ghb v indian industries complaint

8/4/2019 GHB v Indian Industries Complaint

1/36

- 1 -

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

(TEXARKANA DIVISION)

GHJ HOLDINGS, LLC,

Relator,

vs.

INDIAN INDUSTRIES, INC., d/b/a

ESCALADE SPORTS,

Defendant.

))))))))))))

)

Case No.: 5:11-cv-00091

JURY TRIAL DEMANDED

ORIGINAL COMPLAINT FOR FALSE PATENT MARKING

Relator GHJ Holdings, LLC (Relator) alleges as follows:

NATURE OF THE CASE

1. This is an action for false patent marking under 292 of the Patent Act (35U.S.C. 292), which provides that any person may sue to recover the civil penalty

for false patent marking. Relator brings this qui tam action on behalf of the United

States of America.

PARTIES

2. Relator is a Texas limited liability company with its principal place ofbusiness in Texarkana, Texas.

Case 3:11-cv-00104-RLY-WGH Document 1 Filed 04/22/11 Page 1 of 36 PageID #: 1


2/36

- 2 -

3. Upon information and belief, Defendant Indian Industries, Inc., d/b/aEscalade Sports, is a corporation organized under the laws of the state of Indiana

and may be served through its registered agent, Stephen Wawrin, 817 Maxwell

Ave., Evansville, Indiana 47711.

JURISDICTION AND VENUE

4. This Court has subject matter jurisdiction over Relators false markingclaims under Title 28 U.S.C. 1331 and 1338(a).

5. This Court has personal jurisdiction over Defendant by virtue of, inter alia,Defendants persistent and continuous contacts with the Eastern District of Texas,

including active and regular conduct of business during the relevant time period

through its sales in the Eastern District of Texas.

6. This Court has personal jurisdiction over Defendant because, inter alia,Defendant has violated Title 35 U.S.C. 292, and falsely marked, advertised,

distributed, and sold products in the Eastern District of Texas. Further, on

information and belief, Defendant has sold falsely marked products in competition

with sellers of competitive products in the Eastern District of Texas. Such sales by

Defendant are substantial, continuous, and systematic.



3/36

- 3 -

7. Venue is proper in this District under Title 28 U.S.C. 1391(b), (c) and1395(a).

FACTS

8. Defendant holds seventeen brands in the sporting goods industry. Two ofthe brands are Accudart (dart products), which it acquired in 2001, and

Mizerak (a line of billiard products), which it acquired in 2002. Defendant and

its global headquarters are located at 817 Maxwell Ave, Evansville, Indiana 47711.

Upon information and belief, Defendants production and distribution facilities are

located in Olney, Illinois and Raleigh, North Carolina, and its manufacturing

facilities are located in Rosarita, Mexico and Shanghai, China.

9. Defendant has marked and/or continues to mark its products, including, butnot limited to, its Accudart Flight Savers with expired and/or otherwise

inapplicable patents, including at least U.S. Patent Nos. 5,899,824; 5,498,004;

5,271,625; 5,067,728; D425,943; and D425,572. Defendant also has marked

and/or continues to mark its products, including, but not limited to, its Mizerak

Deluxe Cue Chalk, Replacement Ferrules/Tips, Bridgehead, Leather Screw-On

Cue Tips, Slip-On Cue Tips and Ferrules, Leather Cue Tips and Cement, Solid

Wood Triangle Rack, Deluxe Table Brush, Deluxe Billiard Balls, Deluxe Hard



4/36

- 4 -

Cue Case, Solid Wood Cue Rack, Deluxe Cue Ball, and Deluxe Billiard Table

Cover (collectively with the Accudart Flight Savers, the Falsely Marked

Products) with inapplicable patent U.S. Patent No. D446,275 (collectively with

U.S. Patent Nos. 5,899,824; 5,498,004; 5,271,625; 5,067,728; D425,943 and

D425,572, the Expired and Inapplicable Patents).

10. Such false marking by Defendant includes marking the Expired andInapplicable Patents upon, affixing the Expired and Inapplicable Patents to, and/or

using the Expired and Inapplicable Patents in advertising in connection with the

Falsely Marked Products.

