Luxpro Corporation v. Apple, Inc.

Filing 1

COMPLAINT against Apple, Inc. ( Filing fee $ 350 receipt number 4000185.), filed by Luxpro Corporation.(cap)

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L u x p r o Corporation v. Apple, Inc. Doc. 1 IN TIIE UNITED STATESDISTRICT COURT W E S T E R N DISTRICT OF ARKANSAS T E X AR KAN A DIVISION L U X P R 0 CORPORATION.a Taiwanese) corporation, ) Pluintiff, YS. *"'?r'*'d$,'ftgrl"o l*_ ct'nts#W* e* ocT + 2008 t r,,r". C i v i l A c r i o n O8-40? APPLE, INC. f/k/a Apple Computer, Inc., Defendsnt, P L A I N T I F F ' S ORIGINAL COMPLAIN'I and for N OW COMES PlaintilTLuxpro C or por at i ona Taiwanese , oorporatiou, agaitstApple,Inc. f l k l a Apple Conrputor, states: Inc. its OriginalComplaint I, PARTIES I. Luxpro Corporation("Luxpro") is a Taiwanesecorporation"with its principa lplace of business Taiwan.11develops, rnanulactrrtes, and sells in distributes in the a M P 3 players throughout woritl. Luxprois a citizenof andis dornicilcd Taiwan, Ibreign$tate. 2. Apple, Inc. ("Applc") is a California corporation that manufactures, distribute sanrl sells MP3 playersunder the brand name iPod tltoughout the world. hcadquarters locatcdat I Infinite are Applc's ptincipal placeof business corporatc aud L o o p , Cuperlino, SantaClaraCounty,Calilbmia95014. Applc is a citizenof and is dornicilc din Califonria. II. 3. JURISDICTIONAND VENUE This Courl has onginaljurisdictionovcr this caseunder28 U.S.C.$ in exclusivc of cxcccds sumor valueof$75,000, the 1 3 3 2 ( a X 2 )Thematter conttoversy . costsand interest. Luxpro is a citizenof Taiwan,a Ibrcign state. Apple is a citizenof jurisdictionover this cascbascdon Califomi a . Thetefiore, Court has subject-matter the diversit yof citizenship. 4. jurisdictionover Apple beoause This Court haspcrsonal Apple regularly throughout corrducts busincss this stateby sellingits products in Arkansas, includingat Appleownsandoperates. rotailstores 5. District ot'Arkansas properfor this caseunder28 is Venuein the Westenr andis subjcct business thisjudicial in U S C $ l39l(aXl) and(c). Appleconducts district jurisdiction all tirnes relevant hcrcin. t o pcrsonal at III. 6. FACTUALITACKCROUNT) Through a schemcdcsignedto interfere with Luxpro's existing and prospcctivc and partially succeeded, business relations,Apple unlawfully attcmptcd, in Luxpro had achicvcdthroughlawful efforts to coffpete ifl the squash i n g sucoess the worldwid cMP3 playcr market. Luxpro's MP3 playetswcrc indcpcndcntly researched, distributed, licensed and sold. However.Applc furthcrcdits develop e dmanulhctured, , to fair the unending aslriration nronopolizc worldwideMP3 playerntatketby preventing likc cornpetition from smaller MP3 playermanLrlacturers Luxpro. A. The History of Apple'slpod Products 7. iTunesat the MacworJd On.Iaruary 8, ?00I, Apple introduced Expo. that plays and organizcs iTunesis a digital mediaplayer :rpplication digital music and video liles. C)nOctobcr23, 200I, Apple introduced iPod which intcrfhccs with the gcncrations several iTunesto play nrusicfilcs. By Fcbruary of 2005,Apple had released thc iPod Classic, first generatiou the iPod mini andthe iPod Shuffle. On April ?3, the of its the Store. 2003, Appleintroduced onlincmcdiastore, iTunes 8. the Soonafterthe iTunesStorelaunch,Applc announced iTunesStorehad in available download the Uflited Statcs.Throughthe il'unes for ovfi onc million songs itt S t o r e s ,Apple has gaincdcontrol over 80% of tlre rtusic downloadcd thc U.S. Howtlve r, Applc deliberatelymrkes digital nrusic purchasedat the iTunes Slore MP3 players.Thus,in orderto play musicfrom Apple's inoperable witlr its competitor's only option in the iT uncs Storc, the dorninantonline music retailer,thc consunter's d i g i t a lmusicplayerflarkct is Apple's iPods. Apple