7142014 Monster Moto Case

21953371v1

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

APT GROUP INC. d/b/a MOTOVOX, a Missouri corporation, and APT IP HOLDINGS, LLC, a Missouri corporation,

Plaintiff,

vs.

MONSTER MOTO, LLC, a Texas limited liability company, OLEN RICE, an individual, ROBERT A RICE, SR., an individual, JOHN UMSTED, an individual, KENNETH FRANCIS, an individual, and BECK SALANDER, an individual,

Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. 4:14-cv-546

MOTION FOR LEAVE TO FILE EXCESS PAGES

COME NOW Plaintiffs APT Group, Inc. d/b/a MotoVox and APT IP Holdings, LLC

(hereafter Plaintiffs or MotoVox), by and through its attorneys of record, move the Court for

leave to file their Suggestions in Support of its Motion for Preliminary Injunction in excess of the

fifteen (15) pages authorized by Local Rule 7.0(f). In support of this Motion, Plaintiffs state as

follows:

1. Plaintiffs wish to file a Motion for Preliminary Injunction and accompanying

Suggestions in Support. A copy of the proposed Motion for Preliminary Injunction is attached

hereto as Exhibit A and a copy of the proposed Suggestions in Support is attached hereto as

Exhibit B and a copy of the accompanying Declaration of Troy Covey and associated exhibits is

attached hereto as Exhibit C.

Case 4:14-cv-00546-ODS Document 6 Filed 07/11/14 Page 1 of 3

21953371v1 2

2. Plaintiffs have limited the Argument section of its Suggestions in Support to the

15 pages allowed under Local Rule 7.0(f). However, the overall Suggestions in Support, when

taking into account Plaintiffs Statement of Facts and short introduction, is 37 pages long. While

Local Rule 7.0(f) expressly excludes Statements of Fact in the summary judgment context from

the pages to be counted for compliance with the Rules 15 page limit, it does not address how

Statements of Fact should be treated in other contexts, including in the context of motions for

preliminary injunction. Accordingly, out of an abundance of caution, Plaintiff is hereby seeking

leave to file an additional 22 pages for a total of 37 pages in support of its Motion for

Preliminary Injunction.

3. The vast majority of these 22 additional pages are dedicated to Plaintiffs

Statements of Fact. These lengthy factual assertions are necessitated by the complexity of the

facts and issues in dispute in this motion. Plaintiffs have endeavored to limit this Statement of

Facts to only those facts that are in fact critical to resolution of the instant issues.

WHEREFORE, Plaintiffs respectfully request leave to file its Suggestions in Support of

its Motion for Preliminary Injunction consisting of up to but not more than 37 double-spaced

pages, including only 15 pages of Argument, and 22 pages of Statement of Facts and a short

introduction.


21953371v1 3

Dated: July 11, 2014

LATHROP & GAGE LLP

By: /s/ R. Cameron Garrison R. Cameron Garrison (MO #54064) [email protected] Luke M. Meriwether (MO # 59915) [email protected] 2345 Grand Boulevard, Suite 2200 Kansas City, Missouri 64108-2618 816.292.2000 (Tel) 816.292.2001 (Fax) Brett L. Foster (pro hac to be filed) [email protected] Mark A. Miller (pro hac to be filed) [email protected] J. Andrew Sjoblom (pro hac to be filed) [email protected] Ginger Utley (pro hac to be filed) [email protected] HOLLAND & HART LLP 222 S. Main Street, Suite 2200 Salt Lake City, Utah 84101 801.799.5800 (Tel) 801.799.5700 (Fax) Attorneys for Plaintiff APT Group, Inc. d/b/a MotoVox and APT IP Holdings, LLC


EXHIBIT A

Case 4:14-cv-00546-ODS Document 6-1 Filed 07/11/14 Page 1 of 5

21953189v1

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

APT GROUP INC. d/b/a MOTOVOX, a Missouri corporation, and APT IP HOLDINGS, LLC, a Missouri corporation,

Plaintiff,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )


MOTION FOR PRELIMINARY INJUNCTION

Pursuant to Fed. R. Civ. P. 65, 35 U.S.C. 283, and 15 U.S.C. 1116, Plaintiffs APT

Group, Inc. d/b/a MotoVox and APT IP Holdings, LLC (MotoVox or Plaintiffs) by and

through counsel, respectfully request the Court enter a Preliminary Injunction (a proposed Order

is attached as an Exhibit hereto) to enjoin Defendants Monster Moto, LLC, Olen Rice, Robert A.

Rice, Sr., John Umsted, and Kenneth Francis (Monster Moto or Defendants) from: (1)

ongoing infringement of Plaintiffs valid design patent covering Plaintiffs MotoVox minibikes;

(2) misappropriation of trade secrets; (3) breach of contract; and (4) tortious interference with

business expectations. As grounds for this Motion, Plaintiffs state as follows:

1. Plaintiffs are entitled to their requested relief upon a sufficient showing on the

following factors: (1) their reasonable likelihood of success on the merits; (2) whether they will

suffer irreparable harm if preliminary relief is not granted; (3) the balance of hardships; and (4)

whether there will be an adverse impact on the public interest. Winter v. Natural Res. Def.


21953189v1 2

Council, 555 U.S. 7, 20 (2008); PHG Techs., LLC v. St. John Cos., 469 F.3d 1361, 1365 (Fed.

Cir. 2006) (quoting Oakley, Inc. v. Sunglass Hut Int'l, 316 F.3d 1331, 1338-39 (Fed. Cir. 2003)).

2. Plaintiffs seek a preliminary injunction, enjoining Defendants from the following:

infringing Plaintiffs design patent covering the frame and other features of its minibikes

(including model numbers MBxXSe, MBX10, MBX11, MBX12, and MBX20, together, the

MBX Minibikes); misappropriating Plaintiffs trade secrets; breaching their contractual

obligations with Plaintiffs; and interfering with Plaintiffs business expectancies with retailers,

including Kmart, Sears, Costco, and Alco, among others.

3. The preliminary injunction should issue because Plaintiffs can establish each

factor necessary for an injunction: (1) Plaintiffs have a reasonable likelihood of success as to

each of their claims against Defendants; (2) Plaintiffs face significant, irreparable, and immediate

harm to their reputation and goodwill, market share, ability to innovate, their most closely-

guarded trade secrets, and their competitive advantage. This harm is heightened by Defendants

shipment of thousands of infringing products in the past three months alone and the approach of

the peak sales season for motorized minibikes, which occurs in OctoberDecember. If

Defendants are not enjoined and are allowed to advertise and sell their infringing products during

that sales cycle, Plaintiffs will suffer irreparable harm from which they may not recover; (3) the

damage to Plaintiffs represents significant hardship if a preliminary injunction is not entered

while Defendants cannot rightfully claim any hardship as a result of being enjoined from their

infringement and other bad acts; and (4) enjoining Defendants from any further infringement and

other bad acts will not adversely affect the public interest in any manner but will have the

opposite effect and safeguard the public in many respects. Because all four factors are satisfied

and weigh in Plaintiffs favor, a preliminary injunction should issue.


21953189v1 3

4. Accordingly, and due to the irreparable harm facing Plaintiffs, Plaintiffs request

the Court immediately enjoin Defendants from selling or offering to sell any infringing copies of

Plaintiffs MBX Minibikes, misappropriating Plaintiffs trade secrets, breaching their contractual

obligations with Plaintiffs, and interfering with Plaintiffs business expectancies.

5. Filed with this Motion are (1) Plaintiffs accompanying Brief in support, and (2)

the Declaration of Troy Covey and supporting exhibits.