11. U.S. Patent No. 5,067,728 was filed on August 29, 1988 as a continuation ofan application filed on January 25, 1988 and issued November 26, 1991. It expired

no later than November 26, 2008. Nevertheless, Defendant has marked one or

more of the Falsely Marked Products with it after expiration.

12. Defendant has also falsely marked and/or continues to falsely mark theAccudart Flight Savers with the intent to deceive by marking them with a list of

Defendants patents that are inapplicable to the Accudart Flight Savers,

including, but not limited to, U.S. Patent Nos. 5,899,824; 5,498,004; 5,271,625;

5,067,728; D425,943 and D425,572, as can be seen here (in Figure 1):



5/36

- 5 -

Fig. 1

13. U.S. Patent No. 5,899,824 covers a dart having a dart shaft that can be snap-fit into a corresponding dart barrel. Figure 2 below shows an exploded cross-



6/36

- 6 -

sectional view of a preferred embodiment of the present invention dart at the point

of attachment between the dart barrel and dart shaft of the flight assembly.

14. As can be seen below, however, the Accudart Flight Savers are flightsavers that are [d]esigned from high-strength aluminum to protect flights from



7/36

- 7 -

following darts (Robing Hooding) and increases scoring potential. These are used

to slide the flights onto the backend or flight shaft end of the dart and have

nothing to do with the attachment between the dart barrel and dart shaft claimed in

U.S. Patent No. 5,899, 824.



8/36

- 8 -

15. U.S. Patent No. 5,498,004 covers a dart barrel having a surface coatingapplied thereto that provides the dart barrel with an increased resistance to wear

and an increased coefficient of friction. The Accudart Flight Savers, as

explained above, are inapplicable to any surface coating of a dart barrel or the

process of applying the surface coating.

16. U.S. Patent No. 5,271,625 covers a dart point formed from a material withan inherent amount of flexibility, thereby allowing the dart point to deflect to the

side of the a metal rib on a dartboard should the dart point strike the metal rib

during the course of a game of darts. The Accudart Flight Savers are in no way

related to the dart point of a dart, making U.S. Patent No. 5,271,625 inapplicable.

17. U.S. Patent No. 5,067,728 covers a safety lawn dart which is used in lawndart games. The Accudart Flight Savers are not related to the lawn dart game,

and U.S. Patent No. 5,067,728 is inapplicable.

18. U.S Patent No. D425,943 covers the following design for fins of a dartgame.



9/36

- 9 -

As can be seen from the picture above of the Accudart Flight Savers, U.S Patent

No. D425,943 is inapplicable.

19. U.S. Patent No. D425,572 covers the following design for fins of a dartgame.



10/36

- 10 -

As can be seen from the picture above of the Accudart Flight Savers, U.S Patent

No. D425,572 is inapplicable.

20. Defendant has also falsely marked and/or continues to falsely mark theMizerak Deluxe Cue Chalk, Replacement Ferrules/Tips, Bridgehead, Leather

Screw-On Cue Tips, Slip-On Cue Tips and Ferrules, Leather Cue Tips and

Cement, Solid Wood Triangle Rack, Deluxe Table Brush, Deluxe Billiard Balls,

Deluxe Hard Cue Case, Solid Wood Cue Rack, Deluxe Cue Ball, and Deluxe

Billiard Table Cover with the intent to deceive by marking them with inapplicable

U.S. Patent No. D446,275, as can be seen here on the package of the Mizerak

Deluxe Billiard Table Cover as an example.



11/36

- 11 -

21. U.S. Patent No. D446,275 covers the following design for a Tongue andGroove Wood Covered Outdoor Pool Table.

22. As can be seen from the pictures below of Defendants Mizerak DeluxeCue Chalk, Replacement Ferrules/Tips, Bridgehead, Leather Screw-On Cue Tips,

Slip-On Cue Tips and Ferrules, Leather Cue Tips and Cement, Solid Wood

Triangle Rack, Deluxe Table Brush, Deluxe Billiard Balls, Deluxe Hard Cue Case,

Solid Wood Cue Rack, Deluxe Cue Ball, and Deluxe Billiard Table Cover,

respectively, U.S. Patent No. D446,275 is inapplicable.



