NSI International, Inc. v. Horizon Group USA, Inc.

Filing 35

MEMORANDUM OPINION AND ORDER re: 25 MOTION to Dismiss Notice of Motion to Dismiss Pursuant to Rule 12(b)(6). filed by Horizon Group USA, Inc. The Court has considered all of the arguments raised by the parties. To the extent not specifically addressed, the arguments are either moot or without merit. For the foregoing reasons, the motion to dismiss is granted without prejudice. The plaintiff may file an amended complaint within 30 days of the date of this Memorandum Opinion and Order. The motion to strike certain parts of the complaint is denied as moot. The Clerk of the Court is directed to close docket number 25. SO ORDERED. (Signed by Judge John G. Koeltl on 7/16/2021) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
───────────────────────────────────
NSI INTERNATIONAL, INC.,
Plaintiff,

20-cv-8389 (JGK)
MEMORANDUM OPINION
AND ORDER

- against HORIZON GROUP USA, INC.,
Defendant.
───────────────────────────────────
JOHN G. KOELTL, District Judge:

The plaintiff, NSI International, Inc. (“NSI”), brought this
action against Horizon Group USA, Inc. (“Horizon”), asserting
claims of copyright infringement pursuant to 17 U.S.C. § 501,
false designation of origin and false advertising pursuant to
Section 43 of the Lanham Act, 15 U.S.C. § 1125, common law unfair
competition, and common law unjust enrichment.
Horizon now moves to dismiss the complaint for failure to
state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6)
or, alternatively, to strike parts of the complaint. For the
reasons stated below, the motion to dismiss is granted.
I
The following facts are drawn from the amended complaint
(“AC”) and are accepted as true for the purposes of this motion.
NSI—in conjunction with the Smithsonian Institution—markets
and manufactures creative and educational activity kits for
children in the fields of science, technology, engineering, and
math (the “Kits”). AC ¶ 9. The Kits are marketed with an allegedly

uniform aesthetic and are sold through NSI’s website and at major
retailers. Id. NSI owns the United States copyright registrations
for many of the Kits and their packaging, in particular for the
Smithsonian Microscope packaging artwork. AC ¶ 10. NSI claims that
through substantial investment, the relevant public has come to
associate the Kits’ distinctive packaging with NSI and its
Smithsonian brand. AC ¶ 11.
In September 2016, NSI brought a prior action in this
District against Horizon alleging copyright infringement, unfair
competition, and unjust enrichment. AC ¶ 15. NSI alleged that
Horizon’s Discovery-branded products used product names, packaging
artwork, and product instructions similar to NSI’s Kits. Id. The
suit was settled and voluntarily dismissed in January 2017. AC
¶ 16.
In the present action, NSI alleges that Horizon has continued
to copy from or pattern its products on at least ten of NSI’s
Kits, in some instances releasing a similarly packaged product
within a year of the market success of a similar NSI Kit. AC ¶¶
17-18. NSI alleges that Horizon has copied NSI’s general graphic
setup, color ways, photography of components from the same view,
depiction of kit components, placement of name and logo, and box
size. AC ¶ 21. Horizon has recently introduced new packaging for
some of its products which NSI claims is even more similar to its
Smithsonian branded Kits than previous iterations. AC ¶ 20.

2

NSI specifically alleges that Horizon copied four elements of
the Smithsonian Microscope kit’s copyrighted packaging design for
use on Horizon’s Microscope Lab kit: (1) a circular logo followed
by the brand name; (2) three circular graphics down the side of
the box indicating magnification levels; (3) a picture of the
microscope from a perspective view; and (4) pictures of seven
identical accessories. Id. NSI also alleges that the eight
components included in Horizon’s Microscope Lab are the exact same
as those contained in NSI’s Smithsonian Microscope. AC ¶ 22.

