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`March 8, 2006
`
`United States Patent and Trademark Office
`
`Trademark Trial and Appeal Board
`P.O. Box 1451
`
`Alexandria, VA 22313-1451
`
`Attention:
`
`Andrew P. Baxley, Interlocutory Attorney
`
`Re:
`
`Opposition No. 91167279
`Mayan Laboratories LLC
`v. Incredible Scents, Inc.
`
`Dear Mr. Baxley:
`
`Enclosed, pursuant to your communication mailed February 23, 2006,
`there is herewith enclosed a copy of COMPLAINT AND JURY DEMAND of the Civil
`Action referred to in Opposor’s MOTION TO SUSPEND.
`
`It is earnestly believed that the determination of the Civil Action will have
`a bearing on the issues before the Board.
`
`Respectfully,
`
`MYR N AMER
`
`Reg. No. 18,650
`
`MA/ag
`Enclosure
`
`cc:' William C. Wright
`Epstein Drangel Bazerman & James, LLP
`
`WWWWWWMWWM
`
`03-13-2006
`U.S. Patient & TMOfcITM Mail Rcpt D1. #30
`
`

`
`.
`
`' I
`
`Jason M. Drangel (JD 7204)
`Robert L. Epstein (RE 8941)
`William C. Wright (WW 2213)
`EPSTEIN DRANGEL BAZERMAN & JAMES, LLP
`60 East 42"“ Street, Suite 820
`New York, NY 10165
`Tel.: (212) 292-5390
`Fax: (212) 292-5391
`
`‘
`
`Attorneys for Plaintzfl
`Incredible Scents, Inc.
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF NEW YORK
`
`
`
`INCREDIBLE SCENTS, INC.,
`
`Civil Action No.:
`
`Plaintiff,
`
`COMPLAINT
`: AND JURY DEMAND
`
`-against-
`
`'
`
`MAYAN LABORATORIES LLC, PAGEANT
`GROUP, LTD. and LAWRENCE H. PALLINI,
`
`Defendants.
`
`Plaintiff Incredible Scents, Inc. (“Incredible” or “P1aintift"), for its complaint
`
`(the “Complaint”) against Defendants Mayan Laboratories, Inc. (“Mayan”), Pageant Group,
`
`Ltd. “(Pageant”) and Lawrence H. Pallini
`
`(“Pallini”)
`
`(Mayan, Pageant and Pallini are
`
`hereinafier collectively referred to as “Defendants”), alleges upon knowledge as to its own acts
`
`and upon information and belief as to all other matters as follows:
`NATURE OF THE ACTION
`
`1.
`
`This is an action for, among other claims, unfair competition on the part of
`
`Defendants who, in bad faith, entered into an agreement with Plaintiff for exclusive rights to
`
`distribute Plaintiff’ s proprietary nasal dilator product.
`
`

`
`2.
`
`In connection therewith, Defendants used Plaintiffs intellectual property,
`
`including a patent, trademarks, copyrights and trade dress rights, confidential and trade secret
`
`information, Plaintiffs nasal dilators, its FDA clearance, and its “As Seen on TV” status, to enter
`
`the market.
`
`3.
`
`Upon termination of the agreement with Plaintiff, Defendants performed a
`
`“bait and switch” by selling an inferior and unsanitary “knock-off’ nasal clip in indistinguishable
`
`packaging bearing Plaintiffs trademarks and trade dress. Relying on Plaintiffs reputation,
`
`various misrepresentations and Plaintiffs confidential information and trade secrets, Defendants
`
`have essentially displaced Plaintiffs nasal dilator at retail and destroyed Plaintiffs ability to
`
`market its product in the future.
`
`4.
`
`These activities on the part of Defendants are and have been intentional
`
`and part of a scheme to defraud Plaintiff and the public by selling an inferior product on the basis
`
`of the reputation of Plaintiffs product.
`
`5.
`
`As a result, Defendants have violated federal and state unfair competition
`
`statues, the patent laws,
`
`the copyright laws, committed trade dress infringement, breach of
`
`contract and misappropriation of Plaintiffs confidential information and trade secrets.
`
`6.
`
`A Defendants’ wrongful conduct, as described herein, continues unabated.
`
`Unless Defendants are restrained from infringing Plaintiffs intellectual property and competing
`
`unfairly in their business, Defendants will continue to irreparably harm Incredible and its
`
`reputation in the marketplace.
`
`JURISDICTION AND VENUE
`
`7.
`
`Jurisdiction is conferred on this Court pursuant to 28 U.S.C. §§ 1331,
`
`1338(a) & (b), and 1367on the grounds that the Complaint asserts a cause of action for false
`
`
`
`