12/36

- 12 -

Mizerak Deluxe Cue Chalk



13/36

- 13 -

Mizerak Replacement Ferrules/Tips



14/36

- 14 -

Mizerak Bridgehead



15/36

- 15 -

Mizerak Leather Screw-On Cue Tips



16/36

- 16 -

Mizerak Slip-On Cue Tips and Ferrules



17/36

- 17 -

Mizerak Leather Cue Tips and Cement



18/36

- 18 -

Mizerak Wood Triangle Rack



19/36

- 19 -

Mizerak Deluxe Table Brush



20/36

- 20 -

Mizerak Deluxe Billiard Balls



21/36

- 21 -

Mizerak Deluxe Hard Cue Case



22/36

- 22 -

Mizerak Solid Wood Cue Rack



23/36

- 23 -

Mizerak Deluxe Cue Ball



24/36

- 24 -

Mizerak Deluxe Billiard Table Cover



25/36

- 25 -

23. In fact, Defendants website does not show that Defendant makes or sellsany pool table, much less a pool table that would be covered by U.S. Patent No.

D446,275. See http://www.escaladesports.com/mizerak/products (last accessed

4/21/2011).

24. Defendant has marked the Falsely Marked Products by printing the Expiredand Inapplicable Patents on the packaging of the Falsely Marked Products. Such

markings could have easily been updated to reflect accurate patent information.

On information and belief, Defendant updated the packaging and the intellectual-

property markings on the Falsely Marked Products with copyright notices. The

Defendant could have easily remarked its products so as not to include the Expired

and Inapplicable Patents, but decided not to.

25. It was a false statement for Defendant to mark the Falsely Marked Productswith expired or otherwise inapplicable patents. Defendant knew that the patents

were expired or otherwise inapplicable, but nevertheless marked them on its

products after they expired or when they were clearly inapplicable in an attempt to

deceive the public.

26. As discussed below, Defendant is a large, sophisticated company thatregularly reviews its patent portfolio (in light of the importance of such intellectual



26/36

- 26 -

property in the sporting goods industry), providing further indications of its

knowledge that the Expired and Inapplicable Patents had expired or were

inapplicable when it falsely marked its products.

27. Defendant has, and/or regularly retains, sophisticated legal counsel.Defendant has experience applying for patents, obtaining patents, licensing patents,

applying for and obtaining trademarks and/or litigating in patent lawsuits. Indeed,

the United States Patent and Trademark Offices website shows that Defendant is

assignee to 80 patents or patent applications, two of which were filed as recently as

this year. Further, Defendant has been a party to five patent-related lawsuits, two

of which it initiated as a plaintiff for patent infringement in 2003.

28. Defendant also acquired Accudart and U.S. Patent Nos. 5,899,824;5,498,004; 5,271,625; D425,943; and D425,572 in 2001. Defendant then acquired

the Mizerak billiard product line and U.S. Patent No. D446,275 in 2002. Upon

information and belief, during these acquisitions and assignments of the patents,

Defendant performed due diligence on the patents it was acquiring, which would

have given it knowledge of the expiration dates and scopes of those patents.

29. Upon information and belief, Defendant then in 2002 assigned its interests inU.S. Patent Nos. 5,899,824; 5,498,004; 5,271,625; D425,943; and D425,572 to



27/36

- 27 -

SOS Services, Inc., again performing due diligence and confirming its knowledge

of the expiration dates and scope of those patents. Upon information and belief,

Defendant and SOP Services, Inc. consistently review the patents Defendant owns

or licenses for potential patent infringement cases, as they did in 2003 in SOS

Services, Inc. v. ICON Health and Fitness, Inc., Southern District of Indiana, Case

No. 3:03-cv-00172. This also confirms Defendants knowledge of the expiration

dates and scopes of those patents.

30. Finally, in 2009, Defendant used U.S. Patent Nos. 5,498,004; 5,271,625;D425,943; D425,572; and D446,275 as collateral to secure a loan from JP Morgan

Chase Bank, N.A. Upon information and belief, the fact that Defendant used those

patents as loan collateral confirms Defendant knew the expiration dates and scope

of those patents.