alsomakesthc iPod in sucha leaving consumers to a n n e thatit is unablc playmusicsoldat rivalonlinemusicstores, t musicfrom i l'unes. with no choioe to uurclrase but 9. Apple with Unlikemostintemetsites,iTuncsStoreis accessed proprietary thatoar" sollwarcrathcrthanwith a web browser.TheiTunesStorcscllsindividualsongs Iiom thc iTunesStore only be playodby the iPod. Individualsongscan be dowrr'loaded that it tlren funnels to thc lbr $.99. Apple reoeivesfunds from iTuncs purchases reoor'ding industr]'. Applc doesnot tum a profit ofl the salefrom iTunes. hrstead, Apple ptofits. Bccause the irnporlanoo of relieson salcsof its MP3 players sooure to significant o f the worldwideMP3 playcr markctto Apple's bottom line, Apple hts soughtto smallercompetitors. monopol i z c worldwideMP3 playormarketafidcrushlcgitimate, thc B. IIow Applc Monopollzed lhe Worldwide Market 10. the Since the introduotion of the iPod, Applc spurued creation of the MP3 Lr markct anddominated Applehassoldover22 millioniPodssinccits introduction. it. a the United Slirlesalone,Applc has obtained dominant907omarketslrateol'the hard ol'thc MP3 playergeneral market. drivc bascd MP3 playermarketand70% share I l. Apple dominatcs worldwidemarkottoday. In 2005,Apple's iPod thc increas e d nrarketshateto 26% tiom 2I% in the prior year.Mid-rangecompetitots its which oreated Ltd.'s ZEN scrics,Reigncomwhich the such as CrcativcTcchnologies Satnsung SanDisk's and oombinetl nrarketsharedtopped created Lkl.'s Iriver sedes, the 14% markct share,perhapsdue to legitirnate from the previousyear to a oonrbirred manufacturers other digital music playcrs. These of competi ti o fifton smallcr-range smallcrranged manufacturers inoreased theit comhincdmarkctshareof the digitalmusic playerrnarket eightpetccntin oneyear,which wasgreater tharrApple's5% gain ftom by tlueat in the 2004tlrrough2005. It is no wontlerthefl,onceApplc rcalizcdits strongest MP3 playcr market included mid-range and small-rangc manufacturers,Apple in Luxpro,a small-rauge MP3 playermatrufactrLter Taiwan. Applc inteltiona )l ytatgeled suchas Luxpro to preventan iuoreased matkel soughtto collquersmallorcornpetitoru amongthc smallcr-ranged manufacturers. share C, Applc's Conduct fl$ to the Worldwide MP3 Player Market 12. Since the introduction of the iPod, Apple has soughl to staffip out thc have compet i ti o nusing various sohemes.In the last fcw ycars,Apple's competitors attenpted to light back with multiple suits having been filed alleging, among olher in (betweeflthc iPod and things, that Apple engages illegal anti{rust tying schemes iTunes), unfair cornpetition,urd rnonopolizingbchavior by placing unneedetland in restrictions its mostpopularproducts an effort to rcstrict on unjustifiable technological in consumcchoiceandrestraiD r oonrpetition thedigitalmusicInarkets. 13. othcrsmallmanufacturers. Applc hasrepeatedly usodunfirirtacticsagainst beatApplc a based conrpany, As an exarnple, although CreativcTcchnology, Singapore Tcchnology a Wisconsin in Apple suedCreative to the patentpunchon iPod'sinterface, infringedon four of Apple's Patsnts. District Clourtallegingthat CrealiveTechnologics thc when Apple forkedover onc hundredmillion dollarsto Ultirrrate l y , cascwas settled allowed Applc to usc C r e a t i v eTechlologiosin 2006. Ironically,the settlement another tactic designed promote to patcnton the interfnoe Apple products, in Creativc's growthof the Apple tronopoly and to deterother lawful efforts to cofipctc by smaller manufacturers. D. History and ProductDevelopment Thc Luxpro Corporation's 14. 