Outdry Technologies v. Geox S.P.a. Et. Al.

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    Randy Lipsitz, Esq. (RL-1526)Matthew Olinzock, Esq. (M0-3111)KRAMER LEVIN NAFTALIS & FRANKEL LLP1177 Avenue of the AmericasNew York, NY 10036Telephone: 212.715.9100Facsimile: 212.715.8000David W. Axelrod, Esq., pro hac vice to be filedDevon Zastrow Newman, Esq., pro hac vice to be filedSCHWABE, WILLIAMSON & WYATT, P.C.1211 S.W. 5 th Avenue, Suite 1600Portland, OR 97204Telephone: 503.222.9981Facsimile: 503.796.2900Attorneys for PlaintiffOutThy Technologies Corporation

    UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

    OUTDRY TECHNOLOGIESCORPORATION, Civil Action No.Plaintiff,V.

    GEOX S.p.A.;S & A DISTRIBUTION, INC.; and S & A :RETAIL, INC.,DEMAND FOR JURY TRIAL

    Defendants.

    COMPLAINT FOR PATENT INFRINGEMENTPlaintiff OutDry Technologies Corporation ("OutDry") brings this Com plaint for patentinfringement against Defendants Geox S.p.A., S & A D istribution, Inc., and S & A Retail, Inc.(collectively, "the Geox D efendants") and alleges as follows:

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    I.ATURE OF THE ACTION1. This is an action for patent infringement arising under the patent laws of theUnited States, including 35 U.S.C. 271 and 281-285 .

    2. This lawsuit pertains to the Geox D efendants' infringement of U.S. PatentNo. 6,855,171 the ("'171 Patent"), entitled "PROCE SS FOR W ATER PROO FING LEA THERAND LEATHER OBTAINED BY M EANS OF SAID PROCESS."

    3. OutDry seeks injunctive and m onetary relief against the Geox D efendants forinfringement of the '171 Patent.

    H. THE PARTIES

    4. Plaintiff OutDry Technologies Corporation is a corporation organized andexisting under the laws of the state of Oregon, with its principal place of business at 14375 NWScience Park Drive, Portland, OR 97229. O utDry licenses its technology to com panies thatdesign, manufacture, import and market footwear, apparel, and outdoor equipment featuring itsrevolutionary waterproofing process covered by the '171 Patent in the United States and bycorresponding patents in Italy, Germany, Spain, F rance, Great Britain, Portugal, and China.OutDry is a w holly owned subsidiary of Columbia Sportswear Company, also an O regoncorporation.

    5. Defendant Geox S .p.A. is an Italian corporation having a p rincipal place ofbusiness at Via Feltrina Centro, 16 - 31044 Biadene di Montebelluna, Treviso, Italy. Uponinformation and belief, Geox S.p.A is a subsidiary of Italian company LIR S.r.l. Uponinformation and belief, Geox S.p.A. designs, markets and sells footwear and apparel.

    6. Defendant S & A D istribution, Inc. is a Delaware corporation with its principalplace of business located at 29 W 34 th Street, 3 Td Floor, New York, NY 10001-3069. Uponinformation and belief, S&A D istribution, Inc. is a subsidiary of Geox Holland, BV, itself asubsidiary of Geox S.p.A.

    7. Defendant S & A Retail, Inc. is a Delaware corporation with its principal place ofbusiness located at 29 W 34 th Street, 3 rd Floor, New York, NY 10001-3069. Upon information

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    and belief, S & A Retail, Inc. is a wholly-owned subsidiary of S & A Distribution, Inc.8. Upon information and belief, the Geox Defendants together comprise and

    establish a distribution network that manufactures the infringing Amphibiox-branded footweardescribed below in foreign countries and markets the products through this distribution networkin the United States.

    III. JURISDICTION AND VENUE9. This action arises under the Patent Laws of the United States, 35 U.S.C. 101 et

    seq., including 35 U.S.C. 271. This Court has subject matter jurisdiction over this matterpursuant to 28 U.S.C. 1331, and 1338(a).

    10 . This Court has personal jurisdiction over S & A Distribution, Inc. because S & ADistribution, Inc. has systematic and ongoing contact with this judicial district by virtue of itslocation of its principal place of business in this district.

    11 . This Court has personal jurisdiction over S & A Retail, Inc. because S & A Retail,Inc. has systematic and ongoing contact with this judicial district by virtue of its location of itsprincipal place of business in this district.

