activity. Chloe v. Queen Bee of
Beverly Hills, LLC, 616 F.3d 158, 164 (2d Cir. 2010); see also LaMarca v. Pak-Mor Mfg. Co.,

95 N.Y.2d 210, 214 (2000).
Because Plaintiff asserts that subsections 302(a)(3)(i) and (a)(3)(ii) both provide a basis
for exercising jurisdiction over Defendants, the Court will examine the elements of these
provisions in turn. The Court finds that Plaintiff has alleged conduct that demonstrates, by a
preponderance of the evidence, that this Court has jurisdiction against both Turkish Zen
Diamond and

Guzeli~,

under both subsections (i) and (ii).
1. Defendant Committed a Tortious Act Outside the State

Plaintiff concedes that Turkish Zen and Guzeli~ are non-domiciliaries, and the conduct
alleged in the Complaint took place at a trade show outside of New York, in Hong Kong.
(Complaint~

28). Plaintiff alleges that Defendants displayed and sold jewelry in Hong Kong,

violating Plaintiffs Meira T Jewelry Designs, Meira T Trade Dress, Meira T Works and Meira T
Marks ("Meira T trademarks"). Defendants allegedly manufactured, imported, exported,

8

advertised, marketed, promoted, distributed, displayed, offered for sale, and sold jewelry designs
that are substantially similar to the Meira T Works and Meira T Trade Dress ("Infringing
Products"), to U.S. retailers at trade shows such as the Hong Kong Show in March of2015.
(Complaint~

28). Plaintiff sent Defendants a Cease and Desist letter once they learned of

Defendants' potentially infringing conduct. Id.

~

29.

Plaintiff contends that Defendants' conduct will cause consumer confusion, by leading
consumers to believe that the Infringing Products are associated with Plaintiff. They also claim
to have suffered an irreparable injury of lost sales, that Plaintiff has been deprived the value of its
Meira T trade dress, and that its business has suffered losses.
2. Situs of Injury: New York
Defendants argue that they have no contacts in New York to give rise to the action.
(Renewed MTD at 8). However, the evidence contradicts Defendants' claim of having
insufficient contacts in New York. Defendants also contend that there cannot be personal
jurisdiction over them, because they did not engage in any unlawful activities in New York or in
the United States. However, the extraterritoriality of their conduct is not dispositive, under New
York law, for a court to have personal jurisdiction over a non-domiciliary defendant.
Plaintiff must "allege facts demonstrating a non-speculative and direct New York-based
injury to its intellectual property rights." Pablo Star Ltd. v. Welsh Gov 't, 170 F. Supp. 3d 597,
607 (S.D.N.Y. 2016) (Oetken, J.) (citing Troma Entm 't, Inc. v. Centennial Pictures Inc., 729
F.3d 215, 220 (2d Cir. 2013)).
Within this Circuit, several district courts have held that "[t]he torts of copyright and
trademark infringement cause injury in the state where the allegedly infringed intellectual
property is held." McGraw-Hill Co. v. Ingenium Tech. Corp., 375 F.Supp.2d 252, 256

9

(S.D.N.Y. 2005) (Rakoff, J.); see also Capitol Records, LLC v. VideoEgg, Inc., 611 F.Supp.2d
349, 363 (S.D.N.Y. 2009) (Baer, J.) (finding the injury to be in New York, the plaintiffs' place of
business, as they suffered in-state injuries in the form of diminished copyright value); Design