`
`advertising and false designation of origin and unfair competition in violation of Section 43(a) of
`
`the Trademark Act of 1946, as amended (15 U.S.C. §1125(a)); copyright infiingement arising
`
`under the Copyright Act of 1976; patent infringement in violation of U.S. Patent Laws, Title 35,
`
`Part 2, U.S.C. § 100 et seq.; and for
`
`related New York statutory and common law claims of
`
`breach of contract and unfair competition arising from Defendants’ -improper use and
`
`misappropriation of Plaintiffs confidential information and trade secrets.
`
`8.
`
`Venue is proper in this District pursuant to 28 U.S.C. §§ 139l(b) (1) and
`
`(2) and 1400 on the grounds that: (i) Defendants reside in this District and all of the Defendants
`
`are residents of New York State, and (ii) a substantial part of the events or omissions giving rise
`
`to the claims asserted herein occurred in this District.
`
`PARTIES
`
`9.
`
`Plaintiff Incredible Scents, Inc. is a corporation organized and existing
`
`under the laws of the State of New York and maintains its principal offices at 1009 Glen Cove
`
`Avenue, Glen Head, N.Y. 11545.
`
`10.
`
`Defendant Mayan Laboratories LLC is a corporation organized and
`
`existing under the laws of the State of New York, and maintains its principal offices at 69 Mall
`
`Drive, Commack, NY 11725.
`
`11.
`
`Defendants Pageant Group, Ltd. is a corporation organized and existing
`
`under the laws of the State of New York, and maintains its principal offices at 139 The Crescent,
`
`Roslyn Heights, N.Y. 1 1577-1997.
`
`12.
`
`Defendant Lawrence H. Pallini
`
`is an individual residing at 139 The
`
`Crescent, Roslyn Heights, N.Y. 11577-1997. On information and belief, Lawrence Pallini is the
`
`founder, sole shareholder and the chief executive officer of Mayan and Pageant.
`
`

`
`FACTUAL AVERMENTS
`
`History of Incredible Scents, Inc. and its Proprietary Nasal Dilator
`
`13.
`
`After several years of research and development,
`
`in 1995, Richard A.
`
`Davi, (“Davi”), now executive vice-president of Incredible Scents, Inc., invented a new, unique
`
`and unobvious nasal dilator to increase nasal air flow and promote better breathing, particularly
`
`while sleeping (Incredible’s nasal dilator is hereinafier referred to as the “ I-Clip”).
`
`A
`
`photograph of the I—Clip appears below.
`
`
`
`14.
`
`The I-Clip, is a nasal dilator made with an F.D.A. approved memory based
`
`compound material that will return to its original configuration within five (5) minutes alter each
`
`use. When inserted into the nasal vestibule, the bulbous protrusions provide a slight pressure on
`
`the nasal septum, while fitting snuggly over the collumella (septum), promoting easier breathing.
`
`15.
`
`Until the release of the I-Clip product, there was no comparable nasal
`
`dilator on the market.
`
`In fact, when Davi filed an F.D.A. Intended Use Statement 510(k)
`
`Certification No. K963326 for the I-Clip (which issued in 1997), it was only the second nasal
`
`dilator on record with the F.D.A.
`
`16.
`
`Before settling on the I-Clip design shown above, several prototype design
`
`shapes were sampled and tested. The I—Clip has always been manufactured exclusively by
`
`Plaintiffs in order to protect the proprietary composition of the product. A proprietary blend of
`
`
`
`

