Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 1 of 13 PageID #: 1
`
`GOODSILL ANDERSON QUThTN & STIFEL
`A LIMITED LIABILITY LA W PARTNERSHIP LLP
`
`1397-0
`
`2738-0
`
`9490-0
`
`JOHNR.LACY
`i lacy@goodsill.com
`BRUCE L. LAMON
`blamon@goodsill.com
`BRETT R. TOBIN
`btobin@goodsill.com
`Alii Place, Suite 1800
`1099 Alakea Street
`Honolulu, Hawaii 96813
`Telephone: (808) 547-5600
`Facsimile: (808) 547-5880
`
`Attorneys for Plaintiff
`
`IN THE UNITED STATES DISTRlCT COURT
`
`FOR THE DISTRlCT OF HA WAIl
`
`CIVIL{W~.l 2 00 3 5 2
`COMPLAINT; EXHIBITS "A" AND
`,
`,
`"B'" DEMAND FOR JURY TRlAL'
`SUMMONS
`'
`
`CYANOTECH CORPORATION,
`
`Plaintiff,
`
`vs. ,
`
`U.S. NUTRACEUTICALS, LLC, d/b/a
`V ALENSA INTERNATIONAL, and
`the UNIVERSITY of ILLINOIS
`
`Defendants.
`
`COMPLAINT
`
`For its Complaint herein against Defendants U.S. Nutraceuticals,
`
`LLC, d/b/a Valensa International and the University of Illinois ("Defendants"),
`
`39079943
`
`
`
`GOODSILL ANDERSON QUThTN & STIFEL
`A LIMITED LIABILITY LA W PARTNERSHIP LLP
`
`1397-0
`
`2738-0
`
`9490-0
`
`JOHNR.LACY
`i lacy@goodsill.com
`BRUCE L. LAMON
`blamon@goodsill.com
`BRETT R. TOBIN
`btobin@goodsill.com
`Alii Place, Suite 1800
`1099 Alakea Street
`Honolulu, Hawaii 96813
`Telephone: (808) 547-5600
`Facsimile: (808) 547-5880
`
`Attorneys for Plaintiff
`
`IN THE UNITED STATES DISTRlCT COURT
`
`FOR THE DISTRlCT OF HA WAIl
`
`CIVIL{W~.l 2 00 3 5 2
`COMPLAINT; EXHIBITS "A" AND
`,
`,
`"B'" DEMAND FOR JURY TRlAL'
`SUMMONS
`'
`
`CYANOTECH CORPORATION,
`
`Plaintiff,
`
`vs. ,
`
`U.S. NUTRACEUTICALS, LLC, d/b/a
`V ALENSA INTERNATIONAL, and
`the UNIVERSITY of ILLINOIS
`
`Defendants.
`
`COMPLAINT
`
`For its Complaint herein against Defendants U.S. Nutraceuticals,
`
`LLC, d/b/a Valensa International and the University of Illinois ("Defendants"),
`
`39079943
`
`
`
`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 2 of 13 PageID #: 2
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`Plaintiff Cyanotech Corporation ("Cyanotech") alleges as follows:
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`PARTIES
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`1.
`
`Cyanotech is a Nevada corporation with its principal place of
`
`business in Kailua-Kona, Hawaii. Since 1990, Cyanotech has extracted and sold
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`astaxanthin for use in nutritional supplements, including supplements for eye
`
`health, from its facility in Kailua-Kona, Hawaii.
`
`2.
`
`Defendant, U.S. Nutraceuticals, LLC d/b/a Valensa
`
`International ("Valensa") is a Florida limited liability company with its principal
`
`place of business in Eustis, Florida. Valensa was founded in 1999.
`
`3.
`
`Defendant the University of Illinois ("U. Illi,nois") is a public
`
`entity of the State of Illinois with its principal place of business in Chicago,
`
`Illinois.
`
`4.
`
`Valensa is or may be a necessary party pursuant to Fed. R. Civ.
`
`P. Rule 19, as Valensa claims to have the right to sue under US Patent No.
`
`5,527,533, issued June 18, 1996, on Application No. 08/330,194 (the "Patent-in(cid:173)
`
`Suit") on information and belief deriving such right by ownership of substantially
`
`all rights in the Patent-in-Suit. The Patent-in-Suit is attached as Exhibit A.
`
`5.
`
`U. Illinois is joined as a defendant because it may claim an
`
`interest relating to the subject of this action and/or a right to relief is asserted
`
`against it herein inasmuch as the United States Patent and Trademark Office lists
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`2
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 3 of 13 PageID #: 3
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`U. Illinois as the assignee of the Patent-in-Suit thereby making it the last recorded
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`owner of the Patent-in-Suit.
