Mersen USA EP Corp. v. TDK Electronics Inc.

Background

Mersen alleged that TDK Electronics and its affiliate, Zhuhai FTZ, used confidential information disclosed under a December 2016 non-disclosure agreement to develop and sell the MT30, a competing thermally protected metal oxide varistor product. Mersen asserted four claims: breach of the agreement against TDK Electronics; breach of the agreement against Zhuhai FTZ; unfair competition against both defendants; and, in the alternative, unjust enrichment against Zhuhai FTZ.

The agreement was signed by Mersen’s predecessor and EPCOS, Inc., which the parties treated as TDK Electronics’ predecessor. Zhuhai FTZ did not sign the agreement. The agreement included a clause selecting the Southern District of New York for disputes between the parties and providing that New York law governed.

Personal Jurisdiction over Zhuhai FTZ

The court granted Zhuhai FTZ’s motion under Federal Rule of Civil Procedure 12(b)(2), which permits dismissal when the court lacks personal jurisdiction over a defendant. The court rejected Mersen’s arguments that Zhuhai FTZ was bound by the agreement’s forum-selection clause under assumption, agency, or “closely related” theories.

The court concluded that Zhuhai FTZ’s knowledge of the agreement and participation in meetings and technical discussions did not show an unequivocal intent to assume the agreement. The allegations also did not plausibly establish that TDK Electronics acted as Zhuhai FTZ’s agent. Finally, the court declined to apply the “closely related” doctrine because doing so would raise constitutional due-process concerns. The opinion stated that Zhuhai FTZ’s pleaded contacts were interactions with TDK Electronics, meetings in Massachusetts, and Mersen’s visit to Zhuhai FTZ’s facility in China; Mersen did not contend that Zhuhai FTZ had contacts with New York.

Because the court lacked personal jurisdiction over Zhuhai FTZ, it dismissed the claims asserted against that defendant without prejudice.

Breach-of-Contract Claim against TDK Electronics

The court denied TDK Electronics’ motion under Rule 12(b)(6) to dismiss Count One for failure to state a claim. Mersen alleged that it disclosed specific confidential information—including design details, materials, component characteristics, design features, manufacturing processes, and confidential solder specifications—and that the MT30 incorporated that information.

Accepting the complaint’s factual allegations as true at this stage, the court found that Mersen plausibly alleged that TDK Electronics misused confidential information covered by the agreement. The court declined to resolve TDK Electronics’ argument that the information could be found through public specifications or reverse engineering, explaining that this was a potential substantive defense not suitable for resolution on the pleadings.

Unfair Competition Claim

The court granted TDK Electronics’ motion to dismiss Count Three. It held that Mersen’s unfair competition claim was entirely based on the same alleged misuse of confidential information underlying the contract claim. Mersen’s conclusory allegation that TDK Electronics acted willfully and in bad faith did not establish a duty independent of the non-disclosure agreement. The court therefore dismissed the unfair competition claim as duplicative of the breach-of-contract claim.

Disposition

The court granted in part the defendants’ motion to dismiss. It dismissed all claims against Zhuhai FTZ without prejudice, denied TDK Electronics’ motion as to Count One, and granted TDK Electronics’ motion as to Count Three. Count Three was dismissed as duplicative. The court directed TDK Electronics to file its answer by April 12, 2022.