VE NABLEI,

VENABLEI,
5757th Street,N W
Washington,DC 20004-1601
Telephone 202-344-4000
Facsimile 202-344-8300
www.venable.com
July 2,2004
VIA COURIER
Ms. Marilyn R. Auuott
Secretary
U.S. International Trade Commission
500 E Street, S.W., Room 112A
Washington, DC 20436
Re:
,^
1
c
Int'l Trade Commission
Transmittal of Complaint under 19 U.S.C. 6 1337
In the Matter of Certain Ear Protection Devices
- --- -.
lnv. No. 337-TA-
;
j
' -1
--~
Dear Secretary Abbott:
Enclosed please find a Complaint under Section 337 on behalf of the Complainants 180s,
Inc. and 180s, LLC alleging the unlawful sale for importation to the United States, importation
into the United States and the sale within the United States after importation of certain ear
protection devices that infringe Complainants' valid and enforceable U.S. Patent No. 5,835,609
and U.S. Patent No. 6,502,247. Enclosed please find the following papers:
1.
Pursuant to 19 C.F.R. $8 210.8 and 210.12, the original Complaint and twentyfour (24) additional copies of the Complaint with signed Verification. The exhibits to the
Complaint are contained in two volumes; one volume of non-confidential exhibits (Exhibits 1
through 19) and one volume of business confidential exhibits (Exhibits 101 through 138).
All confidential exhibits have been so marked on the cover of each set of
a.
copies. Pursuant to 19 C.F.R. 5 201.6, the Complainants hereby request confidential treatment of
these exhibits. A written description of the nature of the subject information is included in the
body of the Complaint. Confidential treatment of these exhibits is justified because they contain
trade secret information relating to investments and operations o f the Complainants. Disclosure
of this information would cause harm to Complainants' competitive position. Attached to this
letter is a notarized certification that substantially identical information is not available to the
public.
2.
One copy of the Complaint with exhibits for date stamping to be returned to
Venable LLP with the messenger.
WASHINGTON, D C
,
,
MARYLAND
VIRGINIA
*
VENAABLE;,,
Secretary Abbott
U.S. International Trade Commission
July 2,2004
Page 2
Pursuant to 19 C.F.R. 5 210.12(c), a certified copy and three additional copies of
3.
the file history of the ‘609 Patent (attached as Appendix A); four copies of each patent or
technical reference mentioned in the file history of the ‘609 Patent (attached as Appendix B); an
informal copy of the file history plus three additional copies of the file history of the ‘247 Patent
(attached as Appendix C); four copies of each patent or technical reference mentioned in the file
history of the ‘247 Patent (attached as Appendix D); and three copies of a license agreement
related to the ‘609 and ‘247 Patents (attached as Confidential Appendix E). The appendices are
contained in two volumes; one volume of non-confidential appendices (Appendices A through
D) and one volume of confidential appendices (Appendix E).
a.
Complainants have requested but not yet received true and correct
certified copies of the file history for the ‘247 Patent. A true and correct certified copy of this
file history will be substituted upon receipt.
The confidential appendix (Appendix E) has been so marked on the cover
b.
of each set of copies. Pursuant to 19 C.F.R. 5 201.6, the Complainants hereby request
confidential treatment of this appendix. A written description of the nature of the license
agreement which constitutes this appendix is included in the body of the Complaint.
Confidential treatment of this appendix is justified because it contains trade secret information
relating to investments and operations of the Complainants. Disclosure of this information
would cause harm to Complainants’competitive position. Attached to this letter is a notarized
certification that substantially identical information is not available to the public.
4.
Patents.
Pursuant to 19 C.F.R. 5 210.12(a)(9)(i), certified copies of the ‘609 and ‘247
5.
Pursuant to 19 C.F.R. fj 210.12(a)(9)(ii), certified copies of the assignments to the
‘609 and ‘247 Patents.
Pursuant to 19 C.F.R. 5 210.12(b), three samples of Complainants’patented ear
6.
warmers (including one fully assembled ear warmer and one ear warmer with the frame
removed, attached as Physical Exhibit 1); one accused “Black Shell” ear warmer (attached as
Physical Exhibit 2); one accused “Ear Band” ear warmer (attached as Physical Exhibit 3); and
one accused “Fashion Ear Muff’ ear warmer (attached as Physical Exhibit 5). Complainants are
in possession of only one accused pocket membrane “Fashion Ear Band” ear warmer at this time
and as a result are hmishing digital photographs of that accused ear warmer as Physical Exhibit
4. Complainants will be pleased to make the accused pocket membrane “Fashion Ear Band” ear
warmer available for inspection at any time during this case, should the Commission so request.
Secretary Abbott
U.S. International Trade Commission
July 2,2004
Page 3
Thank you for your assistance in this matter. Please feel free to call if you have any
questions.
Respectfully submitted,
Rebecca G. Lombard
Enclosures
CERTIFICATION
I, Brian E. Le Gette, state as follows:
1.
I am the Chief Executive Officer of 180s, Inc. and am duly authorized to sign this
Certification on behalf of the Complainants.
2.
I have read the Complaint and I am aware of its contents.
3.
The disclosure of the information contained in the Confidential Exhibits and the
Confidential Appendix accompanying the Complaint would cause harm to Complainants'
competitive position.
4.
Substantially identical information is not available to the public.
Brian E. Le Gette
SUBSCRIBED A N D SWORN TO before me this&Maryland.
[SEAL]
.tK/day of June, 2004 in Baltimore,
UNITED STATES INTERNATIONAL TRADE COMMISSION
Washington, D.C. 20436
In the Matter of
CERTAIN EAR PROTECTION DEVICES
1
I ~ vNO.
. 337-TA--
)
COMPLAINT
OF 18Os, INC. AND 180s, LLC
UNDER SECTION 337 OF THE TARIFF ACT OF 1930, AS AMENDED
COMPLAINANTS
PROPOSED RESPONDENTS
180s, Inc.
701 E. Pratt Street
Suite 180
Baltimore, Maryland 21202-3 101
(410) 534-6320
http://www. 180s.com
Ningbo Electric and Consumer Goods
Import & Export Corporation
17/F
Ling Qiao Square
3 1 Yao Hang Street
Ningbo, Zhejiang 3 15000
China
Tel: 0086-574-87194997
Fax: 0086-574-87194921
E-mail: [email protected]
Website: www.tigerbiz.net
180s, LLC
701 E. Pratt Street
Suite 180
Baltimore, Maryland 21202-3 101
(410) 534-6320
http://www. 180s.com
COUNSEL FOR COMPLAINANTS
Kevin B. Collins
Jeffrey A. Dunn
Rebecca G. Lombard
David M. Farnum
Venable LLP
575 7th Street, N.W.
Washington, D.C. 20004-1601
(202) 344-4800
Vollmacht Enterprise Co., Ltd.
5F, No. 360
Ruei Guang Road
Neihu
Taipei, Taiwan
Tel: 886-2-87518698
Fax: 886-2-87512333
Website: www.vollmacht.com
March Trading
1239 Broadway, Room 1606
New York, New York 10010
Tel: (212) 725-5418
PROPOSED RESPONDENTS
{CONTINUED)
Alicia International, Inc.
d/b/a Lincolnwood Merchandising
7354 N. Caldwell Avenue
Niles, Illinois 60714
Tel: (847) 324-0404
Fax: (847) 324 041 1
Website: www.acliciainternational.com
Hebron Imports
4142 W. Lawrence Avenue
Chicago, Illinois 60630
Tel: (773) 202-0100
Fax: (773) 202-0140
Ross Sales
23 1 Commack Road
Commack, New York 11725
Value Drugs Rock, Inc.
30 Rockefeller Center
New York, New York 10020
Tel: (212) 757-9335
Fax: (212) 765-3045
Song’s Wholesale
1301-A 14th Street, N.E.
Washington, DC 20002
Wang Da, Inc. Retail and Wholesales
230 Canal Street
New York, New York 10013
Tel: (646) 613-8889
TABLE OF CONTENTS
I.
INTRODUCTION ..................................................................................................
-1
I1.
THE PARTIES.........................................................................................................
9
A.
Complainants ............................................................................................... 9
B.
Proposed Respondents ...............................................................................
C.
1.
“Black Shell” Ear Warmer Respondents .......................................
12
2.
“Ear Band” Ear Warmer Respondents ...........................................
13
3.
Pocket Membrane “Fashion Ear Band” Ear Warmer Respondent.15
4.
“Fashion Ear Muff’ Ear Warmer Respondent ...............................
. . .
Related Litigation.......................................................................................
1.
I11.
IV.
V.
15
15
Settled Cases .................................................................................. 15
THE PRODUCTS AT ISSUE ...............................................................................
A.
12
18
Ear Warmers .............................................................................................. 18
THE PATENT AT ISSUE .....................................................................................
19
A.
United States Patent No . 5.835. 609 ...........................................................
19
B.
Foreign Counterparts to the ‘609 Patent ....................................................
