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UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION North Texas Patent Group, Inc., Relator, JURY TRIAL DEMANDED v. Manhattan Group, LLC d/b/a Manhattan Toy and Automoblox Company LLC, Defendants. Case No. 3:10-cv-1312

COMPLAINT FOR FALSE MARKING Qui tam relator North Texas Patent Group, Inc. (Relator or NTPG), for its Complaint against Manhattan Toy Co. (Manhattan Toy) and Automoblox Company LLC (Automoblox Company) (together, the Defendants), alleges, based on its own personal knowledge with respect to its own actions and based upon information and belief with respect to all others actions, as follows: BACKGROUND 1. This is an action for false patent marking under Title 35, Section 292, of the

United States Code. 2. Defendants have violated 35 U.S.C. 292(a) by marking unpatented articles with

the purpose of deceiving the public. More specifically, Defendants have, with the purpose of deceiving the public, marked products with a patent having a scope which does not cover the marked products and has additionally used in advertising in connection with unpatented products the word patent and/or any word or number importing that the product is patented.

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3.

The marking and false marking statutes exist to give the public notice of patent

rights. Congress intended the public to rely on marking as a ready means of discerning the status of intellectual property embodied in an article of manufacture or design. Federal patent policy recognizes an important public interest in permitting full and free competition in the use of ideas which are, in reality, a part of the public domain. 4. False patent marking is a serious problem. Acts of false marking deter innovation

and stifle competition in the marketplace. If an article that is within the public domain is falsely marked, potential competitors may be dissuaded from entering the same market. False marks may also deter scientific research when an inventor sees a mark and decides to forego continued research to avoid possible infringement. False marking can cause unnecessary investment in design around or costs incurred to analyze the validity or enforceability of a patent whose number has been marked upon a product with which a competitor would like to compete. Furthermore, false marking misleads the public into believing that a patentee controls the article in question (as well as like articles), externalizes the risk of error in the determination, placing it on the public rather than the manufacturer or seller of the article, and increases the cost to the public of ascertaining whether a patentee in fact controls the intellectual property embodied in an article. In each instance where it is represented that an article is patented, a member of the public desiring to participate in the market for the marked article must incur the cost of determining whether the involved patents are valid and enforceable. Failure to take on the costs of a reasonably competent search for information necessary to interpret each patent, investigation into prior art and other information bearing on the quality of the patents, and analysis thereof can result in a finding of willful infringement, which may treble the damages an infringer would otherwise have to pay. False markings may also create a misleading impression that the falsely

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marked product is technologically superior to previously available ones, as articles bearing the term patent may be presumed to be novel, useful, and innovative. 5. The scope of a patent is not readily ascertainable by general members of the

American Public. Basic information about the patent, particularly the claims of the patent and the specification, are available at the website of the United States Patent and Trademark Office and other websites. Even once the patent is retrieved from a website, however, most members of the American Public are not equipped to evaluate the scope of the patent in part because most members of the American Public are not persons skilled in the art of the patents subject matter. Further, most members of the American Public do not have the legal expertise to evaluate the scope of a patent. For example, most members of the American Public do not know that it is the claims of a patent that define the scope of the patent. Further, most members of the American Public do not know how to match every claim limitation of a claim with a marked product. The Defendants, on the other hand, work closely with the inventor of the patent in suit and manufacture the products in suit. These two facts clearly enable the Defendants to determine whether the manufactured products fall within the scope of the patent in suit. But because the Defendants have chosen to either neglect or abdicate their duty to appropriately mark their products, they shift their duty to the American Public, who necessarily suffer as a result of the false mark. 6. The false marking statute explicitly permits qui tam actions. By permitting

members of the public to sue on behalf of the government, Congress allows individuals to help control false marking.

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7.

NTPG, on its own behalf and on behalf of the United States, seeks an award of

monetary damages of not more than $500 for each of Defendants violations of 35 U.S.C. 292(a), one-half of which shall be paid to the United States pursuant to 35 U.S.C. 292(b). PARTIES 8. NTPG is a Texas corporation with its principal place of business at 4223 Buena

Vista Street, Suite 4, Dallas, Texas 75205. 9. 10. NTPG exists to conduct all lawful business in the State of Texas. NTPG represents the United States and the public, including Defendants existing

and future competitors as well as Defendants costumers. 11. Manhattan Group, LLC d/b/a Manhattan Toy (Manhattan Toy) is a Wyoming

corporation with its principal place of business at 430 First Avenue North Suite 500, Minneapolis, Minnesota 55401. 12. Manhattan Toy can be served with process through any of its agents including

officers or directors or its registered agent, C T Corporation System, 1720 Carey Ave., Suite 200, Cheyenne, WY 82001. 1. Automoblox Company LLC is a New Jersey limited liability corporation with its

principal place of business at 175 North Main Street, Wharton, New Jersey 07885. 2. Automoblox Company LLC can be served with process through any of its agents

including officers or directors or its registered agent, Corporation Service Company, 830 Bear Tavern Road, West Trenton, New Jersey 08628. 3. Defendants regularly conduct and transact business in Texas, throughout the

United States, and within the Northern District of Texas, themselves, and/or through one or more

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subsidiaries, affiliates, business divisions, or business units. There are at least sixteen stores that retail Manhattan Toy products. See Ex. C. JURISDICTION AND VENUE 4. This Court has exclusive jurisdiction over this action pursuant to 28 U.S.C.

