IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION WILLIAM GARDNER, III

, and DIANE GARDNER Plaintiffs, -vsRICHARD SHIELDS, BESS SHIELDS, PAUL SCHWEIZER, AMANDA SCHWEIZER and PURPLE PASSION COMPANY, LLC Defendants. § § JURY DEMANDED § § § § CIVIL ACTION NO.1:13-cv-00320 § § § § § § § §

PLAINTIFFS’ ORIGINAL COMPLAINT Plaintiffs William Gardner, III and Diane Gardner (hereafter collectively called the “Gardners” or “Plaintiffs”), complain of Defendants, Richard Shields, Bess Shields (“Shields”), Paul Schweizer, Amanda Schweizer (“Schweizers”) and Purple Passion Company, LLC. Summary of Lawsuit 1. This is a case about the disintegration of the business relationship between The Gardners on the one hand and the Shields and Schweizers on the other hand. The three couples jointly own Purple Passion Company, LLC. 2. William Gardner invented and patented several ultraviolet flashlights for use in inspecting crystals and rocks. Initially, William Gardner allowed the Shields and the Schweizers to sell the patented inventions through their jointly owned company, however there was no licensing agreement between William Gardner and the company.

3.

When the Gardners came to believe that the Shields and the Schweizers were being dishonest about the finances of the business and unfairly denying the Gardners the benefit of their ownership interest, William Gardner sent a letter advising the Shields and the Schweizers to cease and desist selling and offering the sell his patented devices through Purple Passion Company, LLC or otherwise. To date, the Shields and the Schweizers continue to sell and offer to sell the patented devices without a licensing agreement. In addition, the Shields and the Schweizers continue to unfairly deny the Gardners the financial benefits of their ownership interest in Purple Passion Company, LLC. Parties

4.

Plaintiff William Gardner, III is a natural person residing in Maricopa County, Arizona.

5. 6.

Plaintiff Diane Gardner is a natural person residing in Maricopa County, Arizona. Defendant Richard Shields is a natural person residing in Kendall County, Texas. He may be served 215 Cibolo Branch Drive, Boerne, Texas, 78006.

7.

Defendant Bess Shields is a natural person residing in Kendall County, Texas. She may be served 215 Cibolo Branch Drive, Boerne, Texas, 78006.

8.

Defendant Paul Schweizer is a natural person residing in Kendall County, Texas. He may be served at: 8 Guthrie Road, Boerne, Texas, 78006.

9.

Defendant Amanda Schweizer is a natural person residing in Kendall County. She may be served at: 8 Guthrie Road, Boerne, Texas, 78006.

10.

Defendant, Purple Passion Company, LLC, is a Texas limited liability company. Its principal place of business is in Kendall County, Texas. It may be served with

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summons by serving the registered agent: Richard M. Shields, 215 Cibolo Branch Drive, Boerne, Texas, 78006. Jurisdiction 11. This Court has subject matter jurisdiction over this lawsuit because the Plaintiff, William Gardner, brings suit pursuant to 35 U.S.C. § 271 for the defendants’ infringement upon three of his United States Patents. Diane Gardner, William Gardner’s spouse, has a community property interest in the patent rights. The United States District Courts have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States pursuant to 28 U.S.C. § 1331. 12. This Court has supplemental jurisdiction over the claims of breach of fiduciary duty, shareholder oppression and fraud because the facts made the basis of the patent infringement claim substantially related to the original claim of patent infringement. The United States District Courts have jurisdiction to hear these ancillary state law claims pursuant to 28 U.S.C. § 1367. Venue 13. Venue is proper in the Western District of Texas because the Shields and Schweizer Defendants reside in the Western District of Texas and Purple Passion Company, LLC is headquartered in the Western District of Texas. 14. Venue is further proper in the Western District of Texas because many of the acts and omissions upon which Plaintiffs’ causes of action pled herein are based occurred in the Western District of Texas. Factual Background 15. Plaintiffs have operated a business selling ultraviolet lamp fixtures since in or about March 1, 1998, first as sole proprietors under the Arizona-registered trade
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name “Way Too Cool,” and then, beginning in or around March 2007, as owners of the Arizona limited liability company called “Way Too Cool, LLC.” The