19
C.
Licenses Under the ‘609 Patent .................................................................
20
D.
Non-Technical Description of the ‘609 Patent’s Invention .......................
21
E.
United States Patent No . 6.502. 247 ...........................................................
21
F.
United States and Foreign Counterparts to the ‘247 Patent .......................
22
G.
Licenses Under the ‘247 Patent .................................................................
23
H.
Non-Technical Description of the ‘247 Patent’s Invention .......................
23
UNLAWFUL AND UNFAIR ACTS OF THE PROPOSED RESPONDENTS .
PATENT INFRINGEMENT ................................................................................. 23
VI .
VI1.
SPECIFIC INSTANCES OF IMPORTATION AND SALE ................................
A.
“Black Shell” Ear Warmer .........................................................................
B.
“Ear Band” Ear Warmer ............................................................................ 26
C.
Pocket Membrane “Fashion Ear Band” Ear Warmer ................................
28
D.
“Fashion Ear Muff’ Ear Warmer ...............................................................
28
24
POTENTIAL FOR FUTURE UNLAWFUL MPORTATION AND SALE........29
VI11. DOMESTIC INDUSTRY ......................................................................................
IX.
24
31
A.
Technical Prong .........................................................................................
31
B.
Economic Prong .........................................................................................
32
1.
Facilities Related to the Patented Products ....................................
33
2.
Employment Related to the Patented Products ..............................
33
3.
Investment Related to the Patented Products .................................
34
RELIEF ..................................................................................................................
..
11
34
TABLE OF EXHIBITS
Exhibits
No,
Page(s)
Jamie Smith Hopkins. 180s Reinvents its Way to Top of Inner-City List.
Baltimoresun.com, April 5. 2004 .............................................................................
1
2.
New York Times photograph. February 20. 2001 .....................................................
2
3.
Charts Demonstrating Relationships Between Respondents and Infringing Ear
Warmer Products ...................................................................................... 4.8. 12-15
4.
Description of Corporate History for 180s. Inc. and 180s. LLC. and
Assignment History for the ‘609 and ‘247Patents ..................................
4a .
Certificate of Conversion.............................................................
4b .
Article of Amendment
..................................................................
..lo. 19. 2 1
..lo, 19. 2 1
10. 19. 2 1
5.
Dun & Bradstreet Report for March Trading ........................................................
13
6.
Dun & Bradstreet Report for Alicia International. Inc..........................................
13
7.
Dun & Bradstreet Report for Hebron Imports .......................................................
14
8.
Dun & Bradstreet Report for Value Drugs Rock. Inc............................................
14
9.
Complainants’ Marketing Materials for Ear Warmers ..........................................
19
10.
Certified Copy 0fU.S. Patent No . 5.835. 609 ........................................................
19
11.
Certified Copy of Assignment to the ‘609 Patent ..................................................
19
12.
Certified Copy 0fU.S. Patent No . 6.502. 247 ........................................................
21
13.
Certified Copy of Assignment to the ’247 Patent ..................................................
21
14.
Claim Infringement Charts Applying the Asserted Claims of the ‘609 Patent
and the ‘247 Patent to the Accused Ear Warmers ..................................................
24
14a.
Claim Infiingement Chart for ‘609 Patent.................................................
24
14b.
Claim Infringement Chart for ‘247 Patent .................................................
24
15.
Value Drugs Sales Receipts ................................................................................... 27
16.
17.
Further Evidence of Unlawful Activities Related to 180s’ Patented Ear
Warmers by Foreign Non-Respondents.................................................................
31
Claim Embodiment Chart Demonstrating that Complainants’ Ear Warmers
Embody the Asserted Independent Claims ofthe ‘609 Patent ..............................
32
18.
Korean Website Printout ......................................................................... Ex . 16. p . 1
19.
Korean Website Printout .........................................................................
No.
Ex . 16. p . 2
Confidential Exhibits
Paae(s)
101.
180s’ Ear Warmer Price Lists ....................................................................
11, 3 1, 32
102.
Gorgonz 2004 ProductDisplay Price List .................................................
11, 31, 32
103.
From the Blue 2004 Price List ...................................................................
11, 31, 32
104.
Warning Letter to Starcrest of December 2, 2003 .................................................
16
105.
Warning Letter to Starcrest of December 11, 2003 ...............................................
16
106.
Hit Item Response Letter of March 30, 2004 ..................................................
107.
Warning Letter to S.H. Yoon of March 23, 2004 ..................................................
108.
S.H. Yoon Response Letter of April 15, 2004 .................................................
109.
Warning Letter to Ningbo of April 2, 2004 ...........................................................
24
110.
Warning Letter to Vollmacht of April 2, 2004 ......................................................
25
111.
Second Letter to Vollmacht of May 17, 2004........................................................
25
112.
Vollmacht Response Letter of April 8, 2004 ....................................
25, Ex. 16, p . 8
113.
Vollmacht Response Letter of May 19, 2004 ...................................
25, Ex . 16, p . 8
114.
Primeway Letter of January 29, 2004 ..............................................................
115.
Primeway Letter of January 25, 2004 ....................................................................
116.
Primeway Letter of February 12, 2004 .................................................................. 25
117.
Starcrest Response Letter of December 8, 2003 ....................................................
..
11
17, 31
18
18, 28
25, 30
25
25
118.
Value Drug Handwritten Letter (undated) from Steve Miller ........................
.25. 27
119.
Walgreens Letter of March 25. 2004 ...............................................................
26. 27
120.
INTENTIONALLY LEFT BLANK
121.
Warning Letter to Value Drugs of March 19. 2004 ...............................................
27
122.
Second Letter from 180s to Value Drugs of April 2. 2004 ....................................
27
123.
Value Drug Handwritten Letter (undated) from Steve Miller ...............................
27
124.
L.F. Stephens Counterfeit Product Investigation Report to 180s ....................
28. 29
125.
Letter from L.F. Stephens of May 20. 2004 ....................................................
28. 29
126.
Third-party Manufacturing Related to the Patented Products ...............................
127.
Design. Development and Production Equipment
Related to the Patented Products............................................................................ 33
128.
Warehouse and Inventory Related to the Patented Products .................................
33
129.
Employment Related to the Patented Products ......................................................
33
130.
Investments Related to the Patented Products .......................................................
34
131.
Warning Letter to Sambo Home Shopping of December 12. 2003 ........ Ex . 16. p . 3
132.
Warning Letter to Speed of December 16. 2003 ....................................
133.
Sambo Home Shopping Response Letter of December 22. 2003 ........... Ex . 16. p . 3
134.
Jaynuri Response Letter of January 7. 2004 ...........................................
Ex . 16. p . 4
135.
Warning Letters to House of Bath of January 5. 2004 ...........................
Ex . 16. p. 4
136.
Second Letter to House of Bath ofJanuary 19. 2004 .............................
Ex . 16. p . 8
137.
House of Bath Response Letter of February 5. 2004 ..............................
Ex. 16. p . 8
138.
Warning Letter to Kingstown of February 23. 2004...............................
Ex . 16. p . 8
...
111
32
Ex . 16. p. 3
Physical Exhibits
1.
Complainants’ Ear Warmer ................................................................................
2.
“Black Shell’’ Ear Warmer .................................................................................. 23
3.
“Ear Band” Ear Warmer ..................................................................................... 23
4.
Pocket Membrane “Fashion Ear Band” Ear Warmer .........................................
23
5.
“Fashion Ear Muff’ Ear Warmer ........................................................................
23
iv
19
TABLE OF APPENDICES
Letter
-
Appendices
Page(s)
A.
Prosecution History for the ‘609 Patent ..............................................................
19
B.
Patents and Technical References Identified in the Prosecution
History for the ‘609 Patent ..................................................................................
19
C.
Prosecution History for the ‘247 Patent ..............................................................
21
D.
Patents and Technical References Identified in the Prosecution
History for the ‘247 Patent .................................................................................. 21
Confidential Appendix
E.
Ear Warmer License Agreement, dated October 1, 1999 .............................
V
20, 23
I.
INTRODUCTION
1.
180s, Inc. and its wholly-owned subsidiary 1 OS, LLC (collectively, “180s” or
“Complainants”) epitomize the type of domestic industry intended to be protected from unfair
competition pursuant to Section 337 of the Tariff Act of 1930, as amended. Founded by two
University of Pennsylvania Wharton Business School students, who invented and patented the
first of its kind wrap-behind-the-headTMear warmer, 180s has experienced more than a 9,000%
growth since 1998, posting sales of $340,000 in 1998 to more than $45 million in 2003. 180s
has not only become the ninth fastest growing privately held company in the nation, see Exhibit
1 (Baltimoresun.com article, dated April 5,2004, reporting on Inc. magazine list), but it has also
directed its growth to help foster development of Baltimore’s inner-city. Indeed, 180s is ranked
number one on the ICIC-Inc. Inner City 100 list, an annual ranking of the fastest growing innercity private companies in America (eligibility requiring that at least 5 1% of operations be located
in economically distressed urban areas). See Exhibit 1.