'I'he was in of Luxpro Corporation founded December ?002. Luxproowns terteatch and dcvelopment team which has a litsfratc rcputationin the an outstturding Luxpro worltlwi d eMP3 playet nrarkctfor high quality design. Aurotg othersproducts, dcvelopcd and marketed vtriety of outtingedgcMP3 playerssuchas tl:e Luxpro EZ a lrZ EZ MX-l l0D ("EZ Season"), ListenMXShare MX-125D ("HZ Sharc"), Season MX-595D MX-585D("Top Tangent"), Tangent EZ 2 6 5 E("EZ Listen"),Top Tangent ("Super ( " l r Z Tangent") Super Tangent MX-575D/1075D Tangent"). ;urd 15. Luxpro's produotsare progtessivcand unique. Luxpro speut several the rnillion dollarsin rcscarch development. and Ultimately,l,uxpto launched EZ Sharc in January 2004boastingfeatures Applo productsl'ail to contain. For cxamplc.thc EZ $harc cntcrcdthc markctwith thc capabilityto Iisten to FM radio, recordmusic, and m o v e ,receive setLLp and musicfilcs. Similarly, the.EZ Season design launohed {product in July 2004), EZ Listen (produotdesigrrlauuchedin August 2004), Top Tangent (produotdesignlaunched Aptil in (produc tdcsignlaunchcd April 2005),EZ Tangent in 2005) and SuperTiurgent(formally in volumc productionby May 2005) all contaiued thcscextra t'eatures. Additionally,Luxpro developed EZ Listen, Top Tangcnt,and the EZ Talgent with a severrlanguagelcarning function and tri-color OLED display werethe litst MP3 playerswith a monitor s .Moreover, the'I'op Tangent EZ Tangerrt and products to incre;rsetl of lecl VoioePositioning Systeff.Thc dcvclopment theseadvanced recogni ti o nof Luxpro's productsin the worldwide MP3 player nrarket arrd allowed its and L u x p r oto rapid)y expand business opcrations. lI. Luxpro's MP3 Products Grin Momentum in the Global Consumer Electronics Market. 16. 'l'he j1 of success Luxpro's of MP3 players alltrwerl to eflteti to a numher distribu to rs h i pagreements. s 17. For example,in April 2005, Luxpro enteredinto an agreement with 'l'cchnology Digital Co.,Ltd. ("IleijingHuaqi"). Underthis R e i j i n gHuaqilrrItrrnratiorral agreem e n tLuxpro agreedto supply Beijing Huaqi with 630,000 sets of its Super , Tangen t,Top Tangents, EZ 'Iangents and EZ ListonsMP3 players. Also under this to agreenre rtReijing Hrraqiwas licensed distributcLuxpro's MP3 playcrsin Chinafor , oneveaf. 18. with Beijing Also in April 2005,Luxpro entered into arrother agreemerrt 'l'cchnology Co., Ltd. ("Ilcijing Qian Kun"). Undcr this Qian Kun I'imc Digital agrccm c n t,Luxpro agrecdto supply Bcijing Qian Kun with 215 sets of its Super MP3 playcrsfor two years. Also Tangents, Tangents, Top EZ'I'angents EZ l-isterrs turd MP3 playcrsin China undcrthis agrcement, Ilciiing QianKun could distributeLr.rxpro's for two years. 19. Ltd. ("lntcr'l'AN") travclcdto ln June2005,officersof InterTAN Canada, Taiwanto meet with l.uxpro about sclling Luxpro's MP3 playersin InterTAN's retail coflsurrcrclcctronics retailerthat operates under"The storcs. hrterTAN is a Canadian of and is a wholly ownedsubsidiary Circuit City Stores, Sourccby Circuit City" banner Inc. InterTAN showedgteatintcrcstin Luxpro's MP3 players. IrterTAN's intetestin functioning Luxpro's MP3 playcrswas,in parl, basetl l,uxpro's MP3 players'screens orr as an FM radio afld their ability to recordsound. InterTAN placedotdcts for Luxpro's over Top Tangentundcr thc brandname"Centrios." Ifl August2005,Luxpro shipped "Centrios" to sevcnthousand its Top TaflgcntMP3 playersunderthe brand rranre of InterTA N lbr a two-wccktrial sell in InterTAN's tetail storcs. Luxpro's Top Tzurgents and w e r e popularwith lntcr'l'AN'scustonrers flew oll'trl'thc rctailcr'sshelves. ln TntetTAN bcganto activelyprornote Top Tangent. the rcspons e this popularity, to 20. with TC Digital In June 2005, Luxpro entetedinto anotheragreement (lity, China("TC"). Underthis agteement. Luxproagrced to Electronic SBU ol Shenzen Top Ttugerrts,EZ supply TC with more tlran one nrillion sets of Super I'angents, TC Tangcnts and.EZ Listensfor two years. Undcr thc agreemert, ooultl distribute Luxpro'sMP3 playersfor two ycars. 