`
`certified medical grade materials was developed and specified for the product. Multi-cavity
`
`production tooling for the final I-Clip was fabricated.
`
`17.
`
`The I-Clip was clinically tested at Norwalk Sleep Disorders Center for
`
`snoring and easier breathing and was also clinically tested in the Pulmonary Function and Sleep
`
`Laboratory using acoustic rhinometry equipment. The I-Clip was tested to assess its effect on
`
`snoring and on nasal resistance and volume. The test results statistically confirmed significant
`
`reduction of frequency in snoring and significant improvement in nasal volume and decreased
`
`resistance from subjects wearing the device.
`
`18.
`
`Davi filed patent applications in the U.S. and elsewhere for the I-Clip
`
`design. On November 12, 1996, a design patent issued for the I-Clip, U.S. Patent No. Des.
`
`375,552, a copy of which is attached hereto as Exhibit 1.
`
`19.
`
`Given the successful
`
`test results,
`
`that same year Davi entered into a
`
`marketing agreement for the I-Clip with a marketing firm, Cambridge Associates. The I-Clip
`
`was introduced on QVC as BREATHE FIT and was featured more than twenty (20) times on
`
`various QVC television shows.
`
`20.
`
`The I-Clip quickly received recognition as a quality anti-snore device.
`
`It
`
`won QVC’s “the best of the best” category and sold nearly 100,000 units.
`
`21.
`
`Between 1995 and 1997, Cambridge sold a few hundred thousand BREATHE
`
`FIT Clips. In addition to the successful television sales promotions, substantial quantities of the I-Clip
`
`were being sold through catalogs such as Sky Mall, Vermont Country Store, and through catalog
`
`sales representatives in a variety of other catalogs.
`
`22.
`
`The I-Clip was also being sold at retail by CVS (selling between 25,000 -
`
`47,000 units per month), Brookstone, American drug store chain, Mckesson Drug Company, and
`
`Daymark International.
`
`

`
`23.
`
`Cambridge also ran a direct response television commercial for the I-Clip
`
`shown on various cable networks for about one year. At the time, some of the packaging for the
`
`I-Clip indicated the product to be: “AS SEEN ON TV.”
`
`24.
`
`In December of 1999, Davi developed and applied for patents for an
`
`aroma scented I-Clip. Davi believed that the use of aromas such as, menthol and eucalyptus was
`
`the next natural product extension for the I-Clip. Accordingly, in 1999, Davi formed Incredible
`
`Scents, Inc. and created the INCREDIBLE SCENTS brand group of products for marketing the
`
`I-Clip in various scented product categories: snoring, congestion, freer breathing, relaxation,
`
`exercise, and weight loss.
`
`Incredible’s scented nasal dilators would be the first scented nasal
`
`dilators on the market.
`
`25.
`
`Incredible used its proprietary aroma delivery system and their patent
`
`pending technology to develop, test and perform focus groups for the new aroma I-Clip over the
`
`next few years.
`
`Incredible even updated existing clinical testing for the I-Clip, seeking to
`
`improve nasal resistance and volume.
`
`26.
`
`Incredible developed packaging, sales and marketing materials, and
`
`applied for a variety of trademarks. The I-Clip was now being sold using a few different brand
`
`names, such as: BREATHE FREE, 1-2~3 BREEATHE, INCREDIBLE SCENTS, among other
`
`private label brands.
`
`Regardless of the trademark, the I-Clip product trade dress has acquired
`
`distinctiveness through substantial sales and advertising over the past ten years.
`
`27.
`
`Incredible also began to use a number of secondary trademarks to identify
`
`the I-Clip, including: FIGHT 2ND HAND SNORING and SNORING RELIEF.
`
`28.
`
`Between the years 1999 and 2003, Incredible sold hundreds of thousands
`
`of I-Clips (with and without aromas) through various marketing outlets. Incredible continued to
`
`

`
`market the product at retail (Brookstone sold approximately 30,000 to 50,000 I-Clips per year);
`
`through well-known sales representatives such as Thane Distributing Company, Media
`
`Solutions, Laxten Distributing, and Sandcastle Agencies; on shopping networks such as QVC
`
`and Home Shopping Network; through strategic partnerships with distributors worldwide; and
`
`catalogs, such as Avon Health and Beauty (who sold approx. 65,000 units in three months).
`
`29.
`
`Between 2002-2003, Incredible aired a new direct response television
`
`commercial
`
`through Media Solution Services for
`
`the I-Clip under
`
`the trademark 1-2~3
`
`BREEATHE. The commercial aired on ESPN, MSNBC, Nick At Night, Discovery Channel, and
`
`The Game Network, among others.
`
`30.
`
`In 2003, Incredible executives also appeared live on the Fox Good Day
`
`New York morning show in order
`
`to promote
`
`the
`
`I-Clip and to introduce
`
`the
`
`www.incrediblescentscom website.
`
`31.
`
`Incredible is the owner of the trademark BREEATHEFREE, for “medical
`
`devices, namely, an external nasal dilator in the form of a septum clip that does not contain
`
`adhesives and is reusable” and said mark is the subject of U.S. Trademark Application Ser. No.
`
`78/501,549.
`
`32.
`
`Incredible is the owner of the trademark SNORING RELIEF, for “medical
`
`devices, namely, an external nasal dilator in the form of a septum clip that does not contain
`
`adhesives and is reusable” and said mark is the subject of U.S. Trademark Application Ser. Nos.
`
`78/506,069 and 78/510,906.
`
`33.
`
`Incredible is the owner of the trademark FIGHT 2ND HAND SNORING,
`
`for “medical devices, namely, an external nasal dilator in the form of a septum clip that does not
`
`contain adhesives and is reusable” and said mark is the subject of U.S. Trademark Application
`
`

