Jarrow Formulas v. International Nutrition Co., No. CIV. 3:01CV00478(AVC).

• Court: United States District Courts. 2nd Circuit. United States District Court (Connecticut)
• Writing for the Court: Covello
• Citation: 175 F.Supp.2d 296
• Parties: JARROW FORMULAS, INC., Plaintiff, v. INTERNATIONAL NUTRITION COMPANY, Egbert Schwitters, Norman H. Zivin, and Jack Masquelier, Defendants.
• Decision Date: 16 November 2001
• Docket Number: No. CIV. 3:01CV00478(AVC).

175 F.Supp.2d 296 JARROW FORMULAS, INC., Plaintiff,
v.
INTERNATIONAL NUTRITION COMPANY, Egbert Schwitters, Norman H. Zivin, and Jack Masquelier, Defendants. No. CIV. 3:01CV00478(AVC). United States District Court, D. Connecticut. November 16, 2001.

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Eric Watt Wiechmann, Alexandra B. Stevens, Cummings & Lockwood, Hartford, CT, for plaintiff.

Richard S. Order, Thomas W. Edgington, Updike, Kelly & Spellacy, P.C., Hartford, CT, for defendants.

RULING ON THE DEFENDANTS' MOTIONS TO DISMISS

COVELLO, Chief Judge.

This is an action for damages and equitable relief in connection with the marketing and sale of nutritional supplements under certain United States patents. It is brought pursuant to 15 U.S.C. §§ 1 and 2¹ (the Sherman Antitrust Act), Conn. Gen. Stat. §§ 35-24 to -46² (the Connecticut Antitrust Act), Conn. Gen.Stat. §§ 42-110a to -110q³ (the Connecticut Unfair Trade Practices Act or CUTPA), 15 U.S.C. § 1125(a)⁴ (the Lanham Act), Conn. Gen.

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Stat. § 52-568⁵ (the Connecticut vexatious litigation statute), and common law tenants concerning tortious interference with business relations.

The defendants, Egbert Schwitters and Jack Masquelier, have filed the within motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) arguing that the court lacks personal jurisdiction over them. In addition, all the defendants have filed the within motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), arguing that the complaint fails to state a cause of action.

The issues presented are: 1) whether the court can exercise personal jurisdiction over Schwitters and Masquelier; 2) whether the Noerr-Pennington⁶ immunity doctrine applies to Jarrow's causes of action; 3) whether the complaint alleges sufficient facts to state causes of action under CUTPA, the Lanham Act, the Connecticut vexatious litigation statute, and under common law tenants concerning tortious interference with business relations; and 4) whether the complaint alleges sufficient facts in order to hold the defendant, Norman H. Zivin, liable for each of the asserted causes of action.

For the reasons herein set forth, the motion to dismiss for lack of personal jurisdiction is DENIED as to Masquelier and GRANTED as to Schwitters. The motion to dismiss for failure to state a cause of action is DENIED.

STANDARD

"When a defendant challenges personal jurisdiction in a motion to dismiss, the plaintiff bears the burden of showing through actual proof that the court has jurisdiction over the defendant." Divicino v. Polaris Indus., 129 F.Supp.2d 425, 428 (D.Conn.2001) (citing Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir.1996)). "Where [] there has been no discovery conducted, plaintiff need only assert `facts constituting a prima facie showing of personal jurisdiction' to defeat a motion to dismiss." Dan-Dee Int'l, Ltd. v. Kmart Corp., No. CIV 99-11689, 2000 WL 1346865, at *2 (S.D.N.Y. Sept.19, 2000) (quoting PDK Labs Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.1997)); see also United States Surgical Corp. v. Imagyn Med. Techs., Inc., 25 F.Supp.2d 40, 44 (D.Conn.1998) (noting that the prima facie case of personal jurisdiction over a foreign defendant is established by showing that there is a statutory basis for exercising jurisdiction and that the exercise of jurisdiction over the foreign defendant satisfies due process).

With regard to a motion to dismiss for lack of personal jurisdiction, "[i]n the absence of an evidentiary hearing or a trial on the merits, all pleadings and affidavits are construed in the light most favorable to the plaintiff." Sherman Assocs. v. Kals,

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899 F.Supp. 868, 870 (D.Conn.1995); see also Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 768 (2d Cir.1983); Divicino v. Polaris Indust., 129 F.Supp.2d 425, 428 (D.Conn.2001). In addition, "[r]egardless of the controverting evidence put forth by the defendant, the court must resolve all doubts in the plaintiff's favor." United States Surgical Corp., 25 F.Supp.2d at 44 (citing A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993)); see also Divicino, 129 F.Supp.2d at 428.