21. had ordcrsfor its MP3 players from all ElyAugust2005,L,uxpro obtaincd thc of capitalfimrs in theUflited States, over Lheworld andhad attractcd interest venture Luxpro received substantial interest and orders Japan, othercduntries.Spccifically, and supplicrs, and c ons um er s the United in for its MP3 playersfrom retailers, disttihutets, Statcsandaround globc,duringthis time frame. , thc 22. In Scptcmbcr, Luxpro sentMP3 playersvalueda t $2.8Million to Kaga in E l e c t r o n i cCo.,Ltd.,aneleotronics s supplier Japan. lr. Luxpro's Hvolution nd the Mflrket lnterest in lts ProductsProvidesthe I ' o u n d a t i o nfor a PublicOfferingof l,uxpro Securities. 23. of Luxpro's growthallowedit, in 2005,to begin thc proccss publicly trading company sharcson the Cre'Iai SecuritiesMarket ("GreTai"), a non-profit organiza ti o nwhich took ovet the busincssof public stock trading from tJreTaiper Markct Sccurities Dealer'sAssociation. A listing on the Taiwane$e GteTai Securitics would lraveheena greatadvantagc Luxpro's enterprise, to shareholders enrployees. and T'heopportunityto be tratJed GreTaiwould havemadetaising long-tcrmcapitalfor on growth easier, rcputationaud promotedbusiness betteredLuxpro's alreadyoutstanding growth, improvedLuxpro's interior nrarragement riyslefi aud opetatiofls and increascd Luxpro's supportfrom domesticindustries. Moreover,a GreTai listing would have a designed inorease to allowedLuxpro to establish stock option systemfor employees loyalty to the company,iucreasethe social statusof Luxpto"s employccsand allow employec s sharcin thc accomplishments the colnpany. to of 24. Reing tradedon GreTaiwould havc bcncfitcdLuxpro's shareholders by increasi n g markctabilityof Luxpro's stock,madeLuxpro's stock easierto circulate thc and liquidate,and would haveallowedLuxprtr'sstockto bc usedas collateralof loans f r o mlinancial institutions. G. L u x p r o ' s MP3 playersand Apple'sPlansto Squash Compctitor a 25. Howcvcr, as Luxpro MP3 playersbeganto leave their footprint orr the MP3 player market, Apple initiatcd a scries of acts designedto bring clown lheir competi ti o nandspecifically , targeted Luxpro. 26. In February 2005,Luxpro conducted trial run of its SuperShuffleMP3 a playerand showedit off in Maroh 2005at the CeBit Tradeshow Hanovet,Germany, in Apple appliedfor andreoeivod injunotiverelief Contcmp o ra n c o u swith thc tradeshow, ly the a g a i n sLuxpro from a Cennanoourtaskingl,uxpro to abandon use ol'the word t "Shuffle " in the product narne of one of its oompetingproduct$,everr tlrough no for hy in tradenra rk that nanrewas registeted Apple. Nevcrthelcss, thc facc of this challen g eLuxpro renarned SuperShullle the "SuperTdngetlt"and addedthe word , its " l , [ J X P R O "to thc productto clirninate possible any legalclaim of produot confusion Luxprothenbegan remrrketits MP3 playerproducts to undetthe "Tangent"label. 27. In spiteo1'these effortsby Luxpro, in April 2005,Applc cngagcd third a parlyto purchase SuperTange t frorn Luxpro. In addition, furtherance its sohenre a in of to stcalrightfully earncd marketsharefrom Luxpro,Apple alsosurreptitiously obtained price lists. Thc, on April 8 and 26, 2005,withoutrcason l w o ol'Luxprt)'sproprietary other than to intirnidate its competition,Apple sent tlueateningletters 1o Luxpro dcmand i n g Luxpro immediately that stopmarketing, manufacturing sellingall of its and conrpeting MP3 products the Superf'sngent,the l"op Tangentand tha EZ Taugent. Besidcsnoting thc obviousdifl'crcnccs thc Apple and Luxpro.kIP3 players,Luxprc in the r e s p o n d e d re rintlingApplethatit hadchanged flarreofone ol'its MP3players by the SupcrTangcntto avoid confusionand diffcrcntiatcit with Apple's iPod Shufflc. Sincc Apple had rro Iegalright to damand that a compctitor simplywithdrawits