`
`Ser. No. 78/506,083.
`
`34.
`
`On or about October 11, 2005, Incredible appliedito the Register of
`
`Copyrights for a Certificate of Registration for the packaging and instructions ‘for the I-Clip
`
`distributed by Defendants. The Certificate was issued by the Register of Copyrights effective as
`
`of October 11, 2005 and bears the registration number TX 6-210-381. A true and correct copy of
`
`the Certificate is attached hereto as Exhibit 2.
`
`Defendants’ Conduct
`
`35.
`
`In early December 2003, Lawrence Pallini expressed an interest
`
`in
`
`distributing the I-Clip. At the time, Pallini was the president of a company called Pageant
`
`Group, Ltd. (“Pageant”).
`
`36.
`
`On December 15, 2003, Pallini entered into a Confidentiality and Non-Use
`
`Agreement at Plaintiffs request. A copy of the Agreement is attached hereto as Exhibit 3.
`
`37.
`
`From December 16, 2003 through February, 2004, executives from
`
`Incredible worked closely with Pallini to educate him regarding the market for anti-snoring,
`
`congestion relief products and Incredible’s involvement and success in the market selling the 1-
`
`Clip.
`
`38.
`
`Defendants had no background or experience in the anti-snoring,
`
`congestion relief market prior to their encounter with Incredible. Yet, Pallini had indicated to
`
`Incredible that he had the ability,
`
`resources, experience, determination and contacts to
`
`successfully market the I-Clip to the U.S. retail chains that reach a good percentage of the 66.5
`
`million “snoring” mass market.
`
`39.
`
`Based on those representations, on March 2, 2004, Incredible entered into
`
`a distribution agreement for the I-Clip with Defendants (“Distribution Agreement”). Pallini
`
`

`
`executed the Distribution Agreement as president of Pageant. Upon information and belief, he is
`
`the sole shareholder of said company. A copy of the Distribution Agreement is attached hereto
`
`as Exhibit 4.
`
`40.
`
`In April, 2004, Pallini incorporated Mayan Laboratories LLC to market,
`
`distribute and sell the I-Clip. Upon information and belief, Pallini is the sole shareholder of said
`
`company.
`
`41.
`
`The Distribution Agreement granted Pageant an exclusive right to sell the
`
`I-Clip to retail outlets within the United States, provided Pageant satisfied minimum purchase
`
`requirements. The minimum purchase goals were established by Defendants.
`
`In the event
`
`Defendants failed to make minimum monthly purchases of the I-Clip from Incredible, Incredible
`
`had the option of terminating the Agreement on thirty days (30) written notice.
`
`42.
`
`As part of the Distribution Agreement, Incredible agreed to stand-still
`
`from marketing the I-Clip to retail stores in order to provide Defendants the opportunity to
`
`succeed.
`
`Incredible immediately stopped selling to retailers including Brookstone, Sandcastle
`
`Agencies and all other U.S. retail distributors.
`
`43.
`
`Over the next several months the parties worked closely, with Incredible
`
`sharing with Defendants its trade secrets and confidential and proprietary information,
`
`documentation, including: product specifications, early product prototypes, aroma formulations
`
`and manufacturing details, general product manufacturing details, product packaging designs and
`
`specifications,
`
`regulatory compliance and clinical data, product reliability and marketing
`
`methodologies, plus marketing, sales and customer information.
`
`44.
`
`Together Defendants
`
`and Incredible used Plaintiffs
`
`information,
`
`documentation and related materials to develop packaging, marketing and promotional materials,
`
`

