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1 ROBERT J. YORIO (SBN 93178) [email protected] 2 COLBY B. SPRINGER (SBN 214868) [email protected] 3 CHRISTINE S. WATSON (SBN 218006) [email protected] 4 CARR & FERRELL LLP 2200 Geng Road 5 Palo Alto, California 94303 Telephone: (650) 812-3400 6 Facsimile: (650) 812-3444 7 Attorneys for Plaintiff ACTICON TECHNOLOGIES LLC 8 9 10 11 12 13 ACTICON TECHNOLOGIES LLC, 14 15 v. Plaintiff, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFF ACTICON TECHNOLOGIES LLC'S EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND MOTION FOR PRELIMINARY INJUNCTION Date: Time: Judge: Courtroom: TBD TBD Hon. Jeremy Fogel 3, Fifth Floor CASE NO. C 07-4507 JF (HRL) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

16 PRETEC ELECTRONICS CORPORATION, a dissolved California corporation; PTI 17 GLOBAL, INC., a California corporation; CHIU FENG CHEN, an individual; GORDON 18 YU, an individual; TOMMY HO, an individual; ROBERT WU, an individual; GRACE YU, an 19 individual; KUEI LU, an individual; and DOES 1 through 20, 20 Defendants. 21 22 23 24 25 26 27 28
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1 2 I. 3 4 II. 5 6 B. 7 8 III. 9 A. 10 11 12 13 C. 14 15 16 17 18 19 IV. 20 21 22 23 24 25 26 27 28
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TABLE OF CONTENTS SUMMARY OF RELIEF SOUGHT AND NEED FOR TEMPORARY RESTRAINING ORDER ................................................................................................1 BACKGROUND...............................................................................................................2 A. Relevant Procedural and Factual History. ........................................................2 PRETEC's Improper Dissolution and DEFENDANTS' Fraudulent Transfer of PRETEC's Corporate Assets......................................5

ARGUMENT ....................................................................................................................6 ACTICON is Likely to Prevail on the Merits of its Fraudulent Transfer and Improper Dissolution Causes of Action......................................7 ACTICON will Suffer Irreparable Injury if the Court Does Not Issue a Temporary Retraining Order and Preliminary Injunction. .............................................................................................................8 The Balance of Hardships Weighs Strongly in ACTICON's Favor......................................................................................................................9 A Temporary Restraining Order or Preliminary Injunction Will Not Disserve the Public Interest..........................................................................9 ACTICON is willing to Post a Bond. ................................................................10 No Notice to DEFENDANTS is Required. .......................................................10

B.

D.

E. F.

CONCLUSION...............................................................................................................11

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1 2 CASES

TABLE OF AUTHORITIES

3 Amoco Production Co. v. Village of Gambell, Alaska, (1987) 480 U.S. 531 ...............................7 4 Arcamuzi v. Continental Air Lines, Inc. (9th Cir. 1987) 819 F.2d 935.........................................7 5 Ashcroft v. American Civil Liberties Union, (2004) 542 U.S. 656 ...............................................7 6 Department of Parks & Rec. for State of Calif. v. Bazaar Del Mundo, Inc., (9th Cir. 2006) 448 F.3d 1118 ...............................................................................................................7 7 Lakeview Technology, Inc. v. Robinson, (7th Cir. 2006) 446 F.3d 655 ........................................9 8 Weinberger v. Romero-Barcelo, (1982) 456 U.S. 305.................................................................7 9 10 STATUTES 11 Civil Local Rule 65-1(b) .............................................................................................................10 12 Fed.R.Civ.P. 65(b).......................................................................................................................10 13 Fed.R.Civ.P. 65(c).......................................................................................................................10 14 15 OTHER AUTHORITIES 16 17 18 19 20 21 22 23 24 25 26 27 28
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Schwarzer, Tashima & Wagstaffe, Cal. Prac. Guide, Fed. Civ. Pro. Before Trial (The Rutter Group 2007), §13:62............................................................................................9

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1 2

I.

