IP Law Daily, TOP STORY—N.D. Ga.: Lanham Act can be applied to overseas trade dress infringement of Titanic exhibition, (Oct 18, 2013)

By Thomas Long, J.D.

Two Georgia-based companies that created and held a traveling exhibition based on the doomed passenger liner, the RMS Titanic, could go forward with trade dress infringement and other claims against a former employee and companies formed and operated by him, the federal district court in Atlanta has decided (RMS Titanic, Inc. v. Zaller, October 17, 2013, Duffey, W.). The court held that it had subject matter jurisdiction over the plaintiffs’ Lanham Act claims with regard to infringing conduct that allegedly occurred in Singapore and Macau, China.

The plaintiffs—RMS Titanic, Inc. and Premier Exhibitions, Inc.—were involved in staging a “museum quality” exhibition designed to “take visitors on a chronological journey through the life of the RMS Titanic, from the building of the ship, to life on board during its voyage to America, and finally to the ruins on the ocean floor.” The plaintiffs alleged that defendant Thomas Zaller—a Georgia resident once employed by Premier—negotiated with Premier in 2011 to stage a Titanic exhibition in Singapore and then used Premier’s intellectual property to stage his own Titanic exhibition in Macau, China, in 2012. Zaller—along with his four companies, a Georgia corporation called TZ, Inc., a Georgia corporation called Imagine Exhibitions, Inc., a Nevada corporation also called Imagine Exhibitions, Inc. and a Singapore corporation called Imagine Exhibitions, PTE, Ltd.—allegedly infringed the protected trade dress of the plaintiffs’ exhibition. The defendants also were accused of several violations of state law, including conversion, unjust enrichment, and fraud.

The defendants moved to dismiss the action for lack of subject matter jurisdiction, failure to state viable claims, and for lack of personal jurisdiction over some defendants. Primarily, the defendants asserted that the court lacked subject matter jurisdiction over the plaintiffs’ Lanham Act claim because the alleged misconduct took place outside the United States, and that extraterritorial application of the Lanham Act was not permitted under the facts alleged. In addition, the defendants argued that the plaintiffs’ claims for conversion were preempted by copyright law, that their claims for unjust enrichment and fraud were superseded by the Georgia Trade Secrets Act.

Subject Matter Jurisdiction

The defendants contended that the alleged acquisition of proprietary information occurred in Singapore, and that the misuse of this information occurred in Macau, China, where the competing Titanic exhibition was staged. They argued that these allegations were beyond the reach of the Lanham Act, and thus there federal question jurisdiction was lacking.

The Lanham Act can be applied extraterritorially under limited circumstances, the court said. In analyzing whether to apply the Lanham Act to the defendants’ alleged extraterritorial conduct, the court adopted the approach taken by the First Circuit in McBee v. Delica Co., Ltd., 417 F.3d 107 (2005). In that case the court examined and balanced two factors: (1) whether the defendant is a United States citizen or has engaged in conduct within the United States, and (2) if not, whether the defendant’s conduct has had a substantial effect on United States commerce. The First Circuit in McBee rejected other circuits’ inclusion in the analysis of the factor of whether there is any conflict between the plaintiff’s trademark rights under the law of the United States and the foreign jurisdiction where the alleged infringement occurs.

The plaintiffs’ alleged that all of the defendants were U.S. citizens, with the exception of the Singapore corporation. With respect to the defendants that were U.S. citizens, the court found that it had subject matter jurisdiction over the Lanham Act claim. The case implicated Congress’s broad power to regulate the conduct of American citizens in foreign countries. In addition, the defendants allegedly marketed their infringing exhibition in the United States.

The court decided that it lacked subject matter jurisdiction over the Singapore company. There was no allegation that the Singapore company engaged in any conduct outside of Macau, that the Macau exhibition itself affected U.S. commerce, that the Singapore company continued to infringed the plaintiffs’ intellectual property, or that there was any expectation of the company having a substantial effect on U.S. commerce in the future. The plaintiffs’ argument that it should treat the Singapore company as a U.S. citizen because it was an alter ego of Zaller was rejected. There was no authority supporting the extraterritorial application of a U.S. statute to a foreign defendant on the basis of an alter ego theory, the court said.