Tex Grp., Inc. v. U.S. Vinyl Mfg. Corp., 2005 WL 357125, at* 1 (S.D.N.Y. Feb. 14, 2005)
(Rakoff, J.) (''[B]ecause the plaintiffs (and their intellectual property) are based in New York, the
injury is felt within the state no matter where the infringement takes place.").
The Second Circuit certified a question to the New York Court of Appeals on this issue,
in Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 39 (2d Cir. 2010). The New York Court
of Appeals responded, "[i]n copyright infringement cases involving the uploading of a

copyrighted printed literary work onto the Internet," the location of the injury, for jurisdiction
under§ 302(a)(3)(ii), is not the location of the infringement, but the location of the copyright
owner, "when its printed literary work is uploaded without permission onto the Internet for
public access." Penguin Grp. (USA) Inc. v. Am. Buddha, 16 N.Y.3d 295, 301-02 (2011).
Following the logic of the New York Court of Appeals and the district courts in this
Circuit, this Court finds that the infringement of Plaintiff's Meira T Works causes Plaintiff injury
in New York, their place of business, in the form ofreputational harm and lost business. (Opp'n
at 1-17; Complaint 'if 49, 58).
3. Regularly does business, or derives substantial revenue
Under CPLR § 302 (a)(3)(i), Plaintiff must demonstrate that Defendants: 1) regularly
conduct or solicit business in New York; 2) engage in any other persistent course of conduct; or
3) derive substantial revenue from goods used or consumed or services rendered, in New York.
The subsection "necessitates some ongoing activity within New York State"-more than a single
business transaction. Ingraham v. Carroll, 90 N. Y.2d 592, 597 ( 1997).

10

As established supra, Defendants operate a New York sales office that functions as its
department. Defendants acknowledged that the office was set up in 2001 to increase sales in the
United States. (Gilzeli~ Depo. Tr., 28: 8-16; 30:11-23). Turkish Zen Diamond derives substantial
revenue from supplying 99% of the goods sold by New York Zen Diamond, at a minimum, for
the last 5 years. (Interr. Answer No. 10; Opp'n at 18; Gilzeli~ Depo. Tr. 40: 2-11).
4. Reasonable expectation and substantial revenue
Under CPLR § 302 (a)(3)(ii), Plaintiff must demonstrate that Defendants: 1) "expect[] or
should reasonably expect the act to have consequences in the state," and 2) "derive[] substantial
revenue from interstate or international commerce."
To ensure that this test comports with due process, N cw York courts require "tangible
manifestations of a defendant's intent to target New York, or ... concrete facts known to the nondomiciliary that should have alerted it to the possibility of being brought before a court in the
Southern District of New York." DH Servs., LLC v. Positive Impact, Inc., 2014 WL 496875, at

* 13 (S.D.N.Y. Feb. 5, 2014) (Abrams, J.) (quoting Royalty Network Inc. v.

Dishant.com LLC,

638 F.Supp.2d 410, 424 (S.D.N.Y. 2009) (Stein, J.)). In the context of trademark and copyright
infringement claims, courts examine whether defendants knew or should have known that a New
York company held the intellectual property rights at issue, and whether defendants made a
"discernible effort to directly or indirectly serve the New York market." Id. (quoting Capitol

Records, 611 F.Supp.2d at 363).
Plaintiff alleges that Defendants were unquestionably aware of the Meira T trademarks
and copyrights, because Defendants frequently attended the same trade shows as Plaintiff.
(Opp'n at 19). Comparing Plaintiffs Meira T jewelry to Defendants' creations, the Court finds
the latter to be substantially similar to the Meira T jewelry designs, evidencing some awareness

11

by Defendants of Plaintiffs intellectual property. See Complaint~ 13; Ex._ (side-by-side of
designs).
Defendants also made a discernible effort to serve the New York market through
operating New York Zen Diamond as their New York sales office, and subsequently derived
revenue from the sales of inventory to New York Zen Diamond. Defendants, including Gtizeli~,
regularly attend trade shows in the United States, demonstrating an effort to serve the domestic
(Gtizeli~

market.

Tr. 51 :5-25).

In sum, this Court has jurisdiction over Turkish Zen Diamond under Sections 302(a)(3)(i)
and 302(a)(3)(ii).
11.