SUMMARY OF RELIEF SOUGHT AND NEED FOR TEMPORARY RESTRAINING ORDER

ACTICON filed a patent infringement complaint in the United States District Court, 3 Northern District of California, titled Acticon Technologies LLC v. Pretec Electronics Corporation, 4 et al., Case No. C 06-4679 JF (HRL) ("FIRST COMPLAINT"), against Defendant PRETEC 5 ELECTRONICS CORPORATION ("PRETEC") and other defendants for infringement of U.S. 6 Patent Nos. 4,603,320 (the "`320 Patent"); 4,543,450 (the "`450 Patent"); 4,972,470 (the "`470 7 Patent"); and 4,686,506 (the "`506 Patent") (collectively, the "Patents-in-Suit"), which describe 8 various forms of electronic connectors. The FIRST COMPLAINT stated causes of action alleging 9 that PRETEC designed, manufactured, marketed, distributed, imported, sold and/or offered for sale 10 in the United States PCMCIA, CompactFlash and Secure Digital I/O form factor electronic 11 12 Despite being placed on notice of its infringing activity, being served with the FIRST 13 COMPLAINT and summons, the Court's granting of a continuance of the Initial Case Management 14 Conference to allow PRETEC to hire counsel and ACTICON's agreement to refrain from entering 15 PRETEC's default judgment based on PRETEC's representations that it would participate in a pre16 settlement process, PRETEC fraudulently filed for corporate dissolution with the California 17 Secretary of State for the purpose of evading court process. To further its conspiracy to avoid 18 liability under the FIRST COMPLAINT, PRETEC, along with PRETEC's officers, directors and 19 majority shareholders, including Defendants CHIU FENG CHEN, GORDON YU, TOMMY HO, 20 GRACE YU, ROBERT WU and KUEI LU (collectively "INDIVIDUAL DEFENDANTS"), 21 fraudulently transferred PRETEC's assets to PTI GLOBAL, INC., a defendant in the instant action 22 who was formerly known as Pretec Technology, Inc., in order to continue operating PRETEC's 23 business after PRETEC's corporate dissolution. 24 As a result of PRETEC's unlawful conduct, ACTICON was compelled to file a second 25 26 27 28
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connectors which infringed the Patents-in-Suit ("Accused Products")1.

The Accused Products all employ an electronic connector that connects a computer and one or more external devices, whereby such electronic connector converts signals between the computer and external devices in order to obtain a desired connecting configuration and/or function. -1Memo. of Points and Authorities ISO Plaintiff Acticon Technologies LLC's Ex Parte Application for Temporary Restraining Order and Motion for Preliminary Injunction ­ C 07-4507 JF (HRL)

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1 action in the United States District Court, Northern District of California, titled Acticon 2 Technologies LLC v. Pretec Electronics Corporation, et al., Case No. C 07-4507 JF (HRL) 3 ("SECOND COMPLAINT") against PRETEC, PTI GLOBAL, INC. and the INDIVIDUAL 4 DEFENDANTS (collectively "DEFENDANTS") for infringement of the Patents-in-Suit, fraudulent 5 transfer of assets under Civil Code Section 3439, et seq. and improper dissolution under California 6 Corporations Code Section 1903(c). 7 ACTICON now seeks a temporary restraining order and preliminary injunction in order to

8 prevent PRETEC, its successor corporation, PTI GLOBAL, INC., and the INDIVIDUAL 9 DEFENDANTS from avoiding liability for their infringing conduct for the second time by again 10 fraudulently transferring PRETEC/PTI GLOBAL, INC.'s corporate assets to another company or to 11 the INDIVIDUAL DEFENDANTS for the purpose of evading court process. 12 As demonstrated below, ACTICON meets the standards that entitle it to preliminary