NSI/Smithsonian Microscope Kit

Horizon/Discovery Microscrope Lab Kit

Horizon had access to the copied material through publicly
available websites. AC ¶ 29. Horizon did not have a license for
3

the copyrighted material, and was not authorized to display,
reproduce, or use any of the material associated with the Kits. AC
¶ 13. The allegedly infringing products are being sold in several
national retailers. AC ¶ 22.
NSI claims that Horizon engaged in this activity
intentionally, despite having notice of NSI’s rights. AC ¶ 31. NSI
further claims that the alleged copying enables retail stores to
replace NSI’s Smithsonian Kits with Horizon’s less expensive
Discovery Kits, which causes or is likely to cause consumer
confusion, and influences purchasing decisions. AC ¶¶ 19, 38.
NSI seeks to permanently enjoin Horizon’s copyright
infringement and patterning, in addition to obtaining compensatory
damages for injury believed to be in excess of $10 million and
disgorgement of ill-gotten gains, or in the alternative, statutory
damages pursuant to 17 U.S.C. § 504(c). AC at 23. NSI is further
seeking costs, disbursements, and attorney’s fees pursuant to 17
U.S.C. § 505, prejudgment interest on any monetary award, and
punitive damages. Id.
II
In deciding a motion to dismiss pursuant to Rule 12(b)(6),
the allegations in the complaint are accepted as true, and all
reasonable inferences must be drawn in the plaintiff’s favor. See
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.

4

2007). 1 The Court’s function on a motion to dismiss is “not to
weigh the evidence that might be presented at a trial but merely
to determine whether the complaint itself is legally sufficient.”
Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The Court
should not dismiss the complaint if the plaintiff’s complaint
includes “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
While the Court should construe the factual allegations in
the light most favorable to the plaintiff, “the tenet that a court
must accept as true all of the allegations contained in the
complaint is inapplicable to legal conclusions.” Id. When
presented with a motion to dismiss pursuant to Rule 12(b)(6), the
Court may consider documents that are referenced in the complaint,
documents that the plaintiff relied on in bringing suit and that
are either in the plaintiff’s possession or that the plaintiff
knew of when bringing suit, or matters of which judicial notice
may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153
(2d Cir. 2002).

Unless otherwise noted, this Memorandum Opinion and Order omits all
alterations, citations, footnotes, and internal quotation marks in quoted text.
1

5

III
Horizon is seeking dismissal of the Amended Complaint,
arguing that none of the allegations state a claim for which
relief can be granted.
A
Horizon argues that the Amended Complaint fails to state a
claim of copyright violation because the packaging for its
Microscope Lab kit is not substantially similar to packaging for
NSI’s Smithsonian Microscope. 2
The Copyright Act gives copyright holders several “exclusive
rights,” including the right “to reproduce the copyrighted work”
or to authorize others to do so. 17 U.S.C. § 106. “Anyone who
violates any of the exclusive rights of the copyright owner . . .
is an infringer of the copyright . . . .” Id. § 501(a). A
copyright owner who claims infringement must demonstrate “(1)
ownership of a valid copyright and (2) infringement of the
copyright by the defendant.” Spinelli v. Nat’l Football League,
903 F.3d 185, 197 (2d Cir. 2018).
It is undisputed that NSI has a valid copyright for its
packaging. To prove copyright infringement, a plaintiff must
2 While NSI argues that copyright cases are rarely dismissed on a 12(b)(6)
motion, a district court can resolve the question of substantial similarity as a
matter of law if “the similarity between two works concerns only noncopyrightable elements of the plaintiff’s work, or because no reasonable jury,
properly instructed, could find that the two works are substantially similar.”
Peter F. Gaito Architecture v. Simone Dev. Corp., 602 F.3d 57, 63 (2d Cir.
2010). “[W]here, as here, the works in question are attached to a plaintiff’s
complaint, it is entirely appropriate for the district court to consider the
similarity between those works in connection with a motion to dismiss, because
the court has before it all that is necessary in order to make such an
evaluation.” Id. at 64.