    12 . This Court has personal jurisdiction over Geox S.p.A. by virtue of Geox S.p.A.'scomplete control over the acts of infringement by S & A Distribution, Inc. and S & A Retail, Inc.within this judicial district and by reason of its creation and use of an established distributionnetwork to market its infringing products in the United States.

    13 . This Court also has personal jurisdiction over the Geox Defendants because, oninformation and belief, the Geox Defendants have purposefully directed activities at residents ofthis district by selling products that infringe the '171 Patent through at least one retail store inthis district. The Geox Defendants have also sold infringing products to customers in the UnitedStates through retail stores elsewhere in the United States and through online sites operated bythese defendants, including www.shopgeox.com . ClutDry's claim for infringement of the '171Patent arises out of the Geox Defendants' sales of these infringing products.

    14 . Venue is proper in this judicial district with regard to alien company Geox S.p.A.- 3 -

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    pursuant to 28 U.S. C. 1391(d).15. Venue is proper in this judicial district with regard to S & A Distribution, Inc. and

    S & A Retail, Inc. pursuant to 28 U.S.C. 139 1(b)(1) and (c) because these defendants reside inthis state and have principal places of business in this district, both at 29 W 34` 11 Street, 3'1 Floor,New York, NY 10001-3069.

    IV. FACTUAL BACKGROUNDOutDry Technologies Corporation and the Patented Invention

    16. OutDry is the owner, by assignment, of all rights, ti tle, and interest in the '171Patent. The '171 Patent claims priority to an international application filed under the PatentCooperation Treaty, PCT/IT99/00333, which claims priority to the original patent applicationfiled in Italy by inventor Antonio Morlacchi on October 20, 1998. The application for the '171Patent was filed April 19, 2001. Inventor Morlacchi assigned ownership of the application thatbecame the '171 Patent to Nextec, s.r.l. ("Nextec"). The '171 Patent was fully examined by theUnited States Patent and Trademark Office and was duly and legally issued to Nextec onFebruary 15, 2005.

    17 . Columbia Sportswear Company purchased Nextec in 2010, and establishedOutDry Technologies Corporation in Oregon as owner by assignment of the '171 Patent.Columbia Sportswear Company and its affiliated companies, Montrail Corporation andMountain Hardwear, Inc., manufacture and sell products under licenses to the '171 patent.

    18 . The subject matter of the '171 Patent generally is a revolutionary method ofwaterproofing leather through bonding o f a waterproof but breathable mem brane directly to theleather using an adhesive that blocks some, but not all of the pores of the leather. Prior art bootsused seam-sealed membranes inside the boot, but water would pool between the inside of theleather and the membrane layer, creating an uncomfortable "water cushion" between thewearer's foot and leather upper.

    19 . The technology of the '171 Patent addresses this issue through direct bonding ofthe membrane to the inside of the upper leather. The membrane successfully blocks moisture

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    from penetrating beyond the leather into the inner portion of the boot, but smaller vapormolecules generated by the wearer can exit or "transpire" through the leather. This technologyeliminates the former water cushion effect and leads to significantly enhanced w earer comfort.Products mad e through the patented process are particularly suited for outdoor use in footwear,gloves and other clothing items where standard manufacturing techniques based on seam-sealedwaterproof fabrics are unsuitable and w here leather is particularly desirable due to itscomfortable but rugged characteristics. The '171 Patent also claims leather made using theclaimed waterproofing process.

    20 . OutDry products made using the technology of the '171 Patent are soldthroughout the world via Internet direct sales, in brick-and-mortar Columbia Sportswear stores,and through product resellers, including under OutDry's registered trademark, OutDry.

    21 . OutDry products have enjoyed commercial success in the outdoor productsmarket, both for work-related and recreational uses. The patented process received the VolvoSportsDesign "EcoDesign" award in 2008 explaining that this designation recognized eightwinners from more than 300 competitors judged using the following criteria: "functionality,form, innovative step, ergonom ics, shape and produ Ction, material, manufacturing, distribution,product life cycle, recyclability and usability."

    Geox Defendants22 . Geox S.p.A. ("Geox") has shown interest in the technology of the '171 Patent

    (hereafter "OutDry technology") since April 2006 when Geox's CEO, Diego Bolzonello, visitedNextec's booth at the Lineapelle fair in Bologna, Italy. Mr. Bolzonello subsequently initiateddiscussions between Nextec and Geox's Research and Development manager, AlessandroSacilotto.

