DNZ PRODUCTS LLC v. LAKE ASSOCIATES, LLC, et al

Filing 1

COMPLAINT against All Defendants ( Filing fee $ 350 receipt number 0418-1090816.), filed by DNZ PRODUCTS, LLC. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5)(MORSE, CLINTON)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CIVIL ACTION NO. 12-326
DNZ
PRODUCTS
LLC,
DEDNUTZ PRODUCTS, LLC,

F/K/A )
)
)
Plaintiff,
)
)
v.
)
)
LAKE ASSOCIATES, LLC D/B/A )
WARNE SCOPE MOUNTS AND )
NIKON, INC.,
)
)
Defendants.

COMPLAINT
JURY TRIAL REQUESTED

Plaintiff DNZ Products LLC, f/k/a Dednutz Products, LLC (“DNZ”), by and
through its undersigned counsel, for its complaint against Defendants, Lake Associates,
LLC d/b/a Warne Scope Mounts (“Warne”) and Nikon, Inc. (“Nikon”), alleges and states
as follows:
NATURE OF THE ACTION
1.

This action arises out of Warne’s and Nikon’s design patent infringement,

trade dress infringement, and unfair competition and misappropriation in violation of
federal and state law. This is an action for injunctive and monetary relief.
2.

DNZ, through its owners and predecessors, created a novel scope mount

design, which is the subject of a design patent owned by DNZ. Consumers and those in
the field further recognize this design as being an indicator of source for DNZ’s products.
3.

After learning of DNZ’s unique and innovative design, Nikon’s

representatives obtained from DNZ a field-test sample of such a product. Rather than

then dealing with DNZ to obtain authorized product, other arrangements were made to
obtain infringing products.

Namely, Warne began manufacturing for Nikon scope

mounts which copy and incorporate DNZ’s design and the unique attributes of the design.
4.

Warne’s and Nikon’s conduct infringes on DNZ’s patent and DNZ’s

protectable trade dress and is causing significant damage to DNZ. Warne and Nikon
should be enjoined from further misconduct, and they should compensate DNZ for the
damage caused.
PARTIES, JURISDICTION AND VENUE
5.

DNZ is a limited liability company organized and existing under the laws

of the state of North Carolina with a principal place of business in Lee County, North
Carolina.
6.

Upon information and belief, Warne is a limited liability company

organized and existing under the laws of the state of Oregon with a principal place of
business in Washington County, Oregon.
7.

Upon information and belief, Nikon is a corporation organized and existing

under the laws of the state of New York with a principal place of business in Suffolk
County, New York.
8.

This Court has subject-matter jurisdiction over this action under 28 U.S.C.

§ 1331 because one or more of the claims arise under federal laws, such as the Patent
Act. This Court has jurisdiction over the related state and common law claims pursuant
to 28 U.S.C. § 1367. Furthermore, there is diversity of citizenship between DNZ, Nikon,
and Warne, and the amount in controversy is in excess of $75,000.00, giving rise to
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jurisdiction under 28 U.S.C. § 1332.
9.

This Court may exercise personal jurisdiction over the Defendants and

Nikon. Upon information and belief, this Court has general jurisdiction over Nikon and
Warne because Nikon and Warne advertise, market, and sell large volumes of products in
this State and District. Furthermore, this Court has specific jurisdiction over Nikon and
Warne because Nikon and Warne’s infringing products which are the subject of this
action are marketed and sold in this State and District.
10.

Personal jurisdiction in this Court over the Defendants is proper under N.C.

Gen. Stat. § 1-75.4, among other laws and constitutional principles, due to the following,
among other actions: their doing business in the State of North Carolina; and their selling
and placing in the stream of commerce its products which have been offered to persons
within the State of North Carolina.
11.

Venue is proper in this District because Nikon and Warne have offered for

sale and sold products that infringe on DNZ’s patent and DNZ’s trade dress in this
District and a substantial part of the events giving rise to DNZ’s claims therefore
occurred in this District.
FACTS
I. PRODUCT DEVELOPMENT
12.

After working as a machinist in the 1980s and early 1990s, Timothy L.

Coggins (“Mr. Coggins”) started a machine shop in Sanford, North Carolina in the mid1990s.
13.

With his skills as a machinist and as a hunting enthusiast, Mr. Coggins has
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created scope mount designs for years.
14.

Several years ago, Mr. Coggins and his wife, Lisa Coggins (“Mrs.

Coggins”), decided to turn his hobby into his business.

They organized DedNutz

Products, LLC (later renamed “DNZ Products, LLC”) to market and sell Mr. Coggins’
unique scope mount designs, among other products.
II. THE DESIGN
15.