ultraviolet lamp fixtures sold by Plaintiffs are used for the purposing of viewing and examining rocks and crystals, as well as having applications in forensics, research and other uses. 16. Plaintiff William Gardner has been issued several patents relating to ultraviolet lamps and the use of filters to change the wavelength of the light emitted from such devices. U.S. Patent No. 7,148,497 was issued on December 12, 2006. U.S. Patent No. 7,485,883 is a continuation-in-part of No. 7,148,497 and it was filed on July 10, 2006, and issued on February 3, 2009. U.S. Patent No.

7,781,751 is also a continuation-in-part of the first and second Patents, and it was filed on February 7, 2008 and it issued on August 24, 2010. This third Patent is specific to UV LED Flashlights with drawings and descriptions for a flashlight form factor. The third Patent was originally denied as not being

different and it was only issued with a “terminal disclaimer,” meaning that the rights set forth therein have the same effective dates as the second Patent. All three of these patents were issued only to Plaintiff William Gardner, and not to any other individual or entity. 17. Defendant Richard Shields is a dealer of rocks and crystals. In or around 2004 or 2005, Defendant Richard Shields became the Gardners’ agent for the purpose of serving as a distributor of the ultraviolet lamp fixtures that the Gardners produced and sold under the name “Way Too Cool.” In connection with

Defendant Richard Shields’ role as a distributor for the Gardners, a confidential relationship existed between Shields and the Gardners, and Shields was given
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access to proprietary and confidential information, including customer information and trade secret information belonging to the Gardners that was necessary for Shields’ work as a distributor for the Gardners. 18. Shortly thereafter, Defendant Paul Schweizer also became an agent of the Gardners serving as a manufacturer of certain of the ultraviolet lamp fixtures that the Gardners produced and sold. In connection with Defendant Paul Schweizer’s role as a manufacturer for the Gardners, a confidential relationship existed between Schweizer and the Gardners, and Schweizer was given access to proprietary and confidential information belonging to the Gardners that was necessary for Schweizer’s work for the Gardners. 19. In January and February of 2007, Plaintiff William Gardner attended the Tucson Gem and Mineral Show, which is the largest gem and mineral show in the United States. At that time Plaintiff William Gardner discovered that Defendants Richard Shields and Paul Schweizer had been secretly operating a business selling UV LED flashlights that was competing against the Gardners’ Way Too Cool business and which used, without the authorization of the Gardners, Plaintiff William Gardner’s intellectual property which is protected by the abovementioned Patents, along with confidential and proprietary customer information and other confidential and proprietary information belonging to the Gardners. 20. After Plaintiff William Gardner confronted Defendant Richard Shields regarding this conduct, Defendant Richard Shields promised and represented to Plaintiff William Gardner, with the intent that the Gardners rely upon such promises and representations, that a company would be created for the purpose of marketing the UV LED flashlights that Defendant Richard Shields had been secretly selling
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and that the Gardners would own a collective 50% interest in such company. Defendants then later told the Gardners that the Gardners would only receive a collective 49% interest in the company, with the Shields also receiving a collective 49% interest in the company, and with Defendants Paul Schweizer and Amanda Schweizer (the “Schweizers”) collectively receiving the remaining 2% ownership interest in Purple Passion Company, LLC. 21. Defendant Richard Shields also promised and represented to Plaintiff William Gardner, with the intent that Plaintiff William Gardner rely upon such promises and representations, that the soon-to-be-formed company would enter into a reasonable licensing agreement with Plaintiff William Gardner whereby the company would license the right to use Plaintiff William Gardner’s patented technology in the production of ultraviolet LED flashlights, via a non-exclusive and non-transferable license. In reliance upon Defendant Richard Shields’

representations, the Gardners made a capital contribution of $3,500 in connection with the formation of Purple Passion Company, LLC. 22. At the inception of Purple Passion Company, LLC, Plaintiff William Gardner was named (and he remains to this day) a Director/Manager and the Vice President of Defendant Purple Passion Company, LLC. Upon information and belief,

