Fitistics v. Unisen et. al.

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    Case 8:12-cv-01774-JVS-AN Document 1 Filed 10/12/12 Page 1 of 44 Page ID #:1

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    2. Plaintiff is informed and believes, and based thereon alleges, that at all time

    herein mentioned, Defendant, CORE INDUSTRIES, INC. (hereinafter referred to as

    "CORE"), is and was a corporation incorporated under the laws of the state of

    California and doing business in the state of California, and recently converted to a

    limited liability company under the laws of the state of California. Plaintiff is further

    informed and believes, and based thereon alleges, that CORE's principal place of

    business is in Irvine, California.

    3. Plaintiff is informed and believes, and based thereon alleges, that at all time

    herein mentioned, Defendant, UNISEN, INC. (hereinafter referred to as "UNISEN"),

    is and was a corporation incorporated under the laws of the state of California and

    doing business in the state of California. Plaintiff is further informed and believes,and based thereon alleges, that UNISEN's principal place of business is in Vancouver

    Washington.

    4. Plaintiff is informed and believes, and based thereon alleges, that at all time

    herein mentioned, Defendant, STAR TRAC HEALTH & FITNESS, is and was a

    corporation incorporated under the laws of the state of California and doing business

    in the state of California. Plaintiff is further informed and believes, and based thereo

    alleges, that STAR TRAC HEALTH & FITNESSs principal place of business was in

    Irvine, California, and that said STAR TRAC HEALTH & FITNESS merged into and

    became a part of UNISEN (hereinafter jointly referred to as "STAR TRAC").

    5. Plaintiff is informed and believes, and based thereon alleges, that at all time

    herein mentioned, Defendant, FORD-ABC 864736 (hereinafter referred to as

    "FORD"), is and was a corporation incorporated under the laws of the state of

    California and doing business in the state of California.

    II

    JURISDICTIONAND VENUE

    6. This Court has original subject matter jurisdiction over this action pursuant

    to 28 U.S.C. 1331 and 1338(a).

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.2

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    7. This Court may exercise personal jurisdiction over Defendants because all o

    the Defendants are residents of the state of California, all of the Defendants reside in

    this judicial district, and all of the Defendants have minimum contacts with this forum

    as a result of business regularly conducted within the State of California and this

    judicial district.

    8. Venue is proper in this Court under 28 U.S.C. 1391(b),( c), and (d) and

    1400(b). All of the Defendants reside in this district. Moreover, a substantial part of

    the events, acts, and omissions giving rise to this action occurred in this district,

    Defendants conduct substantial business in this district, and Defendants have a

    substantial presence here.

    III

    FACTSCOMMON TOALLCOUNTS

    9. Plaintiff is informed and believes, and based thereon alleges, that Defendan

    FORD entered into a written agreement with Defendant UNISEN by which the later

    party assigned all of its assets to Defendant FORD for the benefit of the creditors of

    Defendant UNISEN and Defendant FORD agreed to act as the trustee of said assets

    for the benefit of said creditors.

    10. Thereafter, in compliance with the notices provided by Defendants, and

    each of them, Plaintiff filed timely claims for payment of the claims set forth herein

    from Defendant FORD. Nevertheless, said Defendant has failed and refused to pay a

    or any portion of said sums to Plaintiff.

    11. Plaintiff is further informed and believes, and based thereon alleges, that

    Defendant CORE entered into a written contract with Defendant FORD by which sai

    Defendant purchased certain assets formerly belonging to Defendant UNISEN from

    Defendant FORD and assumed certain liabilities therefrom. Plaintiff is informed and

    believes, and based thereon alleges, that among the liabilities Defendant CORE

    assumed were the sums due to Plaintiff as set forth in this complaint. Notwithstandin

    that said sums are well past due and owing, Defendants have failed and refused, and

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.3

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    continue to fail and refuse, to pay said sums, and/or any of said sums, to Plaintiff.

    12. FITISTICS develops and sells fitness solutions, including, but not limited

    to USB docking stations (herein "FITISTICS docking stations") that plug into

    virtually any cardio-vascular exercise equipment and allow users to record various

    workout-related data. This data can later be uploaded onto a website, where it can be

    analyzed and used to proactively monitor exercise and encourage a healthier lifestyle

    13. STAR TRAC, UNISEN, and CORE have manufactured and sold, and

    continue to manufacture and sell, cardio-vascular exercise equipment.

