Free Amended Complaint - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE INOVIS USA, INC., ) ) Plaintiff, ) ) v. ) ) CLASSIFIED INFORMATION, INC. and ) DISTANCE DIGITAL LLC, ) ) Defendants. )

C.A. No. 07-459 (GMS) JURY TRIAL DEMANDED

FIRST AMENDED COMPLAINT Plaintiff Inovis USA, Inc. files this first amended complaint for declaratory judgment relief against Defendants, Classified Information, Inc. ("CI"), and Distance Digital LLC ("DD"), and avers as follows: PARTIES 1. Plaintiff Inovis USA, Inc. ("Inovis") is a corporation organized under the laws of

the State of Delaware with its principal place of business at 11720 AmberPark Dr., Alpharetta, Georgia 30004. 2. Classified Information, Inc. ("CI") is a corporation organized under the laws of

the State of Delaware with its principal place of business at 810 Los Vallecitos Blvd., Suite 203/204, San Marcos, CA 92069. 3. Distance Digital Co., LLC ("DD") is a limited liability company organized under

the laws of the State of Delaware with an agent for service of process at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 and, upon information and belief, having its principal place of business in Delaware.

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JURISDICTION AND VENUE 4. This is an action for declaratory relief of non-infringement, invalidity and/or

unenforceability of U.S. Patent No. 5,812,669 (the "669 Patent") that arises under the United States patent laws (35 U.S.C. §§ 101, et seq.), as well as for violations of the Lanham Act and state tort law. The Court has subject matter jurisdiction over this action pursuant to the

Declaratory Judgment Act (28 U.S.C. §§ 2201 and 2202), 28 U.S.C. §§ 1331, 1338, and 1367. 5. This action seeks a declaration that Inovis has not infringed any valid claims of

the 669 Patent and/or that the 669 Patent is invalid and/or unenforceable, as well as relief under federal and state laws that prohibit unfair business practices and unfair competition. 6. CI is incorporated in and has purposefully availed itself of the laws and protection

of this judicial district. 7. DD is incorporated in and has purposefully availed itself of the laws and

protection of this judicial district. 8. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) and (c). BACKGROUND 9. Inovis is in the business of making and selling computer systems that allow

business-to-business commerce and allow secure electronic data interchange over the Internet. 10. Inovis' line of products includes an innovative system that Inovis created and that

Inovis markets and sells as "BizManager" and "Cyclone Interchange Enterprise" (collectively "BizManager"). 11. Among other things, BizManager allows the secure exchange of data between

Inovis' computer systems and the computer systems of its customers or business partners ("First Tier Customers") over the Internet.

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12.

BizManager also allows the secure exchange of data between Inovis' First Tier

Customers and the customers and business partners of the First Tier Customers, known as "Second Tier Customers." 13. CI is a competitor of Inovis. CI markets a product called "Templar Software",

which competes with the BizManager system. 14. Upon information and belief, both First Tier Customers and Second Tier

Customers are potential customers of CI. THE 669 PATENT 15. On September 22, 1998, U.S. Patent No. 5,812,669 ("the 669 Patent"), entitled

METHOD AND SYSTEM FOR PROVIDING SECURE EDI OVER AN OPEN NETWORK, issued. A true and correct copy of the 669 Patent is attached hereto as Exhibit A. 16. CI has claimed that on or about April 10, 2003, all of the rights, title and interest

in and to the 669 Patent were assigned to it. CI'S ENFORCEMENT CAMPAIGN OF THE 669 PATENT AGAINST INOVIS AND INOVIS' CUSTOMERS 17. Inovis' existing First Tier Customers include Bumble Bee Foods, Morgan Foods,

Inc., and Aspen Pet Products. 18. CI has made written threats against the three aforementioned businesses, alleging

that it owns the 669 Patent, has the right to enforce it, and that, by using BizManager, each customer of Inovis' has infringed the 669 Patent (see Exhibit B). 19. CI's actions give rise to a case of actual controversy within the jurisdiction of the

Court, pursuant to 28 U.S.C. §§ 2201 and 2202. 20. Inovis, Inovis' First Tier Customers, and Inovis' Second Tier Customers do not

infringe any valid claim of the 669 Patent, jointly or severally, directly or indirectly, do not -3-

