hana modz v daily vape steals.pdf

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					Case 4:14-cv-00365-RC-ALM Document 1 Filed 06/06/14 Page 1 of 8 PageID #: 1



                           UNITED STATES DISTRICT COURT
                            EASTERN DISTRICT OF TEXAS
                                SHERMAN DIVISION


HANA MODZ, LLC, an Illinois Limited              §
Liability Company,                               §
                                                 §    CIVIL ACTION NO. 4:14-cv-354
      Plaintiff,                                 §
                                                 §
                                                 §
v.                                               §
                                                      DEMAND FOR JURY TRIAL
                                                 §
DAILEY VAPE STEALS, and                          §
DOES 1-10,                                       §
                                                 §
      Defendants.                                §


                         PLAINTIFF’S ORIGINAL COMPLAINT

       Plaintiff Hana Modz, LLC (“Hana Modz”), for its Complaint against Defendant Daily
Vape Steals and DOES 1-10, alleges as follows:
                                       INRODUCTION
       1. In this action, Hana Modz asserts that Daily Vape Steals has infringed its trademarks
and copyrights by marketing and selling “clone” electronic cigarette products bearing proprietary
Hana Modz trademarks, sold using copyrighted Hana Modz photographs, in an effort to unfairly
profit on the highly favorable reputation of Hana Modz products in the marketplace. Hana Modz
seeks injunctive relief and money damages to remedy the harm caused by Daily Vape Steals’
unlawful conduct.
                                        THE PARTIES
       2. Plaintiff Hana Modz is an Illinois Limited Liability Company with its principal place
of business at 10204 Werch Drive, Suite 305, Woodridge, Illinois 60517.
       3. Upon information and belief, Defendant Daily Vape Steals is a business entity in the
state of Texas with its principal place of business at 5910 Saintsbury Drive, The Colony, Dallas,
Texas 75056.



PLAINTIFF’S ORIGINAL COMPLAINT                                                     Page 1
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                                  JURISDICTION AND VENUE
        4. This action arises under the Lanham Act, 15 U.S.C. § 1125, and the Copyright Act,
17 U.S.C. § 106. This Court has jurisdiction over the claims arising under the Lanham Act and
Copyright Act pursuant to 28 U.S.C. §§ 1331 and 1338.
        5. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391 in that Daily
Vape Steals resides in this judicial district and a substantial part of the events giving rise to the
claims herein occurred in this judicial district.
        6. This Court has personal jurisdiction over Daily Vape Steals because it is conducting
business in the state of Texas and maintains its principal place of business in Texas and within
this judicial district.
                                               FACTS
        7. Electronic cigarette products are gaining significant market share as an alternative to
traditional tobacco products. In a typical electronic cigarette product, the product houses a
battery that is used to create an electrical current that reduces a liquid solution to fine particles
(called “vaporizing”) for inhalation by a user. Advanced electronic cigarette products contain
power electronics that can increase and regulate the flow of electricity to optimize the power that
is used for vaporizing. This can result in producing a larger and more consistent draw of vapor,
prolonged battery life, and other functions of benefit to the user.
        8. Hana Modz developed one of the leading advanced electronic cigarette product lines
on the market. The current generation of Hana Modz products, known as the Hana Modz Pack v3
and Hana Modz Mini Pack v3, contain an advanced chipset (known as a DNA-30) that offers a
variety of advanced electronic cigarette functionality, including controlled power output up to 30
watts, over- and under-voltage protection, and a thermal shutdown. These products also contain
an organic light-emitting diode display that provides charge status and other information, buttons
to control the vaporization, a built-in micro-USB charger, and other features. A connector allows
the user to connect a separate heating element (known as an “atomizer”) that uses the power
provided by the Hana Modz product to heat a liquid into vapor for inhalation by the user.


PLAINTIFF’S ORIGINAL COMPLAINT                                                         Page 2
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       9. Hana Modz sells its products exclusively through authorized third party distributors.
       10. Hana Modz first began selling products under the “Hana Modz” brand name at least
as early as April 1, 2013. Hana Modz is the owner of U.S. Trademark Application Serial Number
86256973 for the mark HANA MODZ in International Class 034 for “Electronic nicotine
inhalator; atomizers and cartomizers for electronic smoking devices; Battery-powered,
rechargeable portable vaporizing units.”
       11. Hana Modz first began selling products under the Hana Modz logo (shown below) at
least as early as April 1, 2013. Hana Modz is the owner of U.S. Trademark Application Serial
Number 86195521 in International Class 009 for “Electronic parts, Battery packs, E-Cigarette
Mods” for the logo mark shown here:




       12. Hana Modz is the owner of registered copyrights for photographs of Hana Modz
products. Attached hereto as Exhibit A is a true and correct copy of one such copyrighted
photograph, which is registered under Registration No. VAu 1-163-553, effective April 22, 2014.