13 injunctive relief. A temporary restraining order and preliminary injunction will protect 14 ACTICON's rights and prevent ACTICON from suffering imminent and irreparable injury if the 15 status quo is not preserved. ACTICON respectfully requests that the Court temporarily restrain and 16 preliminarily enjoin DEFENDANTS from transferring PTI GLOBAL, INC.'s assets to another 17 entity or to the INDIVIDUAL DEFENDANTS except for those transfers that ordinarily occur in 18 PTI GLOBAL, INC.'s normal course of business. 19 20 A. 21 II. BACKGROUND

Relevant Procedural and Factual History. ACTICON is the owner of the entire right, title and interest in the Patents-in-Suit. See

22 Declaration of Christine Watson ("Watson Decl."), at ¶2. On or about August 1, 2006, ACTICON 23 filed the FIRST COMPLAINT asserting claims for patent infringement. PRETEC was named as a 24 defendant in the FIRST COMPLAINT and Defendant ROBERT WU (as corporate representative 25 of PRETEC) was personally served with the summons and FIRST COMPLAINT at 46791 Fremont 26 Boulevard, Fremont, California, on or about August 17, 2006. Watson Decl., at ¶3. PRETEC did 27 not respond to the FIRST COMPLAINT on or before September 6, 2006, the deadline for PRETEC 28 to answer or otherwise respond to the FIRST COMPLAINT. Watson Decl., at ¶4.
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1

ACTICON filed a Request for Entry of Default against PRETEC on September 13, 2006,

2 and PRETEC's default was entered in Acticon Technologies LLC v. Pretec Electronics Corp., et al., 3 Case No. C 06-4679 JF (HRL) on September 19, 2006. Watson Decl., at ¶5. On October 5, 2006, 4 ACTICON sent a letter to PRETEC via certified U.S. mail advising that ACTICON would request 5 entry of default judgment against PRETEC if PRETEC did not respond to ACTICON's 6 communication on or before October 11, 2006. PRETEC did not respond to ACTICON's October 7 5, 2006 letter. Watson Decl., at ¶6. 8 Notwithstanding the default entered against PRETEC, on or about October 19, 2006,

9 PRETEC filed a motion captioned, "Motion to Change Time," requesting a sixty-day continuance 10 of the November 29, 2006 Case Management Conference in Acticon Technologies LLC v. Pretec 11 Electronics Corp., et al., Case No. C 06-4679 JF (HRL). This motion was signed by Defendant 12 TOMMY HO and Defendant GORDON YU. Watson Decl., at ¶7. 13 On October 24, 2006, Defendant TOMMY HO contacted counsel for ACTICON via

14 telephone. The following day, in a telephone conference between TOMMY HO and ACTICON's 15 counsel, TOMMY HO requested a description of the "Accused Products" in the FIRST 16 COMPLAINT and agreed to provide ACTICON with six years of annual sales information for 17 PRETEC's Accused Products. Watson Decl., at ¶8. 18 In response to e-mail correspondence from counsel for Acticon, Defendant TOMMY HO

19 wrote in an October 26, 2006 e-mail message, 20 21 22 23 "Thanks for the information. We will study the accused products as you claimed. If we agree, then we will prepare the past years of sales information. If we disagree on some of the accused products, we will contact you to discuss. We will try to get as much sales information as possible." Watson Decl., at ¶9. Based on Defendant TOMMY HO's agreement on behalf of PRETEC to provide sales

24 information for the Accused Products to ACTICON, ACTICON agreed not to seek entry of default 25 judgment against PRETEC, did not oppose PRETEC's Motion to Change Time and filed a 26 Statement of Non-Opposition to Pretec's Motion to Change Time on October 27, 2006, in Acticon 27 Technologies LLC v. Pretec Electronics Corp., et al., Case No. C 06-4679 JF (HRL). Watson 28 Decl., at ¶10. ACTICON never received any further communication, e-mail, telephone or
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1 otherwise, from TOMMY HO or any other representative from PRETEC although TOMMY HO 2 promised to provide sales information to ACTICON or at a minimum, to follow up with 3 ACTICON. Watson Decl., at ¶13. 4 The very same day, October 27, 2006, a Fremont, California based company doing business

