Mikes Novelties v. Eyce - Complaint

Case 2:20-cv-07207 Document 1 Filed 08/11/20 Page 1 of 77 Page ID #:1
1 Louis F. Teran (SBN 249494)

lteran@slclg.com
2
SLC LAW GROUP
3 1055 E. Colorado Blvd., Suite #500
Pasadena, CA 91106
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Telephone: (818) 484-3217 x200
5 Facsimile: (866) 665-8877
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Attorneys for Mike’s Novelties, Inc.
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10 UNITED STATES DISTRICT COURT
11 CENTRAL DISTRICT OF CALIFORNIA

12
13 Case No.: 20-cv-7207
14 MIKE’S NOVELTIES, INC., a Texas COMPLAINT FOR:

15 corporation,
1) DECLARATION OF NON-
16 INFRINGEMENT OF PATENT;
Plaintiff,
17 2) DECLARATION OF PATENT
v. INVALIDITY; AND
18
EYCE, LLC, a Colorado company, 3) DECLARATION OF NON-
19 INFRINGEMENT OF TRADE
20 DRESS
Defendants.
21 DEMAND FOR JURY TRIAL
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1
COMPLAINT
1 PRELIMINARY STATEMENT
2 1. Plaintiff Mike’s Novelties, Inc., dba Mike’s Worldwide Imports,
3 (hereinafter “MWI”), brings this action against Defendant Eyce, LLC (hereinafter “Eyce”)
4 for declaratory judgment of (1) non-infringement of patents; (2) invalidity of patents; and
5 (3) non-infringement of trade dress, pursuant the Declaratory Judgment Act, 28 U.S.C.
6 §§2201-02, the America Invents Act, and the Lanham Act of the United States, and for
7 such other relief as the Court deems just and proper.
8 JURISDICTION AND VENUE
9 2. The Court has subject matter jurisdiction of the claims of this Complaint
10 pursuant to 28 U.S.C. §§1331, 1338(a), 2201, and 2202, the America Invents Act, and the
11 Lanham Act of the United States.
12 3. Venue is proper in this judicial district pursuant to 28 U.S.C. §§1391 and
13 1400.
14 4. Defendant purports to be the owner of rights in trade dress and design patent
15 related to different smoking apparatus as disclosed in U.S. Patent Nos. D825,101;
16 D872,357; D879,372; and D844,227. Attached hereto as Exhibits A-D, and incorporated
17 herein by reference, is a true and correct copy of each of Defendant’s design patents.
18 Through a series of verbal and written communications dating back to June 4, 2020,
19 Defendant has asserted that their trade dress and design patents are infringed by MWI.
20 Defendant has threatened to sue MWI for infringement of the design patents and related
21 trade dress on numerous occasions since June 4, 2020, the latest being a written
22 communication on August 4, 2020. MWI has not infringed and does not infringe, either
23 directly or indirectly, any valid and enforceable trade dress or design patent. A substantial
24 controversy exists between the parties which is of sufficient immediacy and reality to
25 warrant declaratory relief.
26 5. This Court has personal jurisdiction over Defendant. First, Defendant has
27 distributors and/or sales representatives in California and in this Judicial District. Second,
28 Defendant has regularly conducted substantial business in and directed to California and
this Judicial District, including, business pertaining to Defendant’s purported trade dress
2
1 and design patents. Third, Defendant has engaged in various acts in and directed to
2 California and this Judicial District. Fourth, Defendant has advertised, offered for sale,
3 and sold products in California and in this Judicial District.
4 THE PARTIES
5 6. Plaintiff MWI has and does regularly conduct substantial business in and
6 directed to California and this Judicial District, including having distributors and/or sales
7 representatives. MWI designs and sells products into the smoking products and novelties
8 industry.
9 7. Upon information and belief, Defendant is and at all times mentioned herein
10 was, a company organized and existing under the laws of the state of Colorado, having a
11 principal place of business in Bend, Oregon. Defendant designs, manufactures, and sells
12 products into the smoking products industry.
13 FACTUAL BACKGROUND
14 8. Defendant purports to be the owner of U.S. Design Patent No. D825,101
15 and a corresponding unregistered trade dress. A true and correct copy of the design patent
16 is attached hereto as Exhibit A.
19 is attached hereto as Exhibit B.
22 is attached hereto as Exhibit C.
25 is attached hereto as Exhibit D.
26 12. Plaintiff has sold various products which Defendant claims infringe at least
27 one of the above-referenced design patents and trade dress.
28 13. On June 4, 2020, Defendant, through its counsel, sent MWI a cease and