`
`an infomercial (which never ran on television), an interactive website, and a marketing and sales
`
`strategy for the I-Clip.
`
`45.
`
`Incredible even put Defendants in direct contact with its product package
`
`assembler, a sales manager to promote and sell
`
`the product at retail, other retail sales
`
`representatives and media broker contacts.
`
`46.
`
`As part of the Distribution Agreement, Incredible licensed Defendants to
`
`use Incredible’s trademarks in connection with the sale of the I-Clip. The In-Clip would be sold
`
`using Incredible’s: BREATHE FREE, FIGHT 2”” HAND SNORING and SNORING RELIEF
`
`trademarks.
`
`47.
`
`The final packaging bore an AS SEEN ON TV notice based on
`
`Incredible’s past direct response television airings. Defendants never broadcast a direct response
`
`television commercial for the I-Clip.
`
`48.
`
`Defendants went to market with the I-Clip on or around October, 2004.
`
`The I-Clip was sold by Defendants in the following retail stores, among others: CVS, Albertsons,
`
`Sav-On, Rite-Aid, Walgreens, Eckerd Drugs, Stop & Shop, Winn Dixie, Amazon.com,
`
`Drugstore.com.
`
`49.
`
`Defendants purchased approximately 200,000 I-Clips from Incredible,
`
`with the last purchase in December, 2004. This number was significantly less than required by
`
`the Distribution Agreement. However, as a good faith gesture, Plaintiff made some concessions
`
`with regard to Defendants satisfying the minimums.
`
`50.
`
`Between December, 2004 and April 13, 2005, Incredible attempted, on
`
`numerous occasions,
`
`to communicate with Defendants regarding the minimum purchase
`
`10
`
`

`
`deficiencies, among other issues. However,
`
`for no apparent reason, Defendants ceased
`
`communicating with Incredible.
`
`51.
`
`Given Defendants’ silence and failure to satisfy the minimum purchases
`
`required by the License Agreement, on February 15, 2005, Incredible placed Defendants on
`
`notice of their default. On April 20, 2005, Incredible terminated the Agreement since Defendants
`
`failed to cure within the time allowed.
`
`52.
`
`In light of the termination, Incredible instructed Defendants to cease all
`
`use of its intellectual property.
`
`Incredible also demanded that Defendants return all confidential
`
`information and materials. Defendants indicated they had no such confidential materials,
`
`although confidential materials had been supplied by Incredible, and Defendants were required
`
`to maintain them, under the terms of the Confidentiality Agreement.
`
`53.
`
`In September, 2005, Defendants indicated to Plaintiff that they still had
`
`32,793 units of Plaintiff's I-Clip in stock. Defendants also indicated that they had developed a
`
`competitive nasal dilator which they believed did not infringe Incredible’s patent.
`
`54.
`
`On October 6, 2005,
`
`Incredible discovered Defendant's competitive
`
`product being sold at retail in packaging indistinguishable from Plaintiff’s bearing Incredible’s
`
`BREATHE FREE, FIGHT 2"” HAND SNORING and SNORING RELIEF trademarks and
`
`showing a man wearing Incredible’s I-Clip. Below is a side by side comparison of the two
`
`packages:
`
`
`
`

`
`I-1|:|'llll0l.AIliU
`
`I Ml£N1l|()|J\|t.l)
`
`L
`
`Plaintiff
`
`Defendant
`
`55.
`
`Defendants’ product package contains 30 disposable single use nasal clips
`
`in each package. Plaintiffs I-Clip is most often sold as a single unit that could be used up to 40
`
`times prior to disposal.
`
`56.
`
`As for the competitive nasal clip sold by Defendants, they replaced the
`
`proprietary I-Clip with an inferior, untested, unproven nasal clip, shown below (Defendant's
`
`infringing nasal clip is hereinafier referred to as the “M-Clip”).
`
`- .*"?"r,’:§?
`3%”. my
`
`
`
`12
`
`
`
`