5 under the name Pretec Technology, Inc., who was not named a defendant in the FIRST 6 COMPLAINT, filed a Certificate of Amendment of Articles of Incorporation with the California 7 Secretary of State to change its corporate name to PTI GLOBAL, INC. Watson Decl., at ¶11. 8 On October 31, 2006, the Court granted PRETEC's motion in Acticon Technologies LLC v.

9 Pretec Electronics Corp., et al., Case No. C 06-4679 JF (HRL) and continued the Initial Case 10 Management Conference scheduled for November 29, 2006 to February 2, 2007, which PRETEC 11 had requested in order to have sufficient time to obtain counsel. Watson Decl., at ¶12; see Exhibit 12 C to Watson Decl. Counsel for ACTICON has never been contacted by any attorney purporting to 13 be PRETEC's counsel and the Docket in Case No., C 06-4679 JF (HRL) does not reflect the filing 14 of any Substitution of Counsel for PRETEC. Watson Decl., at ¶13. 15 On November 28, 2006, one day prior to the originally scheduled Case Management

16 Conference and one month after Pretec Technology, Inc. changed its name to PTI GLOBAL, INC., 17 PRETEC filed a Certificate of Dissolution in the office of the Secretary of State of California. 18 Watson Decl., at ¶14; see Exhibit G attached to Watson Decl. Defendant CHIU FENG CHEN 19 certified and declared under penalty of perjury in the Certificate of Dissolution that, inter alia, 20 "THE CORPORATION'S KNOWN DEBTS AND LIABILITIES HAVE BEEN ACTUALLY 21 PAID." Watson Decl., at ¶14. Defendant CHIU FENG CHEN's certification and declaration in 22 fact was false since the FIRST COMPLANT was pending and PRETEC had not resolved that 23 litigation. No one from PRETEC appeared at the rescheduled Case Management Conference on 24 February 2, 2007. ACTICON has not heard from PRETEC since October 26, 2006. Watson Decl., 25 at ¶13. Needless to say, DEFENDANTS never informed ACTICON or this Court of their actions. 26 As a result of PRETEC's unlawful conduct, ACTICON filed the SECOND COMPLAINT

27 in this action on August 20, 2007. The SECOND COMPLAINT alleges that prior to PRETEC's 28 improper corporate dissolution on November 28, 2006, PRETEC made, used, imported, distributed,
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1 offered for sale and/or sold certain products in the United States that infringe upon the Patents-in2 Suit, including, but not limited to, CompactFlash form factor I/O devices such as Ethernet and 3 Modem cards, Secure Digital form factor I/O devices such as the Whanto Modem, PCMCIA form 4 factor devices such as Ethernet, Modem and Combo cards, as well as other CompactFlash, SDIO 5 and PCMCIA form factor devices. See SECOND COMPLAINT, ¶¶12, 47. The SECOND 6 COMPLAINT further alleges that each named defendant ("DEFENDANTS") fraudulently 7 transferred and/or conspired to fraudulently transfer PRETEC's assets to PTI GLOBAL, INC. 8 (formerly Pretec Technology, Inc.) for the purpose of avoiding liability under the FIRST 9 COMPLAINT and to continue operating PRETEC's business as PTI GLOBAL, INC. SECOND 10 COMPLAINT, at ¶¶85, 86, 90, 97. 11 B. 12 13 PRETEC's Improper Dissolution and DEFENDANTS' Fraudulent Transfer of PRETEC's Corporate Assets. In order to remove its assets and conceal the transfer of its assets, PRETEC filed for