    14. In or about February of 2008, FITISTICS completed its first release of

    www.FITISTICS.com, a website designed to collect and analyze data captured from

    FITISTICS' docking stations.15. In or about March of 2008, FITISTICS attended the International Health,

    Racquet & Sportsclub Association (IHRSA) trade show as an exhibitor to display

    FITISTICS technology and conduct meetings with health club chains and equipment

    manufacturers.

    16. STAR TRAC was one of five equipment manufacturers with which

    FITISTICS was actively engaged in business conversations at the 2008 IHRSA trade

    show. Representatives of FITISTICS met with STAR TRAC's Vice President of

    Marketing, Randy Bergstedt (herein "Bergstedt"), multiple times at the trade show.

    17. During those March 2008 meetings, and thereafter, Mr. Bergstedt express

    interest in FITISTICS' technology, and arranged for FITISTICS representatives to

    travel to STAR TRAC's Irvine, California, corporate office for a demonstration of the

    FITISTICS docking stations. FITISTICS successfully demonstrated the use of its

    technology on equipment that STAR TRAC presented for use in such testing inside it

    engineering laboratory.

    18. Immediately after the demonstration, FITISTICS' representatives met with

    STAR TRAC's President, Steve Nero; its Vice President of Engineering, Kevin

    Corbalis; its Chief Systems Architect, Greg Wallace; its Cardio Product Manager,

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.4

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    Andrew Moore; and, Mr. Bergstedt, to discuss potential business relationships movin

    forward.

    19. In the first week of April 2008, Mr. Bergstedt informed FITISTICS that M

    Corbalis would be taking over future discussions on defining the business opportunit

    that he said existed between FITISTICS and STAR TRAC. Mr. Corbalis immediately

    thereafter contacted representatives of FITISTICS and started a 1 month long

    negotiation process that included STAR TRAC performing due diligence relative to

    FITISTICS software and hardware, website and patent filings, as well as the

    negotiation of certain employment contracts with certain of the principals of

    FITISTICS.

    20. STAR TRAC and FITISTICS entered into a written license on or aboutMay 9, 2008 (herein "the License Agreement").

    21. Pursuant thereto, FITISTICS granted STAR TRAC an exclusive license to

    make, use, sell, offer for sale, import and export FITISTICS' docking stations

    throughout the world. In exchange therefor and as part of the consideration for said

    agreement, STAR TRAC promised, covenanted and agreed to pay certain royalties to

    FITISTICS for each docking station sold or otherwise disposed of by STAR TRAC in

    any country in which FITISTICS owned a pending application or issued patent as

    designated in said License Agreement.

    22. In addition, STAR TRAC and FITISTICS entered into a second written

    agreement by which STAR TRAC agreed to purchase and FITISTICS agreed to sell t

    STAR TRAC the FITISTICS website. In exchange therefor and as a part of the

    consideration for said agreement, STAR TRAC agreed to pay FITISTICS the sum of

    $225,000.00 (herein "the Website Purchase Agreement").

    23. Section 7.5 of the License Agreement explicitly states that STAR TRAC

    and FITISTICS would "jointly issue one or more appropriate media/press releases

    with regard to the existence of License Agreement within seven (7) days of the

    Effective Date or as soon as reasonably practicable thereafter." No joint media/press

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.5

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    release was ever issued, despite the fact FITISTICS repeatedly made demand therefo

    of STAR TRAC. Notwithstanding said demands, STAR TRAC refused to make any

    such media/press releases of any kind relative to said agreement.

    24. Section 4 of the License Agreement states that FITISTICS would endeavo

    to obtain additional customers for STAR TRAC and its Docking Station and that

    FITISTICS could offer such customers use of the Docking Stations, and/or use of

    STAR TRAC's exercise equipment that has an integrated USB port for collection of

    the fitness data. Section 7.5 states that "FITISTICS shall be able to disclose to

    prospective purchasers of rights in the Licensed Patents the identity of STAR TRAC

    and the existence of this Agreement."

    25. FITISTICS had been repeatedly told that all the main cardio product linesalready had fully functional USB connectivity.

    26. Contrary to said representations that STAR TRAC's cardio product lines

    had fully functional USB connectivity, in fact none of STAR TRAC's products had

    any solution and/or ability to implement USB connectivity and/or any ability to

    interface with the website STAR TRAC purchased from FITISTICS with any of their

    exercise machines.

    27. As of November 2008, and despite the lack of a working product that

    permitted the requisite connectivity, STAR TRAC signed a major equipment deal to

    Esporta, a European health club chain, worth up to $10 million. Multiple STAR

    TRAC executives told FITISTICS that the FITISTICS USB capabilities, which STAR

    TRAC had yet to implement, and as discussed in paragraph 29,supra, did not have th

    ability without the FITISTICS technology to implement, were the main reason for the

    success of this transaction.

