GB MARKETING USA v. Gerolsteiner Brunnen GmbH & Co., Civ. 91-6136L.

• Decision Date: 09 December 1991
• Docket Number: No. Civ. 91-6136L.,Civ. 91-6136L.
• Parties: GB MARKETING USA INC., Plaintiff, v. GEROLSTEINER BRUNNEN GmbH & CO., Miller & Co. Gesellschaft Fuer Import und Export MBH, and Stockmeyer (North America) Inc., Defendants.
• Court: U.S. District Court — Western District of New York

782 F. Supp. 763

GB MARKETING USA INC., Plaintiff, v. GEROLSTEINER BRUNNEN GmbH & CO., Miller & Co. Gesellschaft Fuer Import und Export MBH, and Stockmeyer (North America) Inc., Defendants.

No. Civ. 91-6136L.

United States District Court, W.D. New York.

December 9, 1991.

COPYRIGHT MATERIAL OMITTED

David Rothenberg, Geiger & Rothenberg, Rochester, N.Y., for plaintiff GB Marketing USA Inc.

Kenneth A. Payment and Fred G. Aten, Jr., Harter, Secrest & Emery, Rochester, N.Y., Thomas V. Heyman and Theresa Gillis, Jones, Day, Reavis & Pogue, New York City, for defendant Gerolsteiner Brunnen GmbH & Co.

Lawrence J. Andolina, Harris, Beach & Wilcox, Rochester, N.Y., J. Hayes Kavanagh, Kavanagh, Peters, Powell & Osnato, New York City, for defendants Miller & Co. Gesellschaft Fuer Import und Export MBH and Stockmeyer (North America) Inc.

DECISION AND ORDER

LARIMER, District Judge.

This is an action for equitable relief and monetary damages in connection with the sale and importation of Gerolsteiner Sprudel mineral water from Germany. Jurisdiction is based on the Copyright Act of 1976, 17 U.S.C. § 101 et seq., and on diversity of citizenship under 28 U.S.C. § 1332. Defendants have moved to dismiss the complaint or in the alternative for summary judgment.

Defendants' motion for summary judgment on plaintiff's first cause of action is granted; defendants' motion to dismiss plaintiff's remaining causes of action is denied.

FACTS

In 1988, plaintiff, GB Marketing USA Inc. ("GB"), a New York corporation, began distributing Gerolsteiner Sprudel ("the water") in the United States. The water was bottled in Germany by defendant Gerolsteiner Brunnen ("Gerolsteiner"), a German corporation, and exported to America by defendant Miller & Co. ("Miller"), also a German corporation. Miller in turn sold the water to GB in the United States for distribution.

Although this arrangement lasted for several years until 1991, there was never a written contract between GB and Gerolsteiner or between GB and Miller. There were several draft agreements that were circulated but none was ever formally executed.

In an August 24, 1988 telex to Miller's President Jens Saggau ("Saggau"), Kenneth Gauntlett ("Gauntlett"), President of GB, expressed some dissatisfaction with the design of the label that was then being used on the bottles that were to be distributed in the United States. See Exhibit C to Gerolsteiner's Reply Memorandum of Law. Gauntlett suggested that the label be replaced with one that he had "designed." Accompanying the telex was a faxed copy of an existing Gerolsteiner label, together with a rendering of Gauntlett's label. Gauntlett pointed out the differences between the two labels, which included a rearrangement of certain elements, some different colors, and the addition of the words "Rich in Calcium" on Gauntlett's label. Id. There were also important aspects of the existing label that the proposed label retained; for example, the style of type was the same, and both labels used certain graphic images, particularly a lion inside a seven-pointed star (a Gerolsteiner trademark), and four gold medallions. All of these labels have been submitted to the Court in connection with these motions.

There followed some correspondence between Gauntlett and Saggau concerning the details of the new design. Saggau relayed to Gauntlett some of Gerolsteiner's wishes concerning the appearance of the label. In reference to Gauntlett's desire to copyright the label, Saggau stated in an August 25 fax that "They Gerolsteiner cannot show © 1988 FAMG¹ but feel that they are properly protected anyway against someone stealing layout of label because of their TRADEMARK." Id.

In another August 25 telex, Gauntlett assured Saggau that "i have no interest in tying up this label for my personal benefit even tho it's my creation.... what i am trying to protect is the design of the label, particularly method in which we present high calcium claim." Gauntlett urged Saggau to agree to allow him to obtain the copyright, saying, "think about it. It's very simple to do now, it may come back to haunt us all later." Id. This last sentence would prove unexpectedly prophetic.