14 corporate dissolution. PRETEC did not cease its business operations despite filing a Certificate of 15 Corporate Dissolution with the California Secretary of State, however, and continues to do business 16 in the United States under the PRETEC ELECTRONICS CORPORATION brand and name and as 17 PTI GLOBAL, INC. PTI GLOBAL, INC. now operates at the exact same location where PRETEC 18 had operated prior to its dissolution. Watson Decl., at ¶18; see Exhibits J-K, attached to Watson 19 Decl. Further demonstrating that PRETEC's dissolution was a sham, PRETEC, who supposedly 20 dissolved in November 2006, issued a press release on or about April 4, 2007, announcing its new 21 Ruggedized Industrial CompactFlash card. Watson Decl., at ¶15. In addition, the Feedback page 22 of PTI GLOBAL, INC.'s Amazon.com storefront demonstrates that PTI GLOBAL, INC. has been 23 selling PRETEC products as recently as September 2007. Watson Decl., at ¶19; see Exhibit N 24 attached to Watson Decl. 25 It is clear from the readily available public information regarding PTI GLOBAL, INC. and

26 PRETEC that PTI GLOBAL INC. is a mere continuation of PRETEC. Both prior and subsequent 27 to PRETEC's dissolution, PTI GLOBAL, INC. has been listed as PRETEC's United States 28 company headquarters office on PRETEC's web site and currently is listed as PRETEC's United
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1 States office. Watson Decl., at ¶19; see Exhibit M to Watson Decl. Under the "Where to Buy" 2 link, PRETEC's web site directs Internet users to purchase PRETEC brand products from PTI 3 GLOBAL, INC.'s physical location (231 Whitney Place, Fremont, California), web site 4 (www.ptiglobalusa.com) and Amazon.com storefront. Watson Decl., at ¶19; see Exhibit L to 5 Watson Decl. 6 PTI GLOBAL, INC.'s web site, located at www.ptiglobalusa.com, sells virtually only

7 PRETEC products online. The homepage of PTI GLOBAL, INC.'s web site even contains the 8 header, "Flash Memory Innovation by PRETEC." Watson Decl., at ¶16; see Exhibit I, attached to 9 Watson Decl. In addition, the "About PTI Global Inc." section of PTI GLOBAL, INC.'s storefront 10 in Amazon.com's online marketplace, located at http://www.amazon.com/shops/pti_global, boasts, 11 "Since 1993, PRETEC brand has been recognized internationally for it's experience in pioneering 12 innovative and quality products offered to the data storage, mobile computing and industrial 13 markets. PRETEC brand is focused on global markets providing it's full-line of own brand-name 14 products: USB device storage, Flash memory Card storage, Multi-Media solution, Mobile 15 Peripherals, Multi-Function, Industrial storage and Accessory. PRETEC brand products with 16 unique ID design and highest reliability create PRETEC's winning formula, reaching the customer's 17 needs and enhancing your digital world." Watson Decl., at ¶16; see Exhibit J to Watson Decl. 18 In addition, ROBERT WU, who was personally served in August 2006 with the FIRST

19 COMPLAINT at PRETEC's 46791 Fremont Boulevard, Fremont, California location, was listed as 20 an officer and/or director of Pretec Technology, Inc. (later known as PTI GLOBAL, INC.) in Pretec 21 Technology, Inc.'s May 2006 Statement of Information filed in the Office of the Secretary of State 22 of the State of California. And, Defendant TOMMY HO, who signed PRETEC's Motion to 23 Change Time and corresponded with counsel for ACTICON on behalf of PRETEC also was listed 24 in Pretec Technology, Inc.'s May 2006 Statement of Information. See Exhibit O to Watson Decl. 25 26 III. ARGUMENT

A temporary restraining order and preliminary injunction are appropriate here, where

