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Helios International S.A.R.L. v. Cantamessa Usa, Inc.

United States District Court, Second Circuit

July 27, 2013

HELIOS INTERNATIONAL S.A.R.L. and IDEA ITALIANA s.r.l., Plaintiffs,
v.
CANTAMESSA USA, INC., FABRIZIO CANTAMESSA, and ROBERT KHEIT, Defendants.

OBERDIER RESSMEYER LLP, Carl W. Oberdier, Esq., Kellen G. Ressmeyer, Esq., New York, Attorneys for Plaintiffs.

COWAN, LIEBOWITZ & LATMAN, P.C., J. Christopher Jensen, Esq., Scott P. Ceresia, Esq., New York, Attorneys for Defendants.

OPINION

ROBERT W. SWEET, District Judge.

Defendants Cantamessa USA, Inc., ("CUSA"), Fabrizio Cantamessa and Robert Kheit (collectively, "Defendants") have moved under Fed.R.Civ.P. 12(b) (6) ("Rule 12(b) (6)") for partial dismissal of the complaint ("Complaint") filed by plaintiffs Helios International S.A.R.L. ("Helios") and Idea Italiana s.r.l. ("Idea" and collectively, "Plaintiffs").

In the Complaint, which was filed on November 9, 2012, Plaintiffs have asserted the following causes of action: violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962 (Counts 1-4); copyright infringement under the U.S. Copyright Act, 17 U.S.C. §§ 106(1)-(3) (Count 5); trademark infringement under the Lanham Act, 15 U.S.C. § 1125 (Count 6); trademark dilution under the Lanham Act (Count 7); false designation under the Lanham Act (Count 8); cancellation of federal registration under the Lanham Act (Count 9); state statutory and common law trademark infringement under the Trademark Act of New York, Gen. Bus. L. 360-1 and the common law of each of the fifty states (Count 10); conversion (Count 11); common law fraud (Count 12); trespass to chattels (Count 13); breach of fiduciary duty (Count 14); misappropriation of trade secrets (Count 15); unfair competition (Count 16); and breach of the New York Consumer Protection Act ("NYCPA") § 349 (Count 17).

On January 18, 2013, Defendants submitted the instant motion for partial dismissal of the Complaint, which moved for dismissal of the following claims: (i) RICO (Counts 1-4); (ii) trademark dilution (Count 7); (iii) common law fraud (Count 12); (iv) breach of fiduciary duty (Count 14); (v) trade secret misappropriation (Count 15); and (vi) breach of the NYCPA § 349 (Count 17). The motion was heard and marked fully submitted on March 13, 2013.

Based upon the conclusions set forth below, the Defendants' motion to dismiss is granted with respect to Counts 1-4, Count 7, Count 12, and Count 17, and denied with respect to the other counts.

The Facts

As required on a motion to dismiss pursuant to Rule 12(b) (6), the facts alleged in the Complaint, which are set forth in pertinent part below, are presumed to be true, and all factual inferences are drawn in the plaintiffs' favor. See Mills v. Polar Molecular Corp. , 12 F.3d 1170, 1174 (2d Cir. 1993).

Plaintiffs are owners and distributors of the Cantamessa brand of jewelry. Compl. ¶ 2. The Cantamessa line of jewelry was founded in Valenza, Italy in 1939 by the Cantamessa family, and flourished for six decades under the family's leadership. Id . ¶ 3. However, in the early 2000s the business began to decline, and in 2004 the company ("Cantamessa s.r.l.") was forced to declare bankruptcy. Id.

In 2007, Cantamessa s.r.l.'s assets, including its tangible assets, i.e., jewelry, and intangible assets, i.e., copyrighted jewelry designs, the Cantamessa name and the Cantamessa "Crown Logo" trademark (collectively, the "Intellectual Property"), were acquired by plaintiff Idea. Id . ¶ 4. In 2009, plaintiff Helios purchased Idea's entire inventory of Cantamessa brand jewelry and entered into an exclusive distributorship agreement with Idea. Id . ¶ 5.

In December 2009, Helios entered into an agreement with defendant Fabrizio Cantamessa ("Cantamessa"), a grandson of the founder of Cantamessa s.r.l., in which Cantamessa agreed to act as Helios' global sales agent in connection with the marketing and sale of Cantamessa brand jewelry, and was authorized to use the Intellectual Property in that capacity. Id . ¶¶ 39-41. Cantamessa was granted "unrestricted, unsupervised access" to a warehouse in Geneva, Switzerland containing Cantamessa jewelry (the "Warehouse") and permission to remove jewelry from the Warehouse, and also was given "general authority to execute sales" of any Cantamessa jewelry that he took from the Warehouse. Id . ¶¶ 6, 47. The agreement granted the same rights to Cantamessa's wife, non-party Paola Brussino ("Brussino").

In 2010, defendant Robert Kheit ("Kheit"), a business associate of Cantamessa, entered into an agreement with Helios similar to the agreement between Helios and Cantamessa. Id . ¶¶ 44-47.[1] As with Cantamessa, Kheit was bestowed with authorization to use the Intellectual Property in connection with the marketing and sale of Cantamessa brand jewelry. Id.

At some point in 2010, Cantamessa, who was "infuriated and embittered by the loss of his family's jewelry business, " secretly devised a plan with Kheit "to steal back from Helios and Idea the entire Cantamessa brand, including millions of dollars of inventory, jewelry designs, the Crown Logo and the Cantamessa name." Id . ¶ 48.

