Keramchemie GmbH v. Keramchemie (Canada) Ltd.

• Citation: 771 F. Supp. 618
• Decision Date: 09 August 1991
• Docket Number: No. 91 Civ. 0359 RPP.,91 Civ. 0359 RPP.
• Parties: KERAMCHEMIE GmbH, Plaintiff, v. KERAMCHEMIE (CANADA) LIMITED, Defendant.
• Court: U.S. District Court — Southern District of New York

771 F. Supp. 618

KERAMCHEMIE GmbH, Plaintiff, v. KERAMCHEMIE (CANADA) LIMITED, Defendant.

No. 91 Civ. 0359 RPP.

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

August 9, 1991.

Toren, McGeady, Stanger, Goldberg & Kiel, New York City by Samuel B. Mayer and David Toren, for plaintiff.

Morvillo, Abramowitz, Grand, Iason & Silberberg, New York City by Michael C. Silberberg and Rudnick & Wolfe, Chicago, Ill. by Gary M. Sircus, for defendant.

OPINION AND ORDER

ROBERT P. PATTERSON, Jr., District Judge.

Defendant Keramchemie (Canada) Limited ("KCC") moves pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure to dismiss the action brought by plaintiff Keramchemie GmbH ("KCH") for lack of personal jurisdiction and improper venue. For the reasons stated below, the action is stayed pending resolution of the related action in Canada.

BACKGROUND

Plaintiff's claims arise from defendant's allegedly improper use of the "Keramchemie" trade name and logo (referred to together as the "trademark") to which plaintiff states it owns exclusive rights. Subject matter jurisdiction lies under §§ 32 and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a).

On July 21, 1987, plaintiff registered the Keramchemie trademark in the United States Patent and Trademark Office. On March 23, 1990, defendant notified plaintiff that defendant claimed preexisting rights to use the trademark and that plaintiff's registration of the trademark constituted trade infringement under the Lanham Act and state law. Thereafter litigation between the parties was initiated in Ontario and this action followed.

Plaintiff seeks a declaration that it is the rightful and exclusive owner of the trademark; an injunction restraining defendant from using the trademark; an accounting and damages for defendant's wrongful use in the United States of the trademark; and an injunction restraining defendant from threatening and intimidating plaintiff's customers in the United States.

Plaintiff is a company organized and existing under the laws of the Federal Republic of Germany and has its principal place of business in Sienshahn, Federal Republic of Germany. Defendant is a corporation organized and existing under the laws of Ontario, Canada and has its principal place of business in Toronto, Ontario, Canada.

In 1970, pursuant to a stockholders' agreement (the "1970 Agreement") executed by plaintiff's predecessor Gewerkschaft Keramchemie, Duncan Mill Engineering ("DME"), and KCC, defendant was granted the North American rights to plaintiff's intellectual property, including the use of plaintiff's proprietary "Know How" and continued use of the name "Keramchemie."¹ Defendant's Memorandum in Support of Motion to Dismiss, Exhibit 1.

On April 1, 1979, defendant entered into an agreement (the "1979 Agreement") with DME, its controlling shareholder, in which KCC granted to DME the right to use the Keramchemie knowhow and trademark in the United States. Plaintiff's Memorandum in Opposition, Exhibit. Plaintiff alleges that by entering into the 1979 Agreement, defendant violated the 1970 Agreement, specifically Section 3 which states: "KCC shall have the use of the `Know How' ... Such use shall be limited to KCC's own use and shall not be intended for third parties." Plaintiff contends that, by virtue of KCC's grant of know-how and trademark rights to DME, the defendant's rights to use of the know-how and the "Keramchemie" trademark terminated on April 1, 1979; that the 1970 Agreement therefore has no force or effect; and that defendant's continued use of plaintiff's trademark constitutes infringement.

Defendant's motions are based on both parties being foreign corporations and that an Ontario forum selection clause is contained in the 1970 Agreement. Defendant's Memorandum in Support of Motion to Dismiss, Exhibit 1. Defendant supports its motion with an affidavit of its president stating that KCC does not do business and conducts no business activities in the State of New York. Affidavit of Hans Reicher, March 12, 1991, ¶¶ 3-15. Plaintiff responds that the forum selection clause is inapplicable because the 1970 Agreement is no longer of any force and effect and that the Keramchemie Division of defendant's controlling shareholder DME maintains a checking account and money market account with Chase Manhattan Bank in New York City through which funds have been transmitted to defendant under the 1979 Agreement. Plaintiff's Memorandum of Law in Opposition at 9. Plaintiff also argues that the Keramchemie Division is an agent of defendant by virtue of the 1979 Agreement. Plaintiff requests discovery of defendant to carry its burden of proof on this motion.

