Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_06-cv-02440/USCOURTS-casd-3_06-cv-02440-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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- 1 - 06cv2440

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

BEKAERT PROGRESSIVE

COMPOSITES CORPORATION, a

Georgia corporation,

Plaintiff,

CASE NO. 06cv2440-LAB (LSP)

ORDER DENYING MOTION TO

DISMISS FOURTH CAUSE OF

ACTION

[Dkt No. 7]

vs.

WAVE CYBER LIMITED, a British Virgin

Island corporation, WAVE CYBER

(SHANGHAI), a Chinese corporation,

and TIMOTHY HEBERER, an individual,

Defendants.

This trademark infringement matter is before the court on defendant Timothy

Heberer's ("Heberer") Motion To Dismiss Fourth Cause of Action ("Motion") alleging unfair

competition and false advertising under the statutory and common law of California, on

grounds those claims are purportedly preempted by the federal Copyright Act. Plaintiff

Bekaert Progressive Composites Corporation ("Bekaert") filed Opposition, and Heberer filed

a Reply. Pursuant to Civil Local Rule 7.1(d)(1), the court finds the issues appropriate for

decision on the papers and without oral argument. For the reasons discussed below, the

Motion is DENIED.

Bekaert, a developer, manufacturer, and seller of pressure filtration vessels used to

purify and desalinate water, sues two foreign corporations and Heberer in this action alleging

six causes of action arising out of alleged copying of Bekaert's unique vessel design and

Case 3:06-cv-02440-JLS-LSP Document 15 Filed 04/05/07 Page 1 of 5
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1

 The six causes of action are: (1) false designation of origin and trade dress infringement

under the Lanham Act, 15 U.S.C. § 1125(a); (2) copyright infringement; (3) trade dress infringement

under the common and statutory laws of California; (4) unfair competition and false advertising under

the common law and statutory laws of California; (5) civil conspiracy; and (6) action to hold a

corporate director or officer personally liable for a corporation's wrongful conduct.

2

 "Summit concedes that any attempt to protect its design from being copied, duplicated,

or reproduced is preempted by federal law," although Summit argued on appeal that it was not

seeking to prevent defendant from copying its idea, but rather to prevent the direct appropriation of

the lathe itself. On that basis, Summit unsuccessfully contended its misappropriation claim was not

preempted by federal law. Summit, 7 F.3d at 1439. The reviewing court parsed the unfair

competition and misappropriation elements of the claim to conclude that to the extent Summit was

claiming reverse palming off, the state unfair competition claim was preempted, as was the claimed

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copyrighted written material it uses on the vessels' end cap nameplate.1 Heberer is alleged

to be a corporate officer of one or both of the named corporate defendants with an

ownership interest in one or both. No defendant has yet answered the Complaint. Heberer,

on his own behalf, moves to dismiss "that portion of the plaintiff's fourth claim for state law

unfair competition which alleges the unlawful copying and use of copyrightable materials."

Reply 1:17-18. He contends "part of the plaintiff's state law unfair competition claim merely

alleges that the defendant supposedly copied the plaintiff's copyrightable materials, and thus

is based on the very same conduct underlying the copyright infringement claim," and is

"therefore preempted as a matter of law, and should be dismissed without leave to amend,

since it doesn't qualitatively change the nature of the action." Mot. 1:20-25. There is no

dispute the federal Copyright Act is implicated by Bekaert's claims, and the Complaint

alleges a separate cause of action for copyright infringement.

In support of his Motion, Heberer relies on Summit Machine Tool Mfg. Corp. v. Victor

CNC Systems, 7 F.3d 1434 (9th Cir. 1993) and Kodadek v. MTV Networks, Inc., 152 F.3d

1209, 1212-13 (9th Cir. 1998). In Summit, the plaintiff alleged false designation of origin

under the Lanham Act, unfair competition under California statutory and common law,

intentional interference with contract, and intentional interference with prospective economic

advantage. The Summit court reviewed and affirmed a judgment in favor of defendant

following a bench trial at which, in pertinent part, the court held that to the extent plaintiff

sought to protect its lathe designs, its unfair competition claims were preempted by federal

patent and copyright laws.2 In Kodadek, plaintiff sued to protect his drawings. On review

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"pirating" through alleged employment of a particularly unfair method of copying. The court found,

however, that Summit pled the "extra element" of intentional interference of contract, so that claim

was not preempted despite the underlying contention defendant appropriated lathes to which Summit

had the exclusive right. Id. at 1442. 

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of summary judgment in favor of the defendant on the unfair competition claim under CAL.

BUS. & PROF. CODE §§ 17200, et seq., the Kodadek court found preemption because the

plaintiff expressly based his unfair competition claim solely on rights equivalent to those

protected by the federal copyright laws. 

A state law cause of action is preempted by the Copyright

Act if two elements are present. First, the rights that a plaintiff

asserts under state law must be "rights that are equivalent" to

those protected by the Copyright Act. 17 U.S.C. § 301(a) . . .

Second, the work involved must fall within the "subject matter"

of the copyright Act as set forth in 17 U.S.C. §§ 102 and 103.

Kodadek, 152 F.3d at 1212 (citation omitted). 

Preemption analysis involves determining whether the

state law claim contains an element not shared by the federal

law; an element which changes the nature of the action “so that

it is qualitatively different from a copyright [or patent]

infringement claim.” Balboa Ins. Co. v. Trans Global Equities,

218 Cal.App.3d 1327, 1340, 267 Cal.Rptr. 787 (1990); Del

Madera Properties v. Rhodes & Gardner, Inc., 820 F.2d 973,

977 (9th Cir.1987) [overruled on other grounds]. Therefore, if

copying the lathe or the plans for the lathe in itself infringes the

state-created right, then the state-created right is preempted.