desist notice pertaining to MWI’s products and Defendant’s design patents and trade
3
1 dress. Attached hereto as Exhibit E is a true and correct copy of said cease and desist
2 notice.
3 14. Defendant’s cease and desist notice demands that MWI cease selling the
4 related products, identify its suppliers of the products, and “compensate [Defendant] for
5 past infringement sales”.
6 15. Subsequent to the cease and desist notice, counsel for the parties conferred
7 on the matter telephonically but were unsuccessful at resolving the dispute between the
8 parties.
9 16. Then on August 4, 2020, Defendant, through its counsel, sent MWI a
10 demand letter demanding $400,000 to settle this dispute otherwise Defendant indicates
11 that it would seek judicial intervention for damages and attorneys’ fees. Attached hereto
12 as Exhibit F is a true and correct copy of said demand letter.
13 17. In the demand letter, Defendant erroneously asserts that MWI
14 “acknowledged fault” and “agreed to redesign certain products”. In addition, Defendant
15 makes clear that it is “prepared to seek judicial intervention unless MWI provides the
16 requested information and compensates” Defendant with $400,000.
17 18. In fact, MWI has sold and continues to sell some of the accused products
18 without any plans to redesign them as they do not infringe any valid enforceable patent.
19 19. Without a declaratory judgment of non-infringement and/or invalidity of the
20 design patents, MWI is forced to continue to operate its business with a cloud of a lawsuit
21 over its head unless MWI complies with Defendant’s $400,000 demand.
22 FIRST CAUSE OF ACTION
23 Declaration of Non-Infringement of Design Patents
24 20. MWI repeats and hereby incorporates herein by reference, as though
25 specifically pleaded herein, the allegations of paragraphs 1 through 19.
26 21. MWI has not infringed and does not infringe, directly or indirectly, any of
27 the following design patents: Design Pat. No. D825,101; Design Pat. No. D872,357;
28 Design Pat. No. D879,372; and Design Pat. No. D844,227.
4
1 22. As a result of the acts described in the foregoing paragraphs, there exists a
2 substantial controversy of sufficient immediacy and reality to warrant the issuance of
3 declaratory judgment.
4 23. A judicial declaration is necessary and appropriate so that MWI may
5 ascertain its rights regarding Defendant’s purported design patents.
6 SECOND CAUSE OF ACTION
7 Declaration that the Design Patents are Invalid
10 25. MWI has not infringed and does not infringe, directly or indirectly, any of
11 the following design patents because the design patents are invalid: Design Pat. No.
12 D825,101; Design Pat. No. D872,357; Design Pat. No. D879,372; and Design Pat. No.
13 D844,227. In particular, the design patents are anticipated by prior art; cover a design that
14 is primarily functional and not protected by design patents; cover a design that is not
15 novel or nonobvious; violate the one-year time bar; and/or are indefinite.
20 ascertain its rights regarding Defendant’s purported design patents.
21 THIRD CAUSE OF ACTION
22 Declaration of Non-Infringement of Trade Dress
25 29. MWI has not infringed and does not infringe, directly or indirectly, any
26 valid or enforceable trade dress related to the following design patents: Design Pat. No.
27 D825,101; Design Pat. No. D872,357; Design Pat. No. D879,372; and Design Pat. No.
28 D844,227.
5
5 ascertain its rights regarding Defendant’s purported trade dresses.
6 PRAYER FOR RELIEF
7 WHEREFORE, Plaintiff MWI prays that this Court grant relief as follows:
8 1. For judgment declaring that MWI has not infringed, directly or indirectly,
9 any valid and enforceable design patent owned by Defendant;
10 2. For judgment declaring that Defendant’s design patents are invalid;
11 3. For a judgment declaring that MWI has not infringed, directly or indirectly,
12 any valid and enforceable trade dress owned by Defendant;
13 4. For an order declaring that MWI is a prevailing party and that this is an
14 exceptional case; awarding MWI its costs, expenses, disbursements, and reasonable
15 attorney’s fees;
16 5. For an order that Defendant pay all costs associated with this action; and
17 6. For an award of any other relief as the Court deems just and proper.
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21 DATED: August 11, 2020
22
23 By:___________________________
24 Louis F. Teran
25 Attorney for Plaintiff
Mike’s Novelties, Inc.
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6
1 DEMAND FOR JURY TRIAL