6

demonstrate both that the defendant has “actually copied” the
work, and that such “copying is illegal because a substantial
similarity exists between the [allegedly infringing] work and the
protectible elements of [the copyrighted work].” Knitwaves, Inc.
v. Lollytogs Ltd., 71 F.3d 996, 1002 (2d Cir. 1995); see
also Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 110 (2d Cir.
2001); Odegard, Inc. v. Costikyan Classic Carpets, Inc., 963 F.
Supp. 1328, 1336 (S.D.N.Y. 1997). 3
Horizon argues that there is no substantial similarity
between their packaging and the protectible elements of the NSI’s
packaging. The test for “substantial similarity” is “whether the
ordinary observer, unless he set out to detect the disparities
[between the two works], would be disposed to overlook them, and
regard their aesthetic appeal as the same.” Folio Impressions,
Inc. v. Byer Cal., 937 F.2d 759, 765 (2d Cir. 1991); see
also Knitwaves, 71 F.3d at 1002. Under the ordinary observer test,
the Court “considers the themes, characters, plots, settings, and
total concept and feel of the two works.” Crane v. Poetic Prods.
Ltd., 549 F. Supp. 2d 566, 569 (S.D.N.Y. 2008).

Absent proof of “[a]ctual copying”, the “plaintiff may establish copying
circumstantially by demonstrating [(i)] that the person who composed the
defendant’s work had access to the copyrighted material, and [(ii)] that there
are similarities between the two works that are probative of copying.” Jorgensen
v. Epic/Sony Records, 351 F.3d 46, 51 (2d Cir. 2003). Probative similarity is a
lower burden than substantial similarity, but only satisfies the copying element
of copyright infringement; a plaintiff still must show that copying resulted in
infringement by showing substantial similarity between the allegedly infringing
work and the protectible elements of the copyrighted work. See Blakeman v. Walt
Disney Co., 613 F. Supp. 2d 288, 305 (E.D.N.Y. 2009). Because the issue of
copying is not disputed in this case, only the issue of substantial similarity
is at issue here.
3

7

“[D]issimilarity between some aspects of the works will not
automatically relieve the infringer of liability, for no copier
may defend the act of plagiarism by pointing out how much of the
copy he has not pirated.” Williams v. Crichot, 84 F.3d 581,
588 (2d Cir. 1996). “It is only when the similarities between the
protected elements of [the] plaintiff’s work and the allegedly
infringing work are of small import quantitatively or
qualitatively that the defendant[s] will be found innocent of
infringement.” Id. at 588.
Nevertheless, differences between the two works are relevant
to the question of substantial similarity because “numerous
differences tend to undercut substantial similarity.” Warner
Bros., Inc. v. Am. Broad. Cos., 720 F.2d 231, 241 (2d Cir.
1983); see also Mallery v. NBC Universal, Inc., No. 07-cv-2250,
2007 WL 4258196, at *8 (S.D.N.Y. Dec. 3, 2007) (stating that
listing “several highly generalized similarities . . . fails to
address the underlying issue: whether a lay observer would
consider the works as a whole substantially similar.”), aff’d, 331
F. App’x 821 (2d Cir. 2009).
When a work contains both protectible and unprotectible
elements, as the work does here, the inspection must be more
discerning. See Knitwaves, 71 F.3d at 1002. The Court “must
attempt to extract the unprotectible elements from [its]
consideration and ask whether the protectible elements, standing
alone, are substantially similar.” Id. This more discerning test
8

does not change the degree of similarity required, only what
elements of the works are being compared. See id. at 1002–03; see
also Folio, 937 F.2d at 766 (“[S]ince only some of the design
enjoys copyright protection, the observer’s inspection must be
more discerning.”); Odegard, 963 F. Supp. at 1338. The court must
identify similarities between the two works, and then determine if
the similarities are due to protected or unprotected expressions.
See Tufenkian Imp./Exp. Ventures, Inc. v. Einstein Moomjy, Inc.,
338 F.3d 127, 134-35 (2d Cir. 2003).
NSI claims that Horizon’s microscope packaging copies the
overall look and feel of its Smithsonian Microscope, as well as
four specific elements. The first allegedly similar element is the
circular logo in the corner of the package. While the two logos
share a similar shape, they are graphically very different.
Smithsonian’s logo is a white sunburst shape, while Discovery’s
logo is a green and blue globe. No reasonable jury could find the
logos to be substantially similar. See, e.g., Horizon Comics
Prods., Inc. v. Marvel Ent., LLC, 246 F. Supp. 3d 937, 945-46
(S.D.N.Y. 2017) (finding that “no reasonable jury could find a
substantial similarity” between elements that “vary significantly
in color and design.”).
The second alleged similarity is between three circular
graphics on both packages which depict the magnification level of
the microscopes. The graphics differ in their coloring, the order
in which they are presented, the scientific matter which is
9

