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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, SUPPLEMENTAL BRIEF IN SUPPORT OF PLAINTIFF ACTICON TECHNOLOGIES LLC'S MOTION FOR PRELIMINARY INJUNCTION Date: Time: Judge: Courtroom: November 9, 2007 9:00 a.m. 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 II. 4 5 6 i. 7 8 9 10 11 12 13 14 15 16 17 III. 18 19 20 21 IV. 22 23 24 25 26 27 28
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TABLE OF CONTENTS INTRODUCTION ............................................................................................................1 ARGUMENT ....................................................................................................................1 A. ACTICON has Demonstrated A Likelihood Of Success And The Possibility Of Irreparable Injury........................................................................2 ACTICON is likely to succeed on its patent infringement claims. ........................................................................................................2 ACTICON is likely to succeed on its improper dissolution claim...........................................................................................................4 ACTICON is likely to succeed on its fraudulent transfer claim...........................................................................................................4 If the status quo is not preserved pending the outcome of this litigation, ACTICON will likely suffer irreparable harm...........................................................................................................7

ii.

iii.

iv.

B.

ACTICON Met The Service Requirements Of The Federal And Local Rules Relating To Ex Parte Applications For Temporary Restraining Orders...............................................................................................8 A $500,000 Bond is Inappropriate. .....................................................................8

C.

ADDITIONAL FACTS EVIDENCING THE NEED FOR INJUNCTIVE RELIEF .............................................................................................................................9 A. ACTICON Has Set Forth Sufficient Evidence That It Will Suffer Irreparable Harm If The Injunction Does Not Issue. .....................................11

CONCLUSION...............................................................................................................13

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1 2 CASES 3 4

TABLE OF AUTHORITIES

Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521 (9th Cir. 1984)..................................2

5 Blank v. Olcovich Shoe Corp., (1937) 20 Cal.App.2d 456 ...........................................................6 6 Economy Refining & Service Co. v. Royal Nat. Bank of New York (1971) 20 Cal.App.3d 434, 67 P.2d 376 ..............................................................................................5, 6 7 8 Roe v. Anderson, 134 F.3d 1400, 1401-02 (9th Cir. 1998) ...........................................................2 9 STATUTES 10 11 35 U.S.C. §271(a)......................................................................................................................1, 3

12 Civil Code §3439.04 .....................................................................................................................4 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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1 2

I.

INTRODUCTION

On October 15, 2007, the Court denied the Ex Parte Application for Temporary Restraining

3 Order of Plaintiff Acticon Technologies LLC ("ACTICON") and set a hearing date of November 9, 4 2007, at 9:00 a.m., for ACTICON's Motion for Preliminary Injunction ("motion"). See Order, 5 dated October 15, 2007 (Docket Entry 16). ACTICON hereby submits its supplemental brief in 6 support of its motion in accordance with the Court's Order. 7 Similarly to its predecessor PRETEC's conduct in past and present litigation, PTI

8 GLOBAL's Opposition employs tactics of avoidance and evasion, including the submission of 9 inaccurate facts to the Court. More importantly, PTI GLOBAL's Opposition does not rebut, or 10 even address, the issue of whether ACTICON is likely to suffer irreparable injury. Rather, PTI 11 GLOBAL merely contends that ACTICON "collects royalties from many corporations" so "its 12 damages can be measured by money." PTI GLOBAL's Opposition, at 7:14-17. On this ground 13 alone, the Court should grant ACTICON's motion since ACTICON has made a sufficient showing 14 of the likelihood of irreparable harm if the status quo is not preserved. 15 In addition, PTI GLOBAL's arguments regarding ACTICON's likelihood of success on the