    28. Needing to create the product that included the requisite connectivity that

    had promised to deliver to Esporta, STAR TRAC used FITISTICS' docking station

    software in STAR TRAC's integrated docking stations. As a result, essentially all of

    STAR TRAC's cardio products directly copied and used FITISTICS' software,

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.6

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    including using the exact format and encryption technology that was in the FITISTIC

    docking stations.

    29. By March of 2009, with FITISTICS' assistance, STAR TRAC products ha

    been successfully outfitted with FITISITICS' USB docking station software to achiev

    the functionality that had been promised to Esporta, including working with the

    website FITISTICS had sold to STAR TRAC, now called eFitness

    (www.eFitnessSystem.com).

    30. Mr. Bergstedt informed FITISTICS that the successful use of the

    FITISTICS software would open opportunities to sell FITISTICS docking stations to

    Esporta and to others.

    31. Also in March of 2009, STAR TRAC once again had a booth at the IHRSAtrade show. STAR TRAC used the trade show as the official launch of the STAR

    TRAC fitness website, www.eFitnesssystem.com. This website (herein "STAR

    TRAC's eFitness Website") was STAR TRAC's adaptation of the website FITISTICS

    had sold to STAR TRAC (www.FITISTICS.com). Leading up to the trade show, Mr

    Bergstedt and others had been fostering an environment at STAR TRAC where the

    focus was on integrated USB docking stations. Prior to the trade show, Mr. Bergsted

    told FITISTICS that there would not be any USB docking stations on display at the

    show.

    32. At the trade show, the team from Nike+ visited the STAR TRAC booth,

    where Messrs. Bergstedt, McKirdy, and Robert Nutini (both of whom were

    FITISTICS officers) discussed having an aftermarket product become part of the

    Nike+ "ecosystem."

    33. After the trade show, discussions began between Nike, through Brandon

    Burroughs (herein "Burroughs"), and STAR TRAC, through Bergstedt, and

    FITISTICS. Mr. Burroughs also began having direct discussions with Messrs.

    McKirdy and Nutini about the FITISTICS technology. FITISTICS supplied a

    demonstration USB docking station to Nike for evaluation at the Nike corporate offic

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.7

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    in Oregon, which was very well received.

    34. Between the months of March and October of 2009, Nike, STAR TRAC,

    and FITISTICS discussed options for integrating data from the USB technology onto

    the Nike+ system. Additionally, Nike wanted to explore an aftermarket product that

    would allow for faster penetration of their technology into the commercial market

    without having to rely on new equipment being sold that worked with iPods/iPhones.

    The FITISTICS and/or STAR TRAC docking stations were a perfect match.

    35. These discussions with Nike presented an enormous opportunity for

    FITISTICS as well as STAR TRAC. STAR TRAC would gain significant revenue

    through the sale of the FITISTICS docking station, and FITISTICS would gain

    royalties on all these sales.36. At the same time, Mr. Bergstedt's interference was adversely affecting

    FITISTICS' other business relationships and opportunities. Mr. Bergstedt repeatedly

    inserted himself in such negotiations in an effort to force the integrated USB docking

    stations bundled with STAR TRAC exercise machines on potential customers.

    37. Mr. Bergstedt ultimately terminated a number of potentially lucrative

    business opportunities, claiming lack of opportunity for STAR TRAC, despite the fac

    that STAR TRAC would have received the bulk of the revenue for all sales of the

    FITISTICS' external docking station, with only a royalty going to FITISTICS. These

    represented significant lost opportunities to FITISTICS despite their previous

    representations to FITISTICS, had no intention of honoring its agreement to sell the

    FITISTICS external docking stations.

    38. By the end of September of 2009, FITISTICS had held multiple discussion

    with Nike and proposed various options for conducting business that involved variou

    levels of involvement by STAR TRAC.

    39. At this time, there had still been no press release by STAR TRAC even

    mentioning FITISTICS, and the FITISTICS docking station was not listed on the

    STAR TRAC website or in any sales catalogs.

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.8

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    40. In or about October of 2009, the Club Industry Trade Show was held in

    Chicago. Once again, STAR TRAC made no efforts to promote the FITISTICS

    docking station.

    41. On the first night of that trade show, on or about October 15, 2009, Mr.

    McKirdy approached Mr. Nero, the President of STAR TRAC, and asked to speak

    with him about the Nike business opportunity.