In September 2010, the Defendants incorporated defendant Cantamessa USA in New York and thereafter opened a boutique located in New York City (the "New York Boutique") that offered Cantamessa brand jewelry for sale. Id . ¶¶ 49, 63. Defendants used the Intellectual Property to market Cantamessa jewelry in the United States, and Plaintiffs have alleged that this included both authorized and unauthorized instances of usage. Id . ¶ 43.

From March 2010 through December 2010, Cantamessa and Kheit sold approximately 125 pieces of Cantamessa jewelry having an approximate aggregate value of $1, 757, 484.00. Id . ¶ 50. Pursuant to their respective agreements with Plaintiffs, Cantamessa and Kheit were entitled to retain a total of $236, 380.95 as commission, and were required to remit the remainder to Helios. Id . However, Cantamessa and Kheit retained $1, 138, 787.26, and remitted only $618, 696.81 to Helios. Id.

From the beginning of 2011 through November 2011, Defendants removed 185 pieces of Cantamessa jewelry from the Warehouse. Id . ¶¶ 52-55. Defendants subsequently sold many of these pieces and kept all of the sales proceeds for themselves. Id.

During the course of 2011, Defendants engaged in efforts to publicize the Cantamessa brand by sending pieces of Cantamessa jewelry around the United States and the world for use in high-profile and high-visibility events. Id . ¶¶ 72. In June 2011, Defendants donated a pair of Cantamessa earrings for use in a charity event held in Paris, France hosted by the fashion designer Valentino. Id . In July 2011, Defendants sent several pieces of Cantamessa jewelry to California for use in a photo shoot of actress Lindsay Lohan for Vanity Fair magazine. Id . In September 2011, Defendants sent several pieces of Cantamessa jewelry to Florida for use in a photo shoot of supermodel Adriana Lima for Elle Magazine. Id . In December 2011, Defendants sent several pieces of Cantamessa jewelry to Philadelphia for use in a photo shoot of Melania Trump, wife of Donald Trump, for Philadelphia Style Magazine.

Also in 2011, Cantamessa and Kheit asked Helios and Idea to send approximately $5 million of jewelry to New York on the premise that the jewelry was to be used in a temporary exhibition (the "New York Exhibition") meant to publicize the Cantamessa jewelry line to U.S. consumers. Id . ¶ 57. In shipping the jewelry, Helios and Idea filed certain forms with customs officials indicating that the items were being imported temporarily and would later be returned, and therefore were not subject to the usual taxes that would be due on items being imported for commercial sale. Id . ¶ 58. During the exhibition, Cantamessa and Kheit utilized the Intellectual Property, including the Cantamessa name and the Cantamessa Crown Logo, on the signage used to display the pieces. Id . ¶ 79. Following the exhibition, Defendants began selling the jewelry in their New York Boutique and via the internet. Id . ¶ 63. Idea has been notified by the Italian Chamber of Commerce that failure to produce proof of the jewelry's return to Italy will result in a fine of $27, 452.61. Id . ¶ 97.

In June 2011 and November 2011, Defendants submitted trademark registration applications to the United States Patent & Trademark Office ("USPTO") and the Trademark and Designs Office of the European Union ("ETO") for the Crown Logo and Cantamessa name. Id . ¶¶ 80-85. The application to the USPTO claimed that CUSA was the owner of the Crown Logo and the Cantamessa name, and the ETO application asserted ownership by Cantamessa himself, whereas in actuality the Crown Logo and the Cantamessa name belong to Idea. Id . In addition, the USPTO application claimed that the Crown Logo and Cantamessa name were first used in commerce on March 15, 2011, whereas in actuality they had been used by Defendants prior to that date in their marketing efforts on behalf of Helios. Id.

Helios first became aware of Defendants' alleged scheme in October 2011, when it performed an inventory check on the contents of the Warehouse which revealed that jewelry was missing. Id . ¶ 53. Further investigation revealed that the jewelry had been taken by Cantamessa and Kheit. Id . On October 5, 2011, Helios demanded an accounting by Cantamessa of all sales of Helios' jewelry and all pieces still in Cantamessa's possession. Id . ¶ 66. When Cantamessa did not immediately respond to the request, Helios investigated further and discovered that its entire inventory that had been stored in the Warehouse was missing. Id . ¶ 67.

In early November 2011, Helios terminated its agreement with Cantamessa, restricted Cantamessa from having any access to its inventory, and demanded that Cantamessa cease associating himself with Helios or the Cantamessa brand and/or using the Cantamessa Intellectual Property. Id . ¶¶ 67-68.

On January 25, 2012, counsel for Idea sent CUSA and Kheit a written demand for the return of its merchandise and a reimbursement of all customs penalties incurred by virtue of Defendants' conduct. Id . ¶ 69. The demand was refused by letter from Defendants' counsel dated January 31, 2012. Id . Idea renewed its demand via letters in March 2012, and April 2012, but received no response. Id . ¶¶ 69, 71. On February 12, 2012, Helios sent a written request to Cantamessa and his wife seeking updated contact information for any of Plaintiffs' customers who purchased jewelry through Cantamessa and his wife, as well as any unpaid sales proceeds, less commission due. Id . ¶ 70. Cantamessa did not respond to the request. Id.

In or about February 2012, Defendants shipped pieces of Cantamessa jewelry to the same manufacturing facility in Thailand (the "Debora factory") that Idea had previously used to manufacture its jewelry, and requested that Debra produce replicas of those pieces. Id . ¶¶ 73-78. In addition, Defendants asked Debora to produce certain pieces of jewelry using molds that Debora had previously used to produce pieces for Idea. Id . Defendants directed Debora to send the new pieces to the United States by April 2012. Id . In addition, in July and August 2012, Idea ...


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