27 ACTICON will suffer immediate and irreparable harm if the Court does not preserve the status quo 28 and prevent DEFENDANTS from improperly dissolving PTI GLOBAL, INC. to conceal their
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1 fraudulent transfer of PTI GLOBAL, INC.'s assets to another entity or to the INDIVIDUAL 2 DEFENDANTS. Based on PRETEC's/PTI GLOBAL, INC.'s blatant disregard for the Court and 3 court processes, dishonesty with ACTICON's counsel and flagrantly unlawful conduct, it is likely 4 that PTI GLOBAL, INC. will transfer its assets again in order to avoid liability in the instant action, 5 just as PRETEC did when it transferred its assets to PTI GLOBAL, INC. in order to avoid liability 6 under the FIRST COMPLAINT. 7 The Court may grant injunctive relief where the plaintiff demonstrates irreparable injury

8 and the inadequacy of legal remedies. Weinberger v. Romero-Barcelo, (1982) 456 U.S. 305, 312; 9 Arcamuzi v. Continental Air Lines, Inc. (9th Cir. 1987) 819 F.2d 935, 937. In addition, courts apply 10 either the traditional test or an alternative test in determining whether to grant a request for a 11 temporary restraining order or preliminary injunction. Under the traditional test, the plaintiff must 12 demonstrate (1) a likelihood of success on the merits, (2) a substantial threat that plaintiff will 13 suffer irreparable injury if the injunction is denied, (3) that the balance of the hardships favors the 14 plaintiff and (4) the injunction does not disserve the public interest. See Amoco Production Co. v. 15 Village of Gambell, Alaska, (1987) 480 U.S. 531, 542. The alternative test permits the plaintiff to 16 meet its burden by showing either (1) a combination of probable success on the merits and the 17 possibility of irreparable injury or (2) serious questions as to these matters and the balance of 18 hardships tips sharply in the plaintiff's favor. Department of Parks & Rec. for State of Calif. v. 19 Bazaar Del Mundo, Inc., (9th Cir. 2006) 448 F.3d 1118, 1123. As demonstrated below, ACTICON 20 meets the criteria of both tests. 21 22 23 A. ACTICON is Likely to Prevail on the Merits of its Fraudulent Transfer and Improper Dissolution Causes of Action. A plaintiff must show a likelihood of success on the merits in order to obtain a preliminary

24 injunction. Ashcroft v. American Civil Liberties Union, (2004) 542 U.S. 656, 665. Here, 25 ACTICON is likely to prevail on its Fraudulent Transfer and Improper Dissolution claims. As 26 discussed in Section II above, PRETEC was well-aware of the patent infringement action filed 27 against it because it was served with the FIRST COMPLAINT and even filed a Motion to Change 28 Time with the Court on the fictitious grounds that it needed sixty days in which to obtain counsel.
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1 Prior to the filing of PRETEC's motion, PRETEC's default had already been entered. ACTICON, 2 in good faith and based on PRETEC's representations that it would work with ACTICON towards 3 the resolution of the litigation with respect to the claims against PRETEC, filed a Statement of 4 Non-Opposition to PRETEC's motion and did not seek entry of default judgment against PRETEC. 5 PRETEC, however, had no intention of cooperating with ACTICON or participating in any

6 type of settlement process as it had falsely represented. Nor did PRETEC intend to seek counsel as 7 evidenced by PRETEC's failure to file a Substitution of Counsel or make any other appearance in 8 the first action, its failure to communicate with counsel for ACTICON after its promise to do so and 9 by its filing for dissolution without ever notifying the Court or counsel for ACTICON. Defendant 10 CHIU FENG CHEN, on behalf of PRETEC, had the audacity to sign and declare under penalty of 11 perjury that PRETEC's known debts and liabilities have been actually paid when the first action 12 was pending and DEFENDANTS knew that they had not addressed the contingent liability 13 associated with ACTICON's patent infringement claims. 14 Not only did PRETEC improperly dissolve its corporate entity, but it fraudulently