16 merits are equally inadequate and unpersuasive. PTI GLOBAL simply asserts that it is not a 17 manufacturer of infringing products. The distinction PTI GLOBAL attempts to draw between PTI 18 GLOBAL as an alleged distributor as opposed to a manufacturer of PRETEC branded products is 19 wholly irrelevant to its liability for patent infringement because a company is liable if it makes, 20 uses, offers to sell or sells infringing products. See 35 U.S.C. §271(a). PTI GLOBAL's own 21 admission that it is a distributor of PRETEC products greatly enhances the likelihood of 22 ACTICON's success on the merits of its Complaint if the PRETEC products infringe on the 23 Patents-in-Suit. 24 25 II. ARGUMENT

As the Court's Order dated October 15, 2007 recognizes, "a party seeking a preliminary

26 injunction must show either (1) a likelihood of success on the merits and the possibility of 27 irreparable injury, or (2) the existence of serious questions going to the merits and the balance of 28 the hardships tipping in the movant's favor. Roe v. Anderson, 134 F.3d 1400, 1401-02 (9th Cir.
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1 1998); Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521, 523 (9th Cir. 1984). These 2 formulations represent two points on a sliding scale in which the required degree of irreparable 3 harm increases as the probability of success decreases." Order, at 3:5-9 (Docket Entry 16). 4 ACTICON has met its burden to show that it is likely to succeed on the merits of its

5 fraudulent transfer of assets and improper dissolution claims as well as its patent infringement 6 claims. Based on PRETEC's questionable conduct in previous litigation as described more fully in 7 ACTICON's motion and Section III below and based on the relationship between PTI GLOBAL 8 and PRETEC, there are serious questions going to the merits of ACTICON's claims and the 9 balance of the hardships clearly tips in ACTICON's favor. 10 11 12 13 A. ACTICON has Demonstrated A Likelihood Of Success And The Possibility Of Irreparable Injury. i. ACTICON is likely to succeed on its patent infringement claims.

As described in the Complaint and in ACTICON's motion, the Patents-in-Suit, entitled

14 "Connector Interface" (`320 Patent), "Integrated Connector and Modem" (`450 Patent) 15 "Programmable Connector" (`470 Patent) and "Multiple Connector Interface" (`506 Patent), 16 involve various electronic connectors that convert signals between a computer and certain external 17 devices in order to obtain a desired connecting configuration and/or function. Complaint, at ¶¶4218 46. 19 The Complaint further alleges that "prior to on or about November 28, 2006, PRETEC

20 made, used, imported, distributed, offered for sale and/or sold certain products in the United States 21 that infringe upon the Patents-in-Suit, including, but not limited to, CompactFlash form factor I/O 22 devices such as Ethernet and Modem cards, Secure Digital form factor I/O devices such as the 23 Whanto Modem, PCMCIA form factor devices such as Ethernet, Modem and Combo cards, as well 24 as other CompactFlash, SDIO and PCMCIA form factor devices which may be further identified 25 during the course of discovery." Id., at ¶47. These products constitute the "Accused Products" in 26 this case. Many of the products available on PRETEC's and PTI GLOBAL's web sites, as well as 27 PTI GLOBAL's online storefront in Amazon.com's marketplace represent Accused Products, such 28 as the PRETEC brand CompactFlash cards and PCMCIA cards sold by PTI GLOBAL, which are
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1 products involving electronic connectors that convert signals between a computer and external 2 devices in order to obtain desired connecting configurations and/or functions. See Exhibit I to 3 Watson Decl. (Docket Entry 9). 4 PTI GLOBAL's liability with respect to the patent infringement claims turns on whether

5 PTI GLOBAL manufactures, distributes, offers to sell or sells infringing products. Whether PTI 6 GLOBAL is a manufacturer as opposed to a distributor of infringing products, which PTI 7 GLOBAL contends in its Opposition, is irrelevant to the Court's determination of whether 8 ACTICON will prevail on the merits of its patent infringement claims. Section 271(a) of Title 35 9 of the United States Code states, "Except as otherwise provided in this title, whoever without 10 authority makes, uses, offers to sell, or sells any patented invention, within the United States or 11 imports into the United States any patented invention during the term of the patent therefor, 12 infringes the patent." 35 U.S.C.§ 271(a). 13 Since PTI GLOBAL unquestionably sells PRETEC brand electronic connector products ­

