FILED: NEW YORK COUNTY CLERK 11/24/2015 06:27 PM INDEX NO. 650458/2015 NYSCEF DOC. NO. 57 RECEIVED NYSCEF: 11/24/2015 EXHIBIT C
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 1 of 14
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 2 of 14 substrates. It is significantly more effective than the universal camouflage pattern also available on the market. 3. The MultiCam camouflage pattern and technology is the subject of a United States design patent, and the MultiCam trademark is registered with the United States Patent and Trademark Office ( USPTO ), both of which are owned by LineWeight. Crye Precision is the sister company of LineWeight and has the exclusive rights to sublicense the MultiCam design patent and trademark. 4. MultiCam brand camouflage has been the camouflage of choice for United States Special Forces for nearly a decade, and since 2010 every United States soldier deployed to Afghanistan wears MultiCam garments. MultiCam brand camouflage currently is also being applied onto hundreds of different substrates marketed commercially to the general population. 5. From 2008 until April 11, 2014, Duro was licensed by Crye to print MultiCam camouflage on fabrics (i) in fulfillment of contracts issued by the United States Department of Defense ( Government Sales ) and (ii) for commercial sales. 6. Notwithstanding the expiration of its license in April 2014, Duro has continued, and is continuing, to reproduce, sell and transfer MultiCam camouflage without Plaintiffs authorization and in breach of Duro s continuing obligations under its expired license agreement. 7. Duro has infringed, and continues to infringe, Plaintiffs intellectual property rights in the Multicam camouflage pattern and technology and the MultiCam trademark. Parties and Jurisdiction 8. Plaintiff Crye Precision LLC is a New York limited liability company with its principal place of business in Brooklyn, New York. 2
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 3 of 14 9. Plaintiff LineWeight LLC is a New York limited liability company with its principal place of business in Brooklyn, New York. 10. Defendant Duro Textiles, LLC is a Delaware limited liability company with its principal place of business in Falls River, Massachusetts. 11. This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 and 28 U.S.C. 1338 inasmuch as the claims arise under federal patent and trademark laws. This Court also has subject matter jurisdiction pursuant to 28 U.S.C. 1332 inasmuch as there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000, exclusive of costs. Finally, this Court has supplemental jurisdiction over the state claims pursuant to 28 U.S.C. 1367. 12. Venue is proper in this Court because in the license agreement at issue, the parties agreed that any suit hereunder will be brought in the federal or state courts in the Southern District of New York and [Duro] hereby submits to the personal jurisdiction thereof. Factual Background 13. On April 25, 2006, the USPTO issued to LineWeight U.S. Trademark Registration No. 3,084,726 for the MultiCam mark. 14. On November 30, 2012, U.S. Trademark Registration No. 3,084,726 inadvertently lapsed due to an oversight. 15. LineWeight thereafter reapplied for registration of the MultiCam mark. On December 3, 2013, the US PTO issued to LineWeight U.S. Trademark Registration No. 4,443,275 for the MultiCam mark in International Class 16 for printed camouflage patterns for use on fabrics and hard surfaces. The said registration is based on LineWeight s first use in commerce of the MultiCam mark in connection with the listed goods as early as September 30, 3
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 4 of 14 2003. A true and correct copy of the Certificate of Registration for the MultiCam mark is attached hereto as Exhibit A. 16. On May 29, 2009 the USPTO issued to LineWeight Design Patent No. 592,861 (the 861 Patent ), which embodies the MultiCam camouflage pattern. A true and correct copy of the 861 Patent is attached hereto as Exhibit B. 17. In 2008, Crye entered into an exclusive license agreement with Duro which permitted Duro to print and sell MultiCam fabrics in the United States in connection with Government Sales and commercial sales. This license agreement expired in 2010. 18. In 2010, at the request of the United States Department of Defense, and to help ensure that the Department of Defense would have access to an uninterrupted supply of fabric with the MultiCam design, Crye appointed several United States-based printers, including Duro, as non-exclusive licensees authorized to print and sell MultiCam fabrics in connection with Government Sales. These license agreements had two-year terms and were replaced with new license agreements in 2012. 19. In 2014, upon expiration of the 2012 license agreements, Crye entered into new non-exclusive agreements with various printers. Pursuant to these new license agreements, Crye authorized the printers to print and sell MultiCam fabrics in connection with both Government Sales and commercial sales. 20. Duro rejected the new license agreement that was tendered to and accepted by the other printers. 21. The Non-Exclusive License Agreement dated April 11, 2012, ( Duro License Agreement ), was the last non-exclusive license agreement between Crye and Duro. A true and correct copy of the Duro License Agreement is attached hereto as Exhibit C. 4