`
`Defendants’ M-Clip
`
`57.
`
`Defendants changed the design of their M-Clip in order to avoid patent
`
`infringement of Plaintiff’ s design. Defendants claim on their packaging that their clip design is
`
`patent pending. Yet, as Defendants are well aware, Defendants’ M~C1ip is nearly identical to an
`
`early proprietary design developed by Incredible.
`
`58.
`
`Defendants likely saw a sketch of lncredible’s alternate design in materials
`
`supplied by Plaintiff, while visiting lncredible’s office, and possibly obtained a sample from
`
`lncredible’s assembler, who made the packaging and vacuum form molding for both the I-Clip
`
`and M-Clip products.
`
`59.
`
`Incredible abandoned this
`
`earlier design since
`
`it did not work.
`
`Accordingly, Incredible believes that Defendants’ M-Clip also does not curtail snoring nor does
`
`it promote easier breathing.
`
`60.
`
`Incredible has had Defendants’ M-Clip tested by a group of consumers
`
`who found it to be uncomfortable, and inferior to lncredible’s I-Clip in fimction, quality and
`
`design.
`
`Defendants False and Misleading Advertising Claims
`
`61.
`
`Defendants make a number of false and/or misleading claims
`
`in
`
`connection with advertising and promoting the M-Clip.
`
`62.
`
`Defendant's packaging bears the AS SEEN ON TV logo. To date,
`
`however, Defendants have never broadcast a direct response television commercial.
`
`63.
`
`Defendants claim that the product is “medical grade.” Upon information
`
`and belief, the composition of Defendants’ M~Clip device is not medical grade, but instead,
`
`13
`
`

`
`made of a cheap, hard plastic compositionlthat is uncomfortable to wear and does not form a
`
`product that functions.
`
`64.
`
`Given how quickly Defendants were able to bring the M-Clip to market
`
`after termination of the Distribution Agreement, it is unlikely that Defendants conducted any
`
`consumer or clinical tests for their design. Yet, a recent press release by Defendants indicates
`
`that their nasal clip “relieves snoring by reducing nasal air flow resistance and promotes easier
`
`breathing in any sleeping position.”
`
`65.
`
`Defendants packaging for the M-Clip contain a number of statements by
`
`satisfied customers. To the extent the statements were made at all, they could only be made by
`
`satisfied I-Clip customers, since the M-Clip was only sold recently in the packaging that contains
`
`the statements.
`
`66.
`
`Defendants promote their product as the first “care-free disposable nasal
`
`dilator”, stressing the sanitary aspect of the “throw-away” nature of the product. Yet, a review of
`
`several samples of Defendants’ M-Clips reveals small black specks of foreign material
`
`embedded in the dilators as well as trapped within the sealed product compartments. This shows
`
`poor quality inspection and is a major health concern for consumers.
`
`67.
`
`Consumers and retailers mistakenly believe that Defendants’ M-Clip
`
`product is Plaintiffs I-Clip by, among other marketing methods, Defendants’ use, advertising
`
`and promotion of Defendants’ website: BREATHEFREERCOM where Plaintiffs I-Clip is still
`
`prominently displayed, as is Plaintiffs clinical study results, references to the I-Clip product's
`
`patent protection, adherence to quality standards, FDA clearance, consumer satisfaction
`
`statements, an infomercial showing the I-Clip, and 100% money back guarantee.
`
`14
`
`

`
`68.
`
`The BREATHEFREER.COM domain name is prominently displayed on
`
`Defendant’s M—Clip packaging and insert
`
`instruction materials, and sales and marketing
`
`materials provided to retail and consumers. Direct links to the website are also included in an
`
`interactive press release promoting the release of the M-Clip in November, 2005.
`
`69.
`
`Defendants are selling their inferior, unsanitary M-Clip to retailers based
`
`on Plaintiffs intellectual property and confidential and trade secret
`
`information, such as,
`
`marketing materials and reports, clinical tests, and sales and marketing success stories of the I-
`
`Clip.
`
`70.
`
`Defendants also offer the M-Clip with the same aromas offered by
`
`Incredible. Defendants used confidential information and trade secrets supplied to Defendants
`
`by Incredible under the Confidentiality Agreement
`
`to see the importance of this market
`
`opportunity and how to manufacture and market the various fragranced products.
`
`71.
`
`In order for the I-Clip to maintain the scent for an extended period of time,
`
`it is impregnated with various scents using a proprietary manufacturing process. Defendants’ M-
`
`Clip appears to be simply coated with a scented liquid (to save cost) and could wear off if a
`
`consumer washed the M-Clip before use.
`
`72.
`
`The I-Clip is a repeat purchase product since the device should be
`
`disposed of after 40 uses. Given the near identical infiinging packaging for Defendants’ M-Clip
`
`product, consumers who previously purchased the I-Clip will purchase the unproven, untested,
`
`inferior, unsanitary knock-off M-Clip, mistakenly believing it to be the I-Clip.
`
`73.
`
`As a reflection of their lack of confidence in the M-Clip, Defendants have
`
`ceased the money back guarantee offer that has always been a staple of the I-Clip offering. In all
`
`15
`
`