       13. On information and belief, Daily Vape Steals is a seller of electronic cigarette
products, which it markets and sells online through its website (www.dailyvapesteals.com) and
through other online channels, including its Facebook, Instagram, and Twitter pages.
       14. On or about April 2, 2014, Daily Vape Steals began marketing and selling products
using the Hana Modz brand name, Hana Modz logo, and Hana Modz copyrighted photograph.
       15. Attached as Exhibit B to this Complaint are true and correct copies of screen shots
taken May 20, 2014 from www.dailyvapesteals.com, the Daily Vape Steals Facebook page, the
Daily Vape Steals Instagram page, and the Daily Vape Steals Twitter page, showing Daily Vape



PLAINTIFF’S ORIGINAL COMPLAINT                                                     Page 3
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Steals’s marketing of products using the Hana Modz brand name, Hana Modz logo, and Hana
Modz copyrighted content. To the extent copyrighted Hana Modz photographs have been
modified to resemble the original versions but with minor modifications (such as an alteration to
the background), these modified images constitute unauthorized derivative works of Hana Modz
copyrighted content in violation of Hana Modz’s exclusive rights to create and use such
derivative works.
       16. On information and belief, Daily Vape Steals markets products using the Hana Modz
brand name, logo, and copyrighted content to take advantage of the significant name recognition
and goodwill surrounding Hana Modz products. On information and belief, Daily Vape Steals
markets products as “clones” of Hana Modz products for the purpose of taking advantage of the
strong brand recognition of Hana Modz products. Exhibit B contains photographs showing Daily
Vape Steals’s products being labeled with stickers saying “Hana Modz.”
       17. Daily Vape Steals is not an authorized distributor of Hana Modz products. Daily
Vape Steals has no authorization to sell products under the Hana Modz brand name, logo, or
copyrights.
       18. The products sold by Daily Vape Steals are not authentic Hana Modz products.
Instead, they are products manufactured and sold by third parties over whom Hana Modz
exercises no control or authority. These products are sold at a significant discount below the
price of authentic Hana Modz products.
       19. Through these actions, Daily Vape Steals is damaging the public by deceiving
consumers into believing they are purchasing Hana Modz products when in fact they are
purchasing imitation products. As a result of the actions of Daily Vape Steals, Hana Modz has
suffered monetary damage in the form of lost sales due to the marketing and sales of infringing
products by Daily Vape Steals. By selling lower cost, imitation products not manufactured or
controlled by Hana Modz, Daily Vape Steals is damaging the valuable reputation and goodwill
of Hana Modz by deceiving consumers into believing they are purchasing authentic Hana Modz
products when in fact they are purchasing low-cost imitations.


PLAINTIFF’S ORIGINAL COMPLAINT                                                     Page 4
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                         COUNT I – TRADEMARK INFRINGEMENT
                                    (15 U.S.C. § 1125(a))
        20. Plaintiff Hana Modz incorporates by reference all the allegations of Paragraphs 1
through 19, as if set forth fully herein.
        21. Lanham Act Section 43(a), 15 USC § 1125(a), provides a federal cause of action for
infringement of an unregistered trademark against a party who violates another party’s common
law trademark rights.
        22. In this case, Hana Modz has been using the HANA MODZ mark and Hana Modz
logo in commerce in connection with the sale of electronic cigarette products at least since April
2, 2013. Hana Modz has protectable common law trademark rights in the HANA MODZ mark
and Hana Modz logo by virtue of the fact that these marks are suggestive, arbitrary, or fanciful in
connection with the sale of Hana Modz electronic cigarette products.
        23. Daily Vape Steals’s use of the name and term “Hana Modz” and Hana Modz logo,
including, without limitation, in connection with the marketing and sale of electronic cigarette
products, is likely to cause confusion, mistake or deception among users and the public as to the
source, origin, sponsorship or quality of Daily Vape Steals’s products.
        24. Daily Vape Steals’s use of the name and term “Hana Modz” and Hana Modz logo is
likely to confuse consumers, internet users (including actual and potential purchasers of Hana
Modz products) and the public into believing that Daily Vape Steals is the source, origin or
sponsor of Hana Modz’s products or that Hana Modz otherwise approves of or has an affiliation

with Daily Vape Steals, all in violation of 15 U.S.C. § 1125(a), thereby causing loss, damage and
injury to Hana Modz and to the public.
        25. Hana Modz is entitled to recover Daily Vape Steals’s profits from the infringing use
of the HANA MODZ mark and Hana Modz logo, the lost profits suffered by Hana Modz as a
result of the infringing conduct by Daily Vape Steals, and the costs of the action.
        26. If Daily Vape Steals’ conduct is permitted to continue, Hana Modz faces the risk of
irreparable harm. Hana Modz’s remedy at law is not by itself adequate to remedy Daily Vape