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 5 of 14 22. The Duro License Agreement had a term of two years and expired by its terms on April 10, 2014. Neither Crye nor Duro was required to renew or extend the Duro License Agreement. Ex. A, 9(a). 23. After efforts to negotiate a new license agreement with Duro failed, by letter dated June 5, 2014 ( June 5 Letter ), a true and correct copy of which is attached hereto as Exhibit D, Crye formally notified Duro that the Duro License Agreement had expired as of April 10, 2014. 24. In the June 5 Letter, Crye also advised Duro that it is no longer authorized to print or sell any MultiCam fabrics, that it may not hold itself out as being an authorized printer of MultiCam fabrics, and that any rights to use Crye s various trademarks and logos have expired. 25. In the June 5 Letter, Crye reminded Duro of its post-expiration obligations under the Duro License Agreement, including its obligation to remit a final accounting and pay all royalties, make available its books and records, and return all MultiCam print screens. Crye also reminded Duro of its surviving obligations under the Duro License Agreement, including Section 3(h), which, among other things, prohibits Duro from printing patterns which are similar to the MultiCam pattern or which are modifications to, or derivatives of, the MultiCam pattern. 26. Duro did not comply with the demands in the June 5 Letter. 27. Duro did not comply with its obligations following expiration of the Duro License Agreement. 28. Notwithstanding expiration of the Duro License Agreement, Duro has continued to offer for sale and sell various MultiCam fabrics, and has continued to hold itself out both as 5
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 6 of 14 an authorized distributor of MultiCam fabrics and a licensee of Crye. Website screenshots from Duro s website at www.multicamfabric.com depicting MultiCam fabrics for sale as of November 11, 2014, are attached hereto as Exhibit E. 29. Crye s outside counsel sent Duro a cease and desist letter dated September 29, 2014, a true and correct copy of which is attached hereto as Exhibit F. 30. Duro did not respond to the cease and desist letter and did not comply with the demands therein. First Claim for Relief (Breach of Contract/Injunctive Relief) 31. Plaintiffs repeat and reallege each and every allegation contained in paragraphs 1 through 30 of this Complaint as if fully set forth herein. 32. The Duro License Agreement was a valid and binding contract between Plaintiffs and Duro that expired on April 10, 2014. 33. Plaintiffs have fully performed all of their obligations pursuant to the Duro License Agreement. 34. Under Section 9(d)(iv), upon expiration of the Duro License Agreement, Duro was required to cease using any CRYE trademark, trade name, trade dress, service mark, service name, logo or designation. Ex. A, 9(d)(iv). 35. As set forth in Section 9(f) of the Duro License Agreement, Section 9(d)(iv) survived expiration of the Agreement and remains in effect. 36. Despite due demand therefore, Duro has breached, and continues to breach, Section 9(d)(iv) by, inter alia, using Crye s trademarks, trade name, trade dress, service mark, service name, logo, and/or designation after expiration of the Duro License Agreement in April 2014. 6
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 7 of 14 37. Under Section 7(d) of the Duro License Agreement, except for fulfilling open orders existing at the expiration under certain circumstances, upon expiration of the License Agreement Duro was required to immediately cease all display, advertising and use of all CRYE and MULTICAM trademarks, trade names, logos, and designations and not thereafter use, advertise or display any trademark, trade name, logo or designation which is, or which any part of which is, similar to or confusing with any trademark, trade name, logo or designation associated with CRYE or its affiliates. Ex. A, 7(d). 38. As set forth in Section 9(f) of the Duro License Agreement, Section 7(d) survived expiration of the Agreement and remains in effect. 39. Despite due demand that Duro comply with Section 7(d) of the License Agreement, Duro has breached, and continues to breach Section 7(d) by, inter alia, displaying, advertising, and/or using Crye s trademarks, trade names, logos, and/or designation, or trademarks, trade names, logos or designations that are similar to or confusing with any trademark, trade name, log or designation associated with Plaintiffs or their affiliates. 40. Under Section 3(h) of the Duro License Agreement, during the term and following expiration of the Duro License Agreement, Duro was expressly prohibited from making products similar to the MultiCam camouflage pattern: [Duro] acknowledges and agrees that it will not... during or after the term or expiration of this Agreement, make any products that are similar to MULTICAM through color palette, pattern or arrangement or placement of any elements incorporated in MULTICAM. Furthermore, [Duro] agrees that its shall not make any additions to, new renderings of, or modifications, embellishments, derivative works or other changes of or to MULTICAM or any other intellectual property rights of CRYE without CRYE s prior written consent and Licensee agrees that all such additions, renderings, modifications, embellishments, derivative works or otherwise shall be and remain the sole property of CRYE. 7