    23 . Geox representative Alessandro Sa cilotto met with N extec representatives LucaMorlacchi and Giovanni Ostani on or about May 3, 2006, to discuss the OutDry technology andexplore a potential business relationship between Geox and Nextec. During this meeting, Nextecgenerally described its OutDry technology.

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    24. At the meeting on M ay 3, 2006, Nextec advised Geox that Nextec had issuedpatents and pending patent applications covering the OutDry technology

    25. Geox requested a second meeting with Nextec representatives, which was held atGeox on or abou t July 11, 2006. Geox asked to learn more information about the OutDrytechnology, and in particular asked to see a demonstration of the m anufacturing process. LucaMorlacchi agreed to permit Geox representatives to view the manufacturing process at theOutDry Technology Center in China, provided Geox agreed to a non-disclosure agreementcovering the viewing. Geox orally agreed to treat OutDry's manufacturing process asconfidential OutDry information and to later sign a written non-disclosure agreement.

    26. Pursuant to and in reliance on the oral non-disclosure agreement, Nextecrepresentatives Matteo Morlacchi and Johnny Huang took Alessandro Sacilotto on a tour of theOutDry Technology C enter in China on or about July 12, 2006. Morlacchi provided a detaileddescription of the manufacturing process, which included performing the process on a sample ofGeox footwear upper m aterial provided by Geox from its Sherwood factory, to demonstrate howthe process could be used with G eox materials. The finished material was provided to Mr.Sacilotto for his use in further discussions with Geox about potential business opportunities withNextec.

    27. Geox invited Nextec to a third meeting at Geox on September 6, 2006, to continuediscussions about potential business opportunities between the com panies. Luca Morlacchi andGiovanni Ostani attended on behalf of Nextec and A lessandro Sacilotto on behalf of Geox.Morlacchi asked Sacilotto to sign the written non-disclosure agreement re-affirming the oralagreement that governed the companies' prior discussions and Geox's inspection of the N extectechnology. Sacilotto refused.

    28. On or about September 19, 2006, Sacilotto advised that Geox did not wish tocontinue further discussions regarding collaborating with Nextec.

    29. In Decemb er 2009, LIR s.r.l. ("LIR"), an Italian holding company that whollyowns G eox S.p.A., approached Nextec about a partnership. Geox expressed interest in acquiring

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    Amphibiox600 8 044 - . u 8 g 64dn 04 08,00,dg0t1 '4g,a$d A 64 0

    41 80 04' kJ, ie

    Traditional waterproof

    co-ownership of the waterproofing technology, which had by this time been awarded multiplepatents worldwide, including the '171 Patent in the United States.

    30 . Nextec and LIR entered into discussions regarding a potential partnershippursuant to a nondisclosure agreement dated January 5, 2010. Nextec disclosed informationregarding its customers and business plans to LIR pursuant to the nondisclosure agreement. OnJanuary 19, 2010, LIR provided a letter of intent to Nextec, proposing a potential co-ownershipof the OutDry technology.

    31 . Nextec declined to enter into partnership with LIR on the terms proposed. Laterin 2010 Nextec was purchased by Columbia Sportswear Company. In or about 2012, the GeoxDefendants released in the United States a line of footwear sold under the brand nam e"AMPHIBIOX." Examples of Geox's advertising regarding Amphibiox footwear can be foundat: http://amphibiox.geox.com/. The Geox advertisements claim the Amphibiox footwear isconstructed using a process identical to that used to make OutDry's products that are patentedunder the '171 Patent. Geox's website states under the "Technolo " tab:

    Unlike traditional waterproof shoes which apply the membrane to a shoes sock-likeinner lining, Geox applies the membrane directly to the inside of the upper shell. Thisavoids leaving any space into which water could penetrate and accumulate.32 . Geox also advertises the Amphibiox footwear in a manner similar to OutDry,

    using a graphic that shows elimination of the water cushion on its website:

    Pdhpletiox prevents water penetrahno the shoe, whIch In hadOioriel WaterNoot shoescan lead to reduced bresaiablay and leave your feet reeling cold.

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    The Geox website states its manufacture includes use of a "breathable waterproof membrane":

    A breathable waterproof membrane Is used In the sole and upper construction of theshoe. Moisture mollecutes are hundreds of times smaller than the m icro-pores in the

    membrane, and so can easily pass through. Water mollecules however are thousands oftimes larger than the micro-pores and can'it pass through. Therefor the mem brane

    ensures that the shoes remains breathable yet w aterproof.