FOR THESE REASONS, the Court should grant Plaintiffs Motion and enter a

preliminary injunction as follows: Defendants, including all officers, directors, principals,

agents, servants, employees, successors and assigns, and all others aiding, abetting, or acting in

concert or active participation therewith, are enjoined from making, using, selling, and offering

to sell any infringing copies of Plaintiffs MBX Minibikes or any other product that is the

substantial equivalent to the infringing products in overall design and appearance, regardless of

whatever version or name Defendants may use to sell such products (hereafter the Infringing

Products). The requested injunction should (1) preclude Defendants from making any further

sales of the Infringing Products, (2) order Defendants to contact Monster Motos retail customers

and instruct them to stop their sales and return all Infringing Products to Monster Moto, (3) order

Defendants to stop all advertising, including all Internet advertising, that depicts, promotes, or

otherwise mentions the above-listed Infringing Products; (4) order Defendants to refrain from

using any MotoVox trade secrets in the design or manufacture of any Infringing Products or for

any purpose whatsoever; (5) order Messrs. Olen Rice, Robert Rice, and Kenneth Francis to

comply with their contractual obligations set forth in their Service and Employment Agreements;

and (6) order Defendants to refrain from making contact with any of MotoVoxs existing retail


21953189v1 4

customers, including but not limited to Sears, Kmart, Costco, and Alco, with respect to

advertising or selling any Infringing Products.

Dated: July 11, 2014

LATHROP & GAGE LLP

By: /s/ R. Cameron Garrison R. Cameron Garrison (MO #54064) [email protected] Luke M. Meriwether (MO # 59915) [email protected] 2345 Grand Boulevard, Suite 2200 Kansas City, Missouri 64108-2618 816.292.2000 (Tel) 816.292.2001 (Fax) Brett L. Foster (pro hac to be filed) [email protected] Mark A. Miller (pro hac to be filed) [email protected] J. Andrew Sjoblom (pro hac to be filed) [email protected] Ginger Utley (pro hac to be filed) [email protected] HOLLAND & HART LLP 222 S. Main Street, Suite 2200 Salt Lake City, Utah 84101 801.799.5800 (Tel) 801.799.5700 (Fax) Attorneys for Plaintiff APT Group, Inc. d/b/a MotoVox and APT IP Holdings, LLC


EXHIBIT B


21953209v1

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

APT GROUP INC. d/b/a MOTOVOX, a Missouri corporation, , and APT IP HOLDINGS, LLC, a Missouri corporation,

Plaintiff,

vs.


Defendants.

) ) ) ) ) ) ) ) ) ) ) ) ) ) )


SUGGESTIONS IN SUPPORT OF PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION


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TABLE OF CONTENTS I. INTRODUCTION ........................................................................................................................................... 1

II. STATEMENT OF FACTS .............................................................................................................................. 2

A. Introduction ....................................................................................................................................... 2

B. The MBX Minibike Design and MotoVoxs Intellectual Property Rights........................................ 3

C. MotoVoxs Trade Secrets and The Defendant Employees Misappropriation ................................. 7

D. Defendants Bad Acts ..................................................................................................................... 14

E. MotoVox Will Suffer Irreparable Harm in the Absence of an Injunction ....................................... 17

ARGUMENT .............................................................................................................................................................. 23

I. PRELIMINARY INJUNCTION STANDARD ............................................................................................ 23

II. MOTOVOX IS LIKELY TO SUCCEED ON EACH OF ITS CLAIMS ...................................................... 23

A. MotoVox Is Likely To Succeed on Its Patent Infringement Claim ................................................. 23

B. MotoVox is Likely to Succeed on its Trade Secrets Claim ............................................................. 25

1. A Trade Secret Exists ....................................................................................................... 25

2. Defendants Misappropriated the Trade Secrets ................................................................ 27

C. MotoVox Is Likely to Succeed on Its Breach of Contract Claim .................................................... 28

D. MotoVox Is Likely to Succeed on Its Tortious Interference Claim ................................................ 29

III. MOTOVOX WILL SUFFER IRREPARABLE HARM ............................................................................... 31

A. Reputational Harm and Lost Customer Goodwill ........................................................................... 31

B. Loss of Exclusive Territory, Market Share, and Ability to Innovate .............................................. 33

C. Lost Control of Trade Secrets and Competitive Advantage ............................................................ 34

IV. THE BALANCE OF HARDSHIPS TIPS IN MOTOVOXS FAVOR......................................................... 35

V. THE PUBLIC INTEREST FAVORS GRANTING INJUNCTIVE RELIEF ............................................... 36

VI. CONCLUSION ............................................................................................................................................. 37


21953209v1 ii

TABLE OF AUTHORITIES

Page(s)

Cases

A.B. Chance Co. v. Schmidt, 719 S.W.2d at 858 ................................................................................................................................................ 27

A.B. Chance v. Schmidt, 718 S.W.2d 854 (W.D. Mo. 1986) ....................................................................................................................... 34

Apotex USA, Inc. v. Merck & Co., Inc., 254 F.3d 1031 (Fed. Cir. 2001) ............................................................................................................................ 23

Bancroft Life & Casualty, ICC, Ltd. v. Intercontinental, 456 F. Appx.184 (3d Cir. 2012) .......................................................................................................................... 30

C&A Plus, Inc. v. Pride Solutions, LLC, 2003 WL 25278133 (D. N.D. Feb. 7, 2003) ......................................................................................................... 33

Calvin Klein Cosmetics Corp. v. Lenox Labs, Inc., 815 F.2d 500 (8th Cir. 1987) ................................................................................................................................ 36

Central Trust and Inv. Co. v. Signalpoint Asset Mgmt., LLC, 442 S.W.3d 312 (Mo. 2014) ................................................................................................................................. 27

Cole v. Homier Distrib. Co., Inc., 599 F.3d 856 (8th Cir. 2010) ................................................................................................................................ 30

Concrete Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600 (1st Cir.1988) ................................................................................................................................. 35

Crocs, Inc. v. Intl Trade Commn, 598 F.3d 1294 (Fed. Cir. 2010) ............................................................................................................................ 24

Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109 (8th Cir. 1981) ................................................................................................................................ 23

Decade Indus. v. Wood Tech., Inc., 100 F. Supp. 2d 979 (D. Minn. 2000) ............................................................................................................. 34, 35

Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) ........................................................................................................................ 24, 25

Gorham Mfg. Co. v. White, 81 U.S. 511 (1871) ............................................................................................................................................... 23

H.H. Robertson, Co. v. United Steel Deck, Inc., 820 F.2d 384 (Fed. Cir. 1987) .............................................................................................................................. 35

Horizon Meml Group, LLC v. Bailey, 280 S.W.3d 657 (Mo. Ct. App. 2009) .................................................................................................................. 29


21953209v1 iii

Hybritech Inc. v. Abbott Labs., 849 F.2d 1446 (Fed. Cir. 1988) ............................................................................................................................ 23

Interbake Foods, LLC v. Tomasiello, 461 F. Supp. 2d 943 (N.D. Iowa 2006) .......................................................................................................... 34, 35

Inwood Labs, Inc. v. Ives Labs., Inc., 456 U.S. 844 (1982) ............................................................................................................................................. 36

Kessler-Heasley Artifical Limb, Co. v. Kenney, 90 S.W.3d 181 (Mo. Ct. App. 2002) .................................................................................................................... 26

Keveney v. Missouri Military Academy, 304 S.W.3d 98 (Mo. 2010) ................................................................................................................................... 28

L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117 (Fed. Cir. 1993) ............................................................................................................................ 24

Learning Curve toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714 (7th Cir. 2003) ......................................................................................................................... 25, 26

Modern Controls v. Andreadakis, 578 F.2d 1264 (8th Cir. 1978) .............................................................................................................................. 28

Motorola, Inc. v. Alexander Mfg. Co., 786 F. Supp. 808 (N.D. Iowa 1991) ..................................................................................................................... 31

Pfizer, Inc. v. Teva Pharms., USA, Inc., 429 F.3d 1364 (Fed. Cir. 2005) ............................................................................................................................ 23

R.J. Reynolds Tobacco Co. v. Phillip Morris, Inc., 60 F. Supp. 2d 502 (M.D. N.C. 1999) .................................................................................................................. 31

Rauch Indus., Inc. v. Radko, 2007 WL 3124647 (W.D. N.C. Oct. 25, 2007)............................................................................................... 31, 33

Rubbermaid Commercial Prods. v. Contico Intl, Inc., 836 F. Supp. 1247 (D. Minn. 2000) ...................................................................................................................... 34