    42. Immediately after hearing Mr. McKirdy's proposed deal with Nike, Mr.

    Nero shot down the idea, flatly telling Mr. McKirdy, "No, I will not let you do that

    deal with Nike." When Mr. McKirdy asked why, Mr. Nero replied that a deal with

    Nike would not help STAR TRAC sell cardio products. Mr. McKirdy responded by

    reminding Mr. Nero that, as part of the License Agreement, FITISTICS had a charterto explore and execute sub-licensing deals on the FITISTICS technology.

    43. At that point, Mr. Nero physically took Mr. McKirdy by the arm and said,

    "Follow me." Mr. Nero led Mr. McKirdy to two STAR TRAC Sales Managers, Kevi

    Einck and John Sweeney. Mr. Nero then began to berate Mr. McKirdy, telling him,

    "Sean, you are not an entrepreneurI own your ass, and I own Bob's [i.e, Mr. Nutini

    ass. I never intended to sell your technology, I bought your company for $225,000

    when I bought your website and I also own your patents. I fucked you How does

    feel to be fucked? When your employment agreements are over, I am going to fire

    you and Bob, and then I am going to own your technology and there isn't anything yo

    can do about it."

    44. As a result of STAR TRAC's interference, FITISTICS never entered into a

    agreement with Nike. In addition to the lost profits from that potentially lucrative

    opportunity, FITISTICS lost all credibility with Nike. Combined with the loss of

    credibility from losing the Virgin opportunity and its ongoing association with STAR

    TRAC (whose reputation in the industry was in rapid decline due, inter alia, to its

    repeated failure to honor its contractual commitments, both to its customers and its

    suppliers/vendors), FITISTICS' credibility in the fitness solutions market further

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.9

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    suffered.

    45. Shortly thereafter, STAR TRAC's business was in decline. STAR TRAC'

    suppliers/vendors began to delay shipments due to lack of payments from STAR

    TRAC, causing further harm to FITISTICS' business reputation.

    46. Despite all this, FITISTICS honored the terms of its agreements with STA

    TRAC. Over the next few months, STAR TRAC continued to benefit from significan

    equipment sales because they had access to FITISTICS' technology, which would be

    used to help close large equipment sales in the YMCA and University markets.

    47. Mr. McKirdy began working with and reaching out to key STAR TRAC

    accounts, including Anytime Fitness and Lifetime Fitness. At the March 2010 IHRS

    trade show, the executive teams from Anytime Fitness and Lifetime Fitness met withMr. McKirdy regarding custom hardware options that could be further developed

    around the FITISTICS technology.

    48. However, a few months after the 2010 IHRSA trade show, STAR TRAC

    was in such a poor position financially that Lifetime Fitness e-mailed Mr. McKirdy

    and said, "Sean, I like your product, but I will not do business with STAR TRAC unt

    there are significant management changes."

    49. Anytime Fitness had STAR TRAC as a preferred vendor at that time.

    However, the deteriorating quality of STAR TRAC's products, and STAR TRAC's

    unwillingness/inability to provide service/repairs to their customers lead to Anytime

    Fitness' releasing STAR TRAC from Anytime Fitness' preferred vendor status list.

    This change in preferred vendor status also eliminated FITISTICS' opportunity to

    provide a custom solution for Anytime Fitness around FITISTICS' technology, and

    further damaged FITISTICS' business reputation.

    50. In May of 2010, Mr. Nero was replaced as President of STAR TRAC. Th

    new president was Mike Leveque, who previously served as STAR TRAC's European

    division director.

    51. Soon after Mr. Leveque took over as President, Mr. McKirdy held a

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.10

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    telephone conference with Mr. Leveque to review the business relationship between

    FITISTICS and STAR TRAC.

    52. During that telephone conference, Mr. Leveque agreed to help "make thin

    right" and asked FITISTICS for some time to try to repair the relationship. Mr.

    Leveque tasked Mr. Corbalis to review the existing License Agreement and

    communicate with FITISTICS about a possible renegotiation of the terms of the

    License Agreement.

    53. In or about July 2010, STAR TRAC was acquired by Mike Bruno. Despit

    the change in ownership, the management team remained the same, and FITISTICS

    and Mr. Corbalis continued to discuss a renegotiation of the terms of the License

    Agreement. During this time, STAR TRAC continued to benefit from its businessrelationship with FITISTICS.

