Am. Mariculture, Inc. v. Syaqua Americas, Inc.

• Decision Date: 07 June 2021
• Docket Number: Case No: 2:20-cv-711-JES-MRM
• Parties: AMERICAN MARICULTURE, INC., a Florida corporation, Plaintiff, v. SYAQUA AMERICAS, INC., a Florida corporation, Defendant.
• Court: U.S. District Court — Middle District of Florida

AMERICAN MARICULTURE, INC., a Florida corporation, Plaintiff, v. SYAQUA AMERICAS, INC., a Florida corporation, Defendant.

Case No: 2:20-cv-711-JES-MRM

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

June 7, 2021

OPINION AND ORDER

This matter comes before the Court on review of defendant's Motion to Dismiss for Failure to State a Claim (Doc. #24) filed on October 20, 2020. Plaintiff filed a Corrected Response in Opposition to Motion (Doc. #31) on November 4, 2020, and defendant filed a (Corrected) Reply (Doc. #39) on November 19, 2020.

I.

Under Federal Rule of Civil Procedure 8(a)(2), a Complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). To survive dismissal, the factual allegations must be "plausible" and "must be enough to raise a right to relief above the speculative level." Id. at 555. See also Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). This requires "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted).

In deciding a Rule 12(b)(6) motion to dismiss, the Court must accept all factual allegations in a complaint as true and take them in the light most favorable to plaintiff, Erickson v. Pardus, 551 U.S. 89 (2007), but "[l]egal conclusions without adequate factual support are entitled to no assumption of truth," Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. "Factual allegations that are merely consistent with a defendant's liability fall short of being facially plausible." Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012) (citations omitted). Thus, the Court engages in a two-step approach: "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679.

II.

Taking all the allegations as true, plaintiff American Mariculture, Inc. (plaintiff or AMI) brought suit against SyaquaAmericas, Inc. (defendant or Syaqua) for unfair competition and false designation of origin under the Lanham Act (15 U.S.C. § 1125(a)), for theft of trade secrets under the Defend Trade Secrets Act (18 U.S.C. § 1832), and for breach of contract and a duty of good faith and fair dealing, as well as for violations of the Florida Uniform Trade secrets Act (Fla. Stat. §§ 688.001, et seq.). (Doc. #1, ¶ 1.) Plaintiff offers and sells shrimp both domestically and internationally under its trade name, AMI, and a particular line of shrimp under the trade name, "Kentucky line". Plaintiff also produces shrimp broodstock, including a line of specific pathogen free shrimp broodstock, in competition with defendant on the world market. (Id., ¶¶ 7-8.)

On or about October 15, 2016, the parties executed a Memorandum of Understanding for plaintiff to produce shrimp broodstock for defendant at plaintiff's facilities in St. James City, Florida. After expiration of the initial two-year term of the Memorandum, plaintiff terminated and gave defendant 12 months advance notice of the obligation to remove any remaining shrimp and materials from plaintiff's facility. Defendant proposed a revised agreement granting more favorable treatment to plaintiff. (Id., ¶ 9.)

On or about October 1, 2018, the parties into a second agreement, the Production Agreement, providing for plaintiff to continue using its shrimp breeding facility to grow shrimp providedby defendant for subsequent sale outside the United States. (Id., ¶ 10.) Section 1 of the Production Agreement provides an initial 5 year term ending September 30, 2023, with termination not permitted before this date without cause, including acts of fraud, theft, and other material violations of law constituting a breach. (Id., ¶¶ 12-13.)

Beginning in late 2018, defendant repeatedly breached the Production Agreement by failing to provide shrimp broodstock sufficient to permit plaintiff to produce maximally healthy post-larvae shrimp, and therefore healthy shrimp broodstock. (Id., ¶ 23.) Through 2019 and 2020, defendant breached the Production Agreement by disseminating a marketing brochure in India that falsely claimed that defendant was in possession of the Kentucky line from AMI and that plaintiff's production facilities belonged to defendant, and by falsely claiming association with plaintiff's various lines of shrimp in both China and Indonesia. (Id., ¶¶ 25-26.) Throughout 2020, defendant failed to pay invoiced packaging and shipping fees in the amount of $50,000. (Id., ¶ 24.)