2.
180s’ success has been driven largely by its innovative ear warmer products, which
are protected by a significant portfolio of patents, including U.S. Patent No. 5,835,609 (“the ‘609
Patent”) and U.S. Patent No. 6,502,247 (“the ‘247 Patent”). 180s’ patented ear warmer wraps
behind the user’s head, is fully adjustable, unisex, compliments any attire, can be used during
any activity, and collapses to a relatively small size. Its wrap-behind-the-headTMdesign avoids
disheveling the user’s hair and allows its use with a helmet, hat or other head attire. 180s’
proprietary frame and membrane designs are considered high-end performance wear, are sold in
over 18,000 retail outlets, and account for approximately 70% or more of 180s’ revenue. 180s’
customers include, among others, the United States Secret Service, which has been buying 180s’
ear warmers for several years. In fact, United States Supreme Court Justices Breyer and
Ginsburg wore ear warmers in combination with other cold weather attire at the inauguration of
President George W. Bush. See Exhibit 2 (New York Times photograph). 180s is also currently
involved with the United States Marine Corps in research and development and will be designing
and developing a new Marine Advanced Combat Suit for the U.S. Marine Corps.
3.
Not surprisingly, 180s’ tremendous success in the marketplace has resulted in an
ever increasing flood of cheap, knock-off, imitation products that have been unlawfully imported
into the United States, sold for importation into the United States and/or sold after importation
within the United States. While 180s has been diligent in investigating and prosecuting such
infringing acts, the “Whack-a-Mole” nature of having two or more new infringers pop up for
every one that is discovered and prosecuted represents a clear and significant threat to the
domestic industry that 180s has so carefully fostered and developed. Despite 180s’ best efforts
to identify the sources of the accused ear warmers, including having hired private investigators
both within the United States and abroad, 180s has been unable to conclusively identify what, on
information and belief, are numerous, foreign manufacturers of the accused products, in both
China and South Korea, among others. Accordingly, 180s has brought this Complaint in order to
protect its patent rights and the significant domestic industry that it has solely developed.
4.
As described herein, 180s derives the vast majority of its revenue from sales of its
patented ear warmers. On information and belief, the Proposed Respondents have collectively
imported or sold after importation literally tens of thousands of the accused ear warmers. The
accused ear warmers are cheap imitations of 180s’ patented ear warmers, whose very existence
within the United States threatens to harm the reputation for quality and the goodwill that 180s
has strived hard to create for 180s’ patented ear warmers. As a consequence, if the Proposed
Respondents are not prevented from continuing their unlawful importation and sales activities,
2
then 180s itself, and the numerous jobs created by 180s’ design, development and sale of its ear
warmers, will be gravely threatened and may not survive.
5.
The market for 180s’ innovative, patented ear warmers is seasonal in nature. The
season begins in January and is highlighted by two trade conferences held that month, the
Outdoor Retailers Conference and the Snowsports Industry Association Conference. Following
these and other trade shows, manufacturing activity occurs between approximately March and
August. Depending on customer requirements, orders may thereafter be shipped as early as July
with a majority of orders shipped between approximately August and September. 180s’ patented
ear warmers are typically displayed for sale in retail stores beginning in approximately
September. 180s receives the majority of its revenue between approximately September and
December. The prime selling season for winter apparel products is September through March
with most sales taking place in November and December.
6.
On information and belief, foreign manufacturing and other activities related to the
unlawhl importation into the United States, the sale for importation into the United States and/or
the sale within the United States after importation is well underway. The accused ear warmers
were sold in the United States last winter and most likely will appear on store shelves as early as
Labor Day 2004. In January 2004, a buyer at Modell’s Sporting Goods, a current 180s’
customer, informed one of Complainants’ sales representatives that the buyer had been
approached by someone who offered to sell ear warmers in 180s’ packages to Modell’s for $2.00
per unit. During a February 10,2004, meeting with J.C. Penney, a former 180s’ customer, a
representative of J.C.Penney informed a 180s’ sales representative that they would not be
surprised to see another entity (other than J.C. Penney) market and/or sell an ear warmer product
similar to 180s’ patented ear warmers, suggesting that J.C. Penney had been approached by a
3
third party with ear warmers at very low cost. Finally, during a meeting in June 2004, a
representative of Wal-Mart informed a 180s’ sales representative that Wal-Mart had been
approached by several U.S. entities offering to sell Wal-Mart low cost ear warmers similar in
appearance to 180s’ patented products. This continued unlawful importation into the United
States, the sale for importation into the United States and/or the sale within the United States
after importation of infringing, imitation ear warmers will cause irreparable damage to 180s’
sales of its patented ear warmers through at least loss of revenue and goodwill, harm to 180s’
reputation and price erosion.
7.
On information and belief, in clear violation of 180s’ patent rights under the ‘609
Patent and the ‘247 Patent, Proposed Respondents Ningbo Electric and Consumer Goods Import
& Export Corporation, Vollmacht Enterprise Co., Ltd., March Trading, Alicia International, Inc.,
Hebron Imports, Ross Sales, Value Drugs Rock, Inc., Song’s Wholesale, and Wang Da, Inc.
Retail and Wholesales, have engaged in the unlawful importation into the United States, the sale
for importation into the United States, and/or the sale within the United States after importation
of certain imitation, “knock-off’ ear warmers.
8.
Four charts outlining the Proposed Respondents as well as other parties related to
the unlawful importation to the United States, sale for importation into the United States, and/or
sale within the United States after importation of infringing, imitation ear warmers are attached
hereto as Exhibit 3. The first chart summarizes all of the parties related to the accused ear
warmer products at issue in this Complaint. The following three charts set forth the parties on a
product or product family basis. Each of these charts is also reproduced below for convenience.
4
(a)
Overall Chart Relating to the Accused Ear Warmers
The known entities involved with the accused ear warmer products are identified
on the following chart, which is the first page in Exhibit 3. A product key illustrates the codes
for the different accused ear warmer products, which can be used to understand the relationships
between the parties. A status key is provided to designate: (a) the parties who are Proposed
Respondents in this Complaint; and (b) the parties with whom Complainants have sued and/or
settled.
Ear Warmer Products
Related to ITC Complaint
iOUTH KOREA
..
UNITED STATES
I------
i
I
t-
I
I
5
(b)
Chart Relating to the Family of “Ear Band” Ear Warmers
The known entities involved with the various “Ear Band” ear warmer products are
identified on the following chart, which is the second page in Exhibit 3. As shown, the
Complainants have identified some of the parties and the potential relationships among the
infringers. However, the Complainants have been unable to conclusively identi@ what, on
information and belief, are numerous foreign sources of the accused “Ear Band” ear warmer
products.
SOUTHKOREA
aM& Hapdong
CHINA
...
I-----------I Factories for Ear Band
1
I
Sang‘s
UNITED STATES
I
1
I
_ _ _ - I - - - - - -
!
Clothing (NY)
6
Other
I
[
L----
*.
wwesare (DC)
families
I
r - -- --’
I
1
“EAR BAND”
Ear Warmer Products
Chart Relating to the “Black Shell” Ear Warmers
(c)
The known entities involved with the “Black Shell” ear warmer product are
identified on the following chart, which is the third page in Exhibit 3. As shown, the
Complainants have identified some of the parties and the potential relationships between the
infringers. However, the Complainants have been unable to conclusively identify what, on
information and belief, are numerous foreign sources of the accused “Black Shell” ear warmer
products.
“Black Shell“
Ear Warmer Product
I
TAIWAN
I
I
I
CHINA
Ningbo Electric &
Consumer Goods Import
,
”.
,e
CANADA
,
,
/
,
c
/
/
& Export Coproration
//
I
/
I
/
I
/
I
I
/
/ /
Prime Way
Companies
-
/’
A’
c’
* , ”/’
/
/
I
I
I
//
/
/
/
I
/
1
/
/
UNITED STATES
I
/’
House ofBath
Starcrest Products of J
California
I
(distributor)
(distributor)
7
(d)
Chart Relating to the “Fashion Ear Muff’ Ear Warmers
The known entities involved with the “Fashion Ear Muff’ ear warmer product are
identified on the following chart, which is the fourth page in Exhibit 3. As shown, the
Complainants have identified some of the parties and the potential relationships between the
infingers. However, the Complainants have been unable to conclusively identify what, on
information and belief, are numerous foreign sources of the accused “Fashion Ear Muff’ ear
warmer products.
“Fashion Ear Muff”
Ear Warmer Product
UNITED STCITES
CHINA
I---------I
I
Maryland Screen
Factory
Printers (MD)
-
I
!-------
I
mi-’
t
Wang Da (NY)
9.
