cyber acoustics trademark complaint

COMPLAINT PAGE 1

Susan D. Pitchford, OSB No. 980911 Email: [email protected] J. Peter Staples, OSB No. 794042 Email: [email protected] CHERNOFF, VILHAUER, MCCLUNG & STENZEL LLP 601 SW Second Avenue, Suite 1600 Portland, OR 97204 Telephone: (503) 227-5631 Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT DISTRICT OF OREGON

CYBER ACOUSTICS, LLC, a Washington corporation, and CYBER ACOUSTICS HK LTD., a Hong Kong corporation, plaintiffs

vs. SHENZHEN FENDA TECHNOLOGY CO. LTD, a Chinese corporation, defendant.

Civil Case No._______________ COMPLAINT FOR DECLARATORY JUDGMENT (Trademark Infringement and False Designation of Origin) & BREACH OF CONTRACT

Plaintiffs allege: Jurisdiction

This court has jurisdiction of this action under the Lanham Act 15 USC 1121(a), the

Declaratory Judgment Act 28 USC 2201 and the Court’s Supplemental Jurisdiction provided for

in 28 USC 1367.

Case 3:14-cv-00695-AC Document 1 Filed 04/28/14 of 6 Page ID#: 1

COMPLAINT PAGE 2

Facts Common To All Claims

1. Plaintiff Cyber Acoustics, LLC (Cyber US) is a Washington corporation engaged

in the business of designing, manufacturing and selling stereo speakers and related equipment

nationwide, having its principal place of business in Vancouver, Washington.

2. Plaintiff Cyber Acoustics HK Ltd. (Cyber HK) is a wholly owned subsidiary of

Cyber US having its principal place of business in Wanchai, Hong Kong and acts as an agent for

Cyber US in arranging for the manufacture in Asia of the stereo speakers that are the subject of

this action and for the delivery of said speakers to Cyber US in the United States.

3. Defendant Shenzhen Fenda Technology Co. Ltd (Fenda) is a Chinese corporation

engaged in the manufacture of stereo speakers according to design specifications supplied by

sellers of such speakers, and in supplying such speakers bearing the sellers’ names and

trademarks to such sellers.

4. Beginning in 2008, Cyber US and Cyber HK entered into a supply contract with

Fenda whereby Cyber US supplied stereo speaker design specifications to Fenda, Fenda

manufactured stereo speakers for Cyber US, said speakers bearing Cyber US model numbers and

trademarks, and Cyber HK periodically placed orders for such speakers with Fenda and arranged

for delivery of such speakers to Cyber US in the United States. Under said supply contract, all

payments made to Fenda were made by Cyber US.


COMPLAINT PAGE 3

5. In furtherance of said supply contract, Fenda arranged for the fabrication of nine

injection molds for such speakers, the molds incorporating Cyber US’s design specifications and

trademarks and Cyber US paid Fenda $205,023 for such molds which Fenda agreed were the

property of Cyber US.

6. Under the terms of said supply contract, Fenda agreed to and did apply to such

speakers and to their packaging Cyber US’s federally registered trademark CYBER

ACOUSTICS, Registration No. 2,249,917 and Cyber US’s common law trademark CA which

Cyber US has used continuously since 1996.

7. An important term of said supply contract was that defective product returns of

such speakers were not to exceed four percent (4%).

8. Beginning in 2009 Cyber US began selling Model No. NS-PCS-41 Fenda-

manufactured stereo speakers to Best Buy, a large consumer retailer, which Fenda was made

aware of by Cyber HK and Cyber US.

9. The defective product return rate of Cyber US’s Model No. NS-PCS-41 stereo

speaker sold to Best Buy by Cyber US over the period 2009 to 2013 substantially exceeded the

agreed upon 4% return rate, averaging 9.5%, which was repeatedly reported to Fenda by Cyber

US as constituting an ongoing material breach of said supply contract. Fenda either refused to or

failed to remedy said material breach of said supply contract. On or about February 20, 2014,

Cyber US informed Fenda that said supply contract was deemed to be null and void unless Fenda

remedied said material breach by crediting Cyber US’s account in an amount equal to Cyber

US’s losses attributable to said excessive product return rate, amounting to approximately

$354,000.


COMPLAINT PAGE 4

10. As a direct result of said excessive defective product return rate, Best Buy

discontinued purchasing stereo speakers from Cyber US, thereby damaging Cyber US.

11. On or about April 9, 2014 and again on April 25, 2014 Fenda gave written notice

to Cyber US and Cyber HK that Fenda intends to sell without limitation as to worldwide

markets, Cyber US’s proprietary molds incorporating Cyber US’s designs and stereo speakers

bearing the aforesaid Cyber US trademarks. Neither Cyber US nor Cyber HK has authorized or

consented to such sales by Fenda.

First Claim For Relief

Trademark Infringement Under The Lanham Act

12. This claim arises under 15 USC 1114 of the Lanham Act and this Court has

jurisdiction pursuant to 15 USC 1121(a).

13. The allegations of paragraphs 1-11 are incorporated by reference.

14. Fenda’s threatened sale of stereo speakers bearing Cyber US’s federally registered

and common law trademarks constitutes trademark infringement and, unless enjoined, will

irreparably damage Cyber US.

Second Claim For Relief

False Designation Of Origin Under The Lanham Act

15. This claim arises under 15 USC 1125(a) of the Lanham Act and this Court has

jurisdiction pursuant to 15 USC 1121(a).


17. Fenda’s threatened sale of Cyber US’s molds for said stereo speakers to one or

more third parties will permit such third party or parties to manufacture and sell Cyber US


COMPLAINT PAGE 5

products incorporating Cyber US’s proprietary designs, model numbers and trademarks, thereby

using in commerce a term, name, symbol or device which is likely to cause confusion or mistake

or to deceive as to the affiliation of said third party or parties as to the origin, sponsorship or

approval of Cyber US’s goods, and, unless enjoined, will irreparably damage Cyber US.

Third Claim For Relief

Breach Of Contract With Consequential Damages

18. This claim is a substantial and related claim forming part of the case or

controversy of this action and this Court has supplemental jurisdiction thereof pursuant to 28

USC 1367.


20. Fenda knew or reasonably should have known that substantially exceeding the

agreed upon rate of product returns would cause Cyber US to lose Best Buy as a customer.

21. Based on Cyber US’s five-year stereo speaker supply relationship with Best Buy

and assuming no defective product returns in excess of 4%, Cyber US would have retained Best

Buy as a customer and would have realized net profits of at least $354,000 over the five-year

period.

WHEREFORE, plaintiffs pray for judgment against defendant as follows:

1. For a Declaration that sale of Cyber US’s Fenda-made speakers by Fenda would

constitute trademark infringement under the Lanham Act;

2. For a Declaration that sale by Fenda of Cyber US’s molds would constitute a false

designation of origin under the Lanham Act;

3. For an injunction prohibiting Fenda’s sale of Cyber US’s speakers and molds;


COMPLAINT PAGE 6

4. For damages arising out of Fenda’s breach of contract in an amount to be proven at

trial, but not less than $354,000;

5. For reasonable attorney’s fees;

6. For costs and disbursements incurred in this action; and

7. For such other relief as may appear to the Court to be equitable.

DATED this 28th day of April, 2014 CHERNOFF, VILHAUER, MCCLUNG & STENZEL LLP By /s/ Susan D. Pitchford Susan D. Pitchford, OSB No. 980911 Email: [email protected] 601 SW Second Avenue, Suite 1600 Portland, OR 97204 Telephone: (503) 227-5631 Attorney for Plaintiffs


cyber acoustics trademark complaint

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