    33 . After careful examination of Amphibiox footwear, OutDry has concluded that theAmphibiox footwear infringes OutDry's '171 Patent.

    V. COUNT I - INFRINGEMENT34 . OutDry restates and realleges each of the assertions set forth in Paragraphs 1- 33

    above.35 . OutDry is informed and believes, and on that basis alleges, that the Geox

    Defendants' manufacture, import, use, offer to sell, and/or sale of the Amphibiox footwearproducts identified in this Complaint infringe, directly or indirectly, both literally and/or underthe doctrine of equivalents, at least claims 1, 10 and 14 of the '171 Patent, in violation of 35

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    U.S.C. 271.36 . OutDry is informed and believes, and on that basis alleges, that the infringement

    of the '171 Patent by the Geox Defendants has been and continues to be intentional, willful, andwithout regard to OutDry's rights. OutDry is informed and believes, and on that basis alleges,that the infringement of the '171 Patent by the Geox Defendants is and has been intentional,deliberate, and willful at least because the Geox Defendants had knowledge of the '171 Patentthrough direct comm unications with Nextec, as set forth in paragraphs 21-29 .

    37 . OutDry is informed and believes, and on that basis alleges, that the GeoxDefendants have gained profits by virtue of their infringement of the '171 Patent.

    38 . OutDry ha s sustained damages as a direct and proxim ate result of the GeoxDefendants' infringement of the '171 Patent.

    39 . OutDry is entitled to recover from the Geox Defend ants the damages sustained byOutDry as a result of the Geox Defendants' wrongful acts in an amount subject to proof at trialand not less than a reasonable royalty, together with interest and costs as fixed by this Courtunder 35 U.S.C. 284.

    40 . The infringement by the Geox Defendants of the '171 Patent will continue tocause OutDry irreparable injury and damage for which there is no adequate remedy at law unlessand until the Geox Defendants are enjoined from infringing the '171 Patent.

    VI. PRAYER FOR RELIEFWHEREFORE, OutDry respectfully requests that the Court enter judgment in its favor

    against Defendants, granting the following relief:a. A judgment that the Geox Defendants have infringed, contributorily infringed,

    and/or induced infringement of one or more claims of the '171 Patent literally and/or under thedoctrine of equivalents;

    b. An order and judgment pursuant to 35 U.S.C. 283, permanently enjoiningDefendan ts and their agents, servants, officers, directors, emp loyees, affiliated entities, parents,subsidiaries, divisions, successors and assigns, and all others acting in concert or participation

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    with them, from further acts of infringement of the '171 Patent;c. A judgment awarding OutDry all damages adequate to compensate OutDry for

    Defendants' acts of infringement of the '171 Patent, and in no event less than a reasonableroyalty for the Geox Defendants' acts of infringement, including all pre-judgment and post-judgment interest at the maximum rate permitted by law;

    d. A judgment awarding OutDry all damages, including treble damages, based onany infringement found to be willful, pursuant to 35 U.S.C. 284, together with prejudgmentinterest;

    f. Actual damages suffered by OutDry as a result of the Geox Defendants' unlawfulconduct, in an amo unt to be proven at trial, as well as prejudgment interest as authorized by law;

    g. A judgment that this is an exceptional case and an award to OutDry of its costsand reasonable attorneys' fees incurred in this action as provided by 35 U.S.C. 285; and

    h. Such other and further relief as the Court may deem just and proper under thecircumstances.

    VII. DEMAND FOR JURY TRIALPursuant to Fed. R. Civ. P. 38(b), OutDry respectfully requests a trial by jury of all issues

    so triable.

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    Dated this `lip day of August. 2013.Respectfully submitted.KRA41IN AlUALL'ic FR ABy: Randy Lipsitz,1:sq. (RI, ' 526)Matthew Oil ozock. 1:sq. (MO-311177 Avenue o f the AmericasNew York, NY 10036Telephone: 212.715.9100Facsimile: 212.715.8000

    Attornox fir Plaintiff Out Dly Thehn ologiesCorporiaionOf Counsel:

    David W. Me1rod, Esq., pro hoc vice to he illedDevon Zastrow Ncl.vman, Esq., pro hoc vice to he filedSCI IWABE, WILLIAMSON & WYA TT, P.C.1211 S.W, 5 th Avenue, Suite 1600Portland, OR 97204Telephone: 503.222.9981Facsimile: 503.796.2900

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