    54. On or about November 18, 2010, FITISTICS learned that STAR TRAC

    would be restructuring under an assignment for benefit of creditors filing. Prior

    thereto and during the time of the parties' negotiations, STAR TRAC was fully aware

    that they would be restructuring a company under an assignment for benefit of

    creditors filing, and had been working with a law firm to manage this process. STAR

    TRAC continued the negotiations (knowing full well that these negotiations would

    never result in a new agreement), and represented that these negotiations were being

    conducted in good faith, in order to continue to receive the benefit of its business

    relationship with FITISTICS. STAR TRAC thus actively misled FITISTICS about th

    prospect of a new agreement.

    55. The License Agreement was terminated on or about November 19, 2010.

    56. However, the damage to FITISTICS' business and reputation did not end

    with the termination of the License Agreement. In Spring of 2011 FITISTICS was

    exploring a business relationship with Octane Fitness. After a series of discussions

    Octane Fitness withdrew from negotiations because it understood (through STAR

    TRAC's incorrect statements) that FITISTICS no longer owned any of its intellectual

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.11

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    property.

    57. Plaintiff is informed and believes that STAR TRAC's incorrect statements

    lead Octane Fitness to believe that STAR TRAC owned all of FITISTICS' intellectua

    property. This misinformation had an adverse effect on FITISTICS' prospective

    economic relationship with Octane Fitness.

    58. STAR TRAC's deliberate misstatements regarding the ownership of

    FITISTICS' intellectual property continues to adversely affect FITISTICS.

    59. Further, STAR TRAC never fully paid FITISTICS the royalties as require

    under Section 3 of the License Agreement.

    60. STAR TRAC also never fully paid FITISTICS royalties owed from

    obtaining new customers under Section 4 of the License Agreement.IV

    COUNT I

    BREACHOFCONTRACT

    (Against All Defendants)

    61. Plaintiff refers to and incorporates by this reference as though fully set for

    herein, each and every allegation set forth in paragraphs 1 through 60 above.

    62. Plaintiff FITISTICS has performed all of the acts, promises, covenants, an

    agreements on its part to be performed under the License Agreement at issue herein,

    except those the performance of which have been excused.

    63. Defendants, and each of them, have not performed the terms of the subject

    contract and have breached the terms thereof in that they have failed to pay the

    agreed-upon royalty payments, as stated in sections 3 and 4 of the License Agreemen

    in an amount to be determined at trial, but not less than $1,085,000.00, and failed to

    honor the terms of Section 7.5 of the License Agreement, to Plaintiff's detriment in an

    amount to be determined at trial.

    64. As a direct and proximate result of Defendants, and each of their breaches

    of the terms of the subject contract, Plaintiff, FITISTICS, has been damaged, and

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.12

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    continues to be damaged, in an amount to be determined at trial, but not less that

    $1,085,000.00, together with interest thereon at the legal rate through and including

    the present.

    V

    COUNT II

    FRAUD

    (Against All Defendants)

    65. Plaintiff refers to and incorporates by this reference as though fully set for

    herein, each and every allegation set forth in paragraphs 1 through 64 above.

    66. When STAR TRAC entered into the License Agreement, Website Purchas

    Agreement, and Employment Contract, STAR TRAC represented that it would use itbest efforts to promote, develop and sell FITISTICS docking stations and that it wou

    pay royalties to FITISTICS under the License Agreement if FITISTICS would enter

    into said agreement. In addition, STAR TRAC made repeated representations that

    FITISTICS could independently pursue business relationships with other interested

    companies and continue to promote the FITISTICS brand and technology, subject to

    the agreed-upon revenue-split in the License Agreement.

    67. STAR TRAC made these representations, repeatedly and through a

    multitude of its officers and employees, knowing that they were false, and intending

    for Plaintiff to rely on them.

    68. Plaintiff did in fact reasonably rely on STAR TRAC's representations as se

    forth above. Said reliance was reasonable. In reliance thereon, Plaintiff entered in

    the License Agreement and other agreements set forth herein, and undertook the

    course of conduct alleged herein.

    69. In reality, STAR TRAC's goal was to squeeze as much technology,

    knowledge, and expertise as possible out of FITISTICS with one hand, while blockin

    off any and all opportunities for growth and exposure with the other.

    70. As outlined in detail above, STAR TRAC's fraud was admitted by its then

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    President, Mr. Nero, on or about October 15, 2009.

    71. As a direct and proximate result of Plaintiffs' reliance on STAR TRAC's

    repeated misrepresentations, Plaintiff has suffered financial and reputational damage

    in an amount to be determined at trial, but in excess of $900,000.00.

    72. Furthermore, STAR TRAC acted, or failed to act, fraudulently,

    oppressively, and maliciously in conscious disregard of Plaintiff's rights and with the

    intent to cause it cruel and unjust hardships, thus warranting punitive damages, in an

    amount to be determined at trial.

