Court Opinion

ID: 903166
Source: CourtListenerOpinion
Date Created: 2013-06-18 20:21:13.025237+00
Date Added: 2024-06-11T09:08:52.129247
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUN 18 2013

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

MANDANA D. FARHANG; M.A.                         No. 12-15178
MOBILE LTD.,
                                                 D.C. No. 5:08-cv-02658-RMW
              Plaintiffs-Appellees,

  v.                                             MEMORANDUM *

INDIAN INSTITUTE OF
TECHNOLOGY, KHARAGPUR;
TECHNOLOGY INCUBATION &
ENTREPRENEURSHIP TRAINING
SOCIETY,

              Defendants-Appellants.

                  Appeal from the United States District Court
                      for the Northern District of California
                Ronald M. Whyte, Senior District Judge, Presiding

                        Argued and Submitted May 13, 2013
                             San Francisco, California

Before:      CLIFTON and BEA, Circuit Judges, and KORMAN,
Senior District Judge.**

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

       **    The Honorable Edward R. Korman, Senior United States District Judge
for the Eastern District of New York, sitting by designation.
      1. The Technology Incubation and Entrepreneurship Training Society (the

“Society”), an instrumentality of the Republic of India, appeals from the district

court’s order of January 12, 2012 denying its motion to dismiss the Third Amended

Complaint (“TAC”) pursuant to the Foreign Sovereign Immunities Act (“FSIA”). The

district court held that the “commercial activity” exception to the FSIA applied

because the commercial acts at issue had a “direct effect in the United States.”

Farhang v. Indian Inst. of Tech., No. C-08-02658 (RMW), 2012 WL 113739, at *7-8

(N.D. Cal. Jan. 12, 2012). We have jurisdiction under the collateral order doctrine.

See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1130 (9th Cir. 2012).

      In Terenkian v. Republic of Iraq, we held that an alleged breach of contract

resulting in “the non-deposit of payments for oil in a New York bank (due to the non-

purchase of the oil) and the non-sales of the non-purchased oil to potential customers

of the United States, do not constitute direct effects as defined in § 1605(a)(2) and

subsequent case law.” Id. at 1138. Specifically, we explained that “[w]hile the

cancellation of the contracts directly precluded plaintiffs from buying oil, the non-

deposit of payment for the oil in a New York bank was merely an indirect effect of

Iraq’s breach and is not the ‘legally significant’ act that gave rise to the plaintiffs’

claim, which is based on the breach, not the non-deposit of payment.” Id. (citation

omitted). Terenkian is dispositive here. The non-payment of profits to plaintiffs is

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“merely an indirect effect” of the Society’s alleged breach and is not the “legally

significant” act that gave rise to plaintiffs’ claims for breach of the joint venture

agreement and misappropriation of trade secrets. Thus, the purported loss of profits

in California is not a “direct effect” for the purposes of the FSIA.

      Plaintiffs also argue that the failure of the Society to return all copies of their

patented technology deprived them of the ability to exploit their patent in the United

States. Specifically, plaintiffs allege that the Society’s “breaches” prevented plaintiffs

from “mak[ing] the necessary and required representations regarding the trade secret

status or confidentiality of the Technology that would be required in any basic asset

sale, license or joint venture agreement.” Even if plaintiffs’ patent suffered an

“[i]mmediate diminution in value” as a result of the Society’s alleged conduct, the

legally significant act – the purported misappropriation of trade secrets – occurred

exclusively in India. Moreover, the alleged “diminution in value” is essentially a

financial loss by plaintiffs, which “is not, in itself, sufficient to constitute a ‘direct

effect.’” Adler v. Fed. Republic of Nigeria, 107 F.3d 720, 726-27 (9th Cir. 1997).

      While plaintiffs argue that the Society waived its sovereign immunity in the

non-disclosure agreement (“NDA”), this claim fails because the Society did not

execute the NDA. The transaction at issue involved the Society and a second entity,

Indian Institute of Technology, Kharagpur (“IIT”). While that transaction may have

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contemplated that IIT would require the Society to execute the NDA, the breach of

that condition by IIT does not bind the Society to an agreement it did not sign. Thus,

we vacate the denial of the Society’s motion to dismiss the TAC and remand with

instructions to dismiss.

      2. IIT, also an instrumentality of the Republic of India and a named defendant,

did not move to dismiss the TAC on the ground of sovereign immunity, although it

unsuccessfully moved to dismiss the First Amended Complaint on that ground. See

Farhang v. Indian Inst. of Tech., No. C-08-02658 (RMW), 2010 WL 519815, at *6-8

(N.D. Cal. Jan. 26, 2010). IIT did not take a timely appeal from the district court’s

denial of its motion to dismiss. Nevertheless, relying principally on the doctrine of

pendent appellate jurisdiction, IIT argues that the appeal by the Society also raising

the defense of sovereign immunity confers discretion on us to consider what would

otherwise be an untimely appeal. Passing over the fact that the TAC is the operative

complaint, we decline to exercise any discretion we may have because IIT’s appeal

raises different issues from the Society’s appeal, especially as to waiver. Thus, IIT’s

appeal is dismissed.

      VACATED and REMANDED in part; DISMISSED in part.

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