Cortec Corporation v. Corpac GmbH & Co. KG

Background

Cortec Corporation alleged that Corpac GmbH & Co. KG, Verpa Folie Weidhausen GmbH, and Safe-Pack Solutions GmbH violated Cortec’s patent and trademark rights and breached a distribution agreement. Cortec alleged that Corpac, through a joint venture with Verpa and Safe-Pack, sold or promoted Cortec-related products outside authorized territories, used Cortec’s trademarks and labels improperly, and contributed to the importation of allegedly unauthorized products into the United States.

The complaint asserted induced patent infringement; federal unfair-competition, false-designation, and trademark-infringement claims; a Minnesota deceptive-trade-practices claim; unjust enrichment; and breach of contract. The defendants moved to dismiss for lack of personal jurisdiction and for failure to state a claim.

Personal Jurisdiction

The court denied the personal-jurisdiction motion as to Corpac. Although Corpac had no physical presence, employees, property, Minnesota tax filings, or Minnesota customer revenue, the court found sufficient contacts at the pleading stage. Those contacts included an approximately eighteen-year business relationship with Cortec, more than $20 million in purchases from Cortec, communications with Cortec’s Minnesota headquarters, payments to a Minnesota bank account, visits to Minnesota, and a contract selecting Minnesota law and a Minnesota forum for disputes. The court found that Cortec’s claims were sufficiently related to those contacts.

The court granted the personal-jurisdiction motion as to Verpa and Safe-Pack and dismissed both companies without prejudice under Federal Rule of Civil Procedure 12(b)(2). Cortec had not identified contacts between either company and Minnesota and had not shown that Corpac’s Minnesota contacts could be attributed to them merely because the companies allegedly worked together in a joint venture. The court also declined to allow jurisdictional discovery because Cortec offered speculation about a possible merger but no evidence of Minnesota contacts by Verpa or Safe-Pack.

Failure to State a Claim

The court granted in part and denied in part Corpac’s motion under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court dismissed Counts I, II, III, IV, and V without prejudice and permitted Cortec to file an amended complaint within 30 days.

For Count I, the induced-patent-infringement claim, the court found that Cortec adequately alleged Corpac’s knowledge of the patents. But the complaint did not plausibly allege that Corpac specifically intended to encourage a third party to import infringing products into the United States. The court also declined to dismiss the claim based on the lack of detailed patent claim charts or on patent exhaustion, because those issues could not be resolved from the complaint at this stage.

For Counts II through V, involving federal trademark and unfair-competition theories and a Minnesota deceptive-trade-practices claim, the court found that Cortec did not provide enough facts to reasonably infer that Corpac knowingly or intentionally facilitated a third party’s infringement in the United States. The court stated that Cortec’s allegations about sales to Volkswagen and Volvo did not identify those companies as direct infringers, establish Corpac’s knowledge of infringement, or show that either company imported goods into the United States. The court nevertheless rejected dismissal based on consumer confusion, the alleged genuineness of the goods, or the argument that the distribution agreement could not support trademark claims; those issues were not resolved on the pleadings.

The court denied dismissal of Cortec’s breach-of-contract claim. It found that the alleged expiration of the distribution agreement raised a factual issue because continued performance might have formed a new contract, and the complaint gave Corpac sufficient notice of the alleged sales outside the authorized territory. The court also denied dismissal of Cortec’s unjust-enrichment claim because it was properly pleaded as an alternative to the contract claim. The court did not decide whether to decline supplemental jurisdiction over the state-law claims.

Order

Judge Menendez ordered that the motion to dismiss was granted in part and denied in part. Verpa and Safe-Pack were dismissed without prejudice for lack of personal jurisdiction. Counts I, II, III, IV, and V were dismissed without prejudice for failure to state a claim. The motion was denied in all other respects, and Cortec was allowed to file an amended complaint reasserting Counts I through V within 30 days.