Trade Dress Infringement Claim

The defendants argued that the plaintiffs failed to state a claim for trade dress infringement under the Lanham Act.

Distinctiveness. The court found that the plaintiffs adequately and plausibly alleged that their asserted trade dress was sufficiently distinctive to be protected. They alleged that the trade dress included their protected trade dress “the total image and overall appearance” of their exhibit, including “size, shape, color or color combinations, lighting, design, texture, graphics, photographs, and narratives.” The trade dress allegedly included the font and lettering style of the exhibition name, the room choice and placement, lighting patterns on the floor, a “star drop” lighting curtain, and the design and placement of artifacts throughout the exhibit. These specific features were asserted to be unique, and the plaintiffs stated that they had come to be associated with their Titanic exhibit.

Nonfunctionality. At this stage of the litigation, the plaintiffs were merely required to allege that their trade dress is nonfunctional. The defendants argued that Titanic exhibits would tend to look alike, but that was a question of fact not appropriate for resolution on a motion to dismiss.

Likelihood of confusion. The plaintiffs alleged that the defendants continued to market their competing Titanic exhibit in the United States, including on the internet, to various venues where the plaintiffs also sought to operate. The defendants allegedly promoted their exhibit at trade shows and conferences where the plaintiffs’ target consumers were in attendance. In the court’s view, the plaintiffs sufficiently and plausibly alleged consumer confusion.

The court concluded that the plaintiffs adequately pleaded a plausible claim for trade dress infringement. The motion to dismiss for failure to state a claim was denied.

Preemption of Conversion Claim

The defendants contended that federal copyright law preempted the plaintiffs’ claims for conversion under state law. The court applied a two-prong test: (1) whether the rights at issue fell within the subject matter of copyright set forth in sections 102 and 103 of the Copyright Act and (2) whether the rights at issue were equivalent to the exclusive rights set forth by section 106 of the Act.

The court determined that the plaintiffs failed to identify any intangible property that was outside of the copyright laws. The defendants were not accused of converted “ideas” or “procedures.” Instead, they were accused of copying floor plans, room layouts, artifact arrangements, photographs, texts, and other property that was within the scope of copyright. Therefore, any claim of conversion of intangible property was preempted.

A claim for conversion of tangible property would not be preempted by the Copyright Act, the court said. However, the plaintiffs failed to allege that tangible items had been converted. Therefore, the conversion claims were dismissed.

Preemption of Unjust Enrichment and Fraud Claims

The defendants argued that the plaintiffs’ claims for misappropriation of proprietary information asserted in different forms against all defendants, whether pleaded as claims for conversion, unjust enrichment, or fraud, are all superseded by the Georgia Trade Secrets Act (GTSA).

The GTSA did not supersede civil remedies that were not based upon misappropriation of a trade secret. The plaintiffs appeared to concede that their claims for unjust enrichment and conversion with regard to their intangible property were superseded. However, the fraud and fraudulent inducement claims were not preempted. A fraud claim, which involves willful misrepresentation or deception, may be viable even if the information that was allegedly misappropriated was a trade secret.

Personal Jurisdiction

The Singapore and Nevada “Imagine Exhibitions” companies both argued that the court lacked personal jurisdiction over them. They contended that allegations that the Singapore company had an office and performed accounting and administrative activities in Atlanta, and that the Nevada company conducted certain business operations in Atlanta, were not sufficient, even if proven, to establish sufficient minimum contacts with Georgia for purposes of personal jurisdiction.

The plaintiffs advanced an alter ego theory, arguing that the companies were merely alter egos of Thomas Zaller. The court rejected this argument, because a controlling parent’s contacts with a forum state could not be imputed to its subsidiaries for personal jurisdiction purposes.

The plaintiffs were granted leave, however, to conduct limited discovery into whether there was an independent basis for the exercise of personal jurisdiction over the Nevada corporation.

The case is No. 1:13-cv-0625-WSD.

Attorneys: Brian D. Wainger (In-House Legal Services, PLLC) for RMS Titanic, Inc. Robert Sheffield Thompson (Hawkins Parnell Thackston & Young, LLP) Thomas Zaller.

Companies: RMS Titanic, Inc.; Premier Exhibitions, Inc.; Imagine Exhibitions, Inc.; Imagine Exhibitions, PTE, Ltd.; TZ, Inc.

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