Sigma Chemical Co. v. Harris, 586 F. Supp. 704 (E.D. Mo. 1984) ................................................................................................................. 26, 36

Smith Intl, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983) ............................................................................................................................ 36

Stehno v. Sprint Spectrum, L.P., 186 S.W.3d 247 (Mo. 2006) ................................................................................................................................. 29

Titan Tire Corp. v. Case New Holland, Inc., 2007 U.S. Dist. LEXIS 74173 (S.D. Iowa Oct. 3, 2007) ................................................................................ 31, 32

Uncle Bs Bakery, Inc. v. ORourke, 920 F. Supp. 1405 (N.D. Iowa 1996) ................................................................................................................... 26


21953209v1 iv

Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) ................................................................................................................................................. 23

Statutes

35 U.S.C. 282 ........................................................................................................................................................... 23

Mo. Rev. Stat. 417.453 ....................................................................................................................................... 25, 27

Mo. Rev. Stat. 417.455.1 .......................................................................................................................................... 25


21953209v1 1

Plaintiffs APT Group, Inc. d/b/a MotoVox and APT IP Holdings, LLC (MotoVox or

Plaintiffs) by and through counsel, request that the Court enter a Preliminary Injunction to

enjoin Defendants Monster Moto, LLC, Olen Rice, Robert A. Rice, Sr., John Umsted, and

Kenneth Francis (Defendants) from their continued and ongoing violation of Plaintiffs rights

under the Lanham Act and applicable contracts.

I. INTRODUCTION

MotoVox is an innovator in the motorsports industry. Recently, it invested heavily in

redesigning the traditional motorized minibike, and the result was a high-quality minibike with

an innovative design that was awarded design patent protection for the minibikes frame and

associated features (Frame Design). In 2011, MotoVox released various models of its

minibikes using the Frame Design (the MBX Minibikes). The MBX Minibikes were an

instant market successestablishing MotoVox as the dominant player in the motorized minibike

market.

Defendants Olen Rice, Robert Rice, John Umsted, Kenneth Francis, and Beck Salander

all served as MotoVox officers, employees, or contractors during the redesign and launch of the

MBX Minibikes. Together, these five men had access to the full gamut of MotoVoxs trade

secrets related to the design and manufacture of the MBX Minibikes.

In the spring of 2013, all five men left MotoVox and began working for or providing

services to its competitor, Monster Moto, which had never before manufactured or sold a

motorized minibike. Only months later, Monster Moto introduced to the market a lower-quality

knockoff minibike in a design that clearly copies MotoVoxs patented Frame Design (Infringing

Products). Almost immediately, MotoVox began receiving complaints from confused and


21953209v1 2

angry consumers, and the confusion has only increased while sales of MBX Minibikes have

plummeted. The harm to MotoVox is irreparable, and includes reputational harm and lost

customer goodwill; loss of exclusive market territory, market share, brand image, and ability to

innovate; and loss of control of its trade secrets and related competitive advantage.

The peak sales season for minibikes (October to December) is rapidly approaching, and

Defendants are receiving shipments of thousands of Infringing Products now. If not enjoined,

Defendants will flood the market with Infringing Products, and MotoVox will be unable to

recover its reputation or market share. By this Motion, Plaintiffs seek a preliminary injunction to

prevent that from happening. Specifically, they ask the Court to enjoin Defendants from

advertising or making any further sales of the Infringing Products, from any further disclosure of

MotoVoxs trade secrets, from any further breach of their contractual obligations, and from any

further interference with MotoVoxs business expectancies with Kmart, Sears, Costco, Alco and

all other retail customers.

II. STATEMENT OF FACTS

A. Introduction

1. For many years, MotoVox1 has designed, manufactured and sold high quality

motorized minibikes, go-karts, scooters and electric junior motorbikes using the MOTOVOX

trademark. Declaration of Troy Covey (Covey Decl.) at 3.

2. In June 2011, MotoVox introduced to the market a line of minibikes using the

model numbers MBxXSe, MBX10, MBX11, MBX12; in 2014, it released the MBX20 (the

MBX Minibikes). Id. at 4.

1 Up until 2014, American Performance Technologies, LLC (APT) owned a majority of APT Powersport and Utility Products, LLC (APTPU). In early 2014, APT and APTPU merged into MotoVox, and MotoVox became the successor-in-interest to APT and APTPU.


21953209v1 3

3. The MBX Minibikes were a revolutionary redesign of the traditional motorized

minibike design, which had not substantively changed for decades. Id. at 5.

4. To protect its revolutionary design, MotoVox2 sought and received a design

patent from the United States Patent and Trademark Office (PTO) covering the MBX Minibike

frame. The patent was assigned U.S. Design Patent No. D689,798 (798 Patent). Id. at 6;

See also Ex. E to Amended Complaint, Dkt. 4-5.

5. In about March 2014, Defendant Monster Moto, LLC (Monster Moto), with the

aid of five former MotoVox employees (Defendant Employees) introduced to the market a line

of motorized minibikes in a design that clearly copies MotoVoxs patented Frame Design

(Infringing Products). Defendants were able to copy the Frame Design and manufacture a

knockoff of the MBX Minibikes in the form of the Infringing Products in a very short time based

on their access to and misappropriation of MotoVoxs trade secrets. In willful violation of the

Lanham Act and their contractual obligations, Defendants have sold and are selling the

Infringing Products. Id. at 8.

B. The MBX Minibike Design and MotoVoxs Intellectual Property Rights

6. MotoVox entered the motorized sports market in 2011. At that time, no one in

the market had undertaken any substantive design development of the traditional motorized

minibike for decades. As a result, the motorized minibike that was available in 2010 was

basically the same in design and quality (which was relatively poor) as a motorized minibike that

was available in 1980. Covey Decl. at 10.

7. When MotoVox entered the market, its company mission was (and remains) to

design and innovate motorsports products. Its goal was to provide the most innovatively

designed, aesthetically-pleasing, technically-advanced, and highest quality motorized minibikes, 2 APT IP Holdings, LLC is the owner of the 798 Patent. MotoVox is the licensee for the patent.


21953209v1 4

go-karts, scooters, and electric junior motorbikes in the world. That mission guides every

product MotoVox designs, manufactures, and sells. Id. at 11.

8. As a result of MotoVoxs mission, it has a strong reputation among retailers and

customers. Customer satisfaction rates are very high, as demonstrated by strong customer

reviews. MotoVoxs customers are willing to pay more for its products because they are of such

high quality. Id. at 12.

9. MotoVox has become the dominant player in the motorized sports market,

specifically dominating the minibike market, where its reputation is particularly strong and

where it sells more than any of its competitors. MotoVox earned its place in the minibike

market, in large part, by innovating in design and quality in ways no other competitor had. Id. at

13.

10. In about 2010, MotoVox recognized the market potential for redesigning and

improving the quality of the traditional motorized minibike (the Redesign Project). Id. at 14.

11. The Redesign Project required significant investment in time and resources. It

began with designing and engineering the MBX Minibike and incorporated the entire

manufacturing process, including establishing a supply chain for parts and materials, tooling,

production, transportation, and warehousing. MotoVox created and owns original tooling, jigs,

and molds that are unique to the MotoVox design and that required significant investment to

create. As part of the Redesign Project, MotoVox researched and analyzed high quality

materials and parts for use in the MBX Minibikes and implemented stringent quality controls to

ensure that the MBX Minibikes would be safe, without defects, and would last customers for

years. MotoVox specifically designed the frame for improved rider safety, including changing


21953209v1 5

the rider height frame and other changes improving the frames strength, durability, and

functionality. The Redesign Project took about twelve months to complete. Id. at 15.

12. As a result of the Redesign Project, MotoVox created the MBX Minibike whose

patented Frame Design is markedly different from the traditional motorized minibike in several

respects, namely, changes to the angle of the handlebar risers (which angle forward, towards the

rider), stylized fenders, foot pegs, engine, kickstand, a stylized red/black two-toned seat, and a

revolutionary black teardrop frame design with an attached number plate, unique riding height,

wheel front to rear dimensions, chain tensioner, engine position in frame, and many other small

parts like handle bar clamps, brakes, and throttle . MotoVox implemented this design in

connection with several model numbers, including the MBxXSe, MBX10, MBX11, MBX12, and

MBX20 (the MBX Minibikes). Id. at 16 and Exhibit A thereto. See also Exs. A & B to the

Amended Complaint, Dkt. 4-1, 4-2 (depicting features of the redesigned MBX Minibike and the

traditional minibike).