14 and has admitted as much ­ the only other inquiry before the Court relates to the validity of the 15 Patents-in-Suit. The strength of ACTICON's patents, however, has been proven in a number of 16 legal actions resolved in ACTICON's favor, in which the accused infringers entered into license 17 agreements for the Patents-in-Suit. To date, ACTICON has obtained over 145 licenses involving at 18 least one of the Patents-in-Suit. 19 In addition, the `470 and `320 Patents enjoy a strong presumption of validity based on

20 successful re-examinations by the United States Patent & Trademark Office. See Ex Parte Re21 Examination Certificate for U.S. Patent No. 4,972,470 and Ex Parte Re-Examination Certificate for 22 U.S. Patent No. 4,603,320, attached as Exhibit A to the Supplemental Declaration of Christine S. 23 Watson ("Supp. Watson Decl.") In the re-examination prosecution for the `470 Patent, 114 U.S. 24 patents, 8 foreign patents and 27 printed articles were considered, in addition to the art previously 25 submitted during the original prosecution, and the '470 Patent was reissued without amendment. Id. 26 The '320 Patent also received a Re-Examination Certificate. Id. 27 28
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1 2

ii.

ACTICON is likely to succeed on its improper dissolution claim.

PTI GLOBAL's Opposition fails to address the issue of ACTICON's likelihood of success

3 on its improper dissolution claim. Based on the facts presented in ACTICON's motion, ACTICON 4 has demonstrated a likelihood of success on this claim and the Court should find in ACTICON's 5 favor on this issue. 6 After PRETEC's default had already been entered in Pretec I and despite the fact that the

7 Court had granted PRETEC a continuance for the opportunity to seek counsel, PRETEC filed a 8 Certificate of Dissolution. Watson Decl., at ¶14; see Exhibit G attached to Watson Decl. (Docket 9 Entry 9). Not only did PRETEC file for dissolution while litigation was still pending against it and 10 its default had been entered, but Defendant CHIU FENG CHEN certified and declared under 11 penalty of perjury in the Certificate of Dissolution that, inter alia, "THE CORPORATION'S 12 KNOWN DEBTS AND LIABILITIES HAVE BEEN ACTUALLY PAID." Watson Decl., at ¶14. 13 In addition to filing a false Certificate of Dissolution with the California Secretary of State,

14 PRETEC failed to cease its operations and continued to do business as PTI GLOBAL in the same 15 location, under the same brand name and from the same web site. PTI GLOBAL even shared the 16 same officers and directors as PRETEC until at least December 5, 2006. See Exhibit O to Watson 17 Decl. (Docket Entry 9). 18 19 20 21 22 23 24 25 26 27 28
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iii.

ACTICON is likely to succeed on its fraudulent transfer claim.

Civil Code §3439.04(a) provides that "A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows: (1) With actual intent to hinder, delay, or defraud any creditor of the debtor. (2) Without receiving a reasonably equivalent value in exchange for the transfer or exchange for the transfer or obligation, and the debtor: (A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (B) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due."

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1

In this case, the improper filing of PTI GLOBAL's Motion to Change Time, especially in

2 the context of PRETEC's/PTI GLOBAL's conduct in Pretec I, Sandisk Corp. v. Memorex 3 Products, Inc., Case No. 01-4063 VRW and Lexar Media, Inc. v. Pretec Electronics Corp., Case 4 No. 00-4770 MJJ, described below in Section III, provides evidentiary support for ACTICON's 5 allegations that PRETEC and the other defendants in this case fraudulently transferred PRETEC's 6 assets to PTI GLOBAL with the intent to hinder, delay or defraud ACTICON in pursuing its claims 7 arising out of the FIRST COMPLAINT against PRETEC. 8 Furthermore, PTI GLOBAL admits in its Opposition and supporting declarations that PTI