1331 and 1338(a). 5. This Court has personal jurisdiction over Defendants. Defendants have conducted

and do conduct business within the State of Texas. Defendants, directly or through subsidiaries or intermediaries, offer for sale, sell, mark and/or advertise the products that are the subject of this Complaint in the United States, the State of Texas, and the Northern District of Texas. 6. Defendants have voluntarily sold the products that are the subject of this

Complaint in this District, either directly to customers in this District or through intermediaries with the expectation that the products will be sold and distributed to customers in this District. These products have been and continue to be purchased and used by consumers in the Northern District of Texas. Defendants have committed acts of false marking within the State of Texas and, more particularly, within the Northern District of Texas. 7. Venue is proper in this District pursuant to 28 U.S.C. 1391(b)-(c) and 1395(a),

because (i) Defendants products that are the subject matter of this cause of action are advertised, marked, offered for sale, and/or sold in various retail stores and/or on the Internet in this District; (ii) a substantial part of the events or omissions giving rise to the claim occurred in this District; and (iii) Defendants are subject to personal jurisdiction in this District, as described above. 8. NTPG brings this action under 35 U.S.C. 292(b), which provides that any

person may sue for civil monetary penalties for false patent marking.

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FACTS 9. herein. 10. 11. 12. Manhattan Toy is a sophisticated company with approximately 60 employees. Defendants have, or regularly retain, sophisticated legal counsel. Defendants know that a patent does not cover any product that is not within the NTPG incorporates by reference the foregoing paragraphs as if fully set forth

scope of its claims. 13. Each false marking on the products identified in this Complaint has and/or has the

potential to discourage or deter persons and companies from commercializing competing products. Moreover, each false marking on the products identified in this Complaint has and/or has the potential to mislead consumers into a belief that the products are covered by an existing, enforceable patent right. 14. Defendants false marking of their products has wrongfully quelled competition

with respect to such products thereby causing harm to NTPG, the United States, and the American Public. 15. Defendants have wrongfully and illegally advertised patent monopolies which

they do not possess and, as a result, have benefited by maintaining a substantial market share with respect to the products referenced in this Complaint. 16. United States Patent No. 6,595,824 (the 824 patent), titled Educational Snap-

Together Toy Vehicle System, was filed on July 30, 2002, was issued by the United States Patent and Trademark Office (the USPTO) on July 22, 2003. (See Ex. A.) 17. The 824 patent covers or protects, by way of a property right:

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A toy vehicle system consisting essentially of a plurality of segmented toy vehicles comprising at least a first vehicle and a second vehicle, wherein the first vehicle comprises a plurality of serially connected body parts, each pair of body parts connected to one another by a three-element connector system, the connector system consisting of; a) a fixed universal socket; b) an intermediate shaped-socket coupler having a universal end adapted to engage the universal socket and a shaped end having a first shaped intermediate member defining a first shape; and c) a fixed shaped socket having a first shaped fixed member adapted to engage the first shaped intermediate member, the first connector system being identified by a first color, and wherein the second vehicle comprises a plurality of serially connected body parts, each pair of body parts connected to one another by a three-element connector system, the connector system consisting of; a) a fixed universal socket; b) an intermediate shaped-socket coupler having a universal end adapted to engage the universal socket and a shaped end having a second shaped intermediate member defining a second shape; and c) a fixed shape socket having a second shaped fixed member adapted to engage the second shaped intermediate member, the second connector system being identified by a second color, wherein the first shape is different from the second shape such that the first intermediate shaped socket coupler will not engage the second fixed shaped socket and the second intermediate shaped socket coupler will not engage the first fixed shaped socket; and wherein the first color is different from the second color. (824 patent at claim 1, referred to as Claim 1). 18. Claim 1 is the only independent claim of the 824 patent; the other claims of the

824 patent therefore contain limitations in addition to those of Claim 1. 19. Despite the fact that the claims of the 824 patent covers at most Claim 1,

Defendants marked (or caused to be marked) products within Defendants line of Automoblox products with the 824 patent, despite the fact that some marked Automoblox products do not practice Claim 1 and therefore no claim of the 824 patent.

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20.