On information and belief, each Proposed Respondent has unlawfully imported into
the United States, sold for importation to the United States and/or sold within the United States
after importation one or more of at least four distinct infringing ear warmer products, referred to
for purposes of this action as: (1) the “Black Shell” ear warmer, (2) the “Ear Band” ear warmer,’
~
1
On information and belief, the accused “Ear Band” ear warmer is sometimes also labeled
as the “Fashion Ear Band” ear warmer. On current information and belief, for the
8
(3) the pocket membrane “Fashion Ear Band” ear warmer, and (4) the “Fashion Ear Muff’ ear
warmer (collectively, the “accused ear warmers”). On information and belief, all of the accused
ear warmers infringe at least claims 1,3, 13, 17-19, and 21-22 of the ‘609 Patent. In addition, on
information and belief, the pocket membrane “Fashion Ear Band” ear warmer infnnges at least
claims 37-40 of the ‘247 Patent.
10. In order to adequately protect its patent rights and the significant domestic industry
that has developed based on its ear warmers, 180s seeks as relief a general exclusion order
barring from entry into the United States infinging ear warmers or, in the alternative, limited
exclusion orders against each Proposed Respondent. 180s also seeks as relief cease and desist
orders prohibiting at least the unlawhl importation, sale, offer for sale, advertising, and/or
soliciting the sale of ear warmers covered by the claims of the ‘609 Patent and/or the ‘247 Patent.
11.
THE PARTIES
A.
Complainants
11. In 1994, Brian E. Le Gette and Ronald L. Wilson, 11, two University of
Pennsylvania Wharton Business School students, created the wrap-behind-the-headTM ear
warmer product at issue in this action. In June 1995, Mr. Le Gette and Mr.Wilson filed the first
of a series of patent applications on their invention, which matured into the ‘609 Patent. In the
winter of 1995, after drawing upon all of their own financial resources, and the financial
resources of several other graduate students, they produced their first 5,000 ear warmers, which
they sold on the QVC television channel. All 5,000 ear warmers sold out within the first 10
minutes they were advertised, with over 2,000 callers still on hold.
purposes of this action there is no relevant difference between these two accused
products.
9
12. As a result of the on-going research efforts directed toward the development of the
ear warmer technology, in 2001, Mr. Le Gette and Justin Saul Werner filed a patent application
directed to new ear warmer technology. This patent application resulted in the ‘247 Patent.
13. Complainant 180s, Inc., a company created by Mr. Le Gette and Mr. Wilson, is the
current assignee of both the ‘609 Patent and the ‘247 Patent with the right to sue for all past,
present and future infringement of those patents and all others owned by 180s. (The complete
corporate history of 18Os, Inc. and 18Os, LLC, as well as the related assignment history for the
‘609 Patent and the ‘247 Patent, is set forth in Exhibit 4.)
14. 1 OS, Inc. has its principal place of business at 701 E. Pratt Street, Suite 180,
Baltimore, Maryland 21202-3 101. 180s, Inc. is the holding company for the 180s family of
companies and owns all of the intellectual property created by such companies.
15. 180s, LLC has its principal place of business at 701 E. Pratt Street, Suite 180,
Baltimore, Maryland 21202-3101. 180s, LLC is the operating company for 180s, Inc. through
which 180s designs, manufactures, distributes and sells its patented products.
16. Today, 180s is an innovative performance wear company that designs,
manufactures, markets and sells patented ear warmers, gloves and sunglasses. 180s employs a
unique business strategy that emphasizes that products be patentable prior to bringing the
product to market.
17. 180s is the developer and sole supplier of a variety of ear warmers, which are sold
under the brands 180s, Eargrips, From the Blue and Gorgon. The central components of these
ear warmer products are 180s’ proprietary frame and membrane designs, which are covered by
the ‘609 Patent. Due to their innovative features, 180s’ ear warmers are considered high-end
performance wear and are primarily sold through various high-quality retailers.
10
a.
180s Brand. The ear warmers sold under the 180s brand, which targets
runners and other outdoor sports enthusiasts, are sold in over 18,000 retail outlets,
including L.L. Bean, Eddie Bauer, REI, Eastern Mountain Sports, Dick’s Sporting
Goods, and Galyan’s. See Confidential Exhibit 101 (180s’ Ear Warmer Price List).
b.
Eargrips Brand. The ear warmers sold under the Eargrips brand, which
targets a general audience, are sold at department stores such as Kohl’s and BOSCOV’S.
See Confidential Exhibit
c.
101 (180s’ Ear Warmer Price List).
Gorgonz Brand. The ear warmers sold under the Gorgonz brand, which
targets individuals who work in outdoor environments, such as construction, law
enforcement, and hunting, are sold at numerous retail stores, such as Lowe’s, Home
Depot, Ace Hardware, True Value Hardware, Do-It-Best Hardware, and various catalogs,
including Hammacher Schlemmer and Duluth Trading. See Confidential Exhibit 102
(Gorgonz 2004 Product/Display Price List).
d.
From the Blue Brand. The ear warmers sold under the From the Blue
brand, which targets primarily a female audience and high-end shoppers, are sold at
numerous retail stores, including Macy’s, Hecht’s, Bon-Ton, Nordstrom’s, Lord &
Taylor, Dillards and Elder Bierman. See Confidential Exhibit 103 (2004 From the Blue
Price List).
18. At 180s and in the eyes of U.S. consumers, 180s and its ear warmers are
synonymous. 180s has sold a total of approximately 10.9 million ear warmers since 1995. In
2003, 180s sold about 4 million ear warmers, which accounted for approximately 71% of 180s’
2003 total revenue of $45 million (U.S.). In 2004, 180s expects to sell 4.1 million ear warmers,
which will make up approximately 70% of 180s’ expected 2004 total revenue. The 2004
11
expected sales figures and revenue are critical to 180s’ continued success and are seriously
threatened by the continued sale within the United States of cheap imitation ear warmers from
China andor other foreign sources.
19. 180s also has several other U.S. patents that cover additional features of ear warmer
products, including U.S. Patent Nos. 6,332,223; 6,499,146; 6,502,248; and 6,735,784. Although
not presently at issue in this action, these U.S. patents, and other related pending U.S. patent
applications, are indicative of the substantial and highly successful research and development
program of 180s, which is conducted entirely within the United States and funded by the sale of
180s’ patented ear warmers. In addition, these patents provide 180s with significant protection
against unfair competition from a variety of ear warmers not currently at issue.
20. Corporate functions and activities at 180s’ Baltimore, Maryland headquarters
include senior management, research and development, financial administration, systems
development and integration, graphic design, website design and maintenance, information
technology, operations, technical support, legal services, customer service, and sales and
marketing efforts, all of which are directed in significant part to the ear warmers that are covered
by the ‘609 Patent andor the ‘247 Patent.
B.
Proposed Respondents
1.
“Black Shell” Ear Warmer Respondents
2 1. On information and belief, Proposed Respondent Ningbo Electric and Consumer
Goods Import & Export Corporation (“Ningbo”) is a Chinese corporation with a principal place
of business at 17/F, Ling Qiao Square, 3 1 Yao Hang Street, Ningbo, Zhejiang 3 15000, China.
On information and belief, Ningbo manufactures for importation into the United States andor
sells for importation into the United States at least the infringing “Black Shell” ear warmer,
which is sold within the United States. See Exhibit 3.
12
22.
On information and belief, Proposed Respondent Vollmacht Enterprise Co., Ltd.
(“Vollmacht”) is a Taiwanese corporation, with a principal place of business at 5F, No. 360,
Ruei Guang Road, Neihu, Taipei, Taiwan. On information and belief, Vollmacht at least sells
for importation into the United States and/or imports into the United States the “Black Shell” ear
warmer. On information and belief, the “Black Shell” ear warmers imported and/or distributed
by Vollmacht are manufactured in China. See Exhibit 3.
2.
“Ear Band” Ear Warmer Respondents
23. On information and belief, Proposed Respondent March Trading (“March Trading”)
is a New York corporation with a principal place of business at 1239 Broadway, Room 1606,
New York, New York 10010. On information and belief, March Trading imports into the United
States, sells for importation into the United States and/or sells after importation within the United
States the infringing “Ear Band” ear warmer. On information and belief, the “Ear Band” ear
warmers sold by March Trading within the United States are manufactured in China. See Exhibit
3. A current Dun & Bradstreet report for March Trading is attached as Exhibit 5.
24. On information and belief, Proposed Respondent Alicia International, Inc., d/b/a
one of its divisions, Lincolnwood Merchandising Co., (“Alicia International”) is an Illinois
corporation with a principal place of business at 7354 N. Caldwell Avenue, Niles, Illinois 60714.
On information and belief, Alicia International imports into the United States, sells for
importation into the United States andor sells after importation within the United States the
infringing “Ear Band” ear warmer. On information and belief, the “Ear Band” ear warmers sold
by Alicia International within the United States are manufactured in China. See Exhibit 3. A
current Dun & Bradstreet report for Alicia International is attached as Exhibit 6.