DISCUSSION

I. Personal Jurisdiction

Plaintiff bases its claim of personal jurisdiction over defendant on §§ 301 and 302(a)(3) of the New York Civil Practice Law and Rules ("CPLR").

A. New York Civil Practice Law and Rules, CPLR § 302(a)

CPLR § 302(a) provides in relevant part:

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, or his executor or administrator, who in person or through an agent:

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3. commits a tortious act without the state causing injury to person or property within the state ... if he

(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce ...

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N.Y.Civ.Prac.L. & R. § 302(a)(3) (McKinney 1990) (emphasis added). Plaintiff argues that defendant's tortious acts of trademark infringement and unfair competition, as well as the threat to sue, constituted injury to plaintiff in New York; and that therefore, defendant is amenable to personal jurisdiction under CPLR § 302(a)(3). Nowhere in the complaint does plaintiff allege that plaintiff lost sales or customers in New York, or was in any other way injured here.

The plain meaning of § 302(a)(3) mandates that where the defendant commits a tortious act outside of the state, that act must cause injury within the state to create personal jurisdiction over the defendant. Such injury in the state must be direct and not remote or consequential. Interface Biomedical Laboratories Corp. v. Axiom Medical, Inc., 600 F.Supp. 731 (E.D.N.Y.1985). In general, "the situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff." Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir.1990) (quoting Carte v. Parkoff, 152 A.D.2d 615, 616, 543 N.Y.S.2d 718, 719 (1989) (quoting Hermann v. Sharon Hosp., Inc., 135 A.D.2d 682, 683, 522 N.Y.S.2d 581, 583 (1987)), cert. denied, ___ U.S. ___, 111 S.Ct. 681, 112 L.Ed.2d 673 (1991). See also Lehigh Valley Indus., Inc. v. Birenbaum, 527 F.2d 87, 94 (2d Cir.1975) (holding that loss of profits to plaintiff's New York stockholders was too remote and consequential an injury to satisfy § 302(a)(3)); American White Cross Laboratories, Inc. v. H.M. Cote, Inc., 556 F.Supp. 753, 759 (S.D.N.Y.1983) (dismissing the complaint where "no direct interference by defendant with White Cross's customers or business in New York").

Plaintiff has not shown that it has lost any customers or business or has in any other way been injured in New York as a result of defendant's alleged tortious acts. Thus plaintiff has failed to establish that defendant has met the requirements of § 302(a)(3). Because the lack of injury within the state disposes of this issue, it is unnecessary to consider the other elements of § 302(a)(3). Accordingly, plaintiff has not shown that personal jurisdiction may be asserted over defendant under CPLR § 302(a)(3).

B. New York Civil Practice Law and Rules § 301 ("CPLR § 301")

New York's general jurisdictional statute, CPLR § 301, provides: "A court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." N.Y.Civ.Prac.L. & R. § 301 (McKinney 1990). Section 301 "will in no case detract from the jurisdiction that might have been acquired before the effective date of the CPLR." McLaughlin, Practice Commentaries C301:1 (McKinney 1990).

"Under section 301, an entity is amenable to jurisdiction in New York if it is `doing business' in New York so as to establish its presence in the state." Mareno v. Rowe, supra, 910 F.2d at 1046. In Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 33, 565 N.E.2d 488, 490, 563 N.Y.S.2d 739, 741 (1990), upon certification of the question by the Second Circuit, the court articulated the test for finding personal jurisdiction over foreign corporations:

A foreign corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in such a continuous and systematic course of `doing business' here that a finding of its `presence' in this jurisdiction is warranted. The test for `doing business' is a `simple and pragmatic one,' which varies in its application depending on the particular facts of each case.

Id. at 33, 565 N.E.2d 488, 563 N.Y.S.2d 739 (quoting Bryant v. Finnish Nat'l Airline, 15 N.Y.2d 426, 432, 208 N.E.2d 439, 441, 260 N.Y.S.2d 625, 629 (1965)). "The court must be able to say from the facts that the corporation is `present' in the State `not occasionally or casually, but with a fair measure of permanence and continuity.'" Id. (quoting Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915, 917 (1917)). Accord, Alexander & Alexander Servs., Inc. v. Lloyd's Syndicate 317, 925 F.2d 44 (2d Cir.1991).

Plaintiff does not claim that defendant itself is doing business in New York. Rather, it bases its claim that this Court has personal jurisdiction over KCC on the...