Traditional Minibike Redesigned MBX Minibike

13. No competitor in the field of motorized sports had ever manufactured or sold

anything substantially similar to the MBX Minibikes. Therefore, MotoVox was the first to enter

the market with the MBX Minibike design, and recognizing the value of it, MotoVox sought to

protect the design with a design patent. Covey Decl. at 18.


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14. The PTO granted a design patent for the proprietary Frame Design of the MBX

Minibike as shown in United States Design Patent No. D689,798. Id. at 19; see also Ex. E to

Amended Complaint, Dkt. 4-5.

15. The Frame Design of the MBX Minibike is proprietary to MotoVox and provides

MotoVox with broad intellectual property protections. APT IP Holdings, LLC owns all right,

title and interest in and to the Design Patent and has licensed it to MotoVox. Id. at 20, 6.

16. The unique Frame Design of the MBX Minibike and high quality allows

MotoVox to differentiate itself from among the entire field of competitors in the motorized

minibike market. Id. at 21.

17. MotoVox uses the MOTOVOX name in connection with the MBX Minibikes,

including in advertising and direct branding of the minibikes. MotoVoxs name represents a

source of high quality, well-designed products. Id. at 22.

18. MotoVox introduced the MBX Minibikes to the market in June 2011. They were

offered for sale through the MotoVox website and major retailers, including Kmart, Sears,

Costco, and Alco. Upon their introduction, the MBX Minibikes were an immediate commercial

success, enjoying impressive sales. In 2011, sales of the MBX Minibikes totaled $4.6 million; in

2012, they totaled $5.9 million; and in 2013, they totaled $4.7 million. Id. at 23.

19. Kmart, Sears, Costco, and Alco are MotoVoxs chief retailer customers for the

MBX Minibikes. Sales through these combined retailers constitutes approximately 80% of

MotoVoxs total MBX Minibike sales, annually. Id. at 24.

20. Sales of MBX Minibikes (and other motorsports products) are seasonal.

MotoVox receives the greatest market exposure with consumers and sell 60%70% of its total


21953209v1 7

minibikes during the fourth quarter, leading up to and including the Christmas shopping season

(October December). Id. at 25.

21. Given the initial sales success of the MBX Minibike, MotoVox expected to

realize $6$7 million in sales in 2014. Id. at 26.

C. MotoVoxs Trade Secrets and The Defendant Employees Misappropriation

22. MotoVox has certain trade secrets relating to the MBX Minibike that include but

are not limited to design information (Design Secrets); customer and sales information (Sales

Secrets); and pricing and manufacturing information (Manufacturing Secrets) (together,

Trade Secrets). Covey Decl. at 27.

23. MotoVoxs Design Secrets include the technical data and processes associated

with the design and engineering of the MBX Minibike, which was the first-of-its-kind and was

awarded a design patent for the Frame Design. Id. at 28.

24. MotoVoxs Sales Secrets include selective accumulation of information about

MotoVoxs MBX Minibike customers and sales process that are not generally known to the

public. Id. at 29.

25. MotoVoxs Manufacturing Secrets include the technical and non-technical data,

methods, techniques, and processes related to the manufacturing of the MBX Minibike. This

information is derived from years of experience, incredible investment, and represents some of

MotoVoxs most closely guarded and valuable trade secrets. Id. at 30.

26. The Trade Secrets are of high economic value to MotoVox, and therefore, it

protects them from public disclosure. For example, MotoVox requires employees and

independent contractors (Employees) to sign Service or Employment Agreements

(Agreements) that identify and define the Trade Secrets and require the Employee not to

disclose them (Trade Secret Provision), as follows:


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[Employee] recognizes and acknowledges that in providing services to [MotoVox], he will become possessed of certain trade secrets and other valuable and confidential information concerning matters affecting or relating to the business of [MotoVox] and [its] customers. Such information may include, but is not limited to the names, addresses, and telephone numbers of customers and prospective customers of [MotoVox], the terms (including price terms) of contractual relations with such customers; the requirements of such customer or prospects; customer lists; financial, tax-related and/or personnel information regarding [MotoVox] and/or [its] customers; prospect lists; contact lists; contacts; processes and technology used in connection with [MotoVoxs] services; computer-stored data; plans, specifications and programs; and other information that is relating to [MotoVoxs] business methods and activities, customers, suppliers, vendors, personnel, personnel policies, consultants, agents, affiliates, assets, procedures, technical needs, developments, know-how, projects, sales methods, marketing policies, plans, strategies and/or practices, operative policies and pricing formulas and strategies. [Employee] recognizes and acknowledges that such information is valuable, special and essential to the successful and effective conduct of [MotoVoxs] businesses, and has been developed or acquired by Company and APT at their own substantial cost and expense. Therefore, [Employee] shall not, either during the term of this Agreement or anytime thereafter, use any of [MotoVoxs] trade secrets or confidential information, or disclose, divulge or otherwise communicate any of [MotoVoxs] trade secrets or confidential information to any person, corporation, firm, company or business entity other than [MotoVox], for any reason or purpose whatsoever, except as necessary to perform services for [MotoVox] or as may be required by applicable law or authorized by the prior written consent of [MotoVox]. Further, upon the termination of this Agreement, regardless of reason, [Employee] shall promptly return to [MotoVox] any and all written materials, documents, plans, computer discs or other computer stored or generated material in his possession obtained or created as a result of providing services under this Agreement which relate to the business activities of [MotoVox] and/or [its] customers including any and all copies or reproductions thereof.

Id. at 31. See also Exhibit B to Covey Decl. (emphases added).


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27. Additionally, MotoVox does not allow confidential information to be printed or

sent digitally and informs all employees of the protocol to protect and keep secret its Trade

Secrets. Id. at 32.

28. In March 2010, MotoVox3 contracted with Olen Rice to provide independent

sales-related services. Mr. Rice owned a company called Northern Group that provided sales

coverage to big box retailers. Despite his status as an independent contractor, Mr. Rice was

given the title of Vice President of Sales at MotoVox. He was tasked with making introductions

between MotoVox and other sales representatives in the motorsports market. Id. at 33.

29. As a result of his position with MotoVox, Olen Rice had access to MotoVoxs

Trade Secrets, specifically with respect to market strategies and customer and sales information.

Id. at 34.

30. On December 28, 2012, Olen Rice signed a Service Agreement (the O. Rice

Agreement) with an effective date of March 23, 2010. Id. at 35. See also Exhibit B to Covey

Decl.

31. Pursuant to paragraph 8 of the O. Rice Agreement, Olen Rice agreed not to

interfere with MotoVox as follows (Non-Interference Provision):

While [Olen] Rice is providing services to [MotoVox] under this Agreement, Rice shall not willfully act contrary to the best interests of [MotoVox] in a manner that has a direct, material, adverse impact upon [MotoVox]. [Olen] Rice agrees that during the term of this Agreement, and for a period of one (1) year thereafter, he will not, either directly or indirectly, interfere with the ongoing employer/employee relationship with any of [MotoVoxs] employees by hiring or enticing any such employees to leave the employ of [MotoVox].

3 Olen Rice was hired by APT, LLC and APTPU, LLC and became a unit holder in both as a result of the Service Agreement he signed. When those entities were consolidated into MotoVox in 2014, Olen Rices units were converted to shares of MotoVox. MotoVox is the successor in interest to the Service Agreement signed by Olen Rice.


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Id. at 36. See also Exhibit B to Covey Decl.