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 8 of 14 Ex. A, 3(h). 41. As set forth in Section 9(f) of the Duro License Agreement, Section 3(h) survived expiration of the Agreement and remains in effect. 42. Despite due demand that Duro comply with Section 3(h) of the Duro License Agreement, Duro has breached and continues to breach the Agreement by printing and selling products expressly prohibited by 3(h) thereof. 43. Under Section 7(c) of the Duro License Agreement, Duro agreed that it would not assert or claim any interest in or do anything that may adversely affect the validity of any trademark, trade name, logo, designation, or copyright belonging to or licensed to Crye (including, without limitation, any act or assistance to any act, which may infringe or lead to the infringement of any of Crye s proprietary rights). 44. As set forth in Section 9(f) of the Duro License Agreement, Section 7(c) survived expiration of the Agreement and remains in effect. 45. Despite due demand that Duro comply with Section 7(c) of the Duro License Agreement, Duro has breached and continues to breach the Agreement by (i) using the MultiCam trademark following expiration of the Duro License Agreement and the termination of Duro s right to use the trademark, (ii) printing, distributing, offering for sale and sale of counterfeit fabrics bearing the MultiCam trademark, and (iii) making, having made, using, importing, offering for sale, selling and/or marketing MultiCam fabrics. 46. Under Section 3(p), upon expiration of the License Agreement, Duro was required to return all print screens to Crye. Ex. A, 3(p). 47. As set forth in Section 9(f) of the Duro License Agreement, Section 3(p) survived expiration of the Agreement and remains in effect. 8
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 9 of 14 screens. 48. In breach of its obligations under Section 3(p), Duro has not returned the print 49. In Section 14(g) of the Duro License Agreement, Duro specifically acknowledges that any breach of its obligations under this Agreement with respect to the proprietary rights or confidential information of CRYE will cause CRYE irreparable injury for which there are inadequate remedies at law, and therefore CRYE will be entitled to equitable relief in addition to all other remedies provided by this Agreement or available at law. 50. Unless Duro is enjoined from continuing to breach its continuing obligations under the expired Duro License Agreement as alleged herein, Plaintiffs will be irreparably harmed. 51. Plaintiffs have no adequate remedy at law with regard to Duro s breach of its continuing obligations under the expired Duro License Agreement. Second Claim for Relief (Breach of Contract/Damages) 52. Plaintiffs repeat and reallege each and every allegation contained in paragraphs 1 through 51 of this Complaint as if fully set forth herein. 53. Under Section 9(d)(ii), upon expiration of the Duro License Agreement, all outstanding invoices to Duro for amounts due under the License Agreement were accelerated so they became due and payable on the effective date of the termination, i.e., April 10, 2014, even if longer terms had previously been provided. Ex. A, 9(d)(ii). 54. In breach of its obligations pursuant to Section 9(d)(ii) of the Duro License Agreement, Duro has not made any payments on the outstanding invoices. 55. To the extent Duro has made sales of MultiCam fabrics after expiration of the Duro License Agreement to fill open orders pursuant to Section 7(d) of the Duro License 9
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 10 of 14 Agreement or to fill new orders in violation of its surviving obligations under the Duro License Agreement, Duro has breached the Duro License Agreement by failing to make any payments to Crye. As a result, Crye has, inter alia, lost profits it would have made on those sales. 56. By reason of the foregoing, Plaintiffs have suffered damages in an amount to be determined at trial. Third Claim for Relief (Trademark Infringement) 57. Plaintiffs repeat and reallege each and every allegation contained in paragraphs 1 through 56 of this Complaint as if fully set forth herein. 58. The 4,443,275 Registration is valid and subsisting, and is prima facie evidence of the validity of LineWeight s MultiCam trademark, its ownership of the MultiCam trademark, and its exclusive right to use the MultiCam trademark. By virtue of this registration, the MultiCam trademark is entitled to protection under the Lanham Act, 15 U.S.C. 1051, et seq. 59. Duro s unauthorized use of the MultiCam trademark following expiration of the Duro License Agreement and the termination of Duro s right to use the trademark is likely to cause confusion, mistake, or deception as to the source or origin of MultiCam fabrics in that the trade and the consuming public are likely to believe that Duro s MultiCam fabrics are provided by, sponsored by, licensed by, affiliated or associated with, or in some other way legitimately connected to Plaintiffs. 60. Duro s unauthorized use of the MultiCam trademark following expiration of the Duro License Agreement and the termination of Duro s right to use the trademark is intentional and is for the purpose of misleading the trade and the consuming public. These willful actions are in violation of Section 32(1) of the Lanham Act, 15 U.S.C. 1114(1). 61. As a result of Duro s infringement, as described above, the trade and the 10