13
25. On information and belief, Proposed Respondent Hebron Imports (“Hebron”) is an
Illinois corporation with a principal place of business at 4142 W. Lawrence Avenue, Chicago,
Illinois 60630. On information and belief, Hebron imports into the United States, sells for
importation into the United States and/or sells after importation within the United States the
infringing “Ear Band” ear warmer. On information and belief, the “Ear Band” ear warmers sold
by Hebron within the United States are manufactured in China. See Exhibit 3. A current Dun &
Bradstreet report for Hebron is attached as Exhibit 7.
26. On information and belief, Proposed Respondent Ross Sales (‘Ross Sales”) is a
corporation with a principal place of business at 23 1 Commack Road, Commack, New York
11725. On infomation and belief, Ross Sales at least sells within the United States after
importation the “Ear Band” ear warmer. On information and belief, the “Ear Band” ear warmers
sold by Ross Sales within the United States are manufactured in China. See Exhibit 3.
27. On information and belief, Proposed Respondent Value Drugs Rock, Inc. (“Value
Drugs”) is a New York corporation with a principal place of business at 30 Rockefeller Center,
New York, New York 10020. On information and belief, Value Drugs at least sells within the
United States after importation the “Ear Band” ear warmer. On information and belief, the “Ear
Band” ear warmers sold by Value Drugs within the United States are manufactured in China.
See Exhibit 3. A current Dun & Bradstreet report for Value Drugs is attached as Exhibit 8.
28. On information and belief, Proposed Respondent Song’s Wholesale (“Song’s
Wholesale”) is a corporation with a principal place of business at 1301-A 14th Street, N.E.,
Washington, DC 20002. On information and belief, Song’s Wholesale at least sells within the
United States after importation the “Ear Band” ear warmer. On information and belief, the “Ear
14
Band” ear warmers sold by Song’s Wholesale within the United States are manufactured in
China. See Exhibit 3.
3.
Pocket Membrane “Fashion Ear Band” Ear Warmer Respondent
29. On information and belief, Proposed Respondent Wang Da, Inc. Retail and
Wholesales (“Wang Da”) is a corporation with a principal place of business at 230 Canal Street,
New York, New York 10013. On information and belief, Wang Da at least sells within the
United States after importation the pocket membrane “Fashion Ear Band’’ ear warmer. On
information and belief, the pocket membrane “Fashion Ear Band” ear warmers sold by Wang Da
within the United States are manufactured in China. See Exhibit 3.
4.
“Fashion Ear Muff” Ear Warmer Respondent
30. On information and belief, Proposed Respondent Wang Da also sells within the
United States after importation the “Fashion Ear Muff’ ear warmer. On information and belief,
the “Fashion Ear Muff’ ear warmers sold by Wang Da within the United States are manufactured
in China. See Exhibit 3.
3 1. Complainants reserve the right to further amend this Complaint to add or substitute
additional parties if new, additional, better or different information becomes available.
C.
Related Litigation
1.
Settled Cases
32. On or about March 9,2004, 180s filed a Complaint against Walgreen Company
(“Walgreen~”)~
in the United States District court for the District of Maryland for: (a)
infringement of the ‘609 Patent in violation of 35 U.S.C. 0 271 et seq.; (b) trade dress
infiingement and unfair competition; (c) common law trade dress infiingement; and (d) reverse
palming-off. The case has been captioned 180s, Inc. v. Wulgreen Co. and assigned civil action
2
Walgreens is not a Proposed Respondent in this ITC Complaint.
15
number MD - 1:04cv706. Walgreens sold within the United States after importation at least the
“Ear Band” ear warmer. On information and belief, the “Ear Band” ear warmers sold within the
United States by Walgreens were manufactured in China. The parties have recently resolved
their dispute and are in the process of finalizing the terms of a Settlement Agreement.
Walgreens has agreed not to challenge the validity or enforceability of the ‘609 Patent, not to
request re-examination of the ‘609 Patent, and not to oppose or assist in the opposition of the
‘609 Patent in any way.
33. On or about January 20,2004, after sending two warning letters to Starcrest
Products of California, Inc. (“Star~rest”),~
see Confidential Exhibits 104 and 105, 180s filed a
Complaint against Starcrest in the United States District Court for the District of Maryland for:
(a) infringement of the ‘609 Patent in violation of 35 U.S.C. 5 271 et seq. ;(b) trade dress
infringement and unfair competition; and (c) common law trade dress infringement. The case
has been captioned Z80s, Inc. v. Starcrest Products of California, Inc. and assigned civil action
number MD - 1:04cv177. Starcrest sold after importation within the United States at least the
accused “Black Shell” ear warmer. On information and belief, the “Black Shell” ear warmers
sold by Starcrest within the United States were manufactured in China. The parties have since
settled this dispute.
34. On or about January 20,2004, 180s filed a Complaint against Manijeh Soleimani
Faraz, d/b/a Liter Boutique: (“Liter Boutique”) in the United States District Court for the
District of Maryland for infringement of the ‘609 Patent in violation of 35 U.S.C. tj 271 et seq.
The case has been captioned 180s, Inc. v. Manijeh Soleimani Faraz d/b/a Liter Boutique and
3
Starcrest Products is not a Proposed Respondent in this ITC Complaint.
Liter Boutique is not a Proposed Respondent in this ITC Complaint.
16
assigned civil action number MD - 1:04cv156. Liter Boutique sold after importation within the
United States at least the accused “Ear Band” ear warmer. On information and belief, the “Ear
Band” ear warmers sold by Liter Boutique within the United States were manufactured in China.
The parties have since settled this dispute. The terms of the settlement are subject to a
confidentially agreement.
35. On or about February 26,2004, 180s filed a Complaint against Hit Item, Inc.’ in the
United States District Court for the District of Maryland for: (a) infringement of the ‘609 Patent
in violation of 35 U.S.C. tj 271 et seq.; (b) trade dress infringement and unfair competition; and
(c) common law trade dress infringement. The case has been captioned 180s, Inc. v. Hit Item,
Inc. and assigned civil action number MD - 1:04cv556. Over approximately the past year, Hit
Item sold after importation within the United States at least the accused “Ear Band” ear warmers.
Hit Item purchased the accused ear warmers from a salesperson operating out of a white van.
See Confidential Exhibit 106. The transaction was completed in cash. See Confidential Exhibit
106. Hit Item later attempted to contact the seller but the New York City-area cellular telephone
number previously provided to Hit Item had been disconnected. See Confidential Exhbit 106.
As of April 2004, Hit Item had sold less than 600 “Ear Band” ear warmers in the United States.
On information and belief, the “Ear Band” ear warmers sold by Hit Item within the United States
were manufactured in China. The parties have since settled this dispute. The terms of the
settlement are subject to a confidentially agreement.
5
Hit Item is not a Proposed Respondent in this ITC Complaint.
17
36. On or about February 26,2004, 180s filed a Complaint against Moon-Sung
Corporation6in the United States District Court for the District of Maryland for: (a) infringement
of the ‘609 Patent in violation of 35 U.S.C. $271 et seq.; (b) trade dress infringement and unfair
competition; and (c) common law trade dress infringement. The case has been captioned 180s,
Inc. v. Moon-Sung Corporation and assigned civil action number MD - 1:04cv555. After filing
suit, 180s learned that Moon-Sung’s successor in interest is S&H Yoon, Inc. (“S&H Yoon”).
Moon-Sung/S&H Yoon sold after importation within the United States at least the “Ear Band”
ear warmer. Complainants sent a warning letter to S&H Yoon. See Confidential Exhibit 107. In
response, S&H Yoon stated that it obtained at least some of the infringing “Ear Band” ear
warmers from Proposed Respondent Song’s Wholesale. See Confidential Exhbit 108. On
information and belief, the “Ear Band” ear warmers sold by Moon-Sung/S&H Yoon within the
United States were manufactured in China. The parties have since settled this dispute. MoonSung/S&H Yoon has agreed to no longer market or sell the “Ear Band” ear warmer and has
stipulated that the ‘609 Patent is valid and enforceable.
111.
THE PRODUCTS AT ISSUE
A.
Ear Warmers
37. The products at issue are 180s’ one-of-a-kind ear warmers that wrap around the
back of an individual’s head. 180s’ patented ear warmer is the only ear protection device
currently on the market designed to be worn on the user’s head that has a band that wraps behind
the user’s head. 180s’ patented ear wanner is fully adjustable, unisex, complements any attire,
can be used during any activity, and collapses to a relatively small size. 180s’ patented ear
warmer provides the advantages of not disheveling the user’s hair and being wearable with a
6
Moon-Sung Corporation, and its successor in interest S&H Yoon, is not a Proposed
Respondent in this ITC Complaint.
18
helmet, hat or other article on the user’s head. A sample of a 180s’ ear warmer is attached hereto
as Physical Exhibit 1.
38. Over the past two years, 180s has sold a variety of ear warmer products through its
various brands, including 180s, Eargrips, Gorgonz and From the Blue. Current marketing
materials from 180s that illustrate the various ear wanners marketed and sold by 180s are
attached hereto as Exhibit 9.