15 transferred its assets to PTI GLOBAL, INC., which until October 2006 was known as Pretec 16 Technology, Inc., and which is located at the same physical address as PRETEC prior to PRETEC's 17 dissolution. PTI GLOBAL, INC. continues to operate PRETEC's business, selling only PRETEC 18 brand name products at its physical location, on its web site and in Amazon.com's online 19 marketplace. And, despite the fact that PRETEC purports to be dissolved, PRETEC's web site still 20 boasts that it has 83 distributors in 59 countries. Watson Decl., at ¶19. 21 22 23 B. ACTICON will Suffer Irreparable Injury if the Court Does Not Issue a Temporary Retraining Order and Preliminary Injunction. If the Court does not preserve the status quo and prevent DEFENDANTS from fraudulently

24 transferring PTI GLOBAL, INC./PRETEC's assets to another entity or to the INDIVIDUAL 25 DEFENDANTS, DEFENDANTS will likely transfer PTI GLOBAL, INC./PRETEC's assets for the 26 second time to avoid liability under the SECOND COMPLAINT as they did in order to avoid 27 liability under the FIRST COMPLAINT. In this scenario, ACTICON again will be left without 28 legal recourse as it was in the first action. Legal remedies will be inadequate to redress
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1 ACTICON's injury since, as in the case of Defendant PRETEC in first action, the DEFENDANTS 2 in the instant action would be ­ and PRETEC is ­ judgment-proof. As recognized by the Seventh 3 Circuit, "The ability to calculate damages does not make that remedy adequate if plaintiff cannot 4 collect the award: `A judgment-proof defendant is not deterred by the threat of money damages, so 5 some other remedy (such as the contempt power) may be essential.'" Lakeview Technology, Inc. v. 6 Robinson, (7th Cir. 2006) 446 F.3d 655, 657; see also Schwarzer, Tashima & Wagstaffe, Cal. Prac. 7 Guide, Fed. Civ. Pro. Before Trial (The Rutter Group 2007), §13:62. Here, PRETEC has 8 demonstrated its tendency to take advantage of the Court, opposing counsel and court processes and 9 a threat of money damages will be of no consequence to DEFENDANTS. 10 C. 11 The Balance of Hardships Weighs Strongly in ACTICON's Favor. The balance of hardships weighs in ACTICON's favor since a temporary restraining order

12 and preliminary injunction will merely preserve the status quo and enjoin PTI GLOBAL, INC. from 13 transferring its assets pending the outcome of this litigation, while the lack of any such equitable 14 remedy will create surefire opportunities for DEFENDANTS to evade court process for a second 15 time, without DEFENDANTS suffering any consequences for their unlawful actions. If PRETEC's 16 conduct in the first action is any indication of its level of respect for the law and for this Court, 17 ACTICON undoubtedly will be left without an adequate remedy in the instant action as it was in 18 the first action. Moreover, ACTICON will unreasonably be forced to continually pursue 19 "PRETEC," in its various corporate transformations, in order to obtain any legal redress regarding 20 its complaints filed against PRETEC/PTI GLOBAL, INC. 21 22 23 D. A Temporary Restraining Order or Preliminary Injunction Will Not Disserve the Public Interest. Enjoining PTI GLOBAL, INC. from transferring its assets to another company or the

24 INDIVIDUAL DEFENDANTS carries no conceivable risk or detriment to the public. The 25 injunction will not disserve the public interest, and in fact will result in the opposite outcome, 26 because it will prevent DEFENDANTS from avoiding their legal responsibilities and evading court 27 process. 28
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1 E. 2

ACTICON is willing to Post a Bond. Pursuant to Fed.R.Civ.P. 65(c), ACTICON is prepared to post a bond as a condition of