independently develop e dproduots from the market, Luxpro cofitinued to manufacture, market, license, sellits MP3playcrs. and distribute, 28. Apple, as pat oI' its schcmcto squasha competitor, thell Neverllreless, suedLuxpro in Taiwanallegingthat the appeariurce the SuperTangent,EZ TangcnL, of thc and Top Targent closely resembled iPod Shuffle. Through a clearly one-sided by s u h m i s s i o n Apple when the lawsuit was filed, Apple was able to convjncca I'aiwane s ecourt lo enter a preliffinary injunction that prohibited Luxpro from manufacturing, distributingand mtrketing any of its MP3 playcrs.Evcntually,Luxpro and the iniurction was lifted as to all of Luxpro's products, won the lawsuitorr appeal, cxccpt any using the name "Shu1}le." However,in spite of this lhvorablcruling, the had lorcedLuxpro to stopmanufacturing, its adveftisirrg nrarketing MP3 antl injurrotion playersfor a sigrificantpedod of timc. Thc impruperlyobtained broad-fonninjunction pcrformancc Luxproto ccasc hadstoppcd of Luxpro'sMP3 production had l-otced all rurd to with rnaterial of existingcoutraots orders.Luxpro attemptcd negotiate suppliers to and tcrminate hold ordersof raw materials.Sone ol-theseraw matcrialordcrscould not or bc cancelled. As a result, Luxpro's relationshipwith its raw matcrial suppliers and dctcrioratcd. Additionally, even tJrough Luxpro had spent significan l l yworsened significan tresources undeftakelisting its stock orr the GtaTei securiticsmarkct to Apple's litigalion lirrcedLuxpro to halt thcsc cfforts, as wcll. Apple's litigation was calculate d stoffp orrt thc coftrpctition, to causedLuxpro great econornic tlarnage, and ruined lhe oompany'sreputationwilh the public and with its businesscontactsand wasnot until November 2005,that the Taiwanese courlsagreed with Luxpro IO andrevokedthe prelirninaryinjunotionissuedagainst Top Tangentand EZ Tangcnt the MP3 players. But Apple wouldn't stop its cfforts and appealed ruling in Luxpro's that favor. ln March 2008, the Taiwan SupremeCourt dismissed Apple's appealof the Taiwan HighCourt's ruling. 29, plans,Applc filed rr Despitethesevindications Luxpro's business of Taiwan'sFair m o t i o nwith tJreFair TradeCornmission alleging that Luxpto violated T radeAct. T}e Fair Tradc Commission ultimatelyissueda letter opinion statingthat product L u x p r o ' sTangent line wasrro!in contraventiot theac1.Howevet, delay$ of the causcdby Applc's unlaw{ul legal strategycausedLuxpro to lose valuablemarket opportunities and a oon$iderable amountof product orders, These actions gmvely impeded Luxpro's efforts market MP3players.In fact,to thisday,Applccontinues its to to pursueits litigation strategythrougheudlessappeals, hopesthat the litigation, in partners, completely couplcd with prcssurc cxcrtedagainst Luxpro's business will squaslLuxpro or scvcrclyhampcrLuxpro's ability lo incrcasc markctsharcin thc worldwidc MP3 player market. The Taiwanese oivil court dismissedApple's latest appealin February 2008,but the resultingdamagclostcred this litigation stratcgy by had alrcady crippledT,uxpro's business el'lirrlsin theMP3 rrrarket. 30. Abusive Iitigation not theonly taotio was Appleutilized attenrpt stunt to to Luxpro' s growth in the worldwide MP3 player market. While Apple's over'reaching i n j u r t c t i o n wereon appeal, s Apple sentwamingletters other oonrpanie$ were to wlro doing business with Luxpro demanding they ceasedoing business with Luxpro. For example ,Apple placedsignificantprcssurcon IntcrTAN, a subsidiaryof U.S. based giart, Cirouit City, to drop Luxpro's MP3 playcrsfrorn its rctail coT rsufi eelectronios t 1l slrelves.In Septernber 2005,underpressure lrom Applc, IntcrTAN yankcd4,500Luxpro MP3 playels off its shelvesturd tlestroyecl theseproducts,costitg Luxpro significant revenue . Despitcthe popularityof thc Luxpro MP3 playersin its retail storesthat axe owned and operatedby Cirouit City, InterTAN 'ttoppedplacing otdets with Luxpto. throughout MP3 playermarket,resulting otherentities the in News of the incidentspread temrinati n g contritct$with Luxpro, causing fttthcr cconomic damagc to Luxpro, Notably, otherU.S.