31. As such, the patents that Defendant owns or has licensed, including theExpired and Inapplicable Patents, were and are important assets to Defendant and

are consistently reviewed and monitored in the course of Defendants business,

providing it with knowledge of the expiration dates and scopes of the patents.

32. The expiration date of a U.S. Patent is not readily ascertainable by membersof the public at the time of the product purchase. The patent number itself does not



28/36

- 28 -

provide members of the public with the expiration date of the patent. Basic

information about a patent, such as the filing, issue and priority dates associated

with a particular U.S. patent number are available at, for example, the website of

the United States Patent and Trademark Office (USPTO). However, access to

the Internet is necessary to retrieve that information (meaning that a consumer may

not have the ability to retrieve the information, especially while he is in a store

making a purchasing decision) and even after retrieving that information, it does

not always include the expiration date of a patent. Rather, a member of the public

must also conduct a burdensome legal analysis, requiring specific knowledge of

U.S. Patent laws regarding patent term expiration. Notably, a correct calculation

of the expiration date must also account for at least: a) any term extensions granted

by the USPTO, which may or may not be present on the face of the patent, and b)

whether or not the patent owner has paid the necessary maintenance fees.

33. Defendant knew that a patent that is expired does not cover any product andcertain patents do not cover certain products.

34. Defendant knew that it was a false statement to mark the Falsely MarkedProducts with an expired or otherwise inapplicable patent.



29/36

- 29 -

35. Defendant did not have, and could not have had, a reasonable belief that its products were properly marked, and Defendant knew that the aforementioned

patents had expired and/or were inapplicable.

INJURY IN FACT TO THE UNITED STATES

36. Defendants practice of false marking is injurious to the United States.37. The false marking alleged above caused injuries to the sovereignty of theUnited States arising from Defendants violations of federal law, specifically, the

violation of 35 U.S.C. 292(a). The United States has conferred standing on any

person, which includes Relator, as the United States assignee of the claims in this

complaint to enforce 292.

38. The false marking alleged above caused proprietary injuries to the UnitedStates, which, together with 292, would provide another basis to confer standing

on Relator as the United States assignee.

39. The marking and false marking statutes exist to give the public notice ofpatent rights. Congress intended the public to rely on marking as a ready means of

discerning the status of intellectual property embodied in an article of manufacture

or design, such as the Falsely Marked Products.



30/36

- 30 -

40. Federal patent policy recognizes an important public interest in permittingfull and free competition in the use of ideas that are, in reality, a part of the public

domainsuch as those described in the Expired and Inapplicable Patents.

41. Congress interest in preventing false marking was so great that it enacted astatute that sought to encourage private parties to enforce the statute. By

permitting members of the public to bring qui tam suits on behalf of the

government, Congress authorized private persons like Relator to help control false

marking.

42. The acts of false marking alleged above deter innovation and stiflecompetition in the marketplace for at least the following reasons: if an article that

is within the public domain is falsely marked, potential competitors may be

dissuaded from entering the same market; false marks may also deter scientific

research when an inventor sees a mark and decides to forego continued research to

avoid possible infringement; and false marking can cause unnecessary investment

in design around or costs incurred to analyze the validity or enforceability of a

patent whose number has been marked upon a product with which a competitor

would like to compete.



31/36

- 31 -

43. The false marking alleged above misleads the public into believing that theExpired and Inapplicable Patents give Defendant control of the Falsely Marked

Products (as well as like products), placing the risk of determining whether the

Falsely Marked Products are controlled by such patents on the public, thereby

increasing the cost to the public of ascertaining who, if anyone, in fact controls the

intellectual property embodied in the Falsely Marked Products.

44. Thus, in each instance where a representation is made that the FalselyMarked Products are protected by the Expired and Inapplicable Patents, a member

of the public desiring to participate in the market for products like the Falsely

Marked Products must incur the cost of determining whether the involved patents

are valid and enforceable. Failure to take on the costs of a reasonably competent

search for information necessary to interpret each patent, investigation into prior

art and other information bearing on the quality of the patents, and analysis thereof

can result in a finding of willful infringement, which may treble the damages an

infringer would otherwise have to pay.