2 Plaintiff hereby demands trial by jury as provided by Rule 38(a) of the Federal
3 Rules of Civil Procedure.
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6 DATED: August 11, 2020
7
8 By:___________________________
9 Louis F. Teran
10 Attorney for Plaintiff
Mike’s Novelties, Inc.
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EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
CASE COLLARD
Partner
(303) 352-1116
FAX (303) 629-3450
collard.case@dorsey.com
August 4, 2020
VIA ELECTRONIC MAIL CONFIDENTIAL - SUBJECT TO FRE 408
Louis F. Teran
SLC Law Group
1055 E. Colorado Blvd.
Suite 500
Pasadena, CA 91106
Re: MWI’s Continued Infringement of Eyce’s Design Patents and Trade Dress
Mr. Teran:
I am writing to follow up on our phone conversation of July 27, 2020. Since Eyce’s initial
demand that MWI stop infringing on Eyce’s patents and that MWI make amends for past
infringement, we appreciate that MWI has apparently acknowledged fault and taken some steps
to address its infringement. Specifically, it is good that MWI has agreed to redesign certain
products and to eventually stop selling infringing products. While promising, the steps taken by
MWI so far are inadequate. In our call, you also indicated that MWI would take no further action
to comply with Eyce’s requests for an accounting and payment for past infringement. You also
indicated that MWI intends to continue selling some infringing products while it works on the
redesigns. This is not acceptable to Eyce. MWI must comply fully with Eyce’s requests. Eyce
is prepared to seek judicial intervention unless MWI provides the requested information and
compensates Eyce as specified below.
First, regarding ceasing sales of accused products, MWI must immediately stop sales.
Each additional sale of the infringing products during the redesign period is another sale that
Eyce loses and imposes harm on Eyce’s brand reputation and recognition.
Second, MWI must account for and compensate Eyce for past sales of accused
products. Eyce has evidence that MWI’s sales representatives have described MWI’s products
as being “exactly like Eyce” and have admitted that they “look just like Eyce” products. In effect,
MWI has admitted that its products infringe Eyce’s design patents. L.A. Gear, Inc. v. Thom
McAn Shoe Co., 988 F.2d 1117, 1124 (Fed. Cir. 1993). Eyce is entitled to recover its lost profits
or MWI’s total profits from the sale of the infringing products. 35 U.S.C. §§ 284, 289. While
MWI has not provided an accounting of its sales, Eyce estimates that MWI sold approximately
60,000 units of infringing product from the patent grant dates to present. Based on this
estimation, Eyce can establish it is entitled to recover lost profits of approximately $415,000.
The comments from the MWI sales representative not only help Eyce establish MWI’s
liability and entitlement to lost profits. By expressly marketing its products as copies of Eyce’s
1400 Wewatta Street | Suite 400 | Denver, CO | 80202‐5549 | T 303.629.3400 | F 303.629.3450 | dorsey.com
August 4, 2020
Page 2
products, MWI was willfully infringing. MWI’s admission of infringement, pattern of prior
infringement, and continued sales of infringing products will establish that MWI willfully infringed
Eyce’s design patents. Accordingly, the $415,000 in lost profits may be trebled, entitling Eyce to
recover $1.25 Million in damages from MWI.
Eyce also estimates that it is separately entitled to recover for very significant damages
caused by MWI’s unfair competition practices. For example, the relationship with each
wholesale customer is very valuable and, once established, leads to follow-on sales of other
products. Eyce estimates that over 1000 wholesale customers may have been enticed to work
with MWI due to sales of the copycat products. Those relationships—even at a profit of
$50/month—would lead to millions more in damages.
If forced to seek judicial intervention, Eyce will also seek attorneys’ fees, which have
already been significant will increase if MWI fails to promptly communicate and comply with
Eyce’s requests.
If Eyce is required to seek judicial intervention it will seek compensation for each
category described above and any and all other categories of compensation to which it may be
entitled. But in light of the fact that MWI has taken some steps towards a potential agreement
by removing some products and agreeing to redesign, Eyce remains open to finding a business
solution. To settle this matter, Eyce requires that MWI (1) immediately cease all manufacture,
importation, use, sales, and offer of sale of the infringing products, including those that MWI
intends to redesign; (2) ship all remaining inventory of the infringing product to Eyce for
destruction or sign a certification for products for which there is no remaining inventory; (3)
provide an accounting of its sales of the infringing products; (4) make a settlement payment to
Eyce of $400,000; and (6) agree not to sale, offer for sale, import, manufacture, or distribute any
products that infringe upon or misappropriate one of Eyce’s designs in the future.
Please confirm receipt of this letter and provide us with MWI’s agreement to the terms
above by no later than August 11, 2020. Eyce reserves and does not waive any rights it has at
law or equity.
Best regards,
Case Collard
Partner
CC:cjh

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Case 2:20-cv-07207 Document 1 Filed 08/11/20 Page 1 of 77 Page ID #:1

1 Louis F. Teran (SBN 249494)

11 CENTRAL DISTRICT OF CALIFORNIA

14 MIKE’S NOVELTIES, INC., a Texas COMPLAINT FOR:

1 DEMAND FOR JURY TRIAL

VIA ELECTRONIC MAIL CONFIDENTIAL - SUBJECT TO FRE 408

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