Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 1 of 8 PageID 156 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION NASH MANUFACTURING, INC. d/b/a NASH SPORTS, vs. Plaintiff, KENT SPORTING GOODS COMPANY, INC., MOTION WATER SPORTS, INC., and O BRIEN INTERNATIONAL, INC., Defendants. CIVIL ACTION NO. 4:10-cv-00116-Y FIRST AMENDED COMPLAINT Plaintiff Nash Manufacturing, Inc. d/b/a Nash Sports ( Nash ) files this First Amended Complaint against Defendants Kent Sporting Goods Company, Inc., Motion Water Sports, Inc., ( Motion ) and O Brien International, Inc. (collectively Defendants ) and alleges as follows: I. JURISDICTION 1. This action arises under the Patent Law of the United States, Title 35, United States Code, including 271 and 281 to 287. Jurisdiction exists by reason of 28 U.S.C. 1331 and 28 U.S.C. 1338(a). II. VENUE 2. Venue is proper in the Northern District of Texas under 28 U.S.C. 1400(b) and 28 U.S.C. 1391(b). Defendants transact business in this judicial district by using, selling, or offering First Amended Complaint Page 1
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 2 of 8 PageID 157 to sell products that are the subject of the patents at issue in this lawsuit or by conducting other business in this judicial district. III. PARTIES 3. Plaintiff Nash Manufacturing, Inc. d/b/a Nash Sports is a corporation organized and existing under the laws of the State of Texas with its principal place of business located in Fort Worth, Texas. 4. Defendant Kent Sporting Goods Company, Inc. is a corporation organized under the laws of the State of Ohio with its principal place of business located in New London, Ohio. Kent Sporting Goods Company, Inc. may be served with process by serving its registered agent, John A. Clark, 3136 Lamar Court, Willard, Ohio, 44890. 5. Defendant Motion Water Sports, Inc. is a corporation organized under the laws of the State of Washington with its principal place of business located in Redmond, Washington. Motion Water Sports, Inc. may be served with process by serving its registered agent, Jeffrey G. Bannister, st 14615 NE 91 Street, Redmond Washington, 98052. 6. Defendant O Brien International, Inc. is a corporation organized under the laws of the State of Washington with its principal place of business located in Redmond, Washington. O Brien International, Inc. may be served with process by serving its registered agent, Courtenay D. Babcock, 215 Marine Drive, Suite 103, #15, Blaine, Washington, 98230. IV. FACTS 7. On December 23, 1997, the United States Patent and Trademark Office issued United First Amended Complaint Page 2
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 3 of 8 PageID 158 States Letters Patent No. 5,700,174 (the 174 Patent ), entitled KNEEBOARD. A copy of the 174 Patent is attached as Exhibit A and incorporated by reference. Nash presently owns all right, title, and interest in the 174 Patent. 8. Nash manufactures and sells recreational water sports products, including swimboards, tubes, wakeskates, waterskis, kneeboards, wakeboards, and wakeskis. Nash s kneeboard product line includes several models utilizing the design protected by the 174 Patent. 9. Defendants are also in the business of manufacturing and selling recreational water sports products. Defendants manufacture and sell a kneeboard commonly known as the Black Magic and Full Throttle models. Defendants Black Magic and Full Throttle model kneeboards embody a first lateral side, a middle lateral area, a second lateral side, and a lip connecting the hull to the deck. The average thickness of the area between the dorsal surface of the lip and the ventral surface of the lip is less than the average thickness of its shell measured between the dorsal portion of the passenger contact area and the ventral surface of the hull. Defendants therefore infringe one or more claims of the 174 Patent. V. COUNT I: PATENT INFRINGEMENT 10. Defendants have directly infringed the claims of the 174 Patent, in this judicial district and throughout the United States by making, using, offering to sell, or selling the Black Magic and Full Throttle model kneeboards. 11. This infringement has caused Nash significant injury. As a result, Nash is entitled to compensatory damages consisting of lost profits but not less than a reasonable royalty. 12. Moreover, Defendants infringement is, and at all times herein has been, deliberate, First Amended Complaint Page 3
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 4 of 8 PageID 159 willful, intentional, and with full knowledge of the existence and validity of Nash s patent. As a result, any award of damages should be trebled in accordance with the United States Patent Laws or otherwise enhanced per the discretion of the Court. 13. The specific facts of this case makes the case one of exceptional nature within the meaning of 35 U.S.C. 285, giving rise to an award to Nash of its attorneys fees and costs of litigation. 14. In addition, Defendants will continue to infringe the 174 Patent unless enjoined by this Court. Accordingly, Nash is entitled to preliminary and permanent injunctive relief. VI. COUNT II: BREACH OF CONTRACT 15. In addition or in the alternative, Motion is liable to Nash for breach of contract. On information and belief, the Black Magic Model kneeboard is subject to a License Agreement entered into on or about May 12, 1998 between Earth & Ocean Sports, Inc. d/b/a O Brien International, Inc. ( O Brien ) and SwimWays Corp. ( SwimWays ). On information and belief, the License Agreement is a valid and enforceable contract that was executed as part of the settlement reached in a lawsuit filed by SwimWays against O Brien in the United States District Court for the Eastern District of Virginia, Norfolk Division on or about February 5, 1998. In that suit, SwimWays alleged that O Brien s Ricochet model kneeboard infringed upon the 174 Patent. 16. On information and belief, according to the License Agreement, O Brien obtained a license to manufacture, sell, and promote the Ricochet model kneeboard, or any successor model kneeboard sold under a name other than Ricochet but made with the same mold as the Ricochet. On information and belief, Motion purchased all of O Brien s assets, including all of O Brien s rights First Amended Complaint Page 4