IV.
THE PATENTS AT ISSUE
A.
United States Patent No. 5,835,609
39. On November 10, 1998, U.S. Patent No. 5,835,609 (“the ‘609 Patent”), entitled
“Ear Protection Device,” issued in the name of its inventors, Brian E. Le Gette and Ronald L.
Wilson, 11. A certified copy of the ‘609 Patent is attached as Exhibit 10. A certified copy of the
assignment to the ‘609 Patent is attached as Exhibit 11.
40. The ‘609 Patent is currently assigned to 180s, Inc. The assignment history for the
‘609 Patent, as well as the related corporate history of 180s, Inc. and 180s, LLC, is set forth in
Exhibit 4.
41. The ‘609 Patent claims priority back to U.S. Patent Application No. 08/460,587,
which was filed on June 2,1995, now abandoned. A certified copy and three (3) additional
copies of the prosecution history for the ‘609 Patent is attached as Appendix A. In addition, four
(4) copies of each patent and technical reference identified in the prosecution history of the
applications leading to the issuance of the ‘609 Patent are attached as Appendix B.
B.
Foreim Counterparts to the ‘609 Patent
42. Several issued foreign patents and pending foreign patent applications are related to
the ‘609 Patent. The following table details the status of these counterpart patents and
applications.
19
JURISDICTION
Canada
Europe
Europe
Hong Kong
PATENT NO.
ISSUE DATE
APPLICATION NO.
FILING DATE
STATUS
Pending (Awaiting
CPO response to
recently filed
amendment)
Issued
2,178,014
June 3,1996
Pending (Notice of
Allowance received
fiom EPO);
Continuation of
96304006.8
Pending (Awaiting
examination)
02013409.4
June 12,2002
0745364 B1
August 28,2002
96304006.8
June 3,1996
03 101773.8
March 11,2003
Japan
Issued
9-178524
July 3, 1997
Japan
Pending (Awaiting
decision fiom JPO
Appeal Board);
Continuation of
9- 178524
Pending (Outstanding
Office Action fiom PO);Continuation of
2002-43705
Pending (Outstanding
Office Action fiom
JPO); Continuation of
2002-43705
2002143705
February 20,2002
3,356,967
October 4,2002
I
Japan
Japan
C.
20031384674
November 14,2003
2004137398
February 13,2004
Licenses Under the ‘609 Patent
43. The only existing license under the ‘609 Patent is an intra-corporate license
between 180s, Inc. (formerly Gray Matter Holdings, LLC) and 180s, LLC (formerly Big Bang
Products, LLC). A copy of the License Agreement between those parties is attached as
Confidential Appendix E.
20
D.
Non-Technical Description of the ‘609 Patent’s Invention
44. The following non-technical description of the ‘609 Patent is not intended in any
way to limit the scope of its claims. The ‘609 Patent generally describes an ear wanner that can
wrap around the back of an individual’s head. The ear warmer includes a frame and fabric that
covers part or all of the frame.
E.
United States Patent No. 6,502,247
45. On January 7,2003, U.S. Patent No. 6,502,247 (“the ‘247 Patent”), entitled
“Apparatus and Method for Making an Ear Warmer Having Interior Seams,” issued in the name
of its inventors, Brian E. Le Gette and Justin Saul Werner. A certified copy of the ‘247 Patent is
attached as Exhibit 12. A certified copy of the assignment to the ‘247 Patent is attached as
Exhibit 13.
46. The ‘247 Patent is currently assigned to 180s, Inc. The assignment history for the
‘247 Patent, as well as the related corporate history of 180s, Inc. and 180s, LLC, is set forth in
Exhibit 4.
47. The ‘247 Patent claims priority back to U.S. Patent Application No. 09/521,241,
which was filed on April 5,2000. An informal copy and three (3) additional copies of the
prosecution history for the ‘247 Patent is attached as Appendix C. Complainants have requested
a certified copy of the prosecution history for the ‘247 Patent fiom the U.S. Patent and
Trademark Office and will substitute the certified copy upon receipt. In addition, four (4) copies
of each patent and technical reference identified in the prosecution history of the application
leading to the issuance of the ‘247 Patent are attached as Appendix D.
21
F.
United States and Foreign Counterparts to the ‘247 Patent
48. Two issued U.S. patents, one pending U.S. application (published), one issued
foreign patent and several pending foreign patent applications are related to the ‘247 Patent. The
following table details the status of these counterpart patents and applications.
JURISDICTION
APPLICATION NO.
FILING DATE
STATUS
PATENT NO.
ISSUE DATE
United States
Issued
09/521,241
April 5,2000
6,332,223
December 25,2001
United States
Issued
09/986,103
November 7,2001
6,502,248
January 7,2003
United States
10/335,930
Pending (Published awaiting examination) January 3,2003
Canada
Pending (Awaiting
examination)
China
Pending (Published - 01807620.3
awaiting examination) September 29,2002
Europe
Pending (Published - 01926634.5
awaiting examination) October 7,2002
Hong Kong
Pending (Published - 03108638.8
awaiting examination) November 26,2003
Japan
Issued
2,404,674
October 2,2002
2000-267792
September 4,2000
~~
Japan
Pending (Published - 2003-010786
awaiting examination) January 21,2003
Japan
Pending (Awaiting
examination)
2001-573927
October 7,2002
Korea
Pending (Awaiting
examination)
2002-7013283
October 4,2002
22
3418960
April 18,2003
G.
Licenses Under the ‘247 Patent
49. The only existing license under the ‘247 Patent is an intra-corporate license
between 180s, Inc. (formerly Gray Matter Holdings, LLC) and 180s, LLC (formerly Big Bang
Products, LLC). A copy of the License Agreement between those parties is attached as
Confidential Appendix E.
H.
Non-Technical Description of the ‘247 Patent’s Invention
50. The following non-technical description of the ‘247 Patent is not intended in any
way to limit the scope of its claims. The ‘247 Patent generally describes an ear warmer that can
wrap around the back of an individual’s head. The ear warmer includes a frame and a shell
which includes several fabric membranes, and which may include a pocket membrane.
V.
UNLAWFUL AND UNFAIR ACTS OF THE PROPOSED
RESPONDENTS -PATENT INFRINGEMENT
5 1. At least four infringing ear warmers are being unlawfully imported into the
United States, sold for importation into the United States, and/or sold within the United States
after importation: (1) the “Black Shell” ear warmer; (2) the “Ear Band” ear warmer; (3) the
pocket membrane “Fashion Ear Band” ear warmer; and (4) the “Fashion Ear Muff’ ear
warmer. Samples of these ear warmers are being submitted as Physical Exhibits 2 to 5,
respectively. On information and belief, there are at least three distinct manufacturing
facilities in China that are producing infringing ear warmers for the unlawful importation to the
United States, sale for importation into the United States and sale after importation within the
United States. An analysis of at least the packaging, the shell and the frame of the accused
products indicates that different manufacturers are making the accused products. See Physical
Exhibits 2 to 5. Notably, all of the accused ear warmers have labels attached to them stating
that they were “Made in China.” See Physical Exhibits 2 to 5.
23
52. On information and belief, all four of these accused ear wanners literally infringe,
or inhnge under the doctrine of equivalents, at least claims 1,3, 13, 17-19, and 21-22 of the
‘609 Patent. In addition, on information and belief, the pocket membrane “Fashion Ear Band”
ear warmer also literally infringes, or infringes under the doctrine of equivalents, at least
claims 37-40 of the ‘247 Patent. A claim infringement chart that applies the asserted claims of
the ‘609 Patent to each of the four accused ear warmers and the asserted claims of the ‘247
Patent to the pocket membrane “Fashion Ear Band” ear warmer is attached as Exhibit 14.
VI.
SPECIFIC INSTANCES OF IMPORTATION AND SALE
53. On information and belief, each of the Proposed Respondents imports into the
United States, sells for importation into the United States and/or sells within the United States
after importation the accused ear warmers identified herein. Since the beginning of 2004, there
has been a sharp increase in the number of infringing ear warmers imported into the United
States, sold for importation into the United States and/or sold after importation within the United
States by at least the Proposed Respondents. The accused ear warmers have been sold at least in
densely populated, cold weather climates including Chicago, Boston, New York and Baltimore.
The specific instances of importation and/or sales of ear warmers set forth below are, on
information and belief, only a representative sample of the unlawful activity involving the
infringing ear warmers.
A.
“Black Shell” Ear Warmer
54. Over approximately the last year, Proposed Respondent Ningbo has manufactured
for importation into the United States and/or sold for importation into the United States at least
the infringing “Black Shell” ear warmers. Complainants have sent a warning letter to Ningbo.
See Confidential Exhibit 109.