Defendant Richard Shields is a Director/Manager and the President of Purple Passion Company, LLC, and Defendant Paul Schweizer is a Director/Manager of Purple Passion Company, LLC. Upon information and belief, Defendant Amanda Schweizer is the Treasurer of Purple Passion Company, LLC, and Defendant Bess Shields is the Secretary of Purple Passion Company, LLC.

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23.

Contrary to the representations and promises of Defendant Richard Shields, he and the other defendants have failed to cause Purple Passion Company, LLC to enter into a licensing agreement with Plaintiff William Gardner. Defendants have also failed to cause Purple Passion Company, LLC to display the patent numbers for the patents owned by Plaintiff William Gardner. Plaintiff William Gardner has never received any royalty amounts even though Purple Passion Company, LLC has been using and continues to use his patented technology despite having been told to cease and desist from such use. On May 4, 2011, William Gardner sent an express cease and desist letter to the Shields and Schweizers to stop selling and offering for sale the patented inventions through Purple Passion Company, LLC or otherwise. The Shields and the Schweizers continued to sell and offer to sell, through today, the patented inventions owned exclusively by William Gardner.

24.

Defendants have also engaged in other unlawful conduct in breach of their fiduciary duties to Purple Passion Company, LLC and/or which constitutes oppression of a minority owner. For example, and without limitation, Plaintiffs have repeatedly requested that they be provided access to all of Purple Passion Company, LLC’s financial records, but Defendants have, in violation of Sections 3.152-53 of the Texas Business Organizations Code, without limitation, failed and refused to provide all such information to Plaintiffs. Rather than providing access to Plaintiffs of all of the requested financial information of Purple Passion Company, LLC including general ledgers, bank account statements, credit card account statements and other financial information, Defendants have only provided a smattering of un-audited in-house profit and loss statements and

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balance sheets. Defendants have repeatedly failed and refused to provide to Plaintiffs the general ledgers, bank account statements, credit card statements, and other critical financial information of Purple Passion Company, LLC, even though Plaintiffs have repeatedly requested all such information. There have been substantial inconsistencies between the figures on certain of the un-audited financial documents provided to Plaintiffs and the K-1 tax forms that Purple Passion Company, LLC has issued to Plaintiffs, making it all the more critical that Plaintiffs be provided with this information. 25. Defendants have failed to give notice to Plaintiffs of any member meetings or to Plaintiff William Gardner of any manager meetings for Purple Passion Company, LLC during the entirety of its existence. Even though Plaintiff William Gardner has been a manager/director of Purple Passion Company, LLC since its inception, Defendants have, apart from a single conference call early on in Purple Passion Company, LLC’s existence, never consulted with or informed Plaintiff William Gardner on any Purple Passion Company, LLC business matters during its entire existence, nor have they notified Plaintiff William Gardner of any vote of the managers/directors of Purple Passion Company, LLC. 26. Defendants’ unlawful actions have caused and continue to cause severe economic and other injury to Plaintiffs and Purple Passion Company, LLC, and/or have benefitted Defendants.

Plaintiffs’ Causes of Action Infringement of Patent 35 U.S.C. § 271

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27.

On May 4, 2011, William Gardner, owner of the patents which make the UV flashlights sold by Purple Passion Company, LLC demanded that the Shields and Schweizer Defendants as the operators of Purple Passion Company, LLC to cease and desist using the patented inventions without a licensing agreement from him. The specific patents which the Shields and Schweizer Defendants sell and offer to sell through Purple Passion Company, LLC without a licensing agreement are: (1) U.S. Patent Number 7,148,497; (2) U.S. Patent Number 7,485,883; and (3) U.S. Patent Number 7,781,751. The acts of the Shields and Schweizer Defendants in selling and offering to sell the patented inventions through Purple Passion Company, LLC without the express agreement of William Gardner are acts of infringement pursuant to 35 U.S.C § 271(a). In addition, the Shields and Schweizer Defendants sell and offer to sell through Purple Passion Company, LLC components of the patented inventions, and not a staple article or commodity of commerce suitable for substantial noninfringing use, are liable as a contributory infringer as set forth by 35 U.S.C. § 272(b). Civil Action for Infringement of Patent 35 U.S.C. §§ 281, et seq.