9 GLOBAL never received any "funding" from PRETEC, which further substantiates ACTICON's 10 allegations that PRETEC and the other defendants in this action "transferred PRETEC's assets to 11 PTI GLOBAL, INC. without receiving a reasonably equivalent value in exchange for the transfer 12 and were engaged in a transaction (or series of transactions) for which its remaining assets were 13 unreasonably small in relation to the transactions. Complaint, at ¶87. Evidence of the fact that 14 PRETEC possessed remaining assets unreasonably small in relation to the transaction is 15 demonstrated by virtue of the fact that the corporation dissolved. 16 In Economy Refining & Service Co., (1971) 20 Cal.App.3d 434, 97 Cal.Rptr. 706, the court

17 considered the fact that the debtor did not receive any consideration in return for the transfer of all 18 of its assets in determining the issue of fraudulent conveyance. Economy Refining & Service Co., 19 20 Cal.App.3d, at 441. In that case, the corporation making the fraudulent conveyance did not 20 dissolve, as PRETEC did, and the court noted that if the corporation "had [dissolved], its assets 21 would have been subject to the claims of creditors," which constitutes evidence supporting a 22 finding of fraudulent conveyance. Id. 23 Additionally, PTI GLOBAL and the individual defendants cannot escape liability based

24 merely on the fact that PTI GLOBAL and PRETEC have different names. "Transfers of all of the 25 assets of a person or corporation in straitened circumstances, without fair consideration, to a 26 corporation having substantially the same ownership, by which the just claims of creditors are 27 defeated, are of such fraudulent nature that the new corporation may be held to the debt of the old." 28
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1 Economy Refining & Service Co. v. Royal Nat. Bank of New York (1971) 20 Cal.App.3d 434, 439, 2 67 P.2d 376. In Blank v. Olcovich Shoe Corp., (1937) 20 Cal.App.2d 456, the court recognized that 3 4 5 6 7 8 9 10 11 "there is an abundance of authority to support the claim that under certain circumstances corporations cannot escape liability by a mere change of name or a shift of assets when and where it is shown that the new corporation is, in reality, but a continuation of the old. Especially is this well settled when actual fraud or the rights of creditors are involved, under which circumstances the courts uniformly hold the new corporation liable for the debts of the former corporation (citations omitted). Blank, at 461; see 9 Witkin, Taxation, Partnership, Corporations (10th ed.), at §16 ("If a corporation organizes another corporation with practically the same shareholders and directors, transfers all the assets but does not pay all of the first corporation's debts, and continues to carry on the same business, the separate entities may be disregarded and the new corporation held liable for the obligations of the old"); see also Shea v. Leonis (1939) 14 Cal.2d 666, 669. As argued in ACTICON's moving papers, the facts in this case demonstrate that PTI

12 GLOBAL is a mere continuation of PRETEC. Although PRETEC filed a (false) Certificate of 13 Dissolution, PTI GLOBAL carries on the same business that PRETEC was engaged in prior to 14 PRETEC's dissolution. See ACTICON's Motion, at 5:13-6:24. The Defendants in this case did 15 continue the business of PRETEC, but without making any arrangements to pay for PRETEC's 16 patent infringement debt to ACTICON. Under California creditor/debtor law, these facts warrant a 17 finding that PTI GLOBAL should be held responsible for the patent infringement liability of 18 PRETEC. Economy Refining & Service Co., supra, 20 Cal.App.3d at 439. 19 In addition, PTI GLOBAL was listed on PRETEC's web site as PRETEC's United States