`
`the years that Plaintiff has offered the money back guarantee, it received hardly any customer
`
`returns where the user claimed the product did not work.
`
`74.
`
`Defendants are selling their M-Clip even though it still has considerable
`
`stock of I—Clips. Defendants sell the I-Clip inventory through the BREATHEFREERCOM
`
`website, CVS, and Drugstore.com.
`
`75.
`
`Defendants are selling their M-Clip in the same retail stores where
`
`Defendants sold the I-Clip. Defendants are also selling to new retailers. Wal-Mart has purchased
`
`a significant number of M-Clips based on the success of and earlier presentation of the I-Clip by
`
`Defendants, its function and supporting studies and marketing materials.
`
`76.
`
`Defendants are also simultaneously selling both the I—Clip and M-Clip to
`
`certain retailers. Defendants are dumping the remaining stock of the I-Clip with retailers for
`
`well-below market prices. For instance, CVS stock both products side by side-by-side. The
`
`suggested retail price for the I-Clip is $12.95. Defendants’ M-Clip sells for $12.95 in CVS. The
`
`I-Clip sells for $6.95.
`
`77.
`
`Defendants’ conduct has impaired Incredible’s ability to sell its goods at
`
`retail. In more than one instance, retailers have rejected Plaintiffs attempts to sell the I-Clip due
`
`to Defendants already supplying the M-Clip and/or I-Clip at a cheaper price in near identical
`
`packaging.
`
`78.
`
`Defendant’s conduct has also impaired Incredible’s ability to complete a
`
`distribution deal with potential partners. In one instance, a deal was negotiated but the party
`
`backed out due to Defendants’ confusing presence in the market.
`
`16
`
`

`
`79.
`
`By their conduct, Defendants have wrongfully adopted Incredible’s more
`
`than ten years of hard~earned experience as their own. This is a clear case of the famous “bait
`
`and switch.”
`
`DAMAGES COMMON TO ALL CLAIMS
`
`80.
`
`By reason of Defendants’ acts complained of herein,
`
`Incredible has
`
`suffered and continues to suffer monetary damages in an amount thus far not determined.
`
`81.
`
`Defendants’ wrongful conduct has deprived Incredible-, consumers, and its
`
`retail customers of good will and injured Incredible’s relationship with potential partners, the
`
`general public and retailers.
`
`82.
`
`As a result of Defendants’ conduct, Incredible is suffering, and will
`
`continue to suffer irreparable harm and damage. Defendants will, unless restrained and enjoined,
`
`continue to act in the unlawful manner complained of herein, to Incredible’s irreparable injury.
`
`Incredible’s remedy at law is not adequate to compensate for the injuries suffered and threatened.
`
`COUNT I
`
`(False or Misleading Descriptions or Representations of Fact
`In Violation of Section 43(a))
`
`83.
`
`Incredible repeats _and realleges each and every allegation contained in
`
`Paragraphs 1 through 82 of this Complaint.
`
`84.
`
`Defendants’ misrepresentations and falsehoods identified herein constitute
`
`the use of false descriptions and representations in interstate commerce.
`
`85.
`
`Upon information and belief, Defendants included the misrepresentations
`
`with fiill knowledge that they were false, misleading or deceptive, and with full intent to unfairly
`
`compete with Plaintiff.
`
`17
`
`