-based consumer electrotics cofipafiie$, sttchasBestBuy andRadio rcluscdto do busincss with Luxpro. Shackconsequently , 31. the district By April 2006,while Apple was still appealing Taiwanese corrrt ruling, Luxpro managed persuade to InterTAN's offrcersand conrpanyproduot buyersto travel to Taiwan ttr fteet. [tlterTAN's officets told Luxpro that Applc had placcd cxceptionallystrong prcssurcon InterTAN to yank tlie Centriosbrard from dealingswith Luxpro. Luxpro all InterT A N 's retail shelvesand discorrtinue brrsiness showedInterTAN many MP3 playersthat Luxpro had improvedsirrceInterTAN's first that to orderin 2005. Ovcr Luxpro"svigorousinsistence Apple's actionsweredesigned produots, IntetTAN tefurtedto order motc of' irnprope rl ystop tlle productionof bettorLuxpro 's MP3 playcrs. Luxpro inquiredwhy InterTAN would cany otherMP3 players, but like thosc produccdby Samsung, not Luxpro's. InterTAN explainedit could not to aflbrd to annoy Applc over a small companylike Luxpro. InterTAN apologized placirrg for but without otdets Luxpro'sMP3players. L u x p r u , lefl Taiwan 32. The pattem of interferencein Luxpro's busiless did not end with 2006, Apple irrcreirsed pressureon Luxpro's business its InterTA N . Ir Septenrber partner sincludinga nurnberof U.S.-bascd , partncrsand rctailcrslocatedin the United T2 had to that would States.For exarnple, Starbuoks Corporation agteed initiatc a proposal placeLuxpro'sMP3 playersin Starbucks' stores.Luxpro prcparcd szunples for ,Iapanese Starbucks qua$hits dcal with Luxpro to Starbtck sto approvcfor sale. Apple pressurecl andLuxpro'srelationship with Sturbuoks enrled. 33. Also in Scptcmbcr 2006, Apple threatenetl Orohtrd Company ("Orcha rd " ),a Singapore Co. company, Kaga Electroflic$ Ltd. ("Kaga"), a Japancsc and compan y ,to ceaseall business relationswith Luxpro or Apple would cithcr lilc suit rclationship with thosecomparies. Apple against Orohatda d Kaga or cnd its busincss rclationships alsothreatened Web Worker, a Genrrarr Luxpro client,to cnd all busincss w i t h Luxnro. 34. I11 attefipt to erascits fingcrprintsoff the scheme squash aTr to Luxpro, Luxprobusincss Apple successfully encouraged someof its suppliers heginto pressurc to pafl ers to ondllreir relationships with Luxpro. For example, Apple supplier ASUS Tek Computc rCo, ("ASUS"), threatened CompuImport Co. ("Cornpu"),a Luxpro client in Poland .ASUS told Computhat if it did not stopcarryingLuxproproduots, ASUSwould stop supplyilg Compu wiLh Apple ptoducts. Applc supplicr Syuex Technology Internati o n aLlorp.("Syrurex")threatened numberof Taiwanese l a l.uxpro distributors, EUPA,3C,andET Mall. including Carrefttur, 35. By the time Luxpro had succcssfully defeated Apple's litigation strategy i n theTaiwanese courts, including ?008dismissal thc ofthe latest appeal, wastoo late it Apple's vise-gripon to get backinto the globalmarket,inclutlingits elibrts to penetrate thc UnitedStates MP3 markel IJ 36. Apple's combined concentrated effort to u laitly ruilt Luxpro as a viablc compctitor, that dcvclopcd own products its based its own resoaroh development, on turd great Apple'sactions should rcmcdicd. bc caused damage Luxpro. to IV, A. CAUSESOFACTION Advantage I n tc rfc re n c ewith Contrflctual/Prospective 36. Plaintiff re-alleges irrcorpotates rcfcrcncccachof the allegations and by setforth above. 