More specifically, on or about January 16, 2020, defendant breached section 1.e.(i) of the Production Agreement by engaging in theft of confidential and trade secret information by "surreptitiously" copying breeding records of AMI shrimp that directly compete against Syaqua shrimp. (Id., ¶ 20.) On or about March 13, 2020, defendant again breached the same section of theProduction Agreement by engaging in theft of the AMI shrimp tissue samples taken without plaintiff's authorization. (Id., ¶ 21.) On or about September 1, 2020, defendant failed to make the monthly base facility overhead service fee of $30,000 per month and failed to provide plaintiff with 1,000 pairs of commercial production shrimp broodstock. (Id., ¶¶ 22, 27.)

III.

Defendant seeks to dismiss Count I for the unfair competition allegations under the Lanham Act, Count II for the unfair competition under the state counterpart, the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Count III for alleged violations of the Defend Trade Secrets Act (DTSA), Count IV for alleged violations of the Florida Uniform Trade Secret Act (FUTSA).

1. Lanham Act & FDUTPA

"The legal standards we apply to [the FDUPTA] claim are the same as those we have applied under section 43(a) of the Lanham Act. [ ] Plaintiff's failure to establish a likelihood of confusion as to its Lanham Act claim also extinguishes its claim under Florida law." Suntree Techs., Inc. v. Ecosense Int'l, Inc., 693 F.3d 1338, 1345 (11th Cir. 2012) (citations and internal quotation marks omitted).

"Section 43(a) of the Lanham Act creates a federal cause of action for unfair competition" in interstate commerce, and "forbids unfair trade practices involving infringement oftrademarks, even in the absence of federal trademark registration." Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc., 508 F.3d 641, 647 (11th Cir. 2007) (quoting Univ. of Florida v. KPB, Inc., 89 F.3d 773, 775-76 (11th Cir. 1996) (per curiam)). "Section 43(a) is remedial in nature and should be interpreted and applied broadly so as to effectuate its remedial purpose." Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir. 2001). Under the Lanham Act,

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce¹ any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a). FDUTPA regulates unfair or deceptive acts or practices in commerce as unlawful, and due consideration is given to the interpretations of the Federal Trade Commission and the federal courts. Fla. Stat. § 501.204.

Plaintiff asserts a common law right to the trade name of "AMI" and "Kentucky line". (Doc. #1, ¶ 7.) Under common law, "trademark rights are appropriated only through actual prior use in commerce. . . . Thus, actual and continuous use is required to acquire and retain a protectible interest in a mark." Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1022-23 (11th Cir. 1989) (citation and footnote omitted).

A. Count I

In Count I, the Complaint provides that defendant's unauthorized use in commerce of the marks, AMI and Kentucky line "is likely to cause consumers to believe, contrary to fact, that Defendant's shrimp are sold, authorized, endorsed, or sponsored by Plaintiff, or that Defendant is in some way affiliated with or sponsored by Plaintiff." (Doc. #1, ¶ 31.) Defendant's use in commerce of the two marks is alleged to be a false designation of origin and misleading. (Id., ¶ 32.) Defendant's conduct is described as willful, and "intended to and is likely to cause confusion, mistake, or deception as to the affiliation, connection, or association of Defendant with Plaintiff." (Id., ¶ 33.) Plaintiff alleges that defendant's conduct caused immediateand irreparable harm and injury to plaintiff, and its goodwill and reputation. (Id., ¶ 35.)

Defendant argues that Count I should be dismissed for not asserting any actual facts demonstrating that the marks are valid and legally protectable, or that AMI had prior rights to the mark at issue. Defendant also argue that AMI has not asserted any actual facts of unfair competition by defendant, or actual confusion by customers but only "stated a formulaic recitation of the elements". Defendant asserts that...