28.

William Gardner has a civil action against the Shields and Schweizer Defendants and Purple Passion Company, LLC for infringing upon his patents. Williams Gardener hereby gives notice, through this pleading, of the patent infringement by the Shields and Schweizer Defendants and Purple Passion Company, LLC as required by 35 U.S.C. §282(c). Damages for Infringement of Patent 35 U.S.C. § 284

29.

William Gardner is entitled to an award of damage to adequately compensate him for the infringement of but in no event less than a reasonable royalty for the

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use made of the invention by the infringers, together with interest and costs as fixed by the court. William Gardner seeks three times the amount found or assessed as compensatory damages for the Shields and Schweizer Defendants and Purple Passion Company, LLC’s intentionally infringement of the patent. 30. William Gardner seeks the reasonable cost of necessary legal services to prosecute this claim pursuant to 35 U.S.C. § 285. Breach of Fiduciary Duty 31. As officers, directors, managers and agents of Purple Passion Company, LLC, a closely held business organization, a relationship of trust and confidence existed between the Shields and Schweizer Defendants, on the one hand, and the Gardners, on the other hand. 32. The Shields and Schweizer Defendants as majority shareholders and officers, directors, managers and agents of Purple Passion Company, LLC owe fiduciary duties to the Gardners, including without limitation, the fiduciary duties to act fairly, honestly, with care, in utmost good faith, with undivided loyalty, to make full disclosure of all matters affecting Purple Passion Company, LLC, to account for all profits and property, and to refrain from self-dealing and usurping corporate opportunities for personal gain. As described more fully above, Defendants

intentionally breached their fiduciary duties to the Gardners, which breaches proximately resulted in injury to the Gardners, on the one hand, and/or benefit to the Shields and Schweizer Defendants, on the other. Shareholder Oppression 33. The Shields and Schweizer Defendants, as the majority and/or controlling owners in Purple Passion Company, LLC, owe duties to Plaintiffs as minority owners, including without limitation, a duty to refrain from engaging in oppressive behavior toward Plaintiffs as minority owners. This means the majority

shareholders cannot take actions which unreasonably deny the Gardners’ the
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value of their ownership in the company. As described more fully above as well as in the following paragraph, the Shields and Schweizer Defendants intentionally breached their duties to Plaintiffs, which breaches proximately resulted in injury to Plaintiffs, on the one hand, and/or benefit to the Shields and Schweizer Defendants, on the other. 34. For example, and without limitation, the Shields and Schweizer Defendants have intentionally or otherwise failed to provide Plaintiffs with access to all of Purple Passion Company, LLC’s financial information, including without limitation Purple Passion Company, LLC’s general ledgers, bank account statements, credit card statements, and other financial and corporate information, even though Plaintiffs have repeatedly requested such information, and even though there are substantial discrepancies between the un-audited in-house summaries and the K-1 forms that Defendants have provided to Plaintiffs. Fraud 35. The Shields and Schweizer Defendants have made intentional

misrepresentations of existing fact regarding the profits and loss of Purple Passion Company, LLC. The Shields and Schweizer Defendants have

withdrawn money from the business to pay for either personal expenses or unnecessary business expenses for which they represented were in fact necessary business expenses. The Gardners relied on 215the Shields and

Schweizer Defendants to handle the finances of the company and their representations the finances of the company to their detriment. The Gardners seeks damages for the misrepresentation of fact regarding the true nature of the profits and losses of the business. Plaintiffs’ Damages

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36.

