IPOX Schuster, LLC v. Nikko Asset Mgmt. Co.

Decision Date09 June 2016
Docket NumberCase No. 15 C 9955
Citation191 F.Supp.3d 790
Parties IPOX SCHUSTER, LLC, Plaintiff, v. NIKKO ASSET MANAGEMENT CO., LTD. and Lazard Asset Management LLC, Defendants.
CourtU.S. District Court — Northern District of Illinois

Patrick Thomas Stanton, Aaron Daniel Charfoos, Kara Bledsoe Murphy, Dykema Gossett PLLC, Chicago, IL, Marsha G. Gentner, Dykema Gossett PLLC, Washington, DC, for Plaintiff.

Anne E. Beaumont, John Oster, Katherine L. Pringle, Friedman Kaplan Seiler & Adelman LLP, Michael Salvatore Devincenzo, Mishcon De Reya New York LLP, New York, NY, Brendan J. Healey, Mandell Menkes LLC, Kelly Virginia McHale, Michael Denny Huber, Cray Huber Horstman Heil & Vanausdal LLC, Chicago, IL, for Defendants.



IPOX Schuster, LLC, has sued Nikko Asset Management Co., Ltd., and Lazard Asset Management LLC alleging that defendants misappropriated proprietary and confidential information and violated IPOX's trademark rights. IPOX claims that defendants committed unlawful misappropriation under Illinois common law (count 1) and the Illinois Trade Secrets Act (ITSA), 765 ILCS 1065/2 (count 2), infringed IPOX's trademark in violation of Illinois common law and the Lanham Act, 15 U.S.C. § 1114 (count 3), and violated the Lanham Act's prohibitions on false designations of origin and false advertising, id. § 1125(a) (count 4). IPOX further asserts that defendants violated the Illinois Deceptive Trade Practices Act (IDTPA), 815 ILCS 510/2 (count 5), and trademark dilution under the Illinois Trademark Registration Protections Act (ITRPA), 765 ILCS 1036/65(a), and Illinois common law (count 6). IPOX also asserts against Lazard claims of fraud (count 7) and unfair business practices and unfair competition under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/2, and Illinois common law (count 8). In the alternative, IPOX asserts a breach of contract claim against Nikko (count 9), breach of implied contract claims against Nikko (count 10) and Lazard (count 11), an unjust enrichment claim against both defendants (count 12), and tortious interference claims against Lazard (counts 13 and 14).

Nikko has moved to dismiss IPOX's claims against it on two bases. First, it moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Second, it argues that IPOX has failed to state a claim under Rule 12(b)(6). For the reasons stated below, the Court dismisses count 4 for failure to state a claim but otherwise denies Nikko's motion.


The Court takes the following facts from the allegations in IPOX's complaint and the evidence adduced in jurisdictional discovery. IPOX, a Delaware limited liability company with its principal place of business in Chicago, is a financial services firm. Its main product is a set of benchmark indexes that, using proprietary technology and confidential research and data, provides "scalable, investable and sustainable exposure into global IPO and spin-off performance, often a pure proxy for economic growth and innovation." Compl., dkt. no. 1, ¶ 7. IPOX owns the trademark for the IPOX mark in the United States, U.S. Trademark Registration No. 3,449,902, and it also owns the Japanese trademark for the IPOX mark, no. 474932.

Because IPOX's indexes "characterize the aftermarket performance of IPOs and spin-offs more accurately and comprehensively" than other indexes, id. , investors regularly seek to obtain licenses to gain access to them. IPOX offers "data" licenses and "product" licenses. Under a data license, a licensee is granted limited use of licensed IPOX indexes (and the information, charts, and data derived from them) for research and advisory purposes only. Data licenses expressly disallow licensees to create new financial products using the indexes or the information they provide. IPOX grants data licenses in exchange for annual subscription fees.

If a person wishes to create a financial product using IPOX's indexes, she must secure a product license. IPOX product licenses permit licensees to display the IPOX name and benefit from "the carefully-cultivated reputation and recognition of, and goodwill in, the IPOX name, mark and Indexes, as well as the proprietary index technology, confidential data and research developed by IPOX." Id. ¶ 12. Product licenses are more lucrative for IPOX because rather than requiring an annual subscription, IPOX typically grants a product license for a variable fee based on the amount of money invested daily in the licensed product.

