Origin/ownership false advertising claims barred by Dastar

Invista S.A.R.L. v. E.I. Du Pont de Nemours & Co., 2008 WL 4865208 (S.D.N.Y.)

Invista’s corporate predecessors formed a French joint venture, Butachimie SNC. Invista claimed that defendant Rhodia misappropriated a Butachimie technology known as Gen I, which is used to produce an ingredient for nylon, and that Rhodia intended to build a Chinese plant to use Gen I. DuPont and Invista allegedly disclosed Gen I to Butachimie and Rhodia, subject to confidentiality restrictions which defendants then violated.

Invista argued that defendants’ acts constitued unfair competition under Section 44(h) of the Lanham Act and the Paris Convention, as well as false advertising in that Rhodia has told a number of current Invista customers that it is free to use Gen I to build a new plant in Asia and that it co-holds the technology.

The court held that Section 44(h) does not provide an independent basis for federal jurisdiction. That section entitles foreign nationals from countries party to certain international conventions with the right to “effective protection against unfair competition,” but that’s just a guarantee of national treatment. It creates no new cause of action for unfair competition.

The false advertising claim fared no better. The claim was that Rhodia misrepresented its ownership of Gen I technology. But under Dastar, a process for creating a product isn’t a type of “goods” whose designation of origin might be found false. “Origin” in the Lanham Act refers to the producer of tangible goods, not the author of any idea or concept embodied in the goods. And that rationale holds even when the plaintiff pleads false advertising. (As I’ve said before, I think this is a mistaken overextension of Dastar, which specifically left open the possibility of false advertising claims where a plaintiff could make out the extra elements of competition, statement in advertising or promotion, and materiality.) Anyway, once we preclude repleading idea “origin” claims under the head of false advertising, none of Invista’s allegations related to the “nature, characteristics [or] qualities” of Rhodia’s products or processes.

The court also dismissed a bunch of state-law claims without prejudice.