Gtizeli~

Out-of-state corporate officers are subject to jurisdiction under Section 302(a) when they
supervise and control an infringing activity, Chloe, 616 F.3d 158, 164 (2d Cir. 2010), or are
primary actors in the transaction. Rovio Entm 't, Ltd. v. Allstar Vending, Inc., 97 F. Supp. 3d 536,
542 (S.D.N.Y. 2015) (Forrest, J.) (quoting Karabu Corp. v. Gitner, 16 F. Supp. 2d 319
(S.D.N.Y. 1998) (Sotomayor, J.)). A plaintiff must offer detailed allegations of the defendant's
control over the alleged infringement. Id.
Plaintiffs exhibits and

Gtizeli~'s

deposition are filled with examples of his control over

Turkish Zen Diamond and New York Zen Diamond: he owns 92% of the former and 100% of
the latter; he is listed as the CEO of both New York Zen Diamond and Turkish Zen Diamond;
Gtizeli~

created New York Zen Diamond in order to increase Turkish Zen Diamond's profits; he

is responsible for the jewelry designs; and he arranges for Turkish Zen Diamond to attend trade
shows, which generates most of the company's business, including the shows in Hong Kong.
Thus,

Gtizeli~

is also subject to jurisdiction under Section 302(a).

12

D. Due Process

The test for whether exercising personal jurisdiction comports with due process has two
steps: the minimum contacts inquiry, and the reasonableness inquiry, such that "the maintenance
of the suit does not offend traditional notions of fair play and substantial justice." International
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

Turkish Zen Diamond and

Guzeli~

purposely availed themselves of the New York forum

by using New York Zen Diamond as their subsidiary, to increase sales and revenue; therefore,
the foreign Defendants could reasonable anticipate "being haled into court in this forum."
Newbro v. Freed, 337 F. Supp. 2d 428, 434 (S.D.N.Y. 2004) (Castel, J). Having invoked the

benefits and protections of the laws of New York, the foreign Defendants created a "substantial
connection" with New York-satisfying the threshold minimum contacts requirement-and
availed themselves of the privilege of conducting business within New York. Asahi Metal Indus.
Co. v. Superior Court of California, Solano Cnty., 480 U.S. 102, 108 (1987).

The reasonableness of exercising jurisdiction rests on several factors: the burden on the
defendant, the plaintiffs interest in obtaining relief, the interests of the forum State, the interest
of the interstate judicial system in obtaining the most efficient resolution of controversies, and
the shared interest of the states in furthering social policies. Id. at 113 (quoting World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980) (citations omitted)). Where the

plaintiff has made a threshold showing of minimum contacts, the exercise of jurisdiction is
favored, except when the defendant presents a compelling case that may render jurisdiction
unreasonable. Burger King Corp. v. Rudzewicz, 471U.S.462, 477 (1985). 1

1 If jurisdiction is proper under Section 302(a), due process will be satisfied, because Section 302 "does not reach as
far as the constitution permits." Topps Co v. Gerrit J. Verburg Co., 961 F.Supp. 88, 90 (S.D.N.Y. 1997) (Sweet, J.).

13

Defendants fail to demonstrate that exercising jurisdiction is unreasonable. The burden on
Defendants to litigate is tempered by its substantial connection to New York, through New York
Zen Diamond. Moreover, the state of New York has an interest in resolving conflicts between
business owners, including those with protectable copyright and trademark interests.
Accordingly, the Court finds exercising jurisdiction over Turkish Zen Diamond and
Giizeli~

to be reasonable and consistent with due process.

III.