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`JURISDICTION AND VENUE
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`6.
`
`This Court has original jurisdiction over this action pursuant to
`
`28 United States Code ("U.S.C.") § 1338(a) because it is an action arising under
`
`the patent laws of the United States 35 U.S.C. § 1 et seq.
`
`7.
`
`This Court has original jurisdiction over this action pursuant to
`
`28 U.S.C. § 1338(b) because this action involves a claim for unfair competition
`
`joined with a substantially related claim arising under the patent laws of the United
`
`States.
`
`8.
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`This Court has jurisdiction arising under the Declaratory
`
`Judgment Act 28 U.S.C. §§ 2201-2202 as Cyanotech has been expressly threatened
`
`by Valensa with a claim of infringement of the Patent-in-Suit; Cyanotech is unsure
`
`of its rights and believes that such claim of infringement is invalid due to the scope
`
`of the patent claims being narrower than asserted by Valensa (see Exhibit B,
`
`attached), or that the Patent-in-Suit, US Patent No. 5,527,533, is invalid for failure
`
`to comply with one or more of the following statutory provisions: 35 U.S.C. §§
`
`101, 102, 103 and/or 112, to include but not limited to that the claims are not
`
`novel, are anticipated by the prior art, and that the specification does not support
`
`the claims.
`
`3
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 4 of 13 PageID #: 4
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`9.
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`In addition to exclusive jurisdiction with regard to patent claims
`
`under 28 U.S.C. § 1338(a), this Court has supplemental jurisdiction in a patent case
`
`under 28 U.S.C. § 1367(a), over all claims for relief that are so related to the patent
`
`claims in the action that they form part of the same case or controversy.
`
`10. This Court has jurisdiction under 28 U.S.C. § 1332 as there is
`
`complete diversity between Cyanotech and Defendants, and the amount in
`
`controversy exceeds Seventy Five Thousand ($75,000.00) Dollars.
`
`11. This Court has personal jurisdiction over Valensa under Haw.
`
`Rev. Stat. § 634-35 because Valensa has purposefully availed itself of the privilege
`
`to do business in the State of Hawaii by regularly transacting business in this
`
`forum.
`
`12. This Court has personal jurisdiction over U., Illinois, under
`
`Haw. Rev. Stat. § 634-35 because U. Illinois has purposefully availed itself of the
`
`privilege to do business in the State of Hawaii by regularly coming to Hawaii to
`
`solicit and transact business in this forum.
`
`13. Valensa has committed intentional acts, including but not
`
`limited to, engaging in unfair competition, deceptive and unfair trade practices,
`
`patent-abuse, and unlawful competition, by issuing unlawful threats of patent
`
`infringement to Cyanotech in Hawaii and attempting to prohibit Cyanotech from
`
`engaging in lawful competition regarding the sale and promotion of astaxanthin
`
`4
`
`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 5 of 13 PageID #: 5
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`products for eye health. Astaxanthin is a natural product long known for its ability
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`to neutralize free radicals, thereby promoting eye health, reducing sunburn, and
`
`reducing other types of photic damage.
`
`14. At the time that it made such threats, Valensa knew or should
`
`have known that its threats were unlawful and that Cyanotech's sale and promotion
`
`of astaxanthin products for eye health were lawful and non-infringing competition.
`
`15. Valensa's acts were directed and aimed at persons in Hawaii,
`
`including Cyanotech.
`
`16. Valensa's knew or should have known that its acts would likely
`
`cause harm in Hawaii.
`
`17. Venue is proper in this Court pursuant to 28 U.S.C. § 1391 and
`
`28 U.S.C. § 1400(b) because (a) a substantial part of the events or omissions giving
`
`rise to the claims herein occurred in this District, and (b) because Valensa and U.
`
`Illinois are subject to personal jurisdiction in this District with respect to the claims
`
`asserted and therefore deemed to reside in this judicial District for venue purposes.
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`FIRST CLAIM FOR RELIEF
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`18.
`
`Paragraphs 1 to 17 are re-averred and re-alleged as if set forth at
`
`length herein.
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`19. This is an action for declaratory judgment of non-infringement
`
`of the patent claims in United States Patent No. 5,527,533 and for patent invalidity.
`
`5
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 6 of 13 PageID #: 6
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`20. Valensa has claimed to have rights of an exclusive licensee with
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`substantially all the rights to United States Patent No. 5,527,533, see Exhibit "A"
`
`hereto (the '533 Patent, aka the Patent-in-Suit), and would thereby be the true
`
`owner of all the patent rights for the' 533 Patent.