In a fax on August 26, Saggau told Gauntlett that Miller would approve the new label, although he added that the color of part of Gauntlett's proposed design would have to be changed. Saggau also indicated that Gauntlett could copyright the label, stating, "We will now incorporate C 1988 FAMG. So things are being done your way." Id. Shortly thereafter, Gerolsteiner began using labels with the notation "© 1988 FAMG."

On April 18, 1989, Gauntlett, acting through an agent, submitted a registration form for the label to the United States Copyright Office (Registration Number TX 2 672 769). On the form, Gauntlett listed himself as the author, and in response to an instruction to "describe nature of the material created by this author in which copyright is claimed," Gauntlett stated, "entire text and art work." Gauntlett never indicated that he was acting on behalf of Gerolsteiner or Miller in submitting the registration application. There is also no evidence that he submitted copies of this form to Gerolsteiner.

Gauntlett did not fill out space 6, entitled "Derivative Work or Compilation," which asked the registrant to "Identify any preexisting work or works that this work is based on or incorporates," and to "Give a brief, general statement of the material that has been added to this work and in which copyright is claimed." In short, Gauntlett never mentioned on this form, or apparently anywhere else, that the material he wished to copyright was based to a substantial degree on the existing Gerolsteiner label.

In addition to the label, Gauntlett also registered a copyright for a four-pack carton (Registration Number TX 3 130 818). On the registration form for the carton, which was submitted some time after the label registration,² Gauntlett described the material in which he claimed a copyright as "Some Text." Space 6, dealing with derivative works, was again left blank.

For reasons that are not altogether clear at this point, some problems arose in the relationship between GB and Miller. These problems eventually led to Miller's termination of the relationship in January 1991. Miller thereafter began using defendant Stockmeyer (North America) Inc. ("Stockmeyer"), a New Jersey corporation, as its American distributor.

GB commenced the instant action on April 5, 1991. The complaint asserts five causes of action.

In the first claim, GB alleges that defendants have infringed its copyrights on the bottle label and on the four-pack wrapper. GB seeks an order permanently enjoining defendants from infringing the copyrights, and directing defendants to turn over all of plaintiff's copyrighted materials in defendants' possession. GB also requests damages for the infringement.

The remaining claims are based on diversity jurisdiction under 28 U.S.C. § 1332. The second cause of action is based on a promissory estoppel theory. GB alleges that in 1988 it became the exclusive U.S. distributor of the water, and that Gerolsteiner and Miller assured GB that it would continue in that capacity. In reliance on these promises, GB built up a market for the water in this country, expending time and money in anticipation of a long-term relationship. GB alleges that Gerolsteiner and Miller unjustifiably terminated their relationship with GB, damaging GB in the amount of 5.6 million dollars.

The third, fourth and fifth causes of action are based on theories of quantum meruit, unjust enrichment, and breach of contract respectively.

DEFENDANTS' MOTION

Gerolsteiner, which has not answered the complaint, moves in the alternative for dismissal or summary judgment on plaintiff's first cause of action. Gerolsteiner contends that: the first cause of action fails to state a claim upon which relief can be granted; that the court lacks both subject matter jurisdiction over this claim, and personal jurisdiction over Gerolsteiner and that the rest of the causes of action should be dismissed on the grounds of improper venue and lack of personal jurisdiction.

Miller and Stockmeyer, which have answered the complaint, have not filed separate motions but have joined in Gerolsteiner's motion for summary judgment on the first cause of action, and in the motion to dismiss for improper venue.

1. Personal Jurisdiction Over Gerolsteiner

Gerolsteiner contends that the court lacks personal jurisdiction under N.Y.C.P.L.R. § 302(a)(1), which allows a court to exercise personal jurisdiction over a non-domiciliary which "transacts any business within the state," provided that the cause of action arises out of the business transacted here. Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir.1985). Gerolsteiner contends that it has not transacted business in New York within the meaning of the statute, and that even if it has, there is no nexus between that business and GB's claims.

Personal jurisdiction in this diversity action is determined by reference to the law of New York. Id. at 57. In this case, the relevant statute is C.P.L.R. § 302(a)(1) and it states that "As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary ... who in person or through an agent ... transacts any business within the state or contracts anywhere to supply goods or services in the state ..."

The parties here have concentrated on the first part of this section, i.e., the transaction-of-business test. I believe, however, that the second part of the statute — the "contracts anywhere" provision — is more germane and relevant as to the first (copyright) and fifth (breach of contract) causes of action. This language was added to the statute in 1979 to abrogate the rule that the "mere shipment" of goods into New York could not support jurisdiction. Cleopatra...