24
55. Over approximately the last year, Proposed Respondent Vollmacht has at least sold
for importation into the United States and/or imported into the United States the infringing
“Black Shell” ear warmers. Complainants have sent warning letters to Vollmacht. See
Confidential Exhibits 110 and 111. In response to Complainants’ warning letters, Vollmacht
admitted that it had distributed the accused ear warmers for sale in the United States. See
Confidential Exhibit 112. In further response to Complainants’ warning letters, Vollmacht stated
that its source for the accused “Black Shell” ear warmers was Proposed Respondent Ningbo. See
Confidential Exhibit 113. Vollmacht has also admitted that it sold the infringing ear warmers to
Starcrest. See Confidential Exhibits 112 and 113.
56. On information and belief, Prime Way Companies, Ltd. (“Prime Way”)’ is a
Canadian corporation with a principal place of business at 125 Hagar Street, Welland, Ontario
L3B 5V9, Canada. Over approximately the past year, Prime Way has sold for importation into
the United States and/or imported into the United States at least the infringing “Black Shell” ear
warmer. Following discussions with 1SOs, Prime Way admitted that it sold 36,240 infringing
“Black Shell” ear warmers to Starcrest in the United States.’ See Confidential Exhibit 114.
Prime Way stated that its “sourcing agent” for the 36,240 infringing “Black Shell” ear warmers
was Proposed Respondent Vollmacht. See Confidential Exhibit 115. In hrther correspondence
with lSOs, Prime Way stated that the “factory name” for the inhnging “Black Shell” ear
warmers was Proposed Respondent Ningbo. See Confidential Exhibit 116.
7
Prime Way is not a Proposed Respondent in this ITC Complaint. Complainants and
Prime Way have agreed on a settlement resolving their dispute.
8
Starcrest has confirmed that it received the inhnging “Black Shell” ear warmers from
Prime Way. See Confidential Exhibit 117.
25
B.
“Ear Band” Ear Warmer
57. Over approximately the last year, Proposed Respondent March Trading has
imported into the United States, sold for importation into the United States and/or sold after
importation within the United States infringing “Ear Band” ear warmers to at least Proposed
Respondents Alicia International and Ross Sales. On information and belief, the infringing “Ear
Band” ear warmers imported into the United States, sold for importation into the United States,
and/or sold after importation within the United States by March Trading were manufactured in
China. See Confidential Exhibit 118.
58. On information and belief, Proposed Respondent Alicia International has imported
into the United States, sold for importation into the United States and/or sold after importation
within the United States infi-inging“Ear Band” ear warmers. Over approximately the last year,
Alicia International purchased approximately 14,500 infringing “Ear Band” ear warmers from
Proposed Respondent March Trading. Over approximately the last year, Alicia International has
sold after importation within the United States approximately 10,000 infringing “Ear Band” ear
warmers to Walgreens. In correspondence with Complainants, Walgreens confirmed that it
purchased approximately 10,000 ear warmers from Alicia International (Lincolnwood
Merchandising). See Confidential Exhibit 119. On information and belief, the infringing “Ear
Band” ear warmers sold within the United States by Alicia International were manufactured in
China.
59. On information and belief, Proposed Respondent Hebron has imported into the
United States, sold for importation into the United States and/or sold after importation within the
United States infringing “Ear Band” ear warmers. Over approximately the last year, Hebron has
sold after importation within the United States approximately260 infringing “Ear Band” ear
26
warmers to Walgreens. In correspondence with Complainants, Walgreens confirmed that it
purchased 259 ear warmers from Hebron. See Confidential Exhibit 119. On information and
belief, the infringing “Ear Band” ear warmers sold within the United States by Hebron were
manufactured in China.
60. Over approximately the last year, Proposed Respondent Value Drugs has sold
within the United States after importation the infringing “Ear Band” ear warmers. Purchases of
the “Ear Band” ear warmers were made at Value Drugs’ Rockefeller Center, New York, New
York location in February 2004 and again in March 2004. See Exhibit 15. Complainants sent
warning letters to Value Drugs. See Confidential Exhibits 121 and 122. In response to
Complainants’ warning letters, Value Drugs stated that it obtained the infringing “Ear Band” ear
warmers from Proposed Respondent Ross Sales, who in turn had obtained them from Proposed
Respondent March Trading. See Confidential Exhibits 118 and 123. On information and belief,
the infringing “Ear Band” ear warmers sold within the United States by Value Drugs were
manufactured in China.
61. On information and belief, over approximately the last year, Proposed Respondent
Ross Sales has sold within the United States after importation the infringing “Ear Band” ear
warmers. Ross Sales obtained at least some of the infringing “Ear Band” ear warmers from
Proposed Respondent March Trading. See Confidential Exhibit 118. On information and belief,
the infringing “Ear Band” ear warmers sold by Ross Sales within the United States were
manufactured in China.
62. Over approximately the last year, Proposed Respondent Song’s Wholesale has sold
within the United States after importation the infringing “Ear Band” ear warmers. Song’s
Wholesale sold 43 units of the inhnging “Ear Band” ear warmers to Moon-Sung/S&H Yoon,
27
which products were later sold at a retail price of only $3.99 per unit. See Confidential Exhibit
108. On information and belief, the infringing “Ear Band” ear warmers sold within the United
States by Song’s Wholesale were manufactured in China.
63. On information and belief, in addition to the above examples of infringement,
literally hundreds of street vendors in cold weather climates including Boston, New York,
Chicago, and Baltimore, among others, have been and are selling after importation within the
United States the infringing “Ear Band” ear warmers. See, e.g., Confidential Exhibit 124.
C.
Pocket Membrane “Fashion Ear Band” Ear Warmer
64. In January 2004, Complainants hired the private investigation firm of L.F.
Stephens, Inc. (“LFS”) to conduct a full field investigation regarding the unlawful importation
into the United States, sale for importation to the United States andor the sale after importation
within the United States of infringing ear warmers in the “Chinatown” section of New York,
New York. One of several entities selling infringing ear warmers identified by LFS during its
investigation was Proposed Respondent Wang Da. The LFS Counterfeit Product Investigation
Report to 180s is attached as Confidential Exhibit 124.
65. On or about January 28,2004, Proposed Respondent Wang Da was selling within
the United States after importation the infringing pocket membrane “Fashion Ear Band” ear
warmers. On or about January 29,2004, an investigator from LFS purchased infringing pocket
membrane “Fashion Ear Band” ear warmers from Wang Da. On information and belief, the
infringing pocket membrane “Fashion Ear Band” ear warmers sold within the United States by
Wang Da are manufactured in China. See Confidential Exhibits 124 and 125.
D.
“Fashion Ear Muff” Ear Warmer
66. On or about January 28,2004, Proposed Respondent Wang Da was also selling
within the United States after importation the infringing “Fashion Ear Muff’ear warmers. On or
28
about January 29,2004, an investigator from LFS purchased an infringing “Fashion Ear Muff’
ear warmer from Wang Da. On information and belief, the infringing “Fashion Ear Muff’ ear
warmers sold in the United States by Wang Da are manufactured in China. See Confidential
Exhibits 124 and 125.
67. On information and belief, in addition to the above example of infringement,
literally hundreds of street vendors in cold weather climates including Boston, New York,
Chicago, and Baltimore, among others, have been and are selling after importation within the
United States the infringing “Fashion Ear Muff’’ ear warmers. See, e.g., Confidential Exhibit
124.
68. On information and belief, the accused products that infringe the ‘609 Patent and
the ‘247 Patent are assigned U.S. Harmonized Tariff Schedule Number(s) 61 17.10.2030. This is
an exemplary classification for illustration only and is not intended to restrict the accused
products.
VII.
POTENTIAL FOR FUTURE UNLAWFUL IMPORTATION AND SALE
69. Based on at least the facts alleged in this Complaint, Complainants aver that there
exists a significant potential for the future unlawfkl importation into the United States, the sale
for importation into the United States and the sale within the United States after importation of
infringing ear warmers by not only the Proposed Respondents, but also many other foreign
manufacturing and/or import/export companies as well as domestic import/export, wholesale
and/or retail companies. In light of this significant potential threat to 180s and the domestic
industry that has developed around 180s’ ear warmers, a general exclusion order is necessary
because a limited exclusion order covering only the imported ear warmers of the Proposed
Respondents could be easily circumvented and thereby cause substantial economic harm to 180s
and the domestic industry at issue.
29
70. Based on at least the facts alleged in this Complaint, Complainants aver that there
exists a pattern of violation of Complainants’ patent rights worldwide and that it is difficult to
identify the originating source of the infringing products. Further, Complainants aver that there
has been unlawful importation into the United States and sale for importation into the United
States by numerous manufacturers, a foreign lawsuit based on a related foreign patent has been
filed, and that other evidence indicates a history of unauthorized foreign use of Complainants’
patented technology. In addition, Complainants aver that there exists: (1) an established market
for Complainants’ patented ear warmers both in the United States and abroad; (2) marketing and
distribution networks in the United States for foreign manufacturers; (3) low costs for foreign
manufacturers to build a facility capable of producing infringing ear warmers; (4) numerous
foreign manufacturers whose facilities presently can produce, or could easily be retooled to
produce, infringing ear warmers; and (5) low costs for retooling existing foreign facilities to
produce infringing ear warmers.