Motion to Dismiss for Failure to State a Claim

Defendants move to dismiss Plaintiffs Complaint under Rule 12(b)(6). A court accepts
as true all well-pleaded factual allegations, while drawing all reasonable inferences in favor of
the non-moving party, for the purpose of this motion. See Kaufman v. Time Warner, 836 F.3d
137, 141 (2d Cir. 2016). To survive a motion to dismiss under Rule 12(b)(6), a complaint "must
contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its
face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). "Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice." Id.
A. Failure to State a Claim: Copyright and Lanham Acts

Defendants argue that Plaintiff has failed to state sufficient facts to raise a viable cause of
action under the Copyright and Lanham Acts. Defendants ask the Court to dismiss the Copyright
and Lanham Act counts for Plaintiffs failure to allege any domestic predicate acts.
Plaintiffs Complaint centers on Defendants' alleged infringement through exhibiting the
Meira T Works at the Hong Kong Show in 2015, attended by New York buyers.
Defendants cite the Federal Circuit's decision in Litecubes, LLC v. N Light Prod., Inc.,
523 F.3d 1353 (Fed. Cir. 2008), for the principle that foreign defendants will have "substantial

14

protection if the activity complained of took place wholly outside of the United States," and the
notion that "such cases will often be able to be quickly disposed of in a Rule 12(b)(6) motion to
dismiss for failure to state a claim .... " Id. at 1366 n.14. The Federal Circuit in Litecubes, as well
as this Court in its April 27, 2016 opinion, held that the extraterritoriality of the conduct alleged
would be treated as an element of the infringement claims, rather than a bar to subject matter
jurisdiction. Defendants argue the extraterritorial conduct "could not possibly constitute'' a
predicate domestic act to state a claim under the Copyright and Lanham Acts. This Court agrees.
i. Extraterritorial Application of the Lanham Act
The Second Circuit has held that courts should consider the three Vanity Fair factors to
determine whether the Lanham Act can be applied extraterritorially: "(i) whether the defendant is
a United States citizen; (ii) whether there exists a conflict between the defendant's trademark
rights under foreign law and the plaintiffs trademark rights under domestic law; and (iii)
whether the defendant's conduct has a substantial effect on United States commerce." Hong
Leong Fin. Ltd. (Singapore) v. Pinnacle Performance Ltd.. 2013 WL 5746126, at *4 (S.D.N.Y.

Oct. 23, 2013) (Furman, J.) (quoting Vanity Fair Mills. Inc. v. T Eaton Co., 234 F.2d 633, 643
(2d Cir.1956) (The Court of Appeals has "never applied the Lanham Act to extraterritorial
conduct absent a substantial effect on United States commerce.")).
Plaintiff alleged that Defendants' actions created a likelihood of consumer confusion
(Complaint~~ 49, 54), which damaged Plaintiffs business and goodwill in the United States. Id.
~~ 49, 54, 58. Plaintiff also alleged that Defendants' alleged infringement targeted the United

States by selling the products in question to consumers in the United States and displaying the
Infringing Products to industry professionals from the United States-which caused Plaintiff
substantial harm. Id.

~~

21, 22, 28.

15

However, Plaintiff fails to show with particularity whether Defendants' infringing
conduct in Hong Kong had a substantial effect on United States commerce. Plaintiff merely
states that Defendants' actions caused "substantial and irreparable harm to Plaintiff," id. ii~ 42,
49, 58, without demonstrating this effect with any particularity, let alone a "substantial" effect on
United States commerce. As the United States Supreme Court held in Iqbal, "Threadbare recitals
of the elements of a cause of action, supported by mere conclusory statements, do not suffice.".
556 U.S. at 678.
11.

Extraterritorial Application of the Copyright Act

Secondly, the Copyright Act generally does not apply extraterritorially. The Second
Circuit recognized an exception to this principle when "the type of infringement permits further
reproduction abroad," Update Art, Inc. v. Modiin Publ'g, Ltd., 843 F.2d 67, 73 (2d Cir.1988),
and defendants manufacture copyrighted material without authorization in the United States. Id.
For this exception to apply, a plaintiff must show that the conduct (1) took place in the
United States, and (2) violated the Copyright Act. Roberts v. Keith, 2009 WL 3572962, at *4
(S.D.N.Y. Oct. 23, 2009) (Preska, J.); Fundamental Too, Ltd. v. Gemmy Indus. Corp., 1996 WL
724734, at *5 (S.D.N.Y. Dec. 17, 1996) (Mukasey, J.).
Plaintiff demonstrates with great particularity the alleged infringement that took place at
the Hong Kong Show.