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induce others to infringe the 669 Patent, and do not contribute to infringement of the 669 Patent, by virtue of their respective sale, offering for sale, making or using of BizManager. 21. At the time CI made its claims of patent infringement against Inovis' First Tier

Customers, CI knew or should have known that BizManager does not infringe the 669 Patent and that Inovis' First Tier Customers do not infringe the 669 Patent. 22. CI made its claim for patent infringement in bad faith and for the purpose of

interfering with Inovis' existing and prospective customer relationships. 23. Since making the above-alleged threats against Inovis' customers, CI has claimed,

and a document entitled "Assignment of Patent Rights" so states, that on or about July 12, 2007, all the rights, title and interest in and to the 669 Patent were assigned to DD. The "Assignment of Patent Rights" further states that CI sells, assigns, transfers, and conveys to DD "all causes of action" and all "enforcement rights" relating to the 669 Patent, including "all causes of action and other enforcement rights for (i) damages, (ii) injunctive relief, and (iii) any other remedies of any kind for past, current, and future infringement and (i) all rights to collect royalties and other payments" pursuant to the 669 Patent. A true and correct copy of the purported assignment

between CI and DD ­ "Assignment of Patent Rights" ­ is attached hereto as Exhibit C. 24. If the Assignment of Patent Rights is valid, then DD is the successor in interest to

all of CI's rights to enforce the 669 Patent, including, but not limited to, CI's attempts to enforce its interest under the 669 Patent. 25. On information and belief, DD was aware of CI's claims that Inovis' First Tier

Customers infringe the 669 Patent before DD became party to the Assignment of Patent Rights. 26. On information and belief, it is DD's position that Inovis' First Tier Customers

infringe the 669 Patent.

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27. enforceable. 28.

On information and belief, it is DD's position that the 669 Patent is valid and

On information and belief, DD intends to enforce the 669 Patent against one or

more of Inovis' customers and/or Inovis. 29. 30. DD's legal interests are adverse to those of Inovis. The dispute between Inovis, on the one hand, and CI and/or DD, on the other, is

definite and concrete. 31. The controversy between Inovis, on the one hand, and CI and/or DD, on the other,

admits of specific relief through a decree of a conclusive character. 32. Inovis has made, used, sold, and will continue to make, use, and sell the

aforementioned BizManager products. 33. Accordingly, Inovis is faced with the untenable option of ceasing to make, use,

and sell its BizManager products as opposed to risk actual or treble damages in one or more infringement suits against Inovis and/or one or more of its customers by CI and/or DD. COUNT I DECLARATORY JUDGMENT COUNT: AGAINST CI AND DD (NONINFRINGEMENT, INVALIDITY AND/OR UNENFORCEABILITY OF THE 669 PATENT) 34. Inovis restates and realleges the allegations set forth in paragraphs 1 through 33

above and incorporates them by reference. 35. By virtue of CI's actions against Inovis and its First Tier Customers and DD's

purported purchase of all rights under the 669 Patent, Inovis is at risk of suffering an actual or threatened serious injury in view of Inovis' business of using and selling BizManager software systems. -5-

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36.

Inovis has not directly infringed, contributed to the infringement of, or actively

induced the infringement of any claim of the 669 Patent, nor has it otherwise committed any acts of infringement of any rights of CI and/or DD due to the use, sale and/or offer for sale of BizManager by Inovis, its First Tier Customers, and its Second Tier Customers. 37. Inovis therefore has the right to use, sell, or offer for sale BizManager free and

clear of claims of infringement of the 669 Patent. 38. The claims of the 669 Patent are invalid under 35 U.S.C. §§ 102, 103 and/or 112. COUNT II: AGAINST CI UNFAIR COMPETITION: VIOLATION OF SECTION 43 OF THE LANHAM ACT 39. 40. Inovis repeats and incorporates herein Paragraphs 1 through 38. CI's false statements in the marketplace that Inovis and/or its customers are

infringing the 669 Patent through use of BizManager are intended to deceive, and are likely to deceive, a substantial segment of the intended audience. 41. CI's deception is material in that it is likely to influence purchasing decisions of

Inovis' customers and potential customers in interstate commerce. 42. 43. CI's conduct violates Section 43 of the Lanham Act, 15 U.S.C. § 1125(a). As a direct and proximate cause of CI's false statements in the marketplace,

Inovis has been damaged in an amount to be determined at trial.