In early August 2014, IPOX received an email from a representative of Lazard, a Delaware limited liability company whose principal place of business is New York City. Lazard wished to know the methodology used to develop the IPOX indexes. Josef Schuster, IPOX's founder and CEO, responded to the email and provided Lazard general information. Nikko, a Japanese corporation with its principal place of business in Japan, contacted IPOX less than two weeks later in the hope of "subscrib[ing] to" the IPOX 100 US Index. Schuster responded to this inquiry as well, providing Nikko with information about its two types of licenses, their prices, and how they could be used. Nikko informed IPOX that it was interested in developing a product that would use this IPOX index but that it had not yet determined whether it would do so and was curious about who owned the index. IPOX responded that it owned all of its intellectual property including trademarks and patents and that licensing the indexes was its primary means of generating revenue. In late August 2014, Nikko notified IPOX that it wished to procure a data license. It did not indicate that it intended to launch a product using the IPOX 100 US Index; rather, it indicated that it was interested in monitoring the movement of IPO indexes in the United States. IPOX sent a data license agreement to Nikko on September 4, 2014, but Nikko never executed the agreement.

The next day, Lazard contacted IPOX to request more information about the IPOX indexes. This began a dialogue between the two companies that culminated in Lazard requesting a one-month free trial data license to the IPOX 100 US Index. IPOX agreed to grant Lazard a free trial but notified Lazard that if it decided it wanted to use the index to launch a product, it would need to purchase a product license. During Lazard's free trial, Lazard personnel continued to exchange phone calls and emails with IPOX representatives to inquire about the methods used to create the index and its historical constituents, valuations, and performance. Lazard continued to represent to IPOX that it did not intend to use IPOX's index to launch an investment fund but rather wanted to use the index for research purposes.

According to IPOX, Lazard made "express representations" and agreed that the information IPOX shared with it "would be used solely for the evaluation of the IPOX products and not for launching a fund for commercially exploiting the product."Id. ¶ 19. IPOX claims that in reliance on these representations, it "provided certain research, development and expertise in addition to... IPOX Trade Secrets to Lazard, many of which were not generally known to others, and which Lazard knew or had reason to know comprised the confidential information and/or trade secrets of IPOX." Id. IPOX described these trade secrets as "significant time-sensitive research, data, and information regarding the IPOX proprietary technology, process, strategy, constituents, trading information, rebalancing, historical data, formulas, methods, processes and/or techniques" that "are maintained in secret and confidence by IPOX." Id. ¶ 10.

On October 1, 2014, Nikko launched a financial product called the Nikko US Growing Venture Fund. Pursuant to an investment management agreement, Nikko contracted with Lazard to serve as the fund's investment advisor or manager. IPOX alleges that "[m]arketing material for the Nikko Fund—available to potential U.S. investors via, inter alia , the Internet—prominently displayed the IPOX® trademark" and "made reference to and relied upon the reputation of, and goodwill in, the IPOX® name, mark and business, and the performance history" of the IPOX 100 US index and proprietary materials and information belonging to IPOX. Id. ¶ 20. After the fund's launch but before IPOX was aware of the fund's existence, Lazard continued to ask IPOX questions about its index that suggested to IPOX that Lazard intended to use the index to launch a product. IPOX sent Lazard a product license agreement to sign so that Lazard could, for good consideration, permissibly use the index to launch a fund. Lazard responded that it would not use the IPOX index for any product. IPOX then sent Lazard a data license agreement, but Lazard never executed it.

About two weeks later, IPOX learned that Nikko had launched the fund. IPOX alleges that it also learned Nikko had published promotional materials available on the Internet that used the IPOX "name, mark, reputation, track record, research, development expertise and goodwill" and divulged "IPOX Trade Secrets, including charges, data and information." Id. ¶ 22. The fund bore characteristics that indicated to IPOX that the fund utilized the IPOX 100 US index, despite IPOX's repeated admonitions that Nikko could not use the index to launch a product unless it purchased a product license. On October 16, 2014, IPOX sent a cease-and-desist letter to Nikko. The next day, IPOX emailed a product license agreement to Nikko. Nikko and IPOX exchanged emails in which they proposed edits and revisions to the product license agreement, negotiated terms, and discussed the parameters of a potential product license. After both sides had made changes to the product license agreement, IPOX signed and sent the agreement by mail to Nikko. Shortly thereafter, however, Nikko informed IPOX that it would not sign the license...

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