20 headquarters1; PTI GLOBAL is the registrant of www.pretec.com; PTI GLOBAL sells virtually 21 only PRETEC products on its web sites and online storefronts; PTI GLOBAL occupies the same 22 physical space that PRETEC previously occupied; and PTI GLOBAL has shared several of the 23 24 25 26 27 28
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The fact that PRETEC's web site was changed to delete this information just days after ACTICON filed the instant motion only strengthens ACTICON's argument that PTI GLOBAL is the successor corporation to PRETEC. The alteration of PRETEC's web site only after notice of ACTICON's motion creates a strong inference of a relationship between the two entities. PRETEC's and PTI GLOBAL's audacity in providing the Court with misleading information suggesting that PRETEC's web site never stated that PTI GLOBAL was PRETEC's United States headquarters is exemplary of PRETEC'S/PTI GLOBAL's disrespect for the Court and legal process and is consistent with PRETEC's continuous pattern of fraudulent conduct in this case and others. -6Supplemental Brief ISO Plaintiff Acticon Technologies LLC's Motion for Preliminary Injunction C 07-4507 JF (HRL)

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1 same officers and/or directors with PRETEC. See ACTICON's Motion, at 5:13-6:24. Despite PTI 2 GLOBAL's argument that its only officer/director is KUEI LU, the Statements of Information that 3 Pretec Technology, Inc./PTI GLOBAL filed with the California Secretary of State demonstrate that 4 until at least December 2006 (after PRETEC filed for dissolution), Defendants TOMMY HO and 5 ROBERT WU were officers, directors and/or majority shareholders of both PRETEC and PTI 6 GLOBAL. Exhibit O to Watson Decl. (Secretary of State Statements of Information) (Docket 7 Entry 9). 8 Based on this evidence, ACTICON will likely prove that PRETEC transferred substantially

9 all of its assets to PTI GLOBAL, INC., that PTI GLOBAL, INC. did not pay PRETEC's debts or 10 liabilities and that PTI GLOBAL, INC. carries on the same business as PRETEC conducted prior to 11 PRETEC's dissolution. 12 13 14 iv. If the status quo is not preserved pending the outcome of this litigation, ACTICON will likely suffer irreparable harm.

The latest filing by PTI GLOBAL in the instant case is consistent with PRETEC/PTI

15 GLOBAL's pattern of inappropriately misleading the Court and flagrantly disobeying Court orders 16 without regard to the consequences. Moreover, PTI GLOBAL's Motion to Change Time 17 strengthens ACTICON's argument that it will likely suffer irreparable harm if PTI GLOBAL is not 18 enjoined from transferring its assets pending the outcome of this litigation. Like Tommy Ho, 19 Operations Manager for PRETEC (who also happens to have been listed as an officer and/or 20 director of Pretec Technology, Inc. before it changed its name to PTI GLOBAL), Chi-Lin Tom, 21 General Manager of PTI GLOBAL, contacted counsel for ACTICON in a feigned attempt to "start 22 the conversation." E-mail dated October 12, 2007, attached as Exhibit D to Supp. Watson Decl. 23 Given PRETEC's/PTI GLOBAL's track record, it is likely PRETEC/PTI GLOBAL is

24 engaging in the same tactic it successfully utilized with counsel for ACTICON prior to dissolving 25 PRETEC and fraudulently transferring its assets to PTI GLOBAL and without any intention of 26 participating in its defense of the case or any required court processes. Neither PRETEC nor PTI 27 GLOBAL has exhibited any conduct which would lead the Court to believe that they will observe 28
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1 the strictures of legal and court processes. A preliminary injunction pending the outcome of this 2 case is vital to ensure the protection of ACTICON's interests. 3 4 5 B. ACTICON Met The Service Requirements Of The Federal And Local Rules Relating To Ex Parte Applications For Temporary Restraining Orders. PTI GLOBAL's contention that ACTICON failed to meet the requirements of Civil Local

6 Rule 65-1 is completely baseless. ACTICON fully complied with L.R. 65-1's notice requirements. 7 Counsel for ACTICON faxed notice to PTI GLOBAL on October 4, 2007, the day before it filed 8 the Ex Parte Application and Motion and attempted to serve all defendants in this case. Watson 9 Decl., at ¶20 (Docket Entry 9); Letter from Robert Yorio to Linda Shao, dated October 11, 2007, 10 attached to Supp. Watson Decl. as Exhibit C. Despite multiple diligent attempts, ACTICON has 11 been unable to serve any other defendants besides PTI GLOBAL. ACTICON is not required to 12 provide notice to parties who are purposely evading service. It is not clear why PTI GLOBAL is 13 concerned with notice on the individual defendants and PRETEC since PTI GLOBAL claims it is 14 not related to PRETEC in any way and claims that the only officer and/or director of PTI GLOBAL 15 is Defendant KUEI LU. 16 The reason for PTI GLOBAL's concern over C-One Technology Corporation ("C-One") is

