Case 6:13-cv-00709-TC

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STEPHEN J. JONCUS (OSB No. 013072) stephen.joncus@klarquist.com KLARQUIST SPARKMAN, LLP 121 S.W. Salmon Street, Suite 1600 Portland, Oregon 97204 Telephone: (503) 595-5300 Fax: (503) 595-5301 Attorneys for Defendant USPA ACCESSORIES, LLC d/b/a/ CONCEPT ONE

UNITED STATES DISTRICT COURT DISTRICT OF OREGON EUGENE DIVISION

CTS WHOLESALE, LLC, Plaintiff, v. USPA ACCESSORIES, LLC d/b/a CONCEPT ONE, Defendant.

Civil No. 6:13-CV-00709-TC Honorable Magistrate Judge Thomas M. Coffinn DEFENDANT USPA’S ANSWER TO COMPLAINT AND COUNTERCLAIMS JURY TRIAL DEMANDED

DEFENDANT USPA’S ANSWER TO COMPLAINT AND COUNTERCLAIMS

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Defendant USPA Accessories, LLC d/b/a Concept One (“Concept One”) hereby responds to the complaint for declaratory judgment of non-infringement (“Complaint”) of Plaintiff CTS Wholesale, LLC (“CTS Wholesale”). Concept One denies any allegations made in the Complaint, whether express or implied, that are not specifically addressed below. ANSWER 1. Concept One admits that this is a civil action for declaratory judgment. Concept

One denies CTS Wholesale’s allegation that it does not infringe U.S. Pat. No. D557,478. Indeed, CTS Wholesale’s infringement of U.S. Pat. No. D557,478 is quite clear. Concept One denies any other allegations in paragraph 1 of the Complaint. 2. Concept One is without information or knowledge sufficient to admit the

allegations of paragraph 2 of the Complaint. 3. 4. Admitted. Concept One admits that this action purports to state a claim under 35 U.S.C. §§

101 et seq., and 28 U.S.C. § 2201. 5. 6. district. 7. For purposes of this action only, Concept One admits that personal jurisdiction in Concept One admits that the Court has subject matter jurisdiction. For purposes of this action only, Concept One admits that venue is proper in this

the District of Oregon is proper. 8. 9. 10. Admitted. Admitted. Admitted.

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11.

Concept One denies that it has filed any suits seeking to enforce U.S. Pat.

D557,478. Concept One understands that its predecessor in interest filed four suits against infringers of U.S. Pat. D557,478. Concept One denies any knowledge of U.S. Pat. D575,478 identified in paragraph 11 of Plaintiff’s Complaint. 12. Concept One admits that it has informed CTS Wholesale that it infringes U.S. Pat.

D557,478, requested information concerning CTS Wholesale’s sales of its product “Hair Hat,” and discussed the possibility of court action if this information was not provided. Concept One denies that it has acted beyond the scope of any right granted to Concept One under the U.S. Pat. D557,478 Patent. 13. Concept One is without information or knowledge sufficient to admit or deny the

allegations of paragraph 13 of the Complaint. 14. 15. 16. Denied. Denied. Concept One denies that CTS Wholesale is entitled to any of the relief sought. THE COMPLAINT’S PRAYER FOR RELIEF Concept One denies that CTS Wholesale is entitled to any of the relief sought in its prayer for relief against Concept One. CTS Wholesale’s prayer should be denied in its entirety and CTS Wholesale should take nothing.

COUNTERCLAIMS Counterclaim Plaintiff Concept One alleges against Counterclaim Defendant CTS Wholesale as follows:

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NATURE OF THE ACTION 1. This Counterclaim seeks a judgment finding that CTS Wholesale has infringed

Concept One’s design patent, U.S. Patent No. D557,478 (the ’478 Patent). A true and accurate copy of the ’478 Patent is filed as Exhibit A. 2. This Counterclaim seeks a judgment finding that CTS Wholesale has infringed

Concept One’s trade dress in its Flair Hair® visors. JURISDICTION AND VENUE 3. This Court has subject matter jurisdiction over this Counterclaim pursuant to 28