45. The false marking alleged in this case also creates a misleading impressionthat the Falsely Marked Products are technologically superior to previously



32/36

- 32 -

available products, as articles bearing the term patent may be presumed to be

novel, useful, and innovative.

46. Every person or company in the United States is a potential entrepreneurwith respect to the process, machine, manufacture, or composition of matter

described in the Expired and Inapplicable Patents. Moreover, every person or

company in the United States is a potential competitor with respect to the Falsely

Marked Products marked with the Expired and Inapplicable Patents.

47. Each Falsely Marked Product or advertisement thereof, because it is markedwith or displays the Expired and Inapplicable Patents, is likely to, or at least has

the potential to, discourage or deter each person or company (itself or by its

representatives), which views such marking from commercializing a competing

product, even though the Expired and Inapplicable Patents do nothing to prevent

any person or company in the United States from competing in commercializing

such products.

48. The false marking alleged in this case and/or advertising thereof has quelledcompetition with respect to similar products to an immeasurable extent, thereby

causing harm to the United States in an amount that cannot be readily determined.



33/36

- 33 -

49. The false marking alleged in this case constitutes wrongful and illegaladvertisement of a patent monopoly that does not exists. As a result, the false

marking has resulted in increasing, or at least maintaining, the market power or

commercial success with respect to the Falsely Marked Products, providing motive

for Defendant to continue to falsely mark its products. Defendant boasts on its

website that Since 1973, Accudart, America's number one name in darting has set

the standard for excellence in design, craftmanship, and product quality.

http://www.escaladesports.com/accudart (last accessed 4/21/2011). This is a

position Defendant does not want to lose and motivates it to falsely mark.

50. Each individual false marking (including each time an advertisement withsuch marking is accessed on the Internet) is likely to harm, or at least potentially

harms, the public. Thus, each such false marking is a separate offense under 35

U.S.C. 292(a).

51. Each offense of false marking creates a proprietary interest of the UnitedStates in the penalty that may be recovered under 35 U.S.C. 292(b).

52. For at least the reasons stated in paragraphs 2 to 51 above, the false markingalleged in this case caused injuries to the sovereignty of the United States arising



34/36

- 34 -

from violations of federal law and has caused proprietary injuries to the United

States.

CLAIM

53. For the reasons stated in paragraphs 2 to 52 above, Defendant has violated292 of the Patent Act by falsely marking the Falsely Marked Products with intent

to deceive the public.

PRAYER FOR RELIEF

54. Relator thus requests this Court, pursuant to 35 U.S.C. 292, to do thefollowing:

A. enter a judgment against Defendant and in favor of Relator that

Defendant has violated 35 U.S.C. 292 by falsely marking products

with knowledge that the patent has expired and/or are not applicable

for the purpose of deceiving the public;

B. order Defendant to pay a civil monetary fine of $500 per false

marking offense, or an alternative reasonable amount determined by

the Court taking into consideration the total revenue and gross profit

derived from the sale of falsely marked products and the degree of



35/36

- 35 -

intent to falsely mark the products, one-half of which shall be paid to

the United States and the other half to Relator;

C. enter a judgment declaring that this case is exceptional, under

35 U.S.C. 285 and award in favor of Relator, and against Defendant,

the costs incurred by Relator in bringing and maintaining this action,

including reasonable attorneys fees;

D. order that Defendant, its officers, agents, servants, employees,

contractors, suppliers, and attorneys be enjoined from committing new

acts of false patent marking and be required to cease all existing acts

of false patent marking within 90 days; and

E. grant Relator such other and further relief as the Court may

deem just and equitable.

JURY DEMAND

55. Relator demands a jury trial on all issues so triable.Dated: April 22, 2011 Respectfully submitted,

/s/ Randall T. GarteiserRandall T. Garteiser

Texas Bar No. 24038912

[email protected] S. Johns

Texas Bar No. 24044849



36/36

- 36 -

[email protected] A. Honea

Texas Bar No. [email protected]

GARTEISERLAW GROUP,PC44 North San Pedro RoadSan Rafael, California 94903[Tel.] (415)785-3762[Fax] (415)785-3805

ATTORNEYS FORGHJHOLDINGS,LLC


ghb v indian industries complaint

Documents