depicted, and the placement of the descriptive text. The graphics
on NSI’s package are light and dark blue with wavy lines and the
circle has a gray outline. They are ordered top to bottom from
least to most magnified. The text is wrapped around the top of the
circle. On the other hand, the graphics on Horizon’s package are
green and black and depict groups of cells. They are presented in
the opposite order as NSI’s, and the descriptive text is overlaid
on the bottom of the graphic. As with the logos, these
“differences belie” a claim of substantial similarity. Id. at 947.
All that is similar between the two graphics is the idea of
depicting the microscope’s magnification rather than the
expression of that idea. It is plain that copyright protection
only extends to the expression of ideas, not to the ideas
themselves. See Walker v. Time Life Films, Inc., 784 F.2d 44, 48
(2d Cir. 1986) (“[C]opyright protection . . . extends only to [a]
particular expression of ideas, not to the ideas themselves.”); 17
U.S.C. § 102(a)-(b) (“Copyright protection subsists . . . in
original works of authorship fixed in any tangible medium of
expression . . . [but i]n no case does copyright protection for an
original work of authorship extend to any idea . . . .”).
Therefore, to the extent that any similarities exist between the
sets of circular graphics, they are unprotectible.
The third and fourth alleged similarities are the pictures of
the microscope and the accessories. However, the exact placement
of the microscope and the number of accessories shown differs
10

between the two packages, weakening their alleged similarity.
Moreover, “[t]he sine qua non of copyright is originality.” Feist
Publ’n, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991). As
a result, courts have dismissed copyright infringement claims
based on placement of functional elements, see, e.g., Peter Gaito
Architecture, 602 F.3d at 68, or elements that follow naturally
from the work’s theme rather than from the author’s creativity,
see, e.g., Lapine v. Seinfeld, 375 F. App’x 81, 83 (2d Cir. 2010).
Similarly, there is nothing original or protectible about
including a picture of a product on its packaging. As a result, it
is not a protectible element capable of supporting an infringement
claim.
NSI also argues that Horizon’s packages have the same
“overall concept and feel” as their Smithsonian Microscope
package. However, NSI’s package has a simple white background with
predominately gray, blue, and black components which give it a
plain and educational feel. Horizon’s package has a teal and black
patterned background with an orange circle in the center, giving
it a more playful and explorative feel. Accordingly, the packages
differ in their total “concept and feel.” See Lapine, 375 F. App’x
at 83 (finding a different concept and feel in part because two
works had different color palettes); Streetwise Maps, Inc. v.
VanDam, Inc., 159 F.3d 739, 748 (2d Cir. 1998) (finding two maps
not substantially similar because of different color selections).

11

In sum, because no reasonable jury could find the protectible
elements to be substantially similar—including the specific
elements that NSI specified as well as the total look and feel of
the products—NSI has failed to state a claim of copyright
infringement. See Peter Gaito Architecture, 602 F.3d at 67
(dismissing a claim when specific items and the overall visual
impressions of the two designs are entirely different).
Accordingly, the motion to dismiss the copyright claim is granted.
B
Horizon argues that the false designation of origin and false
advertising claims should be dismissed because NSI has not
identified any intellectual properly right to support the claim.
i
Section 43(a) of the Lanham Act provides a civil cause of
action to a party injured by another’s “false designation of
origin” of its products, regardless of whether or not the
allegedly copied material has a federally registered trademark. 15
U.S.C. § 1125(a). The Lanham Act’s protection of unregistered
trademarks extends to trade dress. See Wal-Mart Stores, Inc. v.
Samara Bros., Inc., 529 U.S. 205, 2009 (2000). Trade dress
“encompasses the design and appearance of the product together
with all the elements making up the overall image that serves to
identify the product presented to the customer.” Fun–Damental Too,
Ltd. v. Gemmy Indus. Corp., 111 F.3d 993, 999 (2d Cir. 1997). It
is “essentially a product’s total image and overall appearance, as
12