U.S.C. §§ 1331 and 1338(a) and the patent laws of the United States, 35 U.S.C. §1, et seq. 4. Venue is proper in this judicial district under the provisions of 28 U.S.C. §§

1391(b) and 1400(b). THE PARTIES 5. Upon information and belief, Counterclaim Defendant CTS Wholesale is a

corporation organized and existing under the laws of Oregon and having its principal place of business in Salem, Oregon. 6. Upon information and belief, CTS Wholesale has distributed products, including

infringing “Hair Hat” products, through an internet website and has sold products to consumers in this district. FACTS 7. With 150 employees worldwide, Concept One is the premier resource of licensed

fashion, sports, and entertainment accessories. Its well-rounded portfolio and expansive product offering establishes the company as the go-to resource for fashion accessories across all channels of distribution.

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8.

Concept One’s customers license Concept One to make products using their most

valuable trademarks and some of the most valuable trademarks in the world. Concept One’s brands include National Basketball Association, National Football League, Major League Baseball, Disney, Warner Brothers, Ford Motor Company, General Motors, Budweiser, Guinness, Izod, Levi’s VanHeusen, Ohio State Buckeyes, North Carolina Tar Heels, and the Nebraska Cornhuskers. 9. Quality is a high priority for Concept One and its customers. Fabrics are sourced

from the finest manufacturers throughout the world, including Italy, and assembled in China to achieve competitive pricing. Concept One maintains an office in Shanghai, China staffed with 25 people to oversee quality control, sourcing, and factory compliance. 10. Concept One has an in-house force of 24 full-time account executives and

planners. The company has distribution in virtually every retail chain in North America and over 1400 specialty stores. Concept-One also works with 20 independent sales reps and attends 15 tradeshows per year. Concept One distributes its products internationally through a network of distributors in local markets. 11. Concept One has worked hard to build a strong reputation that will continue to

attract business from the most valuable brands. Concept One cannot tolerate knock-off products in the market-place. The poor quality of cheap imitations of its products is damaging to Concept One’s reputation and its relationship with its customers. 12. In 2007, David Nance created a visor with sewn-in spiked hair and it immediately

became a hit in his local community. With a federal design patent and a couple years of work, Flair Hair® brand visors were sold in golf shops to truck stops across the United States and some markets abroad. The Flair Hair® brand has its own web site (www.flairhair.com) from which

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customers can purchase Flair Hair® visors bearing the mark of their favorite sports team, humorous sayings, unique designs, or colored hair as shown in the following examples. 13. Concept One acquired the Flair Hair® visor brand, including the ’478 Patent, in

March 2012. After acquiring the Flair Hair® visor brand, Concept One said “Flair Hair is a terrific product that people love, and we believe we can expand its presence across multiple channels in North America very quickly. We’ve already begun discussions with several of our key licensors to apply their properties to our Flair Hair product.” 14. Concept One sells Flair Hair® visors in many variations and under many different

brands. The Flair Hair® brand has its own web site (www.flairhair.com) from which customers can purchase Flair Hair® visors bearing the mark of their favorite sports team, humorous sayings, unique designs, or different colored hair as shown in the following examples.

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15. 16.

The retail price of a Flair Hair® visor is in the range of $20-$25. To date approximately 800,000 Flair Hair® visors have been sold. Flair Hair®

visors are a well-known and familiar novelty item. 17. 18. CTS Wholesale is in the business of selling novelty items. Upon information and belief CTS Wholesale is well-aware of the type of novelty

items sold on the market, such as the Flair Hair® visor. 19. 20. 21. CTS Wholesale offered “Hair Hats” on its website for $3 per hat. The “Hair Hats” offered by CTS Wholesale were of poor quality. Upon information and belief, CTS Wholesale intended to compete with the Flair

Hair® visor by offering “hair hats,” a much cheaper and poorer quality imitation of the Flair Hair® visor.