`
`86.
`
`By reason of the foregoing acts, the public is likely, and will continue to
`
`be confused, misled and deceived, and the Plaintiff is now and will continue to suffer irreparable
`
`injury, including injury to its goodwill and reputation for which it has no remedy at law, in
`
`violation of Section 43(a) of the U.S. Trademark Act, as amended, 15 U.S.C.' Sec. 1125(a).
`
`(False Designation of Origin, False Description and Representation
`In Violation of Section 43(a))
`
`COUNT II
`
`87.
`
`Incredible repeats and realleges each and every allegation contained in
`
`Paragraphs 1 through 82 of this Complaint.
`
`88.
`
`Defendants’ willful and intentional activities are likely to and do create
`
`confusion among the relevant public, the trade, and the public at large; are likely to and do
`
`deceive the foregoing concerning the origin, sponsorship or approval of the goods sold by
`
`Defendants; will otherwise mislead purchasers as to the nature and origin of Defendants’ goods;
`
`and, as a result, severely damage the image of Incredible as the source of its goods and as the
`
`exclusive owner of its trademarks and trade dress.
`
`89.
`
`By reason of the foregoing acts, Defendants have falsely designated the
`
`origin of its goods as that of Incredible and made false descriptions and representations as to the
`
`goods,
`
`the ownership of the trademark and trade dress rights, and the very nature and
`
`sponsorship of the goods in violation of Section 43(a) of the U.S. Trademark Act, as amended,
`
`15 U.S.C. Sec. 1l25(a).
`
`COUNT III
`
`(Patent Infringement (U.S. Pat. No. Des. 375,552))
`
`90.
`
`Incredible repeats and realleges each and every allegation contained in
`
`18
`
`

`
`Paragraphs 1 through 82 of this Complaint.
`
`91.
`
`Defendants have infringed such United States Design Patent No. Des.
`
`375,552 within this district by selling products employing the design of said patent, without
`
`authority or license.
`
`COUNT IV
`
`(Copyright Infringement (Reg. No. TX 6-210-381))
`
`92.
`
`Plaintiff repeats and realleges each and every allegation contained in
`
`Paragraphs 1 through 82 as if fully set forth herein.
`
`93.
`
`By their actions alleged above, Defendants have willfully infringed and
`
`will continue to infringe Plaintiff's copyright (Reg. No. TX 6—2l0-381) in and relating to
`
`Incredible’s copyrighted packing and instruction sheet by marketing, distributing, copying and
`
`otherwise wrongfully using Incredible‘s copyrighted materials or materials substantially similar
`
`thereto.
`
`COUNT V
`
`(Common Law Unfair Competition)
`
`94.
`
`Incredible repeats and realleges each and every allegation contained in
`
`Paragraphs 1 through 82 of this Complaint.
`95.
`Defendants by reason of the foregoing . acts have willfully and
`
`intentionally traded upon and appropriated to itself the reputation and valuable goodwill of
`
`Incredible and acted to create likelihood of confusion and mistake on the part of the purchasing
`
`public and the trade as to the source or sponsorship of Defendants’ goods. Defendants’ acts are
`
`likely to lead the public mistakenly to believe that Defendants’ goods are in some way sponsored
`
`by, or associated with Incredible and create the impression that Defendants’ goods are distributed
`
`19
`
`

`
`under Incredible’s aegis and authority.
`
`96.
`
`Defendants’ activities constitute unfair competition, unprivileged imitation
`
`and a misappropriation and infringement of Incredible’s rights, all to Incredible’s injury and
`
`detriment. Defendants have engaged in the above conduct willfully, maliciously, and/or in
`
`reckless disregard of Incredib1e’s rights.
`
`97.
`
`The
`
`aforesaid
`
`acts
`
`of Defendants
`
`constitute
`
`infringement,
`
`misappropriation and misuse of Incredible’s trademarks, false advertising, passing off and unfair
`
`competition with Incredible in violation of the common law of the State of New York.
`
`COUNT VI
`
`(Breach of Contract)
`
`98.
`
`Incredible repeats and realleges each and every allegation contained in
`
`Paragraphs 1 through 82 of this Complaint.
`
`99.
`
`This is a claim for breach of contract under the laws of the state of New
`
`York.
`
`The Confidentiality Agreement requires Defendants to maintain all
`
`information it
`
`received in confidence and not use such information for any purpose other than in connection
`
`with negotiations with Incredible. Defendants used such information to design and market a
`
`competing nasal dilator incorporating the confidential information supplied to them.
`
`100.
`
`By
`
`the
`
`acts
`
`above, Defendants
`
`have materially breached
`
`the
`
`Confidentiality Agreement, to the injury of Incredible.
`
`20
`
`

`
`COUNT VII
`
`(Against Defendants for Violation of Deceptive Trade Practices Act - Gen. Bus. Law § 349)
`
`101.
`
`Incredible repeats and realleges each of the allegations set forth in
`
`paragraphs 1 through 82 of this Complaint as if fully set forth herein.
`
`V
`
`102. Defendants aforementi

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