17 also unclear. C-One is the parent company of PRETEC; if PTI GLOBAL is not related to 18 PRETEC, then whether ACTICON has named C-One as a defendant in this case is completely 19 irrelevant. The fact that PTI GLOBAL independently brings C-One to the Court's attention in 20 combination with the fact that the attorney who initially contacted counsel for ACTICON on behalf 21 of PTI GLOBALwith respect to this motion, Leodis Matthews, was counsel for PRETEC in 22 Sandisk and counsel for C-One in Lexar Media, heightens the probability of a successor 23 relationship between PTI GLOBAL and PRETEC. 24 C. 25 A $500,000 Bond is Inappropriate. A bond of more than $5,000 is not appropriate in this case and the $500,000 bond proposed

26 by PTI GLOBAL is utterly excessive. Should the preliminary injunction issue, PTI GLOBAL's 27 business will not be adversely affected in terms of its conduct of daily business. The proposed 28 injunction is tailored to prohibit the transfers of PTI GLOBAL's assets to any third parties,
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1 including the individual defendants in this case, that do not ordinarily occur in the normal course of 2 business. The proposed injunction does not seek the restraint of PTI GLOBAL's trade, even 3 though those sales may include sales of infringing products. PTI GLOBAL has not set forth any 4 contradicting evidence on this point or evidence demonstrating what damages it would incur if the 5 injunction issued and therefore, the Court should require only a nominal bond in this case. 6 7 III. ADDITIONAL FACTS EVIDENCING THE NEED FOR INJUNCTIVE RELIEF On October 26, 2007, PTI GLOBAL filed a Motion to Change Time that is almost identical

8 to the Motion to Change Time filed on behalf of PRETEC in the related case, Acticon Technologies 9 LLC v. Pretec Electronics Corporation, et. al., Case No. 06-4679 JF (HRL) ("Pretec I"). See 10 Exhibits A and B to the Declaration of Christine Watson in support of Acticon's Opposition to PTI 11 Global, Inc.'s Motion to Change Time (Docket Entry 9). Both the Motion to Change Time in the 12 instant case and the motion in Pretec I sought a continuance of an impending hearing date on the 13 premise that PRETEC/PTI GLOBAL required additional time to seek counsel. Id. 14 In Pretec I, TOMMY HO, Operations Manager of Pretec, filed a Motion to Change Time

15 with respect to the Initial Case Management Conference ("CMC") date on behalf of PRETEC and 16 subsequently contacted counsel for Acticon to discuss possible resolution of the case. Complaint, 17 at ¶¶31-33. Prior to the date of the CMC, a company named Pretec Technology Inc. changed its 18 name to PTI Global, Inc. and PRETEC filed for dissolution. PRETEC never appeared in the case, 19 never contacted opposing counsel and never notified the Court of its dissolution. 20 The fraudulent conduct that PRETEC displayed in Pretec I is part of a pattern of improper

21 and unlawful conduct exhibited by PRETEC in this case and at least two other cases filed in this 22 District. In Lexar Media, Inc. v. Pretec Electronics Corp., et. al., Civil Case No. 00-4770 MJJ (also 23 known as Acclaim Innovations, Inc. v. Pretec Electronics Corp., et. al.), Acclaim Innovations filed 24 a motion for entry of default and default judgment against PRETEC on the basis that in violation of 25 the court's order, PRETEC "failed to obtain counsel" and "has not made an appearance or attended 26 a status conference in this case since June 2006." Acclaim Innovation LLC's Motion for Entry of 27 Default and Default Judgment by Acclaim Innovation, dated August 10, 2007, attached as Exhibit 28 E to Supp. Watson Decl.
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1