(Complaint~

28; Ex. D). As mentioned supra, Plaintiff states that

Defendants targeted U.S. retailers and consumers, even some in New York, by manufacturing,
advertising, distributing, and selling products infringing the Meira T copyrighted fine jewelry
designs. (Id.

~~

28, 30). Plaintiff demonstrates Defendants' extensive contacts with the United

States, particularly in New York, through New York Zen Diamond. However, Plaintiff fails to
state with particularity that the alleged infringement took place in the United States.

16

Given that Plaintiff has alleged actionable conduct for trademark or copyright
infringement outside the reach of the Lanham and Copyright Acts, this Court dismisses these
claims, granting Plaintiff leave to amend the Complaint with particular allegations of the
substantial effects of Defendants' infringement on commerce, and any domestic predicate acts of
copyright infringement.
B. Failure to State a Claim under New York Law: False Advertising, Unfair
Competition, and Unjust Enrichment
i. False Advertising
Similarly, to succeed on a claim of false advertising under New York statutory law,
Plaintiff must show"[ d]eceptive acts or practices" or "false advertising," both "in the conduct of
any business, trade or commerce or in the furnishing of any services in this state." Gen Bus Law
§§ 349, 350 (emphasis added).
The New York Court of Appeals, in Goshen v. Mut. Life. Ins. Co., held that this statute
was intended to address commercial misconduct taking place in New York. Goshen v. Mut. Life

Ins. Co. ofN. Y, 98 N.Y.2d 314, 324-25 (2002). Plaintiff attempts to meet this requirement by
pointing to the allegations that Defendants have displayed and sold infringing products to New
York consumers, and the infringement has effects on Plaintiffs business in New York.
(Complaint, 'ii~ 28, 61-62, 67). Because Plaintiff fails to state with particularity that any
actionable misconduct took place in New York, the Court GRANTS Defendants' Motion to
Dismiss the fourth and fifth causes of action in the Complaint.
ii. Unfair Competition
To succeed on claim of unfair competition under New York common law, Plaintiff must
couple the evidence of liability under the Lanham Act claims with a showing of actual consumer

17

confusion or a likelihood of confusion, and with some element of bad faith by Defendants. See

Omicron Capital, LLC v. Omicron Capital, LLC, 433 F. Supp. 2d 382, 395 (S.D.N.Y. 2006)
(Sweet, J). Because Plaintiff fails to allege with particularity conduct that would make
defendants liable under Lanham Act, the Court dismisses Plaintiffs unfair competition claims.
iii. Unjust Enrichment
Plaintiffs claim of unjust enrichment is inapposite in this case. Unjust enrichment claims
are traditionally reserved for quasi-contract disputes, in order to prevent injustice "in the absence
of an actual agreement between the parties." Georgia Malone & Co. v. Rieder, 19 N. Y .3d 511,
516, (2012). To succeed on a claim for unjust enrichment, a plaintiff must show that (1)
defendant was enriched, (2) at plaintiffs expense, and (3) "equity and good conscience require
defendant to make restitution." Violette v. Armonk Assocs., L.P., 872 F. Supp. 1279, 1282
(S.D.N.Y. 1995) (Sweet, J.).
Because of the quasi-contractual nature of this claim, a plaintiff must prove that they
performed services for the defendant, which caused the defendant's unjust enrichment. Piccoli

AIS v. Calvin Klein Jeanswear Co., 19 F. Supp. 2d 157, 166 (S.D.N.Y. 1998) (Kaplan, J.). A
plaintiff must also have a sufficiently close relationship with the other party. Sperry v. Crompton

Corp., 8 N.Y.3d 204, 210 (2007); see also Georgia Malone, 19 N.Y.3d at 516 (requiring "a
relationship or connection between the parties that is not 'too attenuated"').
Plaintiff claims that Defendants were unjustly enriched at Plaintiffs expense, by deriving
profits from allegedly infringing conduct. (Complaint~~ 34, 78; Opp'n at 23). Yet Plaintiff does
not allege that they performed services for Defendants, nor does Plaintiff show a "sufficient
relationship" with Defendants to sustain an unjust enrichment claim. Sperry, 8 N.Y.3d at 210.
Thus, the Motion to Dismiss Plaintiffs unjust enrichment claim is GRANTED.