As a proximate, producing and direct result of the acts of Defendants as pleaded hereinabove, without limitation, Plaintiffs have suffered the following damages, without limitation:

(a) (b)

any and all compensatory damages and loss of royalties for patent infringement; any and all past and future actual, incidental, general, special, direct and consequential damages of Plaintiffs associated with, produced and/or proximately caused by Defendants’ (i) breach of fiduciary duty, (ii) shareholder oppression, or (iii) fraud more specifically described hereinabove, without limitation;

(c) (d) (e) (f) (g)

any and all profits lost by Plaintiffs; any and all benefit of the bargain damages lost by Plaintiffs; any and all out of pocket damages lost by Plaintiffs; any and all reasonable and necessary mitigation expenses incurred by Plaintiffs; exemplary, punitive or treble damages in an amount sufficient to punish Defendants for their unlawful conduct;

(h) (i)

pre-judgment and post-judgment interest at the highest rate allowed by law; attorney’s fees, expenses, and costs associated with prosecuting this lawsuit; and

(j)

all other damages of any kind, whether in equity or at law, to which Plaintiffs may be entitled and as may be proved at trial.

Attorney’s Fees 37. Plaintiffs have been compelled to hire the undersigned attorneys to prosecute the claims set forth in this lawsuit. Pursuant to §27.01(e) and §37.009 of the Texas Civil Practice and Remedies Code and 35 U.S.C. § 285 and any other applicable statute or common law precedent, Plaintiffs are entitled to an award of their reasonable attorney’s fees and costs incurred herein.

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Request for Permanent Injunction 38. Pursuant to 17 U.S.C. § 502, 15 U.S.C. § 1116, §§ 65.001 et seq., of the TEX. CIV. PRAC. & REM. C., and all other applicable authorities, whether federal or state, Plaintiffs request the Court enter a permanent injunction ordering Defendants to do the following:

a.

timely disclose and provide full access to all corporate books and records to Plaintiffs; refrain from causing any funds or assets of Purple Passion Company, LLC to be used for any purpose other than Purple Passion Company, LLC’s own legitimate business expenses; cause Purple Passion Company, LLC to make reasonable and appropriate distributions of profits to Plaintiffs; refrain from engaging in any oppressive conduct toward Plaintiffs as a minority shareholder; and refrain from using any of the intellectual property protected by the following patents: (i) U.S. Patent No. No. 7,148,497, (ii) U.S. Patent No. 7,485,883, and (iii) U.S. Patent No. 7,781,751.

b.

c.

d.

e.

39.

Plaintiffs will likely suffer irreparable injury that would be imminent, there is no adequate remedy at law, there is a likelihood of success on the merits, the balance of hardships weighs in favor of granting injunctive relief to Plaintiffs, and the effect on the public interest also weighs in favor of granting injunctive relief to Plaintiffs. Jury Demand

40.

Plaintiffs, simultaneously with the filing of Plaintiffs’ Original Complaint, have paid the statutory jury fee and demand that this case be tried before a jury.

Prayer

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For these reasons, Plaintiffs pray that the Court summon Defendants to appear and answer, and that on final hearing Plaintiffs have judgment from this Court against Defendants, for the following: a. b. c. d. e. actual damages; injunction; reasonable cost of necessary attorneys’ services; court costs; exemplary, treble or punitive damages for Defendants’ fraudulent, intentional and/or malicious perpetration of acts or omissions as pled more particularly hereinabove; f. g. pre-judgment interest at the highest rate allowed by law; and post-judgment interest at the highest rate allowed by law on the amount of the judgment against Defendants until all judgment amounts are satisfied.

Respectfully submitted,

THE GREENWOOD PRATHER LAW FIRM

By:

/s/ Kelly G. Prather Kelly Greenwood Prather TBA: 00796670 Mailing Address: PO Box 1358 Houston, Texas 77251 (713) 333-3200 telephone (713) 621-1449 telecopier ATTORNEY FOR PLAINTIFFS

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