32. Olen Rice further agreed to protect MotoVoxs trade secrets and other

confidential information as detailed in the Trade Secrets Provision:

[Olen] Rice recognizes and acknowledges that in providing services to [MotoVox], he will become possessed of certain trade secrets and other valuable and confidential information concerning matters affecting or relating to the business of [MotoVox] and [its] customers. Such information may include, but is not limited to the names, addresses, and telephone numbers of customers and prospective customers of [MotoVox], the terms (including price terms) of contractual relations with such customers; the requirements of such customer or prospects; customer lists; financial, tax-related and/or personnel information regarding [MotoVox] and/or [its] customers; prospect lists; contact lists; contacts; processes and technology used in connection with [MotoVoxs] services; computer-stored data; plans, specifications and programs; and other information that is relating to [MotoVoxs] business methods and activities, customers, suppliers, vendors, personnel, personnel policies, consultants, agents, affiliates, assets, procedures, technical needs, developments, know-how, projects, sales methods, marketing policies, plans, strategies and/or practices, operative policies and pricing formulas and strategies. [Olen] Rice recognizes and acknowledges that such information is valuable, special and essential to the successful and effective conduct of [MotoVoxs] businesses, and has been developed or acquired by Company and APT at their own substantial cost and expense. Therefore, [Olen] Rice shall not, either during the term of this Agreement or anytime thereafter, use any of [MotoVoxs] trade secrets or confidential information, or disclose, divulge or otherwise communicate any of [MotoVoxs] trade secrets or confidential information to any person, corporation, firm, company or business entity other than [MotoVox], for any reason or purpose whatsoever, except as necessary to perform services for [MotoVox] or as may be required by applicable law or authorized by the prior written consent of [MotoVox]. Further, upon the termination of this Agreement, regardless of reason, [Olen] Rice shall promptly return to [MotoVox] any and all written materials, documents, plans, computer discs or other computer stored or generated material in his possession obtained or created as a result of providing services under this Agreement which relate to the business activities of [MotoVox] and/or [its] customers including any and all copies or reproductions thereof.


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Id. at 37. See also Exhibit B to Covey Decl. (emphases added).

33. Olen Rice left MotoVox in June 2013. Immediately thereafter, he began

providing sales-related services to Monster Moto similar to those he provided to MotoVox. Id.

at 38.

34. In November 2010, MotoVox4 hired Richard (Tony) Ricebrother to Olen

Riceto provide independent sales-related services. Tony Rice was an employee of Northern

Group and worked for MotoVox as its sales manager, managing all aspects the relationships

between MotoVox and its key retailers, including Kmart, Sears, Costco, and Alco. Id. at 39.

35. As a result of his position with MotoVox, Tony Rice had access to MotoVoxs

Trade Secrets, specifically with respect to market strategies, sales information, pricing

information, and information specific to Kmart, Sears, Costco, and Alco. Id. at 40.

36. Tony Rice left MotoVox in May 2013. Immediately thereafter, he accepted the

position of Vice President of Sales with Monster Moto and began providing sales-related

services similar to those he provided to MotoVox. He was recruited to Monster Moto by his

brother, Olen Rice. Id. at 41.

37. In December 2011, MotoVox5 hired John Umsted to serve as the Executive Vice

President of Shared Services. In his position, Mr. Umsted oversaw the inside operations of

MotoVox, including customer service, warehousing, product service, and warranties. Id. at 42.

4 Tony Rice was hired by APT, LLC and APTPU, LLC and became a unit holder in both. When those entities were consolidated into MotoVox in 2014, Tony Rices units were converted to shares of MotoVox. 5 John Umsted was hired by APT, LLC and APTPU, LLC and became a unit holder in both. When those entities were consolidated into MotoVox in 2014, Mr. Umsteds units were converted to shares of MotoVox.


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38. As a result of his position with MotoVox, Mr. Umsted had access to MotoVoxs

Trade Secrets and obtained extensive knowledge of MotoVoxs supply lists, supply chain,

pricing, and bills of materials. Id. at 43.

39. Mr. Umsted left MotoVox in July 2013. Immediately thereafter, he accepted

employment with Monster Moto in the position of Vice President of Operations, providing

Monster Moto services similar to those he provided to MotoVox. Specifically, he oversees the

manufacture of Monster Motos infringing motorized minibikes. Id. at 44.

40. In March 2012, MotoVox6 hired Kenneth Francis to serve as the Vice President of

Product Development. In his position, Mr. Francis oversaw all new product design and

engineering, including the MBX Minibike, and developing MotoVoxs supply chain in Asia. Id.

at 45.

41. As a result of his position with MotoVox, Mr. Francis had access to MotoVoxs

Trade Secrets and obtained extensive knowledge of MotoVoxs Frame Design and the Chinese

suppliers and manufacturers of the MBX Minibikes. As the chief contact for MotoVoxs

Chinese suppliers and manufacturers, Mr. Francis had valuable personal relationships with them

as well as intimate knowledge of all relevant contracts and pricing information regarding the

MBX Minibikes. Id. at 46.

42. On March 31, 2012, Mr. Francis signed an Employment Agreement (the Francis

Agreement). Id. at 47. See also Exhibit C to Covey Decl.

6 Kenneth Francis was hired by APT, LLC and APTPU, LLC and became a unit holder in both as a result of the Employment Agreement he signed. When those entities were consolidated into MotoVox in 2014, Mr. Franciss units were converted to shares of MotoVox. MotoVox is the successor in interest to the Employment Agreement signed by Mr. Francis.


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43. The Francis Agreement included the Non-Interference Provision (in 8) and

Trade Secrets Provision (in 11). They are identical to the provisions set forth in the Service

Agreement. Id. at 48.

44. Mr. Francis voluntarily resigned from MotoVox in July 2013. Immediately

thereafter, he accepted a position as a consultant with Monster Moto, providing Monster Moto

the same type of services he provided to MotoVox. Specifically, he oversees relationships and

contracts with Monster Motos Chinese suppliers and manufacturers who are without

coincidenceexactly the same as MotoVox uses for its MBX Minibikes. Id. at 49.

45. In March 2012, MotoVox hired Beck Salander. As a result of his position with

MotoVox, Mr. Salander had access to MotoVoxs Trade Secrets and obtained extensive

knowledge of MotoVoxs manufacturing process, compliance, quality control, and production

schedules in China regarding the MBX Minibikes. Id. at 50.

46. Mr. Salander voluntarily resigned from MotoVox in June 2013. Immediately

thereafter, he accepted employment with Monster Moto, providing services similar to those he

provided to MotoVox. Id. at 51.

47. Messrs. Olen and Tony Rice, Umsted, and Francis (Defendant Employees7) left

MotoVox within four months of each other. They all began working for Monster Moto almost

immediately thereafter. Id. at 52.

48. At no time did MotoVox consent to the disclosure of its Trade Secrets. At no

time did any of the Defendant Employees inform MotoVox of their plans or intention to begin

providing services to Monster Moto. Id. at 53.

7 Mr. Salander also left MotoVox in the same time frame, but given MotoVoxs inability to serve Mr. Salander in China, MotoVox is not seeking preliminary injunctive relief against him at this time.


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49. The combined knowledge of the Defendant Employees with respect to the MBX

Minibike is comprehensive. Together, they have the knowledge necessary to manufacture a

competing product using a frame almost identical to the Frame Design of the MBX Minibike,

market and sell it to the same customers through the same retail channels, and do it in a fraction

of the time it took MotoVox. That is exactly what they have done. Id. at 54.

D. Defendants Bad Acts

50. Monster Moto has competed with MotoVox in the motorsports marketplace since

2014, when the Defendant Employees joined Monster Moto. Monster Moto is now MotoVoxs

chief competitor in the motorized minibike segment of the market. Id. at 55.

51. Before MotoVox released the MBX Minibike, Monster Moto did not offer a

motorized minibike. Within about nine months of Defendant Employees leaving MotoVox, they

launched a competing company, Monster Moto, and released the MMB80, one of the Infringing

Products. Monster Moto had never offered a motorized minibike for sale prior to 2014. Id. at

56.

52. As shown in the images below, the Infringing Product imitates MotoVoxs Frame

Design in several respects, including the angled handlebars, foot pegs, engine, kickstand, back

wheel, and seat. Monster Motos only alterations to the Frame Design include slight changes to

the stylized fenders and teardrop frame. Id. at 57. See also Exhibit D to Covey Decl. The

design of the Infringing Product clearly copies the Frame Design when considering both as a

whole.