defined by its overall composition and design, including size,
shape, color, texture, and graphics.” Jeffrey Milstein, Inc. v.
Greger, Lawlor, Roth, Inc., 58 F.3d 27, 31 (2d Cir. 1995).
There are two types of trade dress protection: (1) packaging
and (2) product design. Product packaging refers to the “manner in
which a product was dressed up to go to market with a label,
package, display card, and similar packaging elements.” Id.
Product design is “more expansive . . . and includes the design
and appearance of the product as well as that of the container and
all elements making up the total visual image by which the product
is presented to customers.” Id. While NSI’s complaint references
the product name, and in some instances, the components included
in the Kits, almost every allegation in the Amended Complaint
refers to packaging. Accordingly, the alleged trade dress at issue
here is packaging rather than product design.
NSI further claims that the packaging for the Kits reflect a
“product-line aesthetic” attributable to NSI and the Smithsonian
brand. AC ¶ 23. Accordingly, NSI appears to be asserting a
product-line trade dress claim. “A plaintiff . . . may seek trade
dress protection for an entire product line, by establishing that
the overall look in each separate product is consistent.” See
Yurman Design, 262 F.3d at 116. When evaluating an alleged
product-line trade dress, the “concern for protecting competition
is . . . particularly acute.” Id.

13

“In any action under § 43(a), the plaintiff must prove (1)
that the mark is distinctive as to the source of the good, and (2)
that there is a likelihood of confusion between its good and the
defendant’s.” Id. at 115. To prove distinctiveness of a packaging
trade dress, a plaintiff may show either “inherent
distinctiveness” or “secondary meaning.” Id. Inherent
distinctiveness exists when the “intrinsic nature of the mark
serves to identify a particular source,” whereas secondary meaning
exists when “in the minds of the public, the primary significance
of the mark is to identify the source of the product rather than
the product itself.” Id.
As a threshold matter, to prove distinctiveness “[i]n the
Second Circuit, a plaintiff must articulate the specific elements
that comprise its alleged trade dress.” Bobcar Media, LLC v.
Aardvark Event Logistics, Inc., No. 16-cv-885, 2020 WL 1673687, at
*5 (S.D.N.Y. Apr. 6, 2020), aff’d, 839 F. App’x 545 (Fed. Cir.
2021); see also Landscape Forms, Inc. v. Columbia Cascade Co., 113
F.3d 373, 381 (2d Cir. 1997) (“[F]ocus on the overall look of a
product does not permit a plaintiff to dispense with an
articulation of the specific elements which comprise its distinct
dress. . . . [A] plaintiff’s inability to explain to a court
exactly which aspects of its product design(s) merit protection
may indicate that its claim is pitched at an improper level of
generality.”); Shandong Shinho Food Indus., Co. v. May Flower
Int’l, Inc., No. 19-cv-1621, 2021 WL 736710, at *18 (E.D.N.Y. Feb.
14

25, 2021) (applying the articulation requirement to a packaging
trade dress claim on a motion to dismiss).
NSI has failed to satisfy the threshold requirement to
articulate the elements of the trade dress. NSI makes vague,
conclusory assertions that “the . . . public has come to associate
the Kits, and their distinctive . . . packaging . . . with NSI
. . . .” AC ¶ 11. The most detailed description of trade dress NSI
provides is the “general graphic setup, . . . colorways,
photography [of] the components from the same view, depiction of
the same kit components . . . and similar placement of the name
and logo . . . .” AC ¶ 21. While NSI identifies the general
elements which constitute its alleged trade dress, NSI does not
adequately describe the specific elements of its trade dress.
Moreover, NSI does not assert how these elements are distinctive,
nor does the Amended Complaint even mention trade dress.
Accordingly, NSI has not adequately articulated the elements of
its alleged trade dress. See Landscape Forms, 113 F.3d at 381.
NSI argues in its opposition to the motion to dismiss that
the pictures included in the complaint show seven distinctive
elements common to their product line packaging. However, images
alone do not satisfy the plaintiff’s obligation to articulate the
distinctive features of the trade dress. See Nat’l Lighting Co. v.
Bridge Metal Indus., 601 F. Supp. 2d 556, 563 (S.D.N.Y. 2009)
(holding that the court could not “be expected to distill from a