    VI

    COUNT III

    BREACHOF IMPLIEDCOVENANTOFGOOD FAITHAND FAIRDEALING

    (Against All Defendants)

    73. Plaintiff refers to and incorporates by this reference as though fully set

    forth herein, each and every allegation set forth in paragraphs 1 through 72 above.

    74. Plaintiff FITISTICS has performed all of the acts, promises, covenants, an

    agreements on its part to be performed under the License Agreement at issue herein,

    except those the performance of which have been excused.

    75. The License Agreement contains an implied covenant of good faith and fa

    dealing by and between the parties which prohibits them from engaging in any activi

    or conduct which would prevent the other party from receiving the benefits of the

    contract and which required that Defendants use their best efforts to promote, sell and

    develop the products that were the subject of the exclusive license granted thereby.

    76. Defendants, and each of them, have not performed the terms of the subject

    contract and have breached the terms thereof in that they have failed and refused to

    market, sell and develop the FITISTICS docking station and in fact have endeavored

    to prevent said docking station from being sold, marketed and/or developed.

    77. Defendants, in acting or failing to act as alleged above, breached the

    implied covenant of good faith and fair dealing. As a direct and proximate result of

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    Defendants' breach, Plaintiffs have been damaged in an amount to be determined at

    trial, but in excess of the sum of $900,000.00.

    VII

    COUNT IV

    PATENT INFRINGEMENT

    (Against All Defendants)

    78. Plaintiff refers to and incorporates by this reference as though fully set for

    herein, each and every allegation set forth in paragraphs 1 through 77 above.

    79. On November 30, 2007, a patent application was filed that resulted in the

    issuance of US Patent No. 8,118,709 ("the '709 patent") on February 21, 2012.

    80. The '709 patent claims priority to provisional application No. 60/872,203,filed on December 1, 2006.

    81. The '709 patent pertains to a system for collecting biological, workout, an

    machine data from an exercise machine and storing the data on a data transfer device

    for analysis.

    82. FITISTICS is the sole owner of the '709 patent.

    83. A copy of the '709 patent is attached as Exhibit A.

    84. Defendants have and continue to use, manufacture, sell, and/or offer to sel

    products that infringe, contribute to the infringement of, and/or induce the

    infringement of the '709 patent.

    85. Among the products used, manufactured, sold, and/or offered for sale by

    Defendant that infringe, contribute to the infringement of, and/or induce the

    infringement of the '709 patent (herein "the accused products") are:

    a. Treadmills:

    i. E-TREX

    ii. E-TRXi

    iii. E-TRX

    b. Cross-Trainers:

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    i. E-CTE

    ii. E-CTi

    iii. E-CT

    c. Steppers:

    I. E-STe

    ii. E-STi

    iii. E-ST

    d. Upright Bikes:

    I. E-Ube

    ii. E-UBi

    iii. E-UBe. Recumbent Bikes:

    I. E-RBe

    ii. E-RBi

    iii. E-RB

    f. Stairmills:

    I. E-SMe

    ii. E-SMi

    iii. E-SM

    g. Espinner

    h. eFitness USB Box

    i. And/or any units containing part no. 700-0115 and/or 700-0116

    j. replacement part nos. 700-0115 and/or 700-0116.

    86. On information and belief, Defendants continue to use, manufacture, sell,

    and/or offer to sell the infringing products throughout the United States and

    internationally.

    87. The eFitness USB Box, part no. 700-0115, and part no. 700-0116, are all

    designed to be used in combination with an exercise machine to practice the claimed

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    invention of the '709 patent.

    88. The eFitness USB Box, part no. 700-0115, and part no. 700-0116, are not

    staple articles and have no substantial non-infringing uses.

    89. FITISTICS entered into a license agreement with STAR TRAC, effective

    May 23, 2008.

    90. This license agreement (herein "the License Agreement") was terminated a

    least as of November 19, 2010.

    91. Thus, Defendants no longer had permission to make, use, sell, offer to sell

    import, or export any products that practice any claims of the '709 patent at least as o

    November 19, 2010. Unless enjoined by this Court, Defendants will continue to

    infringe the '709 Patent.92. The aforesaid past and continuing actions of Defendants are in violation o

    35 U.S.C. 271 et seq. of the Patent Act and has caused and continues to cause

    Plaintiff irreparable harm warranting the imposition of preliminary and permanent

    injunctive relief, as well as money damages for past infringement.