`
`21. That as a result of the claims made by Valensa, see Exhibit "B",
`
`Cyanotech is unsure of its rights, has been repeatedly threatened by Valensa with
`
`having allegedly committed infringing conduct, and engaging in an allegedly
`
`infringing activity, causing reasonable apprehension that one or both Defendants
`
`will bring suit as Cyanotech's activities continue.
`
`22. Cyanotech believes that the' 533 Patent-in-Suit is invalid for
`
`failure to comply with one or more of the following sections of the patent act, 35
`
`U.S.C. §§101, 102, 103, and/or 112, to include but not limited to, that the claims
`
`are not novel, are anticipated by the prior art, and that the specification does not
`
`support the claims. Further, the conduct and actions ofCyanotech fall outside the
`
`scope of the '533 Patent claims as amended during prosecution of the application
`
`and as finally issued by the U.S. Patent and Trademark Office.
`
`23. Additionally, Cyanotech does not infringe directly, either
`
`literally or under the Doctrine of Equivalents, or indirectly under 35 U.S.C. §
`
`271(b) or § 271(c), any of the claims of the '533 Patent.
`
`6
`
`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 7 of 13 PageID #: 7
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`24. U. Illinois is or may be a necessary party pursuant to Fed. R.
`
`Civ. P. Rule 19 as the United States Patent and Trademark Office lists U. Illinois
`
`as the assignee of the Patent-in-Suit thereby making it the last recorded owner of
`
`the Patent-in-Suit and on information and belief may have retained some
`
`ownership rights.
`
`25. As a direct consequence of the foregoing, there is an actual and
`
`justiciable controversy between Cyanotech and Defendants with respect to
`
`infringement and validity of the' 533 Patent. The controversy between the parties
`
`has adverse legal interests of such sufficient immediacy and creates a reasonable
`
`apprehension of suit against the Cyanotech to warrant a declaratory action.
`
`26. This action qualifies as an exceptional case supporting an award
`
`to Cyanotech of reasonable attorney fees, costs and expenses against Valensa
`
`pursuant to 35 U.S.C. § 285.
`
`SECOND CLAIM FOR RELIEF
`
`27.
`
`Paragraphs 1 to 26 are re-averred and re-alleged as if set forth at
`
`length herein.
`
`28. Valensa, on information and belief, knows or should have
`
`known the patent prosecution history of the '533 Patent.
`
`29. When the '533 Patent was initially filed, as application number
`
`08/330,194 (the' 194 Application), the' 194 Application comprised very broad
`
`7
`
`
`
`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 8 of 13 PageID #: 8
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`claims directed to benefitting and protecting the brain and central nervous system,
`
`including the eye. All claims in the '194 Application were expressly rejected by
`
`the Patent Office in view of extensive prior art establishing the :use of astaxanthin
`
`for eye health and other protective functions. In response to a final rejection of all
`
`claims, including those for eye health and other protective functions, U. Illinois
`
`(the applicant in the '194 Application) amended the claims to greatly narrow the
`
`scope of the claims to «treating an individual suffering from ... " retinal disease or
`
`damage.
`
`30. Based upon such narrowing and limiting of the claims through
`
`amendment of claims during prosecution of the '194 Application, the Patent Office
`
`ultimately issued the' 533 Patent with claims of narrow scope.
`
`31.
`
`In spite of the clear change to the scope of the patent claims,
`
`Valensa, in bad faith, has threatened Cyanotech, and on information and belief has
`
`threatened Cyanotech' s distributors and other parties, who supply astaxanthin as an
`
`ingredient in nutritional supplement formulations for use in for eye health, with
`
`infringement of the '533 Patent notwithstanding that Valensa knew or should have
`
`known that the scope of the claims of the '533 patent does not cover the alleged
`
`infringing activity.
`
`32. As a direct and proximate result of the unlawful activities of
`
`Valensa, to include but not limited to the bad faith infringement claims being made
`
`8
`
`
`
`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 9 of 13 PageID #: 9
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`under the '533 Patent by Valensa, Cyanotech has and will continue to suffer
`
`damages.
`
`THIRD CLAIM FOR RELIEF
`
`33.
`
`Paragraphs 1 to 32 are re-averred and re-alleged as if set forth at
`
`length herein
`
`34. This is a claim for money damages and injunctive relief arising
`
`from Valensa's unfair methods of competition in violation of Haw. Rev. Stat.
`
`§ 480-2.
`
`35. Haw. Rev. Stat. § 480-2 makes it unlawful for a person to
`
`engage in unfair methods of competition in any trade or commerce.
`
`36. As set forth herein, Valensa engaged in unf!;lir methods of
`
`competition in violation of Haw. Rev. Stat. § 480-2 by engaging in a systematic
`
`pattern and practice of unlawful threats, intimidation and harassment of suppliers
`
`and sellers of astaxanthin products in Hawaii and elsewhere, including Cyanotech.