In response, PRETEC filed a request for "`60 days to retain a new counsel'" in Lexar

2 Media, just as it did in Pretec I and the instant case. Id., at 2:12-15. Completely consistent with its 3 longstanding pattern of conduct, PRETEC did not retain counsel, did not file responses ordered by 4 the court, including failing to respond to an order to show case, and did not appear for a court5 ordered status conference in Lexar Media. Id., at 2:15-3:1. On August 13, 2007, the Clerk of Court 6 issued a Notice Vacating Motions Hearing on Acclaim Innovation's motion, which was originally 7 set for a hearing on August 14, 2007, and deemed the matter submitted on the papers. Clerk's 8 Notice Vacating Motions Hearing dated August 13, 2007, attached as Exhibit H to Supp. Watson 9 Decl. 10 In yet another Northern District case, Sandisk Corp. v. Memorex Products, Inc., Civil Case

11 No. 01-4063 VRW, the court entered the default of PRETEC after "the law firm of Matthews & 12 Partners filed a request on Pretec's behalf `to make a special appearance until a substitution of 13 attorney [could] be accomplished' and further request[ed] `an extension of 5 business days, to and 14 including October 19, 2007, within which to file a response to the OSC," which was granted by the 15 court. Order filed October 24, 2007 in Sandisk Corp. v. Memorex, at 2:1-6, attached as Exhibit F to 16 Supp. Watson Decl. Again, PRETEC failed to comply with the court's order. Id. Consequently, 17 the court entered PRETEC's default in the Sandisk case on October 24, 2007 (Docket Entry 495). 18 The attorney who filed the request on behalf of PRETEC described above, Leodis

19 Matthews of the law firm Matthews and Partners, is the same attorney who contacted counsel for 20 ACTICON ­ this time on behalf of PTI GLOBAL ­ on October 5, 2007.2 See Docket Entry 7; E21 mail dated October 5, 2007, attached as Exhibit B to Supp. Watson Decl. Mr. Matthews telephoned 22 counsel for ACTICON after having received notice of ACTICON's ex parte application and motion 23 from his client, PTI GLOBAL, through a Chi-Lin Tom. Supp. Watson Decl., at ¶2. Mr. Tom, who 24 allegedly is the General Manager of PTI GLOBAL, also appears to be the administrative contact 25 and technical contact of the domain name www.pretec.com, PRETEC's web site, which is 26 27 28
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Mr. Matthews also appeared in the Lexar Media case on behalf of C-One Technology Corporation, the parent company of PRETEC. Although PRETEC was a defendant in Lexar Media, Mr. Matthews apparently did not represent PRETEC in that matter. -10Supplemental Brief ISO Plaintiff Acticon Technologies LLC's Motion for Preliminary Injunction C 07-4507 JF (HRL)

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1 registered by PTI GLOBAL. See Exhibit G attached to Supp. Watson Decl; See Declaration of 2 Chi Lin Tom Supporting PTI Global, Inc.'s Opposition to Plaintiff's Ex Parte Motion for TRO 3 (Docket Entry 11). 4 Counsel for ACTICON never heard from Mr. Matthews after October 5, 2007. Supp.

5 Watson Decl., at ¶3. Although counsel for ACTICON sent Mr. Matthews an e-mail on October 10, 6 2007 requesting that Mr. Matthews clarify who represents PTI GLOBAL, after counsel for 7 ACTICON received a telephone call from Linda Shao, current counsel for PTI GLOBAL, Mr. 8 Matthews did not respond to that communication. Supp. Watson Decl., at ¶4. 9 10 11 A. ACTICON Has Set Forth Sufficient Evidence That It Will Suffer Irreparable Harm If The Injunction Does Not Issue. PTI GLOBAL argues that ACTICON's motion is based on pure speculation; however, this

