Fitistics v. Unisen et. al.
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Transcript of Fitistics v. Unisen et. al.
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7/31/2019 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
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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
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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.
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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
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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
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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
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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
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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
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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
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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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