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 11 of 14 consuming public are likely to be confused and deceived as to the source, sponsorship, affiliation or approval of MultiCam fabrics offered for sale and sold by Duro. 62. Plaintiffs have been damaged by the aforementioned acts in an amount to be determined at trial. 63. Duro s use of LineWeight s MultiCam trademark after the expiration of the Duro License Agreement and termination of Duro s right to use the trademark is intentional, malicious, and in bad faith. Therefore, Plaintiffs are entitled to recover from Duro treble damages and attorneys fees. 64. In addition, Duro s conduct, unless enjoined, will result in irreparable harm to Plaintiffs and, specifically, to the goodwill associated with the MultiCam trademark. Fourth Claim for Relief (Counterfeiting) 65. Plaintiffs repeat and reallege each and every allegation contained in paragraphs 1 through 64 of this Complaint as if fully set forth herein. 66. Upon information and belief, Duro has printed, distributed, offered for sale and sold counterfeit fabrics bearing the MultiCam trademark ( Counterfeit Fabrics ) and continues to do so in violation of 15 U.S.C. 1114. 67. Duro has distributed, offered, and sold Counterfeit Fabrics as if they were genuine MultiCam fabrics and in direct competition with Crye s authorized licensees sale of genuine MultiCam fabrics. 68. Duro s use of copies or simulations of the MultiCam mark is likely to cause and is causing confusion, mistake, or deception among the general purchasing public as to the origin of the Counterfeit Fabric, and is likely to deceive the public into believing that the Counterfeit Fabric being sold by Duro originates from, is associated with or otherwise authorized by 11
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 12 of 14 Plaintiffs, all to the damage and detriment of Plaintiffs reputation, goodwill, and sales 69. In addition to compensatory damages, Plaintiffs are entitled to statutory damages for Duro s willful counterfeiting of the MultiCam trademark. 70. Duro s conduct, unless enjoined, will result in irreparable harm to Plaintiffs and, specifically, to the goodwill associated with the MultiCam trademark. Fifth Claim for Relief (Patent Infringement) 71. Plaintiffs repeat and reallege each and every allegation contained in paragraphs 1 through 70 of this Complaint as if fully set forth herein. Patent. 72. LineWeight is the owner of all the right, title and interest in and to the 861 73. The allegations in and relief requested by this Fifth Claim for Relief do not apply to and specifically do not include patent infringement by Duro that occurs with the authorization and consent of the United States and/or where Duro s infringement occurs by or for the United States. 74. The MultiCam fabrics being sold by Duro infringe the 861 Patent. 75. In violation of 35 U.S.C. 271(a), Duro is directly infringing the 861 Patent by making, having made, using, importing, offering for sale, selling and/or marketing MultiCam fabrics. 861 Patent. 76. Duro has been and continues to willfully infringe upon LineWeight s rights in the 77. This is an exceptional case within the meaning of 35 U.S.C. 285, which warrants reimbursement of Plaintiffs reasonable attorney s fees. 12
Case 1:14-cv-09012-DLC Document 2 Filed 11/12/14 Page 13 of 14 78. As a result of Duro s aforesaid conduct, Plaintiffs have suffered substantial damage and irreparable harm constituting an injury for which it has no adequate remedy at law. Unless this Court enjoins Duro s conduct, Plaintiffs will continue to suffer irreparable harm. Jury Demand 79. Plaintiffs demand a trial by jury. Prayer For Relief WHEREFORE, Plaintiffs request that judgment be entered against Duro as follows: 1. An injunction preliminarily and permanently: (i) in accordance with Sections 7(d) and 9(f) of the Duro License Agreement, enjoining Duro from using any Crye trademark, trade name, trade dress, service mark, service name, logo or designation, or from using, advertising, or displaying any trademark, trade name, logo or designation which is, or which any part of which is, similar to or confusing with any trademark, trade name, logo or designation associated with Plaintiffs or their affiliates; (ii) in accordance with Section 3(d) of the Duro License Agreement, enjoining Duro from making any products that are similar to the MultiCam camouflage pattern through color palette, pattern or arrangement or placement of any elements incorporated in the MultiCam camouflage pattern; and (iii) in accordance with Section 3(p) of the Duro License Agreement, requiring Duro to return to Crye all print screens for the MultiCam camouflage pattern or modifications, embellishments, derivative works or other changes of or to the MultiCam camouflage pattern; (iv) (v) enjoining Duro from infringing United States Patent No. 592,861; and enjoining Duro from infringing United States Trademark Registration No. 4,443,275. 13
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