DNZ’s products bear a unique design which resonates with the hunting

public and those in the field.
16.

Mr. Coggins recognized that traditional scope mounts commonly used one

or more “wings” to attach the optics to the mount. When viewed looking down the gun
with the scope mount attached, the wings usually either appeared on the left and the right
sides of the mount or a single wing protruded at the top of the mount. A photo of such a
traditional design is attached as Exhibit 1.
EXHIBIT 1
Traditional Winged Scope Mount

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17.

In a novel twist, Mr. Coggins created a new design which eliminated the

protruding wing. His design is shown in the attached Exhibit 2. His design employs a
streamlined and a largely circular top piece, with screw fasteners largely hidden from
view within the structure of the mount itself rather than being placed in a protruding
wing. With this attractive and distinctive design, when the shooter sights the gun, he is
presented with a memorable visual image having generally smooth, circular arch or
“tunnel” without being distracted by a wing on the top or by side wings.
EXHIBIT 2
DNZ’s Scope Mount

18.

The new design—a one-piece, wingless mount of the type shown in Exhibit

2 – was not previously sold in the marketplace until DNZ introduced its product. Further,
this design has become associated with DNZ such that it is recognized in the marketplace
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as DNZ’s design. DNZ’s designs are distinctive, have acquired secondary meaning and
distinctiveness, and serve to identify DNZ as the source of its products in the
marketplace.
III.

19.

THE DESIGN PATENT AND DNZ’S RECOGNITION IN THE
MARKET
To protect his intellectual property and sweat equity in the wingless scope

mount, Mr. Coggins’ assigned his invention to DNZ, and DNZ applied for and obtained
US Patent No. D554,730 (the “’730 Patent”). The ‘730 Patent is a design patent
describing DNZ’s wingless scope mount. A copy of the ‘730 Patent is attached hereto as
Exhibit 3.
20.

DNZ has spent considerable time and money advertising DNZ as the

manufacturer of premium scope mounts having its relevant design. Due to these efforts
and the inherently distinctive nature of the product design, the design has secondary
meaning as a source indicator of DNZ’s products. The relevant market and consumers
associate the design with DNZ and its products.
IV.WARNE AND NIKON’S INFRINGEMENT
21.

At a product convention in February, 2008, Nikon’s representatives saw

and recognized the ingenuity in DNZ’s products covered by the ‘730 Patent.
22.

John Allen, Nikon’s Vice President of Sales, discussed the possibility of

buying products from DNZ and indicated his authority within Nikon to reach such a deal,
saying “I can make this happen.” On behalf of Nikon, he requested and Nikon received
field-samples from DNZ of its design. Nikon’s representatives led DNZ and Mr. and
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Mrs. Coggins to believe that Nikon would contract with DNZ to provide Nikon with
scope mounts if these field tests were successful.
23.

Nikon, however, did not follow through with its discussions concerning

potential contracts with DNZ for the manufacture of products bearing the DNZ design.
Instead, Nikon contracted with Warne to manufacture products that infringe on DNZ’s
‘730 Patent.
24.

Nikon and Warne now offer scope mounts bearing the DNZ design to the

public on a mass scale throughout the country.
25.

Specifically, Nikon has packaged for sale, and Warne has manufactured

scope mounts which infringe and violate DNZ’s design patent rights and trade dress
rights, such as the scope mount with model number M223 (the “Warne M223”). Rather
than adhering to the teachings of prior art or utilizing a different design, the Warne M223
copies the innovative design features of the ‘730 Patent. The Warne M223 presents two
streamlined, rounded rings such that when the shooter sights the gun, he sees two
rounded archways—the innovative design covered by the ‘730 Patent that consumers
associate with DNZ’s products. An image of the Warne 223 is attached as Exhibit 4.

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Exhibit 4
The Warne M223

26.

Adding to the confusion, the Warne M223 is a one-piece scope mount

made out of lightweight metal—the same premium features consumers expect when they
purchase a DNZ product.
27.

The sameness and confusing similarity of the Warne M223 design as

compared to the DNZ’s product and the ‘730 Patent can be observed in the attached
Exhibit 5, consisting of a side-by-side.
Exhibit 5
Side-by-Side Comparison

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28.

In addition, there has been serious confusion in the industry by persons and

consumers familiar with prior designs. For example, but without limitation:
a. A Bass Pro Shops buyer saw the Warne M223 and believed that it was a
DNZ product;
b. Dealers have asked DNZ whether DNZ was manufacturing the Warne
M223 for Nikon; and
c. Even a Nikon field representative was deceived into believing that the
Warne M223 was manufactured by DNZ.
29.