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 5 of 8 PageID 160 as licensee under the License Agreement, as part of an Asset Purchase Agreement that closed on or about March 28, 2003. On information and belief, the Black Magic kneeboard is made using the same mold as the O Brien Ricochet kneeboard. Nash is the successor to SwimWays under the License Agreement. 17. The License Agreement provides that the licensee shall pay to the licensor a perpetual royalty on the Ricochet (or its successors) of the greater of 12% of Net Sales or $12.00 per unit during the period in which the patent is enforceable. The License Agreement further provides that these royalties shall be paid quarterly, within 20 days of the end of the licensee s fiscal year, and that the licensor shall be given an accounting of all units sold and their average invoice price in conjunction with each royalty payment. In addition, the License Agreement binds the licensee to provide the licensor with an annual written declaration from the licensee s auditors, verifying the accuracy of the royalty payments for the prior year. The licensor also has the right to hire an independent auditor to review the specific sales and royalty data on the Ricochet (or its successors) for accuracy. According to the License Agreement, if the independent auditor identifies a discrepancy of greater than 10% from what the licensee reported to the licensor, the costs of the audit will be borne by the licensee. 18. Neither Motion nor any of its affiliated companies have ever conveyed any royalty payments to Nash. Motion and its affiliates have also failed to provide Nash with any quarterly accountings of all units sold, or any written declarations from their auditors. Therefore, if the Black Magic is subject to the License Agreement as Motion contends, then Motion stands in material breach of that agreement. Motion s breach under the License Agreement has caused Nash to suffer legal injury resulting in monetary damages, for which it now sues. First Amended Complaint Page 5
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 6 of 8 PageID 161 VII. SPECIFIC PERFORMANCE 19. As a remedy for Motion s breach under the License Agreement, Nash requests that the Court enter an Order requiring specific performance of the License Agreement by Motion. Nash cannot determine the amount due under the License Agreement without an independent audit of Motion s records. Thus, Nash has no adequate remedy at law other than specific performance. Nash has strictly performed all of its obligations under the License Agreement or, in the alternative, was excused from performing its contractual obligations. Nash is, and was at all times required by the License Agreement, ready, willing, and able to perform its duties under the License Agreement. VIII. CONDITIONS PRECEDENT 20. All conditions precedent to Nash s recovery have been satisfied. IX. ATTORNEY S FEES 21. As a result of the foregoing, Nash has been required to retain the services of the undersigned counsel to represent it in connection with the prosecution of this suit. Nash has agreed to pay reasonable and necessary attorney s fees in connection with the prosecution of this action, for which it now sues to recover from Motion, pursuant to section 38.001 of the Texas Civil Practice & Remedies Code. Nash has made a proper presentment of its claim for attorney s fees. X. PRAYER For the reasons stated, Plaintiff Nash Manufacturing, Inc. d/b/a Nash Sports respectfully First Amended Complaint Page 6
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 7 of 8 PageID 162 requests a jury trial and prays that this Court enter a judgment against Defendants Kent Sporting Goods Company, Inc., Motion Water Sports, Inc., and O Brien International, Inc. as follows: (1) Preliminarily and permanently enjoining Defendants Kent Sporting Goods Company, Inc., Motion Water Sports, Inc., and O Brien International, Inc., including such Defendants agents, employees, servants, attorneys, officers, directors, managers, representatives, parents, subsidiaries, successors, assigns, and all others in privity or acting in concert with Defendants who receive actual notice of the injunction order, by personal service or otherwise, from making, using, offering for sale, or selling Defendants Black Magic model kneeboard or any similar kneeboard with a means for strengthening the board integrated within the passenger contact area to form contours within the passenger contact area, allowing the lip to be of less thickness than the average thickness of the passenger contact area over the hull; and (2) Awarding Nash: a. Compensatory damages consisting of lost profits but not less than a reasonable royalty; b. Enhanced damages; c. Attorneys fees; and d. Costs of court. In addition and in the alternative, Nash Manufacturing, Inc. d/b/a Nash Sports respectfully requests that this Court enter judgment against Motion Water Sports, Inc. as follows: (1) Ordering that Motion fully perform its obligations under the License Agreement; (2) Awarding Nash all of its applicable legal damages under the License Agreement, including, without limitation, royalty fees owed by Motion,; (3) Awarding Nash its attorney s fees, and costs of court; and (4) Entering such other and further relief as this Court or a jury may deem proper and just. First Amended Complaint Page 7
Case 4:10-cv-00116-Y Document 23 Filed 04/21/10 Page 8 of 8 PageID 163 Respectfully submitted, /s/joseph F. Cleveland, Jr. Joseph F. Cleveland, Jr. State Bar No. 04378900 jcleveland@belaw.com D. Alexander Harrell State Bar No. 24055624 aharrell@belaw.com BRACKETT & ELLIS A Professional Corporation 100 Main Street Fort Worth, TX 76102-3090 Telephone: 817/338-1700 Facsimile: 817/870-2265 ATTORNEYS FOR PLAINTIFF NASH MANUFACTURING, INC. d/b/a NASH SPORTS CERTIFICATE OF SERVICE th I certify that on the 15 day of April, 2010, I served a copy of the foregoing by First Class U.S. Mail and by electronic mail, in accordance with the Federal Rules of Civil Procedure, on the following persons: Warren J. Rheaume Davis Wright Tremaine, LLP 1201 Third Avenue, Suite 2200 Seattle, Washington 98101 COUNSEL FOR DEFENDANTS /s/ Joseph F. Cleveland, Jr. Joseph F. Cleveland, Jr. First Amended Complaint Page 8