31. that were Due to the eariy suocess Ltupro and thc cxistingcontracts of of only duc to Applc's pressure, Luxpro hada rea$onable expectation cconomic canoeled advant a g e benefit. As set forth above,Luxpro hasbcctrin the MP3 playersbusiness or partnerswith whom it had cntcrcd iuto sirrce2002 and had a number of business marketed and ctrnlracts fot Luxpro'sMP3 players be distributed, call to contraots .Tho$e sold throughoutthe world in well known $toressuch as Thc Sourceby Circuit City with features not all MP3 players that Luxpro'sMP3 playersareuniqre andarcdcsigned havc,suchasa FM radiotuner. 38. or Applc hadknowledge Luxpro'sex pec t at i ofof cconomicadvantage of l with its benefit . Apple, irr lhct, soughtout informatiouabout Luxpro's relationship$ to on partncrs. Applc even persuaded husincss other b u s i n o s s entities excrtprcssurc partncrs. I,uxpro's business 39. Apple wtongfully, and without justification, interferedwith l,uxpro's r e a s o n a b lexpectation e ol'an cconornic advantage benefit. No legally sufficient or justilica ti o nf'orApple targeting can by L,uxpro exists. Apple'sactiorrs only be explaincd globaldominance theworldwideMP3 playernrarket. its thirstfor cornplete in I4 40. probable In the absence the wrongful actof Apple,it is rcasonably that of advantagc benefit. Luxpro is a successful or Luxpro woukl haverealizedits economic probabilitycertaiTlly coffipa n y thc worldwidcMP3 playermarket. A reasonable in exists or tlrat I.uxpro would have rcalizcd a significanteconomicadvantage benefit that jt to it. m i s s e d on dus!o Apple'sscheme quash out 41. Luxpro did in faotsustain damages a resultof this wrongfulintcrfcrencc as as by Apple. Luxpro $uslained because danrage a rcsultof Apple's wrongfulinterference its lruc markctsharcin thc worldwideMP3 ulavermarketwasneverrealized. B. Tortiouslnterferencc with I Contrflct 42. Plaintiff re-alleges incorporates relerenceeachof thc allcgations and by setforth above. 43. A valid contractual relationship existedbetween Luxpro and its retailers, partncrs. As sct forth above,Luxpro has been in the MP3 distribu to rsand brrsiness playersbusiness partncrswith whom it had since2002 iurtl hatl a nunrbetof business into c()Trtracts. Thosccontracts for Luxpro's MP3 playersto be distributed, call entered the rnarkete tand sold throughout wotld in well known storessuch as The Sourceby l Circuit City. 44. Applc had knowledge the relationship of between L,uxproarrdLuxpro's partnets. retailersdistribulors business , and 45. Apple intentionally and irnproperly interlered with thc rclationship betweel Luxpro ;urdtheir Retailers which intluoed caused breachor teftnination or a of said relationships.Apple forcedentitieslikc IntcrTAN to drop cxistingcontracts with Luxpro or be without Apple products. Such conductsis intentionaland irnproper. I5 Applc's markct sharcof thc worldwideMP3 playerrnaxket that time wa$ so great, at its InterT A N hadnot real choicebrrtto bow to Apple'swishcsandterminatc relationship with Luxnro. 46. As a result of Apple's intentionalantl inrproperinterllerence, l,uxpro cxpcricnccd significant cconomic otherdamages. and Luxpro expended substantial sums in developirrgits MP3 player products prior to Applc's intcntional and impropcr interfer e n o e .Lurpro sustained danrage a result of Apple's wtongful interference as its rnarketsharein the worldwideMP3 playermarket becaus e truc potcntialor availablc w a snover realize(I. C, Attempted Common Law Monopolization 47. Plaintill're-alleges and incorporates rcfcrcncccach of thc allcgations by s c t forlh abovc. 48. Luxpro wirs a growing and activc mcmbcr of thc MP3 playcr markct, L u x p r o ' sMP3 players wereattraotirrg lot of attention posed significant to a and a risk Applc's dominant sharcof thc markct. 49. 