Buyers and persons in the industry with familiarity for scope mounts have

believed the Warne M223 and DNZ scope designs are the same, come from the same
source, are substantially the same, and are confusingly similar.
V. UNREASONABLE REFUSAL TO CEASE INFRINGEMENT
30.

Upon learning of Nikon and Warne’s infringement of DNZ’s rights, DNZ

contacted Nikon and Warne.
31.

Nikon’s John LeCourt asserted in 2011 at the NRA show that the matter

concerning the products sold under the Nikon name was “Warne’s problem.” In 2012 at
the Shot Show, DNZ again attempted to discuss the matter with John Allen and John
LeCourt, but they refused to discuss the matter substantively.
32.

Warne initially seemed willing to reach a resolution of the matter. On May

17, 2010, one of Warne’s representatives even told Mrs. Coggins that Warne would do
whatever it could to remedy its infringement. After two years of posturing, however,
Warne has unreasonably refused to present any concrete resolution to DNZ.
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33.

DNZ has been harmed by the actions of the Defendants.

34.

In addition to each of their own infringing actions, and in the alternative,

Nikon and Warne have each materially contributed to and induced the other to infringe of
DNZ’s rights, to each Defendant’s own and mutual benefits.
FIRST CLAIM FOR RELIEF
(Patent Infringement)
35.

DNZ repeats and incorporates herein by reference the allegations of

paragraphs 1-34 above as if set forth here in full.
36.

DNZ is the owner of the ‘730 Patent.

37.

DNZ placed the required statutory notice that its wingless mount design

was protected by the ‘730 Patent on the labeling of all products it sold covered by the
‘730 Patent in compliance with 35 U.S.C. § 287.
38.

Overall, and due to the similar features between the Warne M223 and the

‘730 Patent described above, the ordinary observer, familiar with the prior art designs,
giving the degree of attention normally given by a purchaser, would believe that the
Warne M223 and the ‘730 Patent are the same or substantially the same.
39.

Defendants’ conduct, as set forth above, constitutes the use, offering for

sale, and sale of a patented invention within the United States during the term of the ‘730
Patent, all in violation of 35 U.S.C. § 271. Accordingly, DNZ has a right of civil action
pursuant to 35 U.S.C. § 281.
40.

Defendants have infringed and may still continue to infringe the ‘730

Patent by making, selling, offering for sale, using or otherwise transferring scope mounts
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embodying the patented design without authorization from DNZ, and will continue to do
so unless enjoined by this Court.
41.

Pursuant to 35 U.S.C. § 283, DNZ is entitled to injunctive relief in

accordance with the principles of equity to prevent the infringement of rights secured by
its patents.
42.

DNZ has been damaged in an amount to be determined at trial, but in

excess of $75,000.00, as a result of the conduct complained of herein. Pursuant to 35
U.S.C. § 284, DNZ is entitled to damages adequate to compensate for the infringement,
although in no event less than a reasonable royalty, together with such interest and costs
to be taxed to the infringer.

Further, the damages should be trebled because the

infringement was willful pursuant to 35 U.S.C. § 284.

DNZ is also entitled to

reimbursement of its attorney’s fees pursuant to 35 U.S.C. § 285 because this is an
exceptional case.
43.

Pursuant to 35 U.S.C. § 289, DNZ is entitled to an award of Defendants’

total profit because Defendants have sold and exposed for sale wingless scope mounts
infringing the ‘730 Patent.
SECOND CLAIM FOR RELIEF
(Trade Dress Infringement)
44.

DNZ repeats and incorporates herein by reference the allegations of

paragraphs 1-43 above as if set forth here in full.
45.

DNZ is the owner of its products distinctive trade dress—specifically one-

piece, wingless scope mounts shown in Exhibit 2 (the “Trade Dress”). The Trade Dress
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has acquired secondary meaning. As a whole, the Trade Dress is inherently distinctive
and not functional.
46.

Based on advertising, promotion and sales throughout the country, the

Trade Dress has obtained secondary meaning among consumers, identifying DNZ as the
maker of products bearing the Trade Dress.
47.

Defendants’ manufacture, sale, offering for sale, and distribution of the

Warne M233 is likely to cause confusion, or to cause mistake, or to deceive the consumer
as to the affiliation, connection, or association of Defendants and DNZ, and as to the
origin, sponsorship, or approval by DNZ of Defendants’ products.
48.

As described above, Defendants infringed DNZ’s designs and have

therefore violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), among other
laws. DNZ has been damaged in an amount to be determined at trial, but in excess of
$75,000.00, as a result of the conduct complained of herein.
49.