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MBX Minibike Protected Design Infringing Product

Overlay of Infringing Product Atop Protected Design8

53. The Infringing Product looks substantially the same as the MBX Minibike and,

given its lower quality parts and lack of quality control, sells for much less. Id. at 58; Exhibit

D to Covey Decl.

54. In addition to looking substantially similar, and in order to further copy the MBX

Minibike, Defendants adopted a trademark that is similar to the MOTOVOX Mark: MONSTER

MOTO. Id. at 59.

55. MotoVox has never given authorization to Defendants to make, use, offer to sell,

promote, distribute, sell or import into the United States the Infringing Products. Id. at 60.

56. MotoVox has never given authorization or license to Defendants to use its Mark

or any confusingly similar variation thereof on the Infringing Products. Id. at 62.

57. It is inconceivable that Defendants could have designed and manufactured a

design so substantially to the Frame Design so quickly without using MotoVoxs Trade Secrets.

It took MotoVox twelve months to create the Frame Design and manufacture the MBX Minibike

8 The blue background represents the protected Frame Design while the green overlay represents the MMB80 Knockoff Product design. Very little blue appears to differentiate the designs because the Knockoff Product is so substantially similar to the Frame Design.


21953209v1 16

and took Monster Moto only a fraction of that9 time to create the knockoff Infringing Products.

Id. at 62.

58. It also is inconceivable that the Defendant Employees can successfully perform

their duties at Monster Moto without using MotoVoxs Trade Secrets. They are tasked with

performing almost identical duties for Monster Moto as they performed for MotoVox, and

Monster Moto is a direct competitor of MotoVox. There simply is no way Defendant Employees

can provide Monster Moto with product design, engineering, manufacturing, marketing, sales,

and strategy services without relying on MotoVoxs Trade Secrets in violation of their Service

Agreements and related obligations as employees. Id. at 63.

59. MotoVox has learned that Messrs. Rice have contacted Kmart, Sears, and Alco

and reached agreements with them to sell the Infringing Product as a competitor to the MBX

Minibike. This directly breaches their contractual obligations, creates interference with

MotoVoxs existing customers, and has resulted in lost sales and opportunities to MotoVox. Id.

at 64.

60. MotoVox has learned that Messrs. Umsted and Francis are using the same

suppliers and manufacturers in China to produce the Infringing Product as MotoVox uses for the

MBX Minibike. Specifically, Zhejiang Shengqi Motion Apparatus Co., Ltd.a former

manufacturer for MotoVoxs MBX Minibikeis engaged in manufacturing Infringing Products

for Monster Moto using MotoVoxs tooling and designs. Id. at 65.

61. Defendants are not implementing any of the quality controls used by MotoVox in

the manufacturing process, nor are they using the same high-quality parts or materials. This is

how they are able to sell the Infringing Product at about half the price of the MBX Minibikes.

9 It took Defendants about nine months to establish Monster Moto. Defendants spent only a fraction of that time creating the knockoff Infringing Product.


21953209v1 17

These lower-quality minibikes result in defective and even potentially dangerous products that

are of far lower quality than the MBX Minibikes. Id. at 66.

62. Defendants ongoing infringement and other bad acts are willful and unjustifiable.

Id. at 67.

63. Defendants refused to cease selling the Infringing Products and continue to do so.

Id. at 68.

64. By their actions, the Defendant Employees have violated the Non-Interference

and Trade Secrets Provisions of their Agreements and breached their contractual and fiduciary

duties to MotoVox. Id. at 69.

65. Defendant Employees have willfully stolen MotoVoxs Trade Secrets to create a

lower-quality, cheaper product that looks substantially the same as the Frame Design of the

MBX Minibike and bears a similar trademark and have done so with the intent of taking sales,

customers, and market share from MotoVox and confusing the public. Id. at 70.

E. MotoVox Will Suffer Irreparable Harm in the Absence of an Injunction

66. If Monster Moto is allowed to continue selling its Infringing Products, it will

irreparably harm MotoVox in a number of ways. Covey Decl. at 71.

67. First, MotoVox will suffer harm in the form of customer confusion and lost

goodwill. Almost immediately following Monster Motos introduction of the Infringing Product

to the market, MotoVox began receiving complaints from confused customers. For example,

Ms. Lola Gaisford called and emailed MotoVox to complain about the confusion caused by the

Infringing Products. Ms. Gaisford purchased three minibikes, assuming she was purchasing

identical bikes manufactured by the same company. In reality, she had purchased two Knockoff

Monster Moto Products and only one MBX Minibike. Given their substantial similarity in

appearance and confusingly similar trademarks, she did not immediately recognize any


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difference when she received them. But after riding the Infringing Product for a short time, the

front forks bent. When Ms. Gaisford looked for a telephone number to report and complain

about the defect, she still did not realize the difference in the source of the products, and simply

found the MotoVox packaging and called MotoVox. Only after explaining the defect to

MotoVox did she realize the Knockoff Product was different from the MBX Minibike and came

from a different source. Id. at 72.

68. The front fork of the minibike is a critical part. Any bending in the front fork is a

sign of faulty welding or poor metal specifications which MotoVox has guarded against by

investing in expensive instruments and implementing quality controls. Defects of this kind are

the result of lack of quality control and/or the use of low-quality parts. Defects like this not only

harm MotoVoxs reputation when customers are confused about the source of the product, but

they also pose safety risks to riders. Id. at 73.

69. As another example of confusion, on June 15, 2014, Jan Simpson emailed

MotoVox to express that he was pretty perturbed after going to Alco, one of MotoVoxs

largest minibike retailers, to purchase an MBX Minibike (MBX11). The MBX11 was out of

stock and Alco promised to order the MBX11 for Mr. Simpson. Alco ordered an Infringing

Product instead and delivered it to a very disappointed Mr. Simpson. He wrote to Alco to

express my own concern about the situation and to inform Alco of the significant confusion

already occurring in the market. Id. at 74. See also Exhibit E to Covey Decl.

70. As yet another example, Stephen Johnson posted on Monster Motos Facebook

page that their Knockoff Products look like rip offs of MotoVoxs MBX Minibike designs.

And on MotoVoxs Facebook page, Mr. Johnson asked if Monster Moto was a subsidiary of

MotoVox, given the substantial similarity in the appearance of the Knockoff Products and MBX


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Minibikes. Mr. Johnson has no relationship to anyone at MotoVox, and his comments were

unsolicited but represent the inevitable market confusion and harm to MotoVox. Id. at 75. See

also Exhibit F to Covey Decl.

71. In addition to these few examples, Mr. Covey, President of MotoVox, is

personally aware of other examples of customers who have expressed confusion about the source

of the MBX Minibikes and/or unhappiness with the low quality of the Infringing Products. Id. at

76.

72. This confusion represents irreparable harm to MotoVoxs reputation and the

goodwill it has built among consumers. As the example of Mr. Gaisford demonstrates,

customers are easily confused about the source of the Infringing Products, and because those

product are of lower-quality, customers are likely to attribute that standard to MotoVox rather

than Monster Moto. This will tarnish MotoVoxs reputation and goodwill if not enjoined. Once

a customer considers MotoVox to provide low-quality or even dangerous products, it is unlikely

to ever be able to repair that reputationespecially if the customer never realizes they were

confused about the source in the first place. Id. at 77.

73. Though MotoVox has heard from many confused customers, there are many

others with whom MotoVox will not have the opportunity to communicate, to clarify the

confusion, or to mend its reputation, further adding to the irreparable harm to MotoVox. Id. at

78.

74. Second, MotoVox stands to lose control of its brand image given the low quality

of the Infringing Products. MotoVoxs founding vision and subsequent hard-earned reputation is

as a provider of high-quality, innovative products and commitment to the satisfaction of its

customers. If Defendants are not enjoined from selling their lower-quality Infringing Products,


21953209v1 20

MotoVox cannot control its brand image. That loss of control constitutes irreparable harm. Id.

at 79.