50. Applehadspecificintentto monopolize MP3 playerrnarket. the One or morc of Apple's actsclaimedby Luxpro in this Cornplaint was donc,waswrongful,andwasdonein furtherance this intent. of 5I. Apple intendedto monopolizethe MPi playersmarket and acted l n probabi)itythat nronopolization f furtheran c e that intent $o as to oreate reasonable of a o themarketwould sooner lateroccur. or r6 52. The attenrpted monopolization cstablishcd the proximate so was cause of Luxpro to losesalcson which damage the business propertyof Luxpro,by causirrg to or L u x p r owouldhavcmadc profit, a D, Violfltion of Cnlifornia Unfair CompetitionLaw, Cul, Bus, & Prof, Code $ 17 2 0 0 , seq, et 53. by Plaintiff re-alleges incorpotates teferencccach of thc allcgations and set lorth abovc. 54. The conductallcgcdin this complaintconstitutes unfair cornpetitiou and within the mcaningol' thc unlawfu l , unfair, and fraudulent businoss ilcls arld practices (lompetition I Law. $ 17200, se4.of the CalifomiaBusiness et anc C a l i l ' o m i a Jnl'air propcrtyasa injury in fact afid lost ffoney an(Vor Professi o uCode. Luxpro hassuffered s resultof Applc's violationsof Iaw andwrongfulconduot. 55. Apple's actions are unlawlirl and unfair bccausc,in an attempt to monopo l i z cthc worldwide MP3 player market,it has attempted squasha smaller to with L,uxpro's busincss, cconomic advantages competi to rLuxpro. Apple hasinterl'eted , and contracts hasdisparaged and Luxpro'snameirr the worldwideMP3 playetnlatketifl violation ol'common law. 56. Applehasviolated UnfhirCompctition proscription the law Acoor<lingly, practices. againsengaging unlawfirl,unfair,;urdfraudulent t in business 51. As a resultof Apple's unlawful,unfair and fraudulent conduot, Apple has at of heenunjustlyenriched thc cxpcnsc Luxpro. E, CommercialDisparagement 58. Plaintil'l're-alleges incorporatcs refercncccach of thc allcgations and by setforth above. 17 59. protluots. 60. A p p l e published false statements conceming Luxpro's businessand to a Apple intended publioation its falsestateffeflts cause pecuniary the of lossto Luxpro or Apple shouldhavoreasonably kflowfl that the publicationof its lalse wouldresu]l a pecuniary to Luxpro's in loss busincss products. and slaterreflt$ 61. Apple knew the statements rnadewere falseor Apple aotecl reckless it in truth clisregarof tho $latenrFntt; or falsity. d 6?. Apple's disparagenrentcaused lraftt to Luxpro's repulatiotl and caused L u x p r o economiclosses and pccuniarydamagcs. DAMAGES 63. As a dircct andproximatcrcsultof lJcfcndant's actionsPlaintiff has bccn darragc d an amotnt to bc dctcrmined a jury at a trial ol'this mattcrandan awatdol' in by attomey's fees. additionto the aforemenlioned danrages and as a rcsLrlt t h e ol' 64. punitivedamages condr.rc t the part of the l)efendant, on shouldbe inrposed punisht h e to conduc t theDefendant to deterothers of and from similarconduct. J U R Y DEMANI) 6 5 . the Plaintiffdcmands jury trial on all issues this complaint. a of P RAYER FOR RELIEF W F IE R E F OR Eprcmiscsconsidcrcd, , Plaintiff prays fbr judgmcnt againstthc Delendan tand respectlullyrequest$ that this Courl enter its Order grantingjudgnrent againsDefendant aotualarrdconsequential t for tlarnages, attomeyfoes,punitivedamages 18 autl Rrrall othet relicf which Plaintiff is entitled. RespectfulSubmitted, ly t \ ' E' i " h" . . l A. Ad""* B a r N o . 97036 P h i l l i pN. Cockrell B a rNo. 79154 C or eyD. McGaha B a r No. 2003047 P A T T O N ROBERTSPLLC Suite400 C ent ur yBank Plaza, P.O. Box 6128 I Texarkana, Tsxas75505-628 P h o n e :(903)334-7000 F a x ; (903)334-7O()j J er em y Hutohinson Y. B a r No. 2ti06I45 P A T T O N ROBERTSPLLC | | I Center Suitc1315 St., L i t t l eRook,AR 72201 (501)372-3480 Telephone: (501 F a c s i m i l e : ) 372-3488 AT ' T O R N EYSFOR PLAI N T I I I I i LUXPRO CORPORA'I'ION tlh-/4 t l -l + M\/' ,t t/-) /-l ,l 19

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