3 obtaining a temporary restraining order and preliminary injunction. Based on DEFENDANTS' 4 flagrantly improper and unlawful conduct as described above, a nominal bond is sufficient. Even 5 if enjoined, DEFENDANTS would still be able to operate their business to the fullest extent. A 6 bond of $5,000 would more than cover any damages suffered or costs incurred by 7 DEFENDANTS if DEFENDANTS are found to have been wrongfully restrained. 8 F. 9 No Notice to DEFENDANTS is Required. Under Fed.R.Civ.P. 65(b), "[a] temporary restraining order may be granted without written

10 or oral notice to the adverse party or that party's attorney only if (1) it clearly appears from specific 11 facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss, or 12 damage will result to the applicant before the adverse party or that party's attorney can be heard in 13 opposition, and (2) the applicant's attorney certifies to the court in writing the efforts, if any, which 14 have been made to give the notice and the reasons supporting the claim that notice should not be 15 required." Pursuant to Civil Local Rule 65-1(b), however, "unless relieved by order of a Judge for 16 good cause shown, on or before the day of an ex parte motion for a temporary restraining order, 17 counsel applying for the temporary restraining order must deliver notice of such motion to 18 opposing counsel or party." ACTICON has demonstrated through the facts set forth in the 19 Declaration of Christine S. Watson that ACTICON will suffer immediate and irreparable injury 20 before DEFENDANTS or their attorneys can be heard in opposition. In addition, ACTICON's 21 counsel has certified to the Court in writing that ACTICON has provided notice to PTI GLOBAL, 22 INC. of ACTICON's Ex Parte Application for Temporary Restraining Order and Motion for 23 Preliminary Injunction via facsimile and is attempting to serve DEFENDANTS with the SECOND 24 COMPLAINT and all papers and pleadings associated with ACTICON's Ex Parte Application for 25 Temporary Restraining Order and Motion for a Preliminary Injunction on the morning of October 26 5, 2007. See Watson Decl., at ¶20; see also Fed.R.Civ.P. 65(b) and Civil L.R. 65-1(b). 27 28
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1 2

IV.

CONCLUSION

Based on the foregoing, ACTICON respectfully requests that the Court issue, pending a full

3 hearing on ACTICON's motion for preliminary injunction, an Order (i) enjoining and restraining 4 DEFENDANTS, together with all of their officers, agents, servants, employees, representatives, 5 attorneys and assigns and all other persons, firms or companies in active concert or participation 6 with them from directly or indirectly: 7 8 9 10 11 12 13 14 15 16 17 18 c. b. a. Transferring, selling, hypothecating or otherwise moving or removing any assets (including cash and any other monetary sums) of Defendant PTI GLOBAL, INC. to the DEFENDANTS or any defendant's parent companies, subsidiaries, officers, directors, attorneys, agents, affiliates or anyone acting in concert with any defendant; Transferring, selling, hypothecating or otherwise moving or removing any of the Accused Products to the DEFENDANTS or any defendant's parent companies, subsidiaries, officers, directors, attorneys, agents, affiliates or anyone acting in concert with any defendant; and Transferring, selling, hypothecating or otherwise moving or removing any assets (including cash and any other monetary sums) of Defendant PTI GLOBAL, INC. to any business entity or individual, except for the transferring, selling, moving or removing of assets that ordinarily occurs in the normal course of business; and

19 (ii) setting a date and time for a hearing on ACTICON's Motion for Preliminary Injunction, as set 20 forth in the accompanying Proposed Temporary Restraining Order and Order to Show Cause for 21 Preliminary Injunction. 22 23 Dated: October 4, 2007 24 25 26 27 28
{00260449v1}

CARR & FERRELL LLP
By: /s/ Christine S. Watson ROBERT J. YORIO COLBY B. SPRINGER CHRISTINE S. WATSON Attorneys for Plaintiff ACTICON TECHNOLOGIES LLC

-11Memo. of Points and Authorities ISO Plaintiff Acticon Technologies LLC's Ex Parte Application for Temporary Restraining Order and Motion for Preliminary Injunction ­ C 07-4507 JF (HRL)