75. Third, MotoVox is suffering market-based harm. MotoVox invested heavily to

design and manufacture the MBX Minibike and is entitled to the exclusive market territory for

its protected Frame Design. The MBX Minibikes and Infringing Products travel in the same

market channels (including Kmart, Sears, Alco, and the internet) to the same consumers. If

Monster Moto is allowed to continue offering the Infringing Products using a confusingly similar

trademark, MotoVox will lose its investment, its earned exclusive territory, and Monster Moto

will gain market share to which it is not entitled. Once Monster Moto has that market share,

MotoVox may not be able to regain it, even if a permanent injunction issues. Id. at 80.

76. MotoVox already has suffered significant loss of market share and sales: it has

lost $2.5$3.5 million in MBX Minibike revenue in 2014 alone and the sales are trending

downthe exact opposite of the upward trajectory that existed before the Infringing Products

were introduced to the market. Additionally, orders for the MBX Minibike by Sears and Kmart

are down by one-third to one-half over historical averages. Representatives of Sears and Kmart

have verbally confirmed to MotoVox that they have shifted some of that business to Monster

Moto. Alco also has significantly decreased its orders from MotoVox since Monster Moto

introduced the Infringing Product. That is market share MotoVox may never regain, and that

constitutes irreparable harm. Id. at 81.

77. MotoVoxs sales are seasonal. It realizes about 60%70% of its total annual sales

in the fourth quarter during the holiday shopping season. If Monster Moto is allowed to sell its

Infringing Products during the critical fourth quarter, they will gain market exposure and

customers to which they are not entitled and MotoVox may never be able to recover that market


21953209v1 21

share or customers. Indeed, the MBX Minibike design was so unique that it allows MotoVox to

differentiate itself by design alone. If the market is inundated with Monster Motos Infringing

Products during the busiest advertising/sales quarter of the year, MotoVox will lose its ability to

differentiate itself by its protected Frame Design. Additionally, other competitors may be

incentivized to enter the market, create their own knock-offs, and destroy all value of the Frame

Design. Id. at 82.

78. Additionally, MotoVox recently learned that Monster Moto shipped 1,500

Infringing Products from China to the U.S. in March and April and about 6,000 in May and June.

MotoVox is certain that Monster Moto will be shipping many more Infringing Products in the

next 60 days. Though MotoVox is unable to determine precisely how many are going to Kmart,

Sears, and Alco, these retailers have ordered less than half of the orders they made in 2011 and

2012 from MotoVox for MBX Minibikes. Id. at 83.

79. In addition, MotoVox sells many other motorized products, including go-karts,

scooters, and generators. The MBX Minibikes are likely to bring in customers, allowing

MotoVox to establish customer relationships and make sales of other products and accessories.

Lost opportunities with these customers cannot be quantified. Id. at 84.

80. MotoVox also planned to innovate with new products based on the success of the

MBX Minibikes. If Defendants are not enjoined, MotoVox may not have the financial ability to

innovate or the confidence that its innovations will be worth the investment if they are easily

stolen and pilfered by competitors. Id. at 85.

81. Fourth, the harm to MotoVoxs competitive standing against Monster Moto as a

result of Defendant Employees misappropriation of trade secrets is irreparable. That

misappropriation has resulted in the harms identified above and will result in MotoVoxs lost


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competitive advantage. Possessing MotoVoxs Trade Secrets in the hands of five of its former

high level employees/executives, Monster Moto will have an unfair, significant competitive

advantage that MotoVox may never regain. Indeed, the economic value of the Trade Secrets is

clearly demonstrated by the fact that once they were misappropriated, Defendants realized

significant sales and market success through the use of those secrets to create a lower-cost

knockoff in the form of the Infringing Products. Id. at 86.


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ARGUMENT

I. PRELIMINARY INJUNCTION STANDARD

In considering a motion for preliminary injunction, the court weighs (1) the reasonable

likelihood of success on the merits; (2) whether the [plaintiff] will suffer irreparable harm if

preliminary relief is not granted; (3) the balance of hardships, and (4) whether there will be an

adverse impact on the public interest. Winter v. Natural Res. Def. Council, 555 U.S. 7, 20

(2008); Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109 (8th Cir. 1981). MotoVox

satisfies each factor with respect to each claim against Defendants.

II. MOTOVOX IS LIKELY TO SUCCEED ON EACH OF ITS CLAIMS

A. MotoVox Is Likely To Succeed on Its Patent Infringement Claim

A preliminary injunction enjoining patent infringement involves substantive matters

unique to patent law and, therefore, is governed by the law of th[e Federal Circuit]. Hybritech

Inc. v. Abbott Labs., 849 F.2d 1446, 1451 n.12 (Fed. Cir. 1988). The standard for establishing

likelihood of success is whether success is more likely than not. Id.

To prevail on a design patent infringement claim, a plaintiff must show that the defendant

infringed a valid and enforceable patent. Pfizer, Inc. v. Teva Pharms., USA, Inc., 429 F.3d

1364, 1372 (Fed. Cir. 2005). A federally-issued patent enjoys the presumption of validity. 35

U.S.C. 282. The PTO has granted a federally-issued patent for the MBX Minibike design. See

Ex. E to Amended Complaint, Dkt. 4-5. Because the 798 Patent is presumed valid, a heavy

burden shifts to Defendants who can establish invalidity only by clear and convincing

evidence. Apotex USA, Inc. v. Merck & Co., Inc., 254 F.3d 1031, 1036 (Fed. Cir. 2001).

Once a valid patent is asserted, as it is here, the only remaining question is whether it has

been infringed. To determine design patent infringement, courts apply the ordinary observer

test. Gorham Mfg. Co. v. White, 81 U.S. 511, 528 (1871). Pursuant to that test, infringement


21953209v1 24

exists when, in the eye of an ordinary observer, giving such attention as a purchaser usually

gives, two designs are substantially the same, if the resemblance is such as to deceive such an

observer, inducing him to purchase one supposing it to be the other, the first one patented is

infringed by the other. The ordinary observer test is the sole test for determining

infringement. Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 678 (Fed. Cir. 2008). Thus,

the court must not parse the design into points of novelty. Id. at 672. Additionally, [i]n

conducting [infringement] analysis, the patented design is viewed in its entirety, as it is claimed.

L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1125 (Fed. Cir. 1993) (emphasis added).

The Frame Design covered by the798 Patent is an ornamental design for a minibike

and includes seven figures depicting the protected Frame Design. See Ex. E to Amended

Complaint, Dkt. 4-5. Monster Motos Infringing Product copies MotoVoxs Frame Design in

several respects, including the angled handlebars, foot pegs, engine, kickstand, back wheel, and

seat. Covey Decl. at 57. The only alterations to the Frame Design include slight changes to the

stylized fenders and teardrop frame, which are not sufficient to defeat the ordinary observer test.

See, e.g., Exs. B, C, D to Amended Complaint. See, e.g., Crocs, Inc. v. Intl Trade Commn, 598

F.3d 1294, 1303-06 (Fed. Cir. 2010) (finding infringement of shoe design patent despite minor

differences of wider shoe front with an additional row of holes and square holes rather than

rounded holes on the top of). Even the most cursory review establishes that when viewed as a

whole by an ordinary observer, the frame and related features of the Infringing Products appear

substantially the same as the Frame Design in the MBX Minibikes. In fact, ordinary

observers/consumers have already judged the products to be so substantially similar they have

been induc[ed] to purchase [a Monster Moto bike] supposing it to be the other MBX Minibike.


21953209v1 25

Egyptian Goddess, 543 F.3d at 683. See Covey Decl. at 75-77. That is the key test of design

patent infringementand it clearly is met here.

B. MotoVox is Likely to Succeed on its Trade Secrets Claim

Under the Missouri Uniform Trade Secrets Act (MUTSA), misappropriation of trade

secrets may be enjoined. Mo. Rev. Stat. 417.455.1. A claim has three elements: (1) a trade

secret exists, (2) the defendant misappropriated the trade secret, and (3) the plaintiff is entitled to

either damages or injunctive relief. Id. at 417.453, 417.455. MotoVox satisfies each element.