`
`37.
`
`Specifically, on multiple occasions in the years 2010 and 2011,
`
`Valensa's authorized representatives, including its president, Rudi Moerck, made
`
`material false statements, both orally and in writing, to Cyanotech's representatives
`
`that the use of astaxanthin products as a preventive measure to maintain eye health
`
`infringed the claims of the Patent-in-Suit. An example of Val ens a's unlawful
`
`9
`
`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 10 of 13 PageID #: 10
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`threats and unfair methods of competition is included in the email attached as
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`Exhibit B, sent from Rudi Moerck to Cyanotech's CEO, Brent Bailey.
`
`38. Valensa repeatedly threatened to "shut down" Cyanotech's
`
`business and to embroil Cyanotech in prohibitively expensive patent litigation if
`
`Cyanotech did not capitUlate and agree to purchase a license of,the Patent-in-Suit
`
`from Valensa in order to sell, or promote the use of, astaxanthin products for eye
`
`health (as distinct from therapeutic treatment of retinal injury or disease).
`
`39. Upon information and belief, Valensa made similar false claims
`
`and threats to other producers, buyers and sellers of astaxanthin products for the
`
`purpose of unlawfully restricting competition and thereby gaining an unfair
`
`competitive advantage.
`
`40. At the time that Valensa made the foregoing statements
`
`regarding the scope and nature of Val ens a's patent, it knew or should have known
`
`that those statements were false. Cyanotech repeatedly countered Valensa's threats
`
`by asking Valensa to explain Valensa's construction of the claims in the Patent-in(cid:173)
`
`Suit, and how Valensa's construction was supported by the specification, to which
`
`questions Valensa did not reply. Rather than reply to Cyanotech's questions,
`
`Valensa continued to threaten infringement litigation.
`
`10
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 11 of 13 PageID #: 11
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`41. Valensa made the foregoing statements with the intent to
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`deceive, mislead, harass and intimidate Cyanotech and others in an effort to gain
`
`an unlawful and unfair competitive advantage.
`
`42. Valensa's conduct and unfair methods of competition was
`
`injurious to consumers in this State by, among other things, limiting competition
`
`and increasing costs.
`
`43. Valensa's conduct has adversely impacted, and continues to
`
`adversely impact, Cyanotech and consumers by, among other things: (a)
`
`threatening to disrupt Cyanotech's ability to serve its clients; (b) requiring
`
`Cyanotech to expend considerable resources to retain patent counsel to investigate
`
`and respond to Valensa's fraudulent claims and threats; (c) unjustly and unfairly
`
`reducing competition for astaxanthin products; and (d) reducing the pool of
`
`potential customers for Cyanotech's astaxanthin products.
`
`44. As a direct and proximate result of Val ens a's unfair completion,
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`Cyanotech has suffered economic losses in an amount in excess of$75,000.00.
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`RELIEF REQUESTED
`
`Wherefore Cyanotech respectfully requests this Court to enter
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`Judgment in favor of Cyanotech and against Defendants and:
`
`1.
`
`Enter Judgment declaring the' 533 Patent to be invalid;
`
`11
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 12 of 13 PageID #: 12
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`2.
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`Enter Judgment declaring that the' 533 Patent is not infringed
`
`by the activities of Cyanotech;
`
`3.
`
`Determine that the case is exceptional pursuant to 35 U.S.C. §
`
`285' ,
`
`4.
`
`Award Plaintiff compensatory damages in an amount in excess
`
`of$75,OOO.00;
`
`5.
`
`Enter an order increasing damages three times pursuant to 35
`
`U.S.C. § 284;
`
`6.
`
`Enter Judgment that Valensa has engaged in unfair competition
`
`prohibited by Haw. Rev. Stat. § 480-2;
`
`7.
`
`Award Plaintiff statutory damages pursuant to Haw. Rev. Stat.
`
`§ 480-13;
`
`480-13;
`
`8.
`
`Award Plaintiff treble damages pursuant to Haw. Rev. Stat. §
`
`9.
`
`Enter injunctive relief enjoining Valensa from engagmg in
`
`unlawful methods of competition pursuant to Haw. Rev. Stat. § 480-13;
`
`10. Award reasonable attorney fees and costs to Plaintiff pursuant
`
`to 35 U.S.C. § 285 and Haw. Rev. Stat. § 480-13 ; and
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`11. Award such further relief as the Court deems just and proper.
`
`12
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`
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`Case 1:12-cv-00352-JMS-RLP Document 1 Filed 06/20/12 Page 13 of 13 PageID #: 13
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`DATED: Honolulu, Hawaii, June 20, 2012.
`
`Attorneys for Plaintiff
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`13
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`
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