"When deciding a motion to dismiss under Rule 12(b)(6), the court is required to accept as true all factual allegations in the complaint and must construe any well pleaded factual allegations in the plaintiff's favor." Connecticut v. Physicians Health Servs. of CT, Inc., 103 F.Supp.2d 495, 500 (D.Conn.2000) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). "In addition, the court must draw inferences in the light most favorable to the plaintiff." Id. "Dismissal is not warranted unless `it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims which would entitle [it] to relief.'" Id. (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "The motion must therefore be decided solely on the facts alleged." Id. at 501 (citing Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir.1985)).

A compulsory counterclaim is defined as "any claim which at the time of serving the pleading the pleader has against any party if it arises out of the same transaction or occurrence that is the subject of the opposing party's claim." Fed.R.Civ.P. 13(a). "The test for determining whether a counterclaim is compulsory is whether a logical relationship exists between the claim and the counterclaim and whether the essential facts of the claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit." Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir.1991) (quoting United States v. Aquavella, 615 F.2d 12, 22 (2d Cir.1979)) (internal quotation marks omitted). "If a party has a compulsory counterclaim and fails to plead it, the claim cannot be raised in a subsequent lawsuit." Critical-Vac Filtration Corp. v. Minuteman Int'l, Inc., 233 F.3d 697, 699 (2d Cir.2000) (citing Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469 n. 1, 94 S.Ct. 2504, 41 L.Ed.2d 243 (1974)).

FACTS

Examination of the complaint discloses the following:

International Nutrition Company ("INC") is a foreign corporation organized under the laws of Liechtenstein with its principal place of business in Liechtenstein. Egbert Schwitters, a citizen of Monaco, "is the founder, sole shareholder, and an officer of INC."

Norman H. Zivin, a resident of New York, "is a member of the state bar of New York, is admitted to practice before the Court of Appeals for the Second Circuit and, is admitted Pro Hac Vice before the United States District Court for the District of Connecticut."

Jarrow Formulas, Inc. ("Jarrow") is a corporation organized under the laws of California. Jarrow engages in the sale and distribution of proanthocyanidins for radical scavenging ("PACs") and oligo, or oligomeric, proanthocyanidins ("OPCs") extracted from grape seed.

On April 1, 1985, Masquelier, a citizen of France, executed an assignment of U.S. Patent No. 4,698,360 ("the '360 patent") to Societe Civile d'Investigations Pharmacologiques d'Aquitaine ("SCIPA") and Horphag Research Ltd. ("Horphag"), which was thereafter recorded in the U.S. Patent and Trademark Office. The '360 patent

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relates to the use of plant extracts containing proanthocyanidins as a therapeutic agent and as antioxidants.

On April 26 and 29, 1985, SCIPA and Horphag entered into an agreement that would govern their joint ownership of the '360 patent. "The 1985 agreement included a provision that stated that any litigation pertaining to the agreement shall be of the `exclusive jurisprudency of the Courts of Bordeaux.'"

On March 18, 1994, Masquelier and SCIPA "purported to assign SCIPA's interest in the '360 patent to Defendant INC, ... Horphag's competitor in Connecticut and the United States, without notice to, or consent of, co-owner Horphag."

In October 1995, after learning of the 1994 assignment, Horphag brought suit against INC, SCIPA, and SCIPA's principals, including Masquelier, in France pursuant to the 1985 agreement between Horphag and SCIPA. On March 6, 1996, while the French litigation was pending, INC brought suit in this court against Horphag, Jarrow, and other distributors and customers alleging infringement of the '360 patent and the trademark "OPC-85."

On October 10, 1996, Masquelier assigned to INC "whatever rights, if any, he had in the '360 patent that reverted to him from Horphag." On November 4, 1996, this assignment was recorded in the United States Patent and Trademark Office.

On January 30, 1997, INC filed suit against Horphag, Interhealth Nutritionals, Inc., Natrol, Inc., General Nutrition, Inc., Nat-Trop, and Melaleuca, Inc. in the United States District Court, Northern District of California, alleging infringement of the '360 patent.

"On March 25, 1997, the French trial court declared the 1994 Assignment to INC void ab initio because SCIPA could not assign its interest in the '360 patent to INC without offering Horphag a right of first refusal." On May 28, 1998, the French Appellate Court affirmed the trial court's decision.

On March 18, 2000, this court granted summary judgment for the defendants concluding that: 1) INC's "claim that it was a bona fide purchaser for value [wa]s without merit" and 2) "that INC ha[d] no ownership interest in the '360 patent and thus lack[ed] the requisite standing to pursue an action for infringement." INC appealed the order granting summary judgment against INC to the United States Court of Appeals for the Federal Circuit.

INC then filed a motion to amend the complaint and a motion for leave to join Centre d'Experimentation Pycnogenol ("CEP") as a party in connection with the District of Connecticut action. These motions were filed based on CEP's acquisition of SCIPA and INC's subsequent acquisition of CEP. This court denied INC's motions. INC entered a...