1. A Trade Secret Exists

Pursuant to the MUTSA, a trade secret is information or data that (a) derives

independent economic value, actual or potential, from not being generally known to, and not

being readily ascertainable by proper means by other persons who can obtain economic value

from its disclosure or use; and (b) is the subject of efforts that are reasonably under the

circumstances to maintain its secrecy. Mo. Rev. Stat. 417.453(4). MUTSA defines trade

secrets as including information, including but not limited to, technical or nontechnical data, a

formula, pattern, compilation, program, device, method, technique, or process. Id. 417.453.4.

First, the Frame Design of the MBX Minibike is a trade secret (Design Secret). Covey

Decl. at 28. [I]t is commonly understood that if an invention has sufficient novelty to be

entitled to patent protection, it may be said a fortiori to be entitled to protection as a trade

secret. Learning Curve toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 724 (7th Cir. 2003)

(citation omitted) (finding design of toy train track constituted a trade secret, in part, based on

patent and because it allowed plaintiff to differentiate itself from a host of competitors).

Here, the 798 patent establishes that the Design Secret is entitled to trade secret

protection. See Ex. E to Amended Complaint; Covey Decl. at 19. Additionally, the Frame


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Design of the MBX Minibikes is so unique that, when introduced to market, it allowed MotoVox

to differentiate itself from a host of competitors. Id. at 21.

Second, MotoVoxs customer and sales information is a trade secret (Sales Secrets)

because it contains a selective accumulation of information based on past selling experience

[and] . . . considerable time and effort have gone into compiling them. Kessler-Heasley

Artifical Limb, Co. v. Kenney, 90 S.W.3d 181, 188 (Mo. Ct. App. 2002). Id. at 29.

Third, the pricing and manufacturing information constitutes a trade secret

(Manufacturing Secrets) as it is comprised of the technical and non-technical data, methods,

techniques, and processes necessary for manufacturing the first-of-its kind MBX Minibike.

Covey Decl. at 30. See also Uncle Bs Bakery, Inc. v. ORourke, 920 F. Supp. 1405, 1412-13

(N.D. Iowa 1996) (recognizing recipes and manufacturing and packaging processes as trade

secrets). Additionally, MotoVoxs knowledge of and information regarding the suppliers, parts,

tooling, and pricing necessary to manufacture the MBX Minibike are not known to the public

and were derived from years of experience, incredible investment, and represent some of

MotoVoxs most closely guarded and valuable trade secrets. Covey Decl. at 30. See Sigma

Chemical Co. v. Harris, 586 F. Supp. 704, 710 (E.D. Mo. 1984) (finding trade secret in

knowledge regarding suppliers and pricing that was based on years of experience and testing).

The proper criterion [for establishing economic value of a trade secret] is not actual

use but whether the trade secret is of value to the company. Learning Curve, 342 F.3d at

728. In finding that value established, the court noted that a patent owner derives value from

mere control of its patent as well as from sales of the relevant products. Id. The same is true

here. Prior to Defendants misappropriation, MotoVox derived significant economic value from

the Trade Secrets by being the first to market with the newly-designed, high quality MBX


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Minibike and realizing significant market success. Id. at 23. Similarly, when Defendants

introduced their Infringing Products, MotoVoxs sales fell while Defendants rose, and that trend

continues. Id. at 81. The Trade Secrets are valuable to MotoVox and Defendants alike.

Therefore, MotoVox has taken reasonable steps to protect the Trade Secrets, in part, by requiring

certain employees to sign Agreements containing the Trade Secrets Provision. See, e.g., A.B.

Chance Co. v. Schmidt, 719 S.W.2d at 858 (finding certain processes to be trade secrets, in

part, because the employment agreement identified and defined them as such).

2. Defendants Misappropriated the Trade Secrets

Misappropriation occurs where one disclosing a trade secret without consent knew or

had reason to know that the secret was acquired under circumstances giving rise to a duty to

maintain its secrecy or limit its use. Mo. Rev. Stat. at 417.453(2)(b) and (c)(ii); Central Trust

and Inv. Co. v. Signalpoint Asset Mgmt., LLC, 442 S.W.3d 312 (Mo. 2014).

Here, the Defendant Employees had such knowledge when they learned of the

confidential nature of the Trade Secrets and when some signed Agreements wherein the Trade

Secrets were defined and each signatory covenanted not to disclose them. Covey Decl. at 31-

32. Nevertheless, without the consent of MotoVox, Defendant Employees disclosed the Trade

Secrets. Id. at 53. The disclosure is acutely devastating in this case because within the

combined knowledge of the Defendant Employees is the full scope of MotoVoxs Trade Secrets

vis--vis the MBX Minibike. Id. at 54. Messrs. Olen and Tony Rice, VP of Sales and sales

manager, respectively, had all customer lists, pricing, and customer-relationship information and

Messrs. Umsted and Francis,10 the Executive VP of Shared Services and VP of Product

Development, respectively, had all supplier lists, supply chain information, supply and parts

10 Mr. Francis was the point person, working with suppliers and manufacturers in China on behalf of MotoVox and was intimately familiar with all relevant pricing information.


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pricing, logistics, warehousing, service, and warranty information. Id. at 33-49. Thus,

Defendant Employees had all the Trade Secreted information necessary to manufacture the

Infringing Products in a fraction of the timeand that is exactly what they did. Within only

months of leaving MotoVox, Defendants established a competing company and introduced the

Infringing Products to market using many of the same suppliers, manufacturers, and warehouses

and retailers: Kmart, Sears, and Alco. The only way Defendants could have done so was by

misappropriating and disclosing MotoVoxs Trade Secrets. Id. at 62-63.

Moreover, given their positions with Monster Moto and extent of their knowledge,

ongoing disclosure is inevitable: It is unrealistic to expect that [defendant employee] has not

utilized confidential information gained . . . when working on an identical product for plaintiff

or that the confidential information will not give [defendants employer] a significant advantage

over plaintiff. Modern Controls v. Andreadakis, 578 F.2d 1264, 1269 (8th Cir. 1978).

Here, Defendant Employees have accepted positions with Monster Moto that are similar

to those they held at MotoVox, requiring them to direct the design, production, manufacture,

pricing and sales of products that compete with and infringe the Frame Design of the MBX

Minibike. Therefore, [i]t is unrealistic to expect that they can complete their duties with

Monster Moto without disclosing the Trade Secrets. It also is unrealistic to expect that Monster

Moto will not realize a significant advantage over plaintiff. As described, it already has.

C. MotoVox Is Likely to Succeed on Its Breach of Contract Claim

To establish breach of contract, Plaintiffs must demonstrate (1) the existence of a

contract; (2) plaintiffs performed; (3) defendants breached; and (4) damages resulted. Keveney v.

Missouri Military Academy, 304 S.W.3d 98, 104 (Mo. 2010).

First, Messrs. Olen Rice and Kenneth Francis signed an Agreement with MotoVox, the

terms of which are valid and enforceable on their face. Second, MotoVox Performed its duties


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and obligation under the Agreements. Third, Rice and Francis breached the Non-Interference

Provision by willfully acting contrary to the best interest of MotoVox in a variety of ways,

including: by (1) becoming employed by or entering a consulting agreement with Monster

Moto; and (2) interfering with the employment relationships between MotoVox and other

Defendant Employees. They also breached the Trade Secrets Provision by disclos[ing],

divulge[ing] or otherwise communicat[ing] MotoVoxs most valuable Trade Secrets to Monster

Moto. And MotoVox has been damaged as a result of the Contracted Employees breaches. In

terms of calculable damages, MotoVox has lost millions in sales and revenue. Covey Decl. at

81. With respect to incalculable damage, it has suffered damage to its reputation and goodwill,

significant market share, and all the other harms detailed infra. Id. at 71-86.

D. MotoVox Is Likely to Succeed on Its Tortious Interference Claim

Under Missouri law, a tortious interference claim requires a plaintiff to prove the

following: (1) a contract or a valid business expectancy; (2) defendants knowledge of the

contract or relationship; (3) intentional interference by the defendant inducing or causing a

breach of contract or relationship; (4) absence of justification; and (5) damages resulting from

defendants conduct. Horizon Meml