PLAINTIFF’S ORIGINAL COMPLAINT                                                        Page 5
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Steals’ actions, and irreparable harm suffered by Hana Modz will continue unless this Court
enjoins Daily Vape Steals. Hana Modz is therefore is entitled to injunctive relief.
        27. Furthermore, the actions of Daily Vape Steals were undertaken willfully and with the
intention of causing confusion, mistake, or deception, making this an exceptional case entitling
Hana Modz to recover reasonable attorneys’ fees pursuant to 15 U.S.C. § 1117.
                             COUNT II – COPYRIGHT INFRINGEMENT
                                    (17 U.S.C. §§ 106 and 501)
        28. Plaintiff Hana Modz incorporates by reference all the allegations of Paragraphs 1
through 27, as if set forth fully herein.
        29. The acts and practices of Daily Vape Steals as alleged herein, including without
limitation, the unauthorized use of Hana Modz’s copyrighted works and the unauthorized
creation and use of derivative works thereof, as part of Daily Vape Steals’s marketing and
promotion of Daily Vape Steals’ electronic cigarette products, constitute copyright infringement
in violation of 17 U.S.C. §§ 106 and 501.
        30. As a direct and proximate result of Daily Vape Steals’s infringing conduct, Hana
Modz has suffered damages in an amount to be determined at trial. Hana Modz is entitled to
recover these damages in addition to Daily Vape Steals’s profits attributable to the infringement.
        31. In addition, Daily Vape Steals’ acts of infringement are willful in disregard of and
with indifference to Hana Modz’s rights. Hana Modz is therefore entitled to recover statutory
damages of $150,000 for each of the copyrighted works infringed by Daily Vape Steals in this
action. Hana Modz is also entitled to recover its attorneys’ fees and costs pursuant to 17 U.S.C. §
505 and otherwise according to law.
        32. As a direct and proximate result of the foregoing acts and conduct, Hana Modz has
sustained and will continue to sustain substantial, immediate, and irreparable harm for which
there is no adequate remedy at law. Hana Modz is informed and believes, and on that basis
alleges, that unless enjoined and restrained by this Court, Daily Vape Steals will continue to




PLAINTIFF’S ORIGINAL COMPLAINT                                                        Page 6
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infringe Hana Modz’s rights in the copyrighted works. Hana Modz is therefore is entitled to
injunctive relief.
                                    PRAYER FOR RELIEF
        THEREFORE, Plaintiff Hana Modz prays for judgment against Daily Vape Steals as
follows:
        A.      An award of Daily Vape Steals’s profits from its infringement and unfair
competition with Hana Modz;
        B.      An award of Hana Modz’s damages caused by Daily Vape Steals’s infringement
and unfair competition with Hana Modz;
        C.      An award of $150,000 in statutory damages under 17 U.S.C. § 504 for the willful
infringement of Hana Modz’s copyrights;
        D.      An injunction against Daily Vape Steals and each of its agents, servants,
employees, and attorneys, and those persons in active concert or participation with any of them:
                (1)    Enjoining the use of the HANA MODZ mark, or any colorable imitation
thereof or confusingly similar term, in the electronic cigarette market;
                (2)    Enjoining the use of the Hana Modz logo, or any colorable imitation
thereof or confusingly similar logo, in the electronic cigarette market;
                (3)    Enjoining the use of the Hana Modz copyrighted content, colorable
imitation, or derivative work thereof;
                (4)    Enjoining the advertising, marketing, promotion, sale, distribution, or
other commercial use of the designation “clone,” “copy,” or similar phrase in connection with
the use of the HANA MODZ mark, Hana Modz logo, and Hana Modz copyrighted content; and
                (5)    Requiring the immediate removal of the HANA MODZ mark, Hana Modz
logo, and Hana Modz copyrighted content from all websites owned or controlled by the enjoined
parties, including but not limited to, www.dailyvapesteals.com, the Daily Vape Steals Facebook,
Instagram, and Twitter pages, relevant pages from electronic commerce sites such as




PLAINTIFF’S ORIGINAL COMPLAINT                                                      Page 7
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www.ebay.com, and all other text or media offering for sale any products making infringing use
of the designations and content.
       E.      An award of Plaintiff’s attorneys’ fees, expenses, and costs; and
       F.      Such further relief as the Court deems just and reasonable.
                                    JURY TRIAL DEMAND
       Plaintiff hereby demands a trial by jury on all issues so triable in this action.



Dated: June 6, 2014                                Respectfully submitted,


                                                   /s/ Kelly J. Kubasta
                                                   Kelly J. Kubasta
                                                   Texas State Bar No. 24002430
                                                   KLEMCHUK KUBASTA LLP
                                                   8150 North Central Expressway, 10th Floor
                                                   Dallas, Texas 75206
                                                   Telephone: (214) 367-6000
                                                   Facsimile: (214) 367-6001
                                                   kelly.kubasta@kk-llp.com

                                                   Brian Orion
                                                   California State Bar No. 239460
                                                   RAJ ABHYANKER, P.C.
                                                   1580 W. El Camino Real, Suite 13
                                                   Mountain View, California 94040
                                                   Telephone: (650) 965-8731
                                                   Facsimile: (650) 989-2131
                                                   brian@legalforcelaw.com


                                                   Attorneys for Plaintiff




PLAINTIFF’S ORIGINAL COMPLAINT                                                             Page 8

				
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