18

IV.

Forum Non Conveniens

Finally, Defendants move to dismiss the Complaint for forum non conveniens, which this
Court has the discretion to do, if another forum would be a more efficient venue to litigate this
case. See Am. Dredging Co. v. Miller, 510 U.S. 443, 448 (1994). The doctrine of forum non

conveniens "has continuing application [in federal courts] only in cases where the alternative
forum is abroad, and perhaps in rare instances where a state or territorial court serves litigational
convenience best." Sinochem Int'! Co. v. Malaysia Int'! Shipping Corp., 549 U.S. 422, 430
(2007) (internal citations and quotation marks omitted). Defendants offer no alternative forum to
New York. Rather, Defendants state that the alleged infringement occurred in Hong Kong, and
two of the three Defendants are located in Turkey; thus, litigating in New York, Defendants
argue, is "not appropriate." (Renewed MTD at 17).
In Gulf Oil v. Gilbert, the United States Supreme Court gave district courts a nonexhaustive list of factors to consider in determining whether to dismiss a case for forum non

conveniens, including: 1) the private interest of the litigant; 2) the relative ease of access to
sources of proof; 3) the availability of process to compel unwilling witnesses; and 4) practical
problems that make trial of a case easy, expeditious and inexpensive. 330 U.S. 501, 508 (1947).
The Court cautioned that although a Plaintiff may not harass the defendant by choosing an
inconvenient forum, "unless the balance is strongly in favor of the defendant, the plaintiffs
choice of forum should rarely be disturbed." Id.
Defendants have failed to prove that a specific forum abroad is the more appropriate
venue to litigate the case. First, Plaintiff, a New York corporation, chose to bring this action in
the Southern District of New York, and courts generally defer to plaintiffs' choice of forum.

Murray v. BBC, 81 F.3d 287 (2d Cir. 1996). Plaintiff alleges that U.S. consumers attended the

19

Hong Kong Show, and claim that Plaintiff experienced harm to their business, domestically.
Second, Defendants fail to demonstrate that an alternative forum would be more convenient to
litigating in New York-or that an alternative forum would assist locating relevant evidence.
Despite Defendants' claim that they will have to conduct transnational discovery, the
convenience of the parties weighs in favor of litigating in the Southern District of New York.
Third, given that Turkish Zen Diamond and

Gi.izeli~

have a significant connection to New York

through New York Zen Diamond, this Court has the ability to compel the attendance of
unwilling witnesses. Fourth and finally, Defendants New York Zen Diamond and Turkish Zen
Diamond are corporations, with

Gi.izeli~

as the majority owner of both. Defendants are

sophisticated parties with the relative means to litigate in New York.
Because the balance of factors weighs in favor of maintaining this action in this District,
this Court denies the Defendants' Motion to Dismiss for forum non conveniens.
V.

Conclusion

For the reasons stated above, the Court DENIES the Defendants' Motion to Dismiss for
lack of personal jurisdiction andforum non conveniens, without prejudice. The Court GRANTS
Defendants' Motion to Dismiss the Copyright and Lanham Act claims, as well as the false
advertising, unfair competition, and unjust enrichment claims.
This resolves Docket No. 56. If Plaintiff wishes to file an Amended Complaint, they may
do so by July 31, 2017.
SO ORDERED.
DATED:

New York, New York
June 29, 2017

f~m-~
KIMBA M. WOOD
United States District Judge

20