15

set of images those elements that are common to a line of products
and both distinctive and non-functional.”).
Having failed to identify with particularity the elements of
its trade dress, NSI has failed to allege that its trade dress is
distinctive. Accordingly, the false designation of origin claim
fails.
ii
The Lanham Act provides a cause of action against anyone who
uses a “false or misleading description [or representation] of
fact . . . which is likely to cause confusion” or to
“misrepresent[] the nature, characteristics, qualities, or
geographic origin of [their product].” 15 U.S.C. § 1125(a).
To establish a false advertising claim under Section 43(a), a
plaintiff must (1) demonstrate that the challenged statement is
either literally false or, though literally true, likely to
confuse or deceive consumers; (2) show that the defendant
misrepresented an inherent quality or characteristic of a product;
(3) show that the defendant placed the false or misleading
statement in interstate commerce; and (4) prove that the plaintiff
was injured as a result of the defendant’s misrepresentation,
either by a diversion of business or a loss of goodwill associated
with the plaintiff’s goods or services. See Merck Eprova AG v.
Gnosis S.p.A., 760 F.3d 247, 255 (2d Cir. 2014); see also Davis v.
Avvo, Inc., 345 F. Supp. 3d 534, 539-40 (S.D.N.Y. 2018).

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Other than conclusory assertions that Horizon’s packaging is
false, NSI does not allege any facts that support a claim that the
packaging is literally false. Therefore, for this claim to
succeed, NSI must show sufficient facts to support a claim that
Horizon’s packages are “likely to mislead [or] confuse consumers.”
McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 936 F.2d 1544,
1549 (2d Cir. 1991).
In its Amended Complaint, NSI alleges that Horizon’s copying
causes consumer confusion as to the nature of Horizon’s products,
and the misleading impression that Horizon’s products are
affiliated with NSI. AC ¶¶ 38-44. NSI’s theory of consumer
confusion is based on the existence of NSI’s alleged distinctive
trade dress which is recognizable to the public. It is widely
accepted that “without distinctiveness[,] the trade dress would
not cause confusion as to the origin, sponsorship, or approval of
the goods.” Wal-Mart Stores, 529 U.S. at 210. Because NSI has
failed to allege that its packaging is distinctive or to explain
how it is distinctive, NSI cannot adequately support a claim of
consumer confusion caused by Horizon’s allegedly similar trade
dress. As a result, NSI’s claim of false advertising fails.
Accordingly, the motion to dismiss the claims pursuant to
Section 43(a) is granted.
C
Horizon argues that NSI’s unfair competition claim fails for
the same reasons that its Lanham Act claims fail.
17

“The elements of an unfair competition claim under New York
law are identical to the elements of an unfair competition claim
under the Lanham Act, save that the plaintiff must also show bad
faith by the infringing party.” Fischer v. Forrest, 286 F. Supp.
3d 590, 617 (S.D.N.Y. 2018), aff’d, 968 F.3d 216 (2d Cir. 2020);
see also Girl Scouts of U.S. of Am. v. Bantam Doubleday Dell Pub.
Grp., 808 F. Supp. 1112, 1131 (S.D.N.Y. 1992), aff’d, 996 F.3d
1477 (2d Cir. 1993). Because NSI has failed to plead adequately
the existence of trade dress, a requisite element of the Lanham
Act claim, the common law unfair competition claim also fails.
Accordingly, the motion to dismiss the common law unfair
competition claim is granted.
D
Horizon argues that the unjust enrichment claim should be
dismissed because there is an insufficient relationship between
the parties.
To state a claim for unjust enrichment in New York, “the
plaintiff must allege that (1) the other party was enriched, (2)
at that party’s expense, and (3) that it is against equity and
good conscience to permit the other party to retain what is sought
to be recovered.” Georgia Malone & Co. v. Reider, 973 N.E.2d 743,
746 (N.Y. 2012); see also Kaye v. Grossman, 202 F.3d 611, 616 (2d
Cir. 2000). “The essential inquiry in any action for unjust
enrichment or restitution is whether it is against equity and good
conscience to permit the defendant to retain what is sought to be
18