For example, Defendants falsely marked the following products with the 824

patent: (i) Mini A9-S, (ii) Mini X9-X, (iii) Mini M9, (iv) Mini C9-R, (v) Mini S9-R, (vi) Mini C9-S, (vii) Mini C9 Sport Car, (viii) Mini S9 Sedan, (ix) Mini T9 Truck, (x) Mini X9-X SUV, (xi) Mini SR-9 Sports Sedan, (xii) Mini CR-9 Sportscar, (xiii) Mini C9-S Berlinetta, (xiv) Mini A9-S convertible, (xv) Mini M9 sport-van, (xvi) Mini C9p sports car, (xvii) Mini C9-R/S9-R/C9S 3-Pack, (xviii) Mini A9-S/X9-X/M9 3-pack, and (xix) Mini T9/S9/C9 3-Pack. See, e.g., Ex. B. 21. Defendants products that do not connect using a three-element connector system,

as claimed and described in the 824 patent, do not practice Claim 1. 22. The three-element connector system, as claimed in the 824 patent, does not

permit differently colored parts to be interchanged. See, e.g., 824 at 2:47-58; see also Claim 1. 23. Some of Defendants Automoblox products do not connect by a three-element

connector system as disclosed in the 824 patent. 24. Some of Defendants Automoblox products employ a two-element connector

system that permits differently colored parts to be interchanged. Compare Ex. G with Ex. H. 25. 26. Defendants know and have known the facts stated in Paragraphs 16 through 24. The two-element connector system, which permits differently colored parts to be

interchanged, is termed the universal connector system. See, e.g, Ex. D. 27. Defendants know that the universal connector system allow the interchanging of

differently colored parts. See id. 28. To be sure, some of Defendants Automoblox products practice the 824 patent,

such as the C9 sports car. See, e.g., Ex. E.

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29.

Nevertheless, Defendants knew that the 824 patent does not cover every

Automoblox product that Defendants marked and advertised as being covered by the 824 patent. 30. The fact that some of Defendants Automoblox products practice the 824 patent

while others do not evidences Defendants intent to deceive the public into believing that the scope of the 824 patent is so broad as to encompass Automoblox products that do not employ the three-element connector system. 31. Patrick Calello, a co-inventor of the 824 patent, is the man behind the

Automoblox brand creation, corporate identity, graphic design, industrial design, and mechanical engineering. Together with a team of professionals, Mr. Calello was involved in bringing the Automoblox line of products to market. See Ex. F. 32. The facts that (i) Mr. Calello is the co-inventor of the 824 patent and (ii) has a

close relationship with Defendants commercialization of the Automoblox products evidence Defendants intent to deceive the public into believing that the scope of the 824 patent is so broad as to encompass Automoblox products that do not employ the three-element connector system. 33. Alternatively, because the 824 patent unmistakably does not cover every

Automoblox product marked and advertised as covered by the patent, Defendants cannot have any reasonable belief that each and every one of its Automoblox products are patented or covered by the 824 patent. 34. Defendants intended to deceive the public by marking (or causing to be marked)

all of its Automoblox products with the 824 patent.

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COUNT I (FALSE MARKING WITH OUT OF SCOPE PATENTS) 35. herein. 36. Defendants falsely marked certain Automoblox products that do not practice the NTPG incorporates the foregoing paragraphs by reference as if fully set forth

824 patent with the 824 patent despite their knowledge that the 824 patent covers some but not all of Defendants Automoblox products. 37. Defendants knew or reasonably should have known that marking Automoblox

products which do not practice the 824 patent with the824 patent violated Federal patent marking laws, which authorize marking only existing and enforceable patent or patent pending claims on a patented article. 38. Defendants intended to deceive the public by falsely marking the Automoblox

products which do not practice the 824 patent with the 824 patents. 39. Defendants actions are in violation of 35 U.S.C. 292. COUNT II (FALSE ADVERTISING) 40. herein. 41. Defendants falsely advertised certain Automoblox products as practicing the 824 NTPG incorporates the foregoing paragraphs by reference as if fully set forth

patent when they do not. 42. Defendants knew or reasonably should have known that falsely advertising their

products with such language is in violation of 35 U.S.C. 292. 43. Defendants intended to deceive the public by marking certain products with such

language and advertising those products as covered by the 824 patent.

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44.

Defendants actions are in violation of 35 U.S.C. 292. PRAYER FOR RELIEF

NTPG requests the Court, pursuant to 35 U.S.C. 292, to: A. B. Enter judgment against Defendants and in favor of NTPG for the violations alleged in this Complaint; Enter an injunction prohibiting Defendants, and its officers, directors, agents, servants, employees, attorneys, licensees, successors, and assigns, and those in active concert or participation with any of them, from violating 35 U.S.C. 292; Order Defendants to pay a civil monetary fine of up to $500 per false marking offense, one-half of which shall be paid to the United States and one-half of which shall be paid to NTPG; Enter a judgment and order requiring each Defendant to pay NTPG prejudgment and post-judgment interest on the damages awarded; Order Defendants to pay NTPGs costs and attorney fees; and Grant NTPG such other and further relief as it may deem just and equitable. JURY DEMAND

C.

D. E. F.

NTPG, pursuant to Federal Rule of Civil Procedure 38(b), hereby demands a trial by jury on all issues so triable.

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Dated: July 6, 2010 Respectfully submitted, ZWEBER P.C. By: /s/ Michael C. Zweber Michael C. Zweber Texas State Bar No. 24003236 4223 Buena Vista St., Suite 4 Dallas, Texas 75205 Telephone: 214-507-0508 Fax: 214-252-0205 mzweber@zweberlaw.com ATTORNEY FOR RELATOR NORTH TEXAS PATENT GROUP, INC.

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