COUNT III: AGAINST CI TORTIOUS INTERFERENCE WITH BUSINESS RELATIONSHIPS 44. 45. Inovis repeats and incorporates herein Paragraphs 1 through 43. CI acted improperly, unlawfully, and without privilege when it falsely accused, in

bad faith, Inovis' customers of infringing the 669 Patent. -6-

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46.

In falsely accusing Inovis' customers of patent infringement, CI intended to

prevent Inovis' performance, cause Inovis' performance to be more expensive or burdensome, and/or reduce the likelihood that one or more of Inovis' customers will continue their business relationship with Inovis or enter into new contracts and/or relationships with Inovis in the future. 47. In falsely accusing Inovis customers of patent infringement, CI acted maliciously,

for the purpose of interfering with Inovis business relationships. 48. CI's conduct, in fact, injured Inovis by causing Inovis' performance to be more

expensive or burdensome, by straining the contractual and/or business relationships, and/or by reducing the likelihood that one or more of Inovis' customers will continue their business relationship with Inovis or enter into new contracts and/or relationships with Inovis in the future. 49. CI's conduct constitutes an intentional, tortious interference with Inovis' business

relations with its customers. 50. As a direct and proximate cause of CI's actions, Inovis has been damaged in an

amount to be determined at trial. 51. CI's conduct was willful or malicious, was intentionally fraudulent, or manifested

a knowing, reckless indifference toward Inovis' rights. Inovis, therefore, is entitled to an award of punitive damages. PRAYER FOR RELIEF WHEREFORE, Inovis prays for the following: 1. A judgment and declaration that neither Inovis nor any of its customers have

infringed and do not infringe in any manner any claim of the 669 Patent, directly, contributorily or by inducement, and have not otherwise infringed or violated any rights of CI and/or DD. 2. A judgment that each claim in the 669 Patent is invalid and unenforceable.

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3.

An injunction against CI, DD and their affiliates, subsidiaries, assigns, employees,

agents or anyone acting in privity or concert with CI or DD from charging infringement or instituting any legal action for infringement of the 669 Patent against Inovis or anyone acting in privity with Inovis, including the divisions, successors, assigns, agents, suppliers, manufacturers, contractors and First and Second Tier customers of Inovis. 4. An injunction against CI, DD and their affiliates, subsidiaries, assigns, employees,

agents or anyone acting in privity or concert with CI or DD from interfering in any way with Inovis' business or anyone acting in privity with Inovis, including the divisions, successors, assigns, agents, suppliers, manufacturers, contractors and First and Second Tier customers of Inovis. 5. An award of damages to Inovis adequate to compensate Inovis for actual injuries

sustained as a result of CI's actions. 6. 7. 8. An award of treble damages to Inovis pursuant to 15 U.S.C. § 1117(a). An award of punitive damages to Inovis. A judgment and declaration that this is an exceptional case within the meaning of

35 U.S.C. § 285, entitling Inovis to an award of its reasonable attorneys' fees, expenses and costs in this action. 9. A judgment for such other and further relief in law or in equity as this Court

deems just or proper.

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MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Jack B. Blumenfeld (#1014)
Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 [email protected] Attorneys for Plaintiff Inovis USA, Inc. OF COUNSEL: David J. Wolfsohn Lynn B. Morreale Jordan L. Jonas WOODCOCK WASHBURN LLP Cira Centre, 12th Floor 2929 Arch Street Philadelphia, PA 19104 (215) 568-3100 August 17, 2007
1214182

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CERTIFICATE OF SERVICE I, the undersigned, hereby certify that on August 17, 2007, I electronically filed the foregoing with the Clerk of the Court using CM/ECF which will send notification of such filing to the following: Steven J. Balick John G. Day Tiffany Geyer Lydon ASHBY & GEDDES Arthur G. Connolly, III CONNOLLY BOVE LODGE & HUTZ LLP and that copies were caused to be served upon the following individuals in the manner indicated: ELECTRONIC MAIL Steven J. Balick John G. Day Tiffany Geyer Lydon ASHBY & GEDDES 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899 Arthur G. Connolly, III CONNOLLY BOVE LODGE & HUTZ LLP 1007 N. Orange Street P.O. Box 2207 Wilmington, DE 19899

/s/ Jack B. Blumenfeld (#1014)
Jack B. Blumenfeld (#1014) [email protected]

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EXHIBIT B

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EXHIBIT C

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