    VIII

    COUNTV

    WILLFUL PATENT INFRINGEMENT

    (Against All Defendants)

    93. Plaintiff refers to and incorporates by this reference as though fully set for

    herein, each and every allegation set forth in paragraphs 1 through 92 above.

    94. At least as early as May, 2008, STAR TRAC was informed that FITISTIC

    had filed an application for the then-pending '709 patent.

    95. Prior to entering negotiations for the License Agreement, STAR TRAC

    conducted its own inquiry into the validity of the then-pending '709 patent as part of

    its due diligence.

    96. On or about May 23, 2008, Defendants entered into the License Agreemen

    which included an exclusive license to practice the then-pending '709 patent. After

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.17

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    obtaining the license, Defendants brought to market the accused products.

    97. In developing the accused products, Defendants copied the software used

    FITISTICS' USB docking station and used the copied software in its integrated

    docking stations. This wholesale adoption of FITISTICS' software demonstrates the

    strong similarity between FITISTICS' USB docking station and the integrated dockin

    stations in the accused products.

    98. The '709 patent issued on February 21, 2012.

    99. Defendants had actual knowledge of the '709 patent. Moreover,

    Defendants knew that the accused products infringe the '709 patent. Unless enjoined

    by this Court, Defendants will continue to infringe the '709 Patent.

    100. The past and continuing acts of Defendants constitute willful infringemeof the '709 patent and has caused and continues to cause Plaintiff irreparable harm

    warranting the imposition of preliminary and permanent injunctive relief, as well as

    money damages for past infringement.

    IX

    COUNTVI

    COPYRIGHT INFRINGEMENT

    (Against All Defendants)

    101. Plaintiff refers to and incorporates by this reference as though fully set

    forth herein, each and every allegation set forth in paragraphs 1 through 100 above.

    102. FITISTICS has sought copyright protection for an original work titled

    "Computer program for ensuring secure communications of exercise machine data

    using a unique encryption key".

    103. This copyrighted software (herein "FITISTICS' software") was designed

    by FITISTICS in or about 2007 to work in conjunction with FITISTICS docking

    stations to achieve new functionality, including downloading and uploading

    customized workouts, workout data, and biological data.

    104. The originality of FITISTICS' software is well recognized in the fitness

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    industry and has received national media attention.

    105. Effective May 23, 2008, STAR TRAC acquired a license to use

    FITISTICS' software through the License Agreement.

    106. After the execution of the License Agreement, it became apparent that,

    though STAR TRAC's exercise machines had the hardware to connect to USB ports,

    STAR TRAC had not developed any of its own software to enable the functionality o

    FITISTICS' docking station (which used FITISTICS' software), such as uploading an

    downloading customized workouts, workout data, and biological data.

    107. STAR TRAC continues to use FITISTICS' software in all of the accused

    products, and therefore to reproduce and distribute FITISTICS' software.

    108. The License Agreement was terminated on or about November 19, 2010.109. Thus, Defendants no longer have permission to reproduce or distribute

    FITISTICS' software at least as of November 19, 2010, yet they continue to do so to

    this date. Unless enjoined by this Court, Defendants will continue to infringe

    Plaintiff's well-established intellectual property rights.

    110. The aforesaid past and continuing actions of Defendants are in violation

    of 17 U.S.C. 501 et seq. and has caused and continues to cause Plaintiff irreparable

    harm warranting the imposition of preliminary and permanent injunctive relief, as we

    as money damages for past infringement.

    X

    COUNTVII

    TRADEMARKINFRINGEMENT

    111. Plaintiff refers to and incorporates by this reference as though fully set

    forth herein, each and every allegation set forth in paragraphs 1 through 110 above.

    112. FITISTICS develops and sells fitness solutions, including, but not limited

    to, USB docking stations that plug into virtually any cardio-vascular exercise

    equipment and allow users to record various workout-related data. This data can late

    be uploaded onto a website, where it can be analyzed and used to proactively monito

    COMPLAINT FORDAMAGES FORBREACH OF CONTRACT,ETC.19

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    exercise and encourage a healthier lifestyle.

    113. Since at least September 1, 2007, FITISTICS has continuously used the

    highly distinctive trademark FITISTICS to market and sell its products throughout th

    United States and the world.

    114. FITISTICS has devoted substantial time, effort, and resources to the

    development and extensive promotion of the FITISTICS mark and products offered

    thereunder.

    115. The FITISTICS registration is in full force and effect on the Patent &

    Trademark Office's Principal Register, and gives rise to presumptions in favor of

    FITISTICS with respect to validity, ownership, and exclusive rights to use the

    FITISTICS mark throughout the United States.116. FITISTICS is the sole owner and rights-holder in the FITISTICS mark.