recovered.” Paramount Film Distrib. Corp. v. New York, 285 N.E.2d
695, 698 (N.Y. 1972); see also Republic of Benin v. Mezei, No. 06cv-870, 2011 WL 4373921, at *7 (S.D.N.Y. Sept. 20, 2011), aff’d,
505 F. App’x 27 (2d Cir. 2012).
In New York, “a plaintiff cannot succeed on an unjust
enrichment claim unless it has a sufficiently close relationship
with the other party.” Georgia Malone, 973 N.E.2d at 746. While
privity is not required, the relationship between the parties must
be not “too attenuated” such that it “could have caused reliance
or inducement.” Mandarin Trading Ltd. v. Wildenstein, 944 N.E.2d
1104, 1111 (N.Y. 2011).
The parties here are competitors, which alone is an
insufficient relationship. See GeigTech East Bay LLC v. Lutron
Elecs. Co., 352 F. Supp. 3d 265, 286 (S.D.N.Y. 2018) (“The
Complaint alleges only that the parties are competitors. This
connection is far too attenuated to state a claim in quasi
contract.”).
NSI argues that mere awareness of how Horizon’s conduct would
affect NSI is enough to create a sufficiently close relationship.
NSI claims that with discovery, it will be able to investigate
Horizon’s actions and will likely show that the bad acts were done
with knowledge of the impact they would have on NSI. Even if such
speculation were permissible to state a claim, and it is not, see
Twombly, 550 U.S. at 570; Iqbal, 556 U.S. at 678, this awareness
argument has been rejected by the New York Court of Appeals. See
19

Georgia Malone, 973 N.E.2d at 747 (“mere knowledge . . . is
insufficient to support a claim for unjust enrichment . . . .”).
NSI finally argues that the prior lawsuit and settlement is a
sufficient connection between the parties, because NSI would not
have agreed to settle the previous lawsuit if not for the implicit
promise that Horizon would not copy NSI’s packaging. NSI’s Amended
Complaint, however, merely states that the previous lawsuit was
settled and voluntarily dismissed. The complaint alleges no facts
to “indicate a relationship between the parties that could have
caused reliance or inducement.” Mandarin Trading Ltd., 944 N.E.2d
at 1111.
Moreover, NSI does not allege that it directly conferred a
benefit to Horizon, but merely that the profit Horizon earned from
selling its own product is unjust. This is insufficient for an
unjust enrichment claim. See GeigTech, 352 F. Supp. 3d at 286
(dismissing a claim in which a plaintiff “does not allege that it
conferred a direct benefit onto [the d]efendant – only that [the
d]efendant profited from the sales of its own product.”); Int’l
Diamond Imps., Inc. v. Med Art, Inc., No. 15-cv-4045, 2017 WL
2839640, at *10 (S.D.N.Y. June 29, 2017) (“[A] plaintiff must
prove that they performed services for the defendant.”).
As a result, NSI’s complaint neither alleges direct
enrichment of Horizon by NSI nor indicates a relationship that
caused reliance or inducement. Therefore, NSI has not stated a

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claim of unjust enrichment. Accordingly, the motion to dismiss the
unjust enrichment claim is granted.
CONCLUSION
The Court has considered all of the arguments raised by the
parties. To the extent not specifically addressed, the arguments
are either moot or without merit. For the foregoing reasons, the
motion to dismiss is granted without prejudice. The plaintiff may
file an amended complaint within 30 days of the date of this
Memorandum Opinion and Order. The motion to strike certain parts
of the complaint is denied as moot. 4
The Clerk of the Court is directed to close docket number 25.
SO ORDERED.
Dated:

New York, New York
July 16, 2021
___ _/s/ John G. Koeltl_____
John G. Koeltl
United States District Judge

Horizon had moved to strike allegations in the AC relating to the prior
lawsuit between the parties and to products as to which no intellectual property
interest had allegedly been identified.
4

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