IPOX Schuster, LLC v. Nikko Asset Management Co.

191 F. Supp. 3d 790, 2016 U.S. Dist. LEXIS 74988, 2016 WL 3194445
CourtDistrict Court, N.D. Illinois
DecidedJune 9, 2016
DocketCase No. 15 C 9955
StatusPublished
Cited by25 cases

This text of 191 F. Supp. 3d 790 (IPOX Schuster, LLC v. Nikko Asset Management Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IPOX Schuster, LLC v. Nikko Asset Management Co., 191 F. Supp. 3d 790, 2016 U.S. Dist. LEXIS 74988, 2016 WL 3194445 (N.D. Ill. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge

IPOX Schuster, LLC, has sued Nikko Asset Management Co., Ltd., and Lazard Asset Management LLC alleging that defendants misappropriated proprietary and confidential information and violated IPOX’s trademark rights. IPOX claims that defendants committed unlawful misappropriation under Illinois common law (count 1) and the Illinois Trade Secrets Act (ITSA), 765 ILCS 1065/2 (count 2), infringed IPOX’s trademark in violation of Illinois common law and the Lanham Act, 15 U.S.C. § 1114 (count 3), and violated the Lanham Act’s prohibitions on false designations of origin and false advertising, id. § 1125(a) (count 4). IPOX further asserts that defendants violated the Illinois Deceptive Trade Practices Act (IDTPA), 815 ILCS 510/2 (count 5), and trademark dilution under the Illinois Trademark Registration Protections Act (ITRPA), 765 ILCS 1036/65(a), and Illinois common law (count 6). IPOX also asserts against La-zard claims of fraud (count 7) and unfair business practices and unfair competition under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 ILCS 505/2, and Illinois common .law (count 8). In the alternative, IPOX asserts a breach of contract claim against Nikko (count 9), breach of implied contract claims against' Nikko (count 10) and Lazard (count 11), an unjust enrichment claim against both defendants. (count 12), and tortious interference claims against' Lazard (counts 13 and 14).

Nikko has moved to dismiss IPOX’s claims against it on two bases. First, it moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Second, it argues that IPOX has failed to state a claim under Rule 12(b)(6). For the reasons stated below, the Court dismisses count 4 for failure to state a claim but otherwise denies Nikko’s motion.

Background

The Court takes the following facts from the allegations in IPOX’s complaint and the evidence adduced in jurisdictional discovery. IPOX, a Delaware limited liability company with its principal place of business in Chicago, is a financial services firm. Its main product is a set of benchmark indexes that, using proprietary technology and confidential research and data, provides “scalable, investable and sustainable exposure into global IPO and spin-off performance, often a pure proxy for economic growth and innovation.” Compl., dkt. no. 1, ¶ 7. IPOX owns the trademark for the IPOX mark in the United States, U.S. Trademark Registration No. 3,449,-[796]*796902, and it also owns the Japanese trademark for the IPOX mark, no. 474932.

Because IPOX’s indexes “characterize the aftermarket performance of IPOs and spin-offs more accurately and comprehensively” than other indexes, id., investors regularly seek to obtain licenses to gain access to them. IPOX offers “data” licenses and “product” licenses. Under a data license, a licensee is granted limited use of licensed IPOX indexes (and the information, charts, and data derived from them) for research and advisory purposes only. Data licenses expressly disallow licensees to create new financial products using the indexes or the information they provide. IPOX grants data licenses in exchange for annual subscription fees.

If a person wishes to create a financial product using IPOX’s indexes, she must secure a product license. IPOX product licenses permit licensees to display the IPOX name and benefit from “the carefully-cultivated reputation and recognition of, and goodwill in, the IPOX name, mark and Indexes, as well as the proprietary index technology, confidential data and research developed by IPOX.” Id. ¶ 12. Product licenses are more lucrative for IPOX because rather than requiring an annual subscription, IPOX typically grants a product license for a variable fee based on the amount of money invested daily in the licensed product.

In early August 2014, IPOX received an email from a representative of Lazard, a Delaware limited liability company whose principal place of business is New York City. Lazard wished to know the methodology used to develop the IPOX indexes. Josef Schuster, IPOX’s founder and CEO, responded to the email and provided La-zard general information. Nikko, a Japanese corporation with its principal place of business in Japan, contacted -IPOX less than two weeks later in the hope of “sub-scribfing] to” the IPOX 100 US Index. Schuster responded to this inquiry as well, providing Nikko with information about its two types of licenses, their prices, and how they could be used. Nikko informed IPOX that it was interested in developing a product that would use this IPOX index but that it had not yet determined whether it would do so and was curious about who owned the index. IPOX responded that it owned all of its intellectual property including trademarks and patents and that licensing the indexes was its primary means of generating revenue. In late August 2014, Nikko notified IPOX that it wished to procure a data license. It did not indicate that it intended to launch a product using the IPOX 100 US Index; rather, it indicated that it was interested in monitoring the movement of IPO indexes in the United States. IPOX sent a data license agreement to Nikko on September 4, 2014, but Nikko never executed the agreement.

The next day, Lazard contacted IPOX to request more information about the IPOX indexes. This began a dialogue between the two companies that culminated in La-zard requesting a one-month free trial data license to the IPOX 100 US Index. IPOX agreed to^ant Lazard a free trial but notified Lazard that if it decided it wanted to use, the index to launch a product, it would need to purchase a product license. During Lazard’s free trial, Lazard personnel continued to exchange phone calls and emails with IPOX representatives to inquire about the methods used to create the index and its historical constituents, valuations, and performance. Lazard continued to represent to IPOX that it did not intend to use IPOX’s index to launch an investment fund but rather wanted to use the index for research purposes.

According to IPOX, Lazard made “express representations” and agreed that the information IPOX shared with it “would be [797]*797used solely for the evaluation of the IPOX products and not for launching a fund for commercially exploiting the product.” Id. ¶ 19. IPOX claims that in reliance on these representations, it “provided certain research, development and expertise in addition to... IPOX Trade Secrets to Lazard, many of which were not generally known to others, and which Lazard knew or had reason to know comprised the confidential information and/or trade secrets of IPOX.” Id. IPOX described these trade secrets as “significant time-sensitive research, data, and information regarding the IPOX proprietary technology, process, strategy, constituents, trading information, rebalancing, historical data, formulas, methods, processes and/or techniques” that “are maintained in secret and confidence by IPOX.” Id. ¶ 10.

On October 1, 2014, Nikko launched a financial product called the Nikko US Growing Venture Fund.

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Bluebook (online)
191 F. Supp. 3d 790, 2016 U.S. Dist. LEXIS 74988, 2016 WL 3194445, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ipox-schuster-llc-v-nikko-asset-management-co-ilnd-2016.