    117. STAR TRAC has and continues to infringe the FITISTICS mark by

    displaying the mark on the displays of the accused products.

    118. Additionally, STAR TRAC has and continues to infringe the FITISTICS

    mark by displaying the mark in the headers of software code running on the accused

    products.

    119. STAR TRAC's unauthorized uses of the FITISTICS mark on the accused

    products is likely to confuse, mislead, and deceive consumers as to the origin of the

    accused products. Unless enjoined by this Court, Defendants will continue to infring

    Plaintiff's trademark rights.

    120. STAR TRAC uses the actual FITISTICS mark, and this mark is displaye

    on STAR TRAC products that infringe the '709 patent and FITISTICS' software.

    These infringing products are sold in the United States and throughout the world.

    121. FITISTICS has not consented to, sponsored, endorsed, or approved of

    STAR TRAC's continued and post-license use of the FITISTICS trademark or any

    variations thereof in connection with the manufacture, marketing, or sale of any

    products or services.

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    122. The aforesaid past and continuing actions of STAR TRAC constitute

    trademark infringement in violation of 15 U.S.C. 1125 and has caused and

    continues to cause Plaintiff irreparable harm warranting the imposition of preliminary

    and permanent injunctive relief, as well as money damages for past infringement.

    XI

    COUNTVIII

    INTENTIONAL INTERFERENCEWITH PROSPECTIVEECONOMICRELATIONS

    (Against All Defendants)

    123. Plaintiff refers to and incorporates by this reference as though fully set

    forth herein, each and every allegation set forth in paragraphs 1 through 122 above.

    124. In spring of 2011 FITISTICS was exploring a business relationship withOctane Fitness. Their discussions created an economic relationship that probably

    would have resulted in an economic benefit to FITISTICS.

    125. After a series of discussions, Octane Fitness withdrew from negotiations

    because it understood (through STAR TRAC's incorrect statements) that FITISTICS

    no longer owned any of its intellectual property.

    126. Plaintiff is informed and believes that STAR TRAC knew of the

    relationship between FITISTICS and that STAR TRAC's public, and materially

    incorrect, statements that STAR TRAC owned all of FITISTICS' intellectual property

    were made in an effort to disrupt FITISTICS' business relationships.

    127. STAR TRAC made these false and deceptive statements (namely, that

    STAR TRAC, not FITISTICS, owned FITISTICS' intellectual property).

    128. As a result, FITISTICS' economic relationship with Octane Fitness, and

    possibly others, was disrupted and FITISTICS was harmed.

    129. STAR TRAC's deliberate misstatements regarding the ownership of

    FITISTICS' intellectual property was a substantial factor in causing harm to

    FITISTICS.

    130. These acts constitute an intentional inference with FITISTICS' economic

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    relationship with, inter alia, Octane Fitness - an economic relationship that probably

    would have resulted in an economic benefit to FITISTICS.

    PRAYERFORRELIEF

    WHEREFORE, Plaintiff prays for judgment and relief against the Defendants,

    and each of them, as follows:

    A. For an award of actual damages according to proof herein, but in excess o

    $1,085,000.00;

    B. For interest at the legal rate on all damages awarded herein;

    C. For punitive and examplary damages according to proof;

    D. For a judicial determination that the '709 Patent is infringed by Defendants

    E. For a judicial determination that the '709 Patent is valid and enforceable;F. For a judicial determination that Defendants' infringement of the '709 Paten

    is willful;

    G. That preliminary and permanent injunctions be issued against Defendants

    for, inter alia, their continued and ongoing infringement of the claims of the '709

    patent, the FITISTICS trademark, and FITISTICS' copyrighted material by Defendan

    and their parents, subsidiaries, officers, directors, employees, affiliates, representativ

    and agents, and all those acting in concert with or through Defendants, directly or

    indirectly, including, but not limited to, distributors, customers, and other retailers;

    H. That an accounting be had for damages caused to Plaintiff by Defendants'

    respective acts in violation of the U.S. Patent Act (35 USC 1, et seq.) together with

    pre-judgment and post-judgment interest;

    I. That damages be awarded in accordance with the U.S. Patent Act, 35 USC

    1, et seq., and in no event less than a reasonable royalty to be affixed by the Court

    after due and careful consideration of evidence related to such damages;

    J. That any damages awarded in accordance with any prayer for relief be

    enhanced and, in particular, trebled in accordance with the U.S. Patent Act (35 USC

    1, et seq.) for Defendants' respective acts which are found to be willful acts of patent

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