FIRST CLAIM FOR RELIEF PATENT INFRINGEMENT 22. Concept One incorporates the foregoing paragraphs of its counterclaims by

reference as if fully set forth below. 23. The ’478 Patent entitled “Visor” was duly and regularly issued on December 18,

2007. The Inventor of the ’478 Patent assigned all right, title and interest in, to and under the ’478 Patent to Backgate Designs, Inc. Backgate Designs, Inc. subsequently assigned all right, title, and interest in, to and under the ’478 Patent to Concept One. Concept One is the sole and exclusive owner of the ’478 Patent. 24. At all relevant times, the owner of the ’478 Patent has complied with the marking

requirements of 35 U.S.C. § 287(a).

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25. 26.

The ’478 Patent is valid and enforceable. The ’478 Patent claims the ornamental design for a visor as shown and described.

The following image appears on the cover page of the ’478 Patent.

27.

CTS Wholesale has sold “Hair Hat” visors consisting partly of simulated hair,

including at least Model Number C5144. 28. A comparison of the CTS Wholesale’s “Hair Hat” with Concept One’s “Flair

Hair” is shown below.

Concept One’s Patented “Flair Hair” Visor 29.

CTS Wholesale’s “Hair Hat”

An ordinary observer, familiar with the prior art, would be deceived into thinking

that the CTS Wholesale “Hair Hat” visors was the same as the patented design in the ’478 Patent.

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30.

The CTS Wholesale “Hair Hat” embodies the patented design or a colorable

imitation of the patented design of the ’478 Patent. 31. CTS Wholesale’s Model Number C5144 employs the design claimed in the ’478

Patent without permission from Concept One. 32. Without the authority or consent of Concept One, CTS Wholesale offered to sell,

sold, or imported visor products in the United States which infringe the ’478 Patent. 33. CTS Wholesale acted despite an objectively high likelihood that its actions

constituted infringement of a valid patent, and objectively defined risk was either known or so obvious that it should have been known to the accused infringer. 34. CTS Wholesale’s infringement of the ’478 Patent was willful. SECOND CLAIM FOR RELIEF TRADE DRESS INFRINGEMENT UNDER LANHAM ACT § 43(a) 35. Concept One incorporates the foregoing paragraphs of its counterclaims by

reference as if fully set forth below. 36. Concept One’s Flair Hair® visors are inherently distinctive or have acquired

secondary meaning. 37. The appearance of Flair Hair® visors is primarily non-functional. Design features

of Concept One’s Flair Hair® visors consist of arbitrary embellishments or a form of dress for goods that are primarily adopted for purposes of individuality. 38. The Hair Hat sold by CTS Wholesale is confusingly similar to Flair Hair® visors

causing a likelihood of confusion in the marketplace.

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39. Hair® visors. 40.

The Hair Hat sold by CTS Wholesale infringes Concept One’s trade dress in Flair

CTS Wholesales infringement was deliberate and willful or with willful blindness

to Concept One’s rights. WHEREFORE, Counterclaim Plaintiff Concept One respectfully prays that the Court enter judgment in its favor and award the following relief against CTS Wholesale: A. Find that CTS Wholesale infringed the ’478 Patent and Concept One’s

trade dress in the Flair Hair® visors. B. Enjoin CTS Wholesale and its officers, directors, employees, agents,

licensees, representatives, affiliates, related companies, servants, successors and assigns, and any and all persons acting in privity or in concert with any of them, preliminarily and permanently, from further infringement; C. Order that an accounting be made to establish profits and damages arising

out of CTS Wholesale’s infringement; D. E. F. Award Concept One damages; Award Concept One treble damages Award Concept One its costs and reasonable attorneys’ fees incurred in

connection with this action; and G. Award and grant Concept One such other and further relief as the Court

deems just and proper under the circumstances.

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DEMAND FOR JURY TRIAL Pursuant to Ryle 38 of the Federal Rules of Civil Procedure, Concept One hereby demands a jury trial.

Dated: August 6, 2013

s/ Stephen J. Joncus Stephen J. Joncus, OSB No. 013072 stephen.joncus@klarquist.com KLARQUIST SPARKMAN, LLP 121 S.W. Salmon Street, Suite 1600 Portland, Oregon 97204 Telephone: (503) 595-5300 Fax: (503) 595-5301 Counsel for Defendant USPA ACCESSORIES, LLC d/b/a CONCEPT ONE

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