Defendants’ actions complained of herein were committed willfully and

intentionally. DNZ is entitled to the trebling of its actual damages or Defendants’ profits
as set forth 15 U.S.C. § 1117(a). Because this is an exceptional case, DNZ is also entitled
to an award of its attorney’s fees.
50.

Due to Defendants’ actions, DNZ is entitled to an accounting of all of

Defendants’ infringing products, sales and orders, and to a disgorgement to DNZ of the
profits of Defendants for such infringing products and designs.
51.

DNZ is also entitled to injunctive relief in accordance with the principles of

equity to prevent the infringement of the Trade Dress.
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THIRD CLAIM FOR RELIEF
(Common Law Unfair Competition and Misappropriation)
52.

DNZ repeats and incorporates herein by reference the allegations of

paragraphs 1-51 above as if set forth here in full.
53.

Through the expenditure of considerable time, money, and labor, DNZ has

earned a commercial advantage in marketing its scope mounts through use of its unique
and innovative designs, including those design elements constituting the Trade Dress.
54.

Defendants’ manufacture, marketing, and sale of the Warne M233 as

described above constitutes unfair competition in that Defendants’ actions are calculated
to misappropriate DNZ’s commercial competitive advantage. Defendants are taking
unfair advantage of the goodwill that DNZ has built up in its innovative designs.
55.

Upon information and belief, Defendants’ actions described above have

been carried out knowingly, willfully, and wantonly.
56.

DNZ has been damaged in an amount to be determined at trial, but in

excess of $75,000.00, as a result of the conduct complained of herein. Furthermore, DNZ
is entitled to punitive damages in an amount to be determined by the trier of fact as
provided in N.C. Gen. sta. § 1D-1, et. seq.
FOURTH CLAIM FOR RELIEF
(Unfair and Deceptive Trade Practices – N.C. G. S. § 75-1.1)
57.

DNZ repeats and incorporates herein by reference the allegations of

paragraphs 1-56 above as if set forth here in full.
58.

Defendants’ actions described above constitute unfair and deceptive trade

practices in violation of N.C.G.S. § 75-1.1.
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59.

Defendants’ unfair and deceptive actions are in and effecting commerce.

60.

DNZ has been damaged in an amount to be determined at trial, but in

excess of $75,000.00, as a result of the conduct complained of herein, plus attorney’s fees
and costs.
61.

Such damages award should be trebled as set forth under the laws of North

Carolina.
JURY REQUEST
62.

DNZ requests a jury trial of all issues so triable.

WHEREFORE, Plaintiff DNZ Products, LLC, prays for relief as follows:
1.

For a permanent injunction enjoining Warne, Nikon, and their respective

directors, officers, employees, representatives or agents, and any persons or entities in
active concert or participation with them, from any conduct infringing on the ‘730 Patent,
including without limitation all manufacture, importation, distribution, offering or sale of
the Warne M223 product or similar designs infringing on the ‘730 Patent;
2.

For a permanent injunction enjoining Warne, Nikon, and their respective

directors, officers, employees, representatives or agents, and any persons or entities in
active concert or participation with them, from any use, display or other infringement of
the Trade Dress, including without limitation all manufacture, importation, distribution,
offering or sale of the Warne M223 product or similar designs infringing on the Trade
Dress;
3.

For a permanent injunction enjoining Warne, Nikon, and their respective

directors, officers, employees, representatives or agents, and any persons or entities in
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active concert or participation with them, from assisting, aiding or abetting any other
person or business entity from engaging in or performing any of the activities referred to
in paragraphs 1 and 2 immediately above;
4.

For an award of a reasonable royalty compensating Plaintiff for Warne and

Nikon’s design patent infringement;
5.

For an award of compensatory damages;

6.

For an award of treble damages;

7.

For an award of punitive damages as may be allowed by law;

8.

For an accounting of and a disgorgement to DNZ of Warne and Nikon’s

profits attributable to their respective infringement(s);
9.

For an award of attorney fees, interest, including prejudgment interest, and

10.

For a jury trial on all issues so triable; and

11.

For such other and further relief as the Court deems just and proper.

costs;

This the 2nd day of April, 2012,

/s/ Clint S. Morse
David W. Sar
N.C. State Bar No. 23533
Clint S. Morse
N.C. State Bar Number 38384
Attorneys for Plaintiff

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BROOKS, PIERCE, MCLENDON,
HUMPHREY & LEONARD, L.L.P.
Suite 2000 Renaissance Plaza
230 North Elm Street (27401)
Post Office Box 26000
Greensboro, North Carolina 27420
Telephone: [phone]
Facsimile: 336/378-1001
E-mail:
[e-mail]

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