71. Based on Complainants’ knowledge and experience in the relevant industries,
Complainants aver that the manufacture of poor-quality “knock-off’ versions of their patented
ear warmers presents a grave danger to the domestic industry that has been created by
Complainants’ innovative ear warmer technology because the manufacturing of poor-quality
“knock-off’ products can be started up for relatively low cost and in a short amount of time. The
raw materials used to manufacture “knock-off’ ear warmers are readily available in a number of
foreign countries and from many foreign sources. Numerous foreign manufacturers are capable
of the mass production of poor-quality “knock-off’ ear warmers for a very low cost. For
example, in a letter to Complainants, Prime Way stated that its selling price to Starcrest for
36,240 ear warmers was only $1.54 per unit. See Confidential Exhibit 114. In a separate letter
30
to Complainants, Hit Item stated that it purchased 50 dozen ear warmers for only $.90 each and
thereafter sold the ear warmers for only $1.50 each. See Confidential Exhibit 106. This is
significantly less than 180s’ cost to manufacture and assemble its patented ear warmers and is
also far below the average selling price for 180s’ ear warmers. See Confidential Exhibits 101,
102 and 103. Further evidence of this widespread pattern of unlawful activities in several
foreign countries and its potential for the future manufacture, distribution and sale of infringing
ear warmers to the United States is set forth in Exhibit 16.
72. As discussed herein, despite Complainants’ best efforts to stem this widespread
violation of its U.S. and foreign intellectual property rights, including having hired private
investigators both within the United States and abroad, 180s has been unable to conclusively
identify what, on information and belief, are numerous, foreign manufacturers of the accused
products, in both China and South Korea, among others. The ease with which foreign
manufacturers can begin to produce counterfeit, “knock-off’ ear warmers, coupled with the
difficulties Complainants have encountered in trying to identify foreign manufacturing sources,
warrants the issuance of a general exclusion order.
VIII. DOMESTIC INDUSTRY
73. A domestic industry relating to products that exploit the ‘609 Patent exists
sufficient to establish each of the three prongs of 19 U.S.C. §1337(a)(3). This domestic industry
is based on significant investment in plant and equipment, significant employment of labor and
capital in the United States, and substantial investment in the exploitation of the ‘609 Patent in
the United States through engineering, research and development.
A.
Technical Prong
74. The ear warmers sold by Complainants practice at least asserted claims 1, 3, 13, 1719, and 21-22 of the ‘609 Patent. A claim embodiment chart demonstrating how Complainants’
31
ear warmer practices independent claim 1 and independent claim 13 of the ‘609 Patent is
attached as Exhibit 17.
75. The various ear warmer models sold in the United States by Complainants that
practice the claims of the ‘609 Patent are identified in Confidential Exhibits 101, 102 and 103.
B.
Economic Prong
76. A domestic industry exists by virtue of significant investments in plant and
equipment and employment of labor and capital in the United States relating to products covered
by the ‘609 Patent.
77. Many of the components of Complainants’ patented ear warmers have been and are
manufactured in the United States for 180s by a number of third-party manufacturers. These
domestically manufactured components include numerous styles of fabric, various types of
packaging and displays, labels and stickers, and binding and rivets, each of which is used in the
final assembly of Complainants’ ear warmers. Additionally, one hundred (100) percent of the
frames used in Complainants’ patented ear warmers are manufactured in the United States by a
third-party manufacturer for 180s. In 2002, Complainants spent over approximately $4.6 million
on ear warmer components that were manufactured in the United States. In 2003, Complainants
spent over approximately $7.8 million on ear warmer components that were manufactured in the
United States. Through May 2004, Complainants have spent over approximately $2.3 million on
ear warmer components that were manufactured in the United States. Collectively, since 2002,
Complainants have spent over approximately $14.8 million on ear warmer components that were
manufactured in the United States and were used in the final assembly of 180s’ patented ear
warmers. These domestically manufactured components are shipped overseas and the final
assembly of Complainants’ patented ear warmers takes place in China. Further details regarding
these third-party manufacturers are set forth in Confidential Exhibit 126.
32
78. In addition to the third-party manufacturing costs and investments described above,
Complainants have devoted significant U.S. resources at their facility in Baltimore, Maryland, to
the research and development, engineering, graphic design, packaging, and marketing and sales
of products covered by the ‘609 Patent.
1.
Facilities Related to the Patented Products
79. Complainants’ main facility is located at 701 E. Pratt Street, Suite 180, Baltimore,
Maryland 21202-3101. This main facility occupies approximately 5 1,000 square feet. This
facility includes a full service in-house research and development production shop whch is
approximately 11,000 square feet. This facility also has specialized equipment related to, inter
alia, design, research and development, and production activities for products covered by the
‘609 Patent. Further details regarding this facility are set forth in Confidential Exhibit 127.
80. In addition, 180s’ facility in Baltimore, Maryland houses all corporate and businessrelated functions, including graphic design and packaging functions, accounting and sales and
marketing, legal hctions, manufacturing management and operations functions, and
information technology functions related to products covered by the ‘609 Patent.
81. 180s also leases a warehouse at 9101 Yellow Brick Road, in Baltimore Maryland,
which is approximately 5 1,200 square feet. Further details regarding this facility are set forth in
Confidential Exhibit 128.
2.
Employment Related to the Patented Products
82. Complainants collectively employ in the United States a significant number of
persons involved in the research and development, graphic design and packaging, accounting,
marketing and sales of ear warmers that exploit the ‘609 Patent. Further details regarding these
employees are set forth in Confidential Exhibit 129.
33
83. In addition, the third-party manufacturers Complainants use for various components
of Complainants’ patented ear warmers also employ numerous persons who work on the
domestic production and manufacture of components used in ear warmers covered by the ‘609
Patent.
3.
Investment Related to the Patented Products
84. Complainants have also made substantial investments in research and development
related to the patented products. These activities include the design and development of ear
warmers and improvements thereof, and the testing of numerous aspects of each model of ear
warmers exploiting the ‘609 Patent. Further details regarding these investments are set forth in
Confidential Exhibit 130.
IX.
RELIEF
WHEREFORE, by reason of the foregoing, Complainants request that the United States
International Trade Commission:
a)
Institute an immediate investigation pursuant to Section 337 of the Tariff Act of
1930, as mended, with respect to violations of that section based on the
importation into the United States, the sale for importation into the United States,
or the sale within the United States after importation by the Respondents of ear
warmer products that infringe Complainants’ valid and enforceable U.S. Patent
No. 5,835,609 and U.S. Patent No. 6,502,247;
b)
Schedule and conduct a hearing on said unlawful acts and, following said hearing;
c)
Issue general and/or limited exclusion orders forbidding entry into the United
States of ear warmer products that infringe the ‘609 Patent and the ‘247 Patent;
d)
Issue cease and desist orders prohibiting Respondents from importing, selling,
offering for sale (including via the internet or electronic mail), advertising
34
(including via the internet or electronic mail), distributing or soliciting any ear
warmer products encompassed by the claims of the ‘609 Patent and the ‘247
Patent; and
e)
Issue such other orders and hrther relief as the Commission deems just and
proper based upon the facts determined by the investigation and under the
authority of the Commission.
Respecthlly submitted,
Kevih B. Collins !J
Jeffrey A. D u m
Rebecca G. Lombard
David M. Farnum
Venable LLP
575 ThStreet, N.W.
Washington, D.C. 20004-1601
(202) 344-4800
Counsel for Complainants
180s, Inc. and 180s, LLC.
Date: July 2,2004
DC2lDOCSI545078v4
35
VERIFICATION OF COMPLAINT
I, Brian E. Le Gette, hereby declare, in accordance with 19 C.F.R. §§ 210.4 and
210.12(a), as follows:
1.
I am the Chief Executive Officer of 180s, Inc. and am duly authorized to sign this
Complaint on behalf of the Complainants.
2.
I have read the Complaint and am aware of its contents.
3.
The Complaint is not being presented for any improper purpose, such as to harass
or to cause unnecessary delay or needless increase in the cost of litigation.
4.
To the best of my knowledge, information and belief, founded after a reasonable
inquiry, the claims and legal contentions of this Complaint are warranted by existing law or a
good faith argument for the extension, modification, or reversal of existing law.
5.
To the best of my knowledge, information and belief, founded after a reasonable
inquiry, the allegations and other factual contentions in the Complaint have evidentiary support
or are likely to have evidentiary support after a reasonable opportunity for further investigation
or discovery.
I hereby declare under penalty of perjury that the foregoing is true and correct to the best
of my knowledge, information and belief.
Executed on June
g,2004.
A
2
B r i z E . Le Gette
SUBSCRIBED AND SWORN TO before me this
2day of June, 2004 in Baltimore,
Nbtary Public