12 is not the case. While ACTICON has not presented a written agreement between PRETEC and PTI 13 GLOBAL to engage in a conspiracy to fraudulently transfer PRETEC's assets to PTI GLOBAL and 14 then improperly dissolve PRETEC, this type of evidence is not required in order for ACTICON to 15 meet is burden. As set forth in Section III herein and in ACTICON's motion, ACTICON has 16 presented a multitude of facts evidencing PRETEC's improper conduct. In Sandisk, Lexar, Pretec 17 and the instant case, PRETEC has requested continuances to obtain counsel, failed to obtain 18 counsel and/or failed to make scheduled appearances as ordered by the court. These actions in 19 addition to Pretec Technology, Inc. changing its name to PTI GLOBAL, the dissolution of 20 PRETEC and deletion of TOMMY HO and ROBERT WU from PTI GLOBAL's Statement of 21 Information within one single month's time all establish a pattern of conduct designed to evade 22 creditors' claims. 23 Additionally, PTI GLOBAL's own admission that it is the same corporation as Pretec

24 Technology, Inc. in addition to the timing of events prior to and during Pretec I provide substantial 25 support for the inference that PTI GLOBAL was a shell corporation formed by PRETEC and/or the 26 individual defendants for the sole purpose of transferring its assets in order to evade court process. 27 28
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The relevant chronology of events is as follows:

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1 2 3 4 5 6 7 8 9 10

Sandisk Complaint filed PRETEC's Answer in Sandisk filed Pretec Technology, Inc. incorporated Pretec I filed PRETEC's Motion to Change Time in Pretec I

October 2001 December 12, 2001 January 4, 2002 August 1, 2006 October 19, 2006

Pretec Technology, Inc. renamed as PTI GLOBAL October 27, 2006 PRETEC files for dissolution PTI GLOBAL replaces TOMMY HO, ROBERT WU and other corporate officers and directors with KUEI LU. PTI GLOBAL web site registered November 28, 2006 December 5, 2006

February 10, 2007

11 As demonstrated by the chronology above, Pretec Technology, Inc. was formed less than one 12 month after PRETEC appeared in the Sandisk matter. Then, almost immediately after appearing in 13 Pretec I, Pretec Technology, Inc. changed its name to PTI GLOBAL and shortly thereafter, 14 PRETEC filed for dissolution. 15 PTI GLOBAL's contention that PTI GLOBAL could not be the successor corporation of

16 PRETEC because PTI GLOBAL was incorporated prior to the date PRETEC dissolved is not 17 factually or legally supported and PTI GLOBAL's reasoning is illogical. Whether Pretec 18 Technology, Inc./PTI GLOBAL was formed four years prior to the dissolution of PRETEC is 19 immaterial: a company formed for the purpose of existing as a shell corporation need not ­ and 20 likely would not ­ be formed after or contemporaneously with the dissolution of the company from 21 which it will unlawfully receive assets. In fact, the incorporation of PTI GLOBAL is entirely 22 consistent with the characteristics of a shell corporation. PTI GLOBAL has not presented any 23 evidence demonstrating that Pretec Technology, Inc. ever engaged in any kind of business or 24 commerce prior to its being renamed PTI GLOBAL. 25 The foregoing additional facts provide additional support for ACTICON's position set forth

26 in Sections II(A)(i)-(iv) above. These additional facts exemplify the Defendants' untrustworthiness 27 and inability, or unwillingness, to obey Court orders. Accordingly, a finding of irreparable injury is 28 warranted and ACTICON respectfully submits that the Court should issue the preliminary
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1 injunction requested. 2 3 IV. CONCLUSION

Based on the foregoing, ACTICON respectfully requests that the Court issue an order enjoining

4 and restraining DEFENDANTS, together with all of their officers, agents, servants, employees, 5 representatives, attorneys and assigns and all other persons, firms or companies in active concert or 6 participation with them from directly or indirectly: 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Dated: November 2, 2007 22 23 24 25 26 27 28
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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;

b.

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

c.

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.

Respectfully submitted,

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

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