Balboa, 218 Cal.App.3d at 1339-40, 267 Cal.Rptr. 787. Thus,

“preemption law ... requires analysis of each theory [of unfair

competition] to determine whether it contains the necessary

qualitatively different extra element distinguishing it from

copyright [or patent] protection.” Id. at 1342, 267 Cal.Rptr. 787;

see also Del Madera, 820 F.2d at 977.

Summit, 7 F.3d at 1439-40; see Del Madera, 820 F.2d at 977 (a claim will survive

preemption if "the state cause of action [protects] rights which are qualitatively different from

copyright rights. . . . The state claim must have an 'extra element' which changes the nature

of the action").

California's unfair competition law implicates a “broad range of claims” (Balboa, 218

Cal.App.3d at 1341), "explicitly extends to any 'unlawful, unfair or deceptive business

practice,' " and " 'the Legislature, in our view, intended by this sweeping language to permit

tribunals to enjoin on-going wrongful business conduct in whatever context such activity

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might occur. . . .' " Summit, 7 F.3d at 1440 n.3, quoting Barquis v. Merchant's Collection

Ass'n, 7 Cal.3d 94, 111 (1972). "The myriad branches of California's unfair competition law

involve different elements and raise different issues." Summit, 7 F.3d at 1440 ("the breadth

and analytical vagueness of [California's] unfair competition law complicates the preemption

analysis greatly"), quoting Balboa, 218 Cal.App.3d at 1341. Preemption analysis,

accordingly, requires the court to "precisely identify the nature of [plaintiff's] claims." Id.

Bekaert argues no portion of its Count IV claim is preempted by the Copyright Act,

identifying three elements it has pled in that claim which cannot be asserted under the

Copyright Act: "(1) misappropriation of goodwill; (2) misrepresentation via imitation for

purposes of diverting business; and (3) misrepresentation via false and misleading

advertising." Opp. 3:15-20. Moreover, Bekaert argues Heberer "ignores that Count IV is not

based on the nameplate alone, but also the trade dress which includes the nameplate."

Opp. 4:3-4.

Misappropriation is one branch of California's unfair competition

law. . . . California's common law tort of misappropriation has

three elements: “(1) the plaintiff has invested substantial time

and money in development of its ... ‘property’; (2) the defendant

has appropriated the [property] at little or no cost; and (3) the

plaintiff has been injured by the defendant's conduct.” Self

Directed, 908 F.2d at 467 (quoting Balboa, 218 Cal.App.3d at

1342, 267 Cal.Rptr. 787).

Summit, 7 F.3d at 1441, citing Balboa, 218 Cal.App.3d at 1342, and quoting Self Directed

Placement Corp. v. Control Data Corp., 908 F.2d 462, 467 (9th Cir. 1990).

Bekaert distinguishes Summit on grounds its Count IV "does not merely allege

misappropriation of the time and effort in developing Bekaert's trade dress and nameplate,

but rather alleges the misappropriation of the goodwill associated with the trade dress and

nameplate." Opp. 6:12-14. Bekaert distinguishesKodadek on grounds that plaintiff "did not

plead a claim based upon misrepresentation of goodwill, deliberate imitation to divert

business resulting in unjust enrichment, and false advertising," as Bekaert pleads in its

Count IV, but rather alleged conduct not qualitatively different from a copyright claim:

defendants "have been publishing and placing on the market for sale products bearing the

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images subject to the copyright ownership of the plaintiff and has thereby been engaging in

unfair trade practices and unfair competition against plaintiffs [sic] and to plaintiffs' [sic]

irreparable damage." Opp. 6:15-26, quoting Kodadek, 152 F.3d at 1212. 

 Heberer relies on the "incorporation by reference" of all preceding paragraphs in the

first paragraph of Count IV ( Compl. ¶ 58) as the foundation for his preemption argument.

Reply 1:18-21. To the extent he also contends the other allegations of that cause of action

(e.g., misappropriation of good will, misrepresentation by imitation to divert business) are

insufficient to supply "extra elements" beyond the rights asserted that are equivalent to those

protected by the Copyright Act, his own cited authority defeats his argument because the

misappropriation and misrepresentation allegations in that cause of action are adequate to

avoid preemption. See Summit, 7 F.3d 1434; Kodadek, 152 F.3d 1209; see also ValenteKritzer Video v. Pinckney, 881 F.2d 772, 776 (9th Cir. 1989)1976) (reversing a district court's

finding on summary judgment that plaintiff's fraud claim was substantially equivalent to the

rights afforded owners and exclusive licensees of copyrighted works under the Copyright Act

and was therefore preempted, concluding an allegation of misrepresentation distinguished

the state law claim from a claim based on copyright). Heberer has not convinced the court

dismissal of the Fourth Cause of Action or any part on preemption grounds is warranted.

The court finds the state law unfair competition allegations meet the requirement of

pleading elements of wrongdoing in addition to and qualitatively different from the elements

of a Copyright Act claim, irrespective of any overlap with the elements of a Copyright Act

claim, so that Count IV is not on its face preempted. Accordingly, IT IS HEREBY ORDERED

the Motion is DENIED.

IT IS SO ORDERED.

DATED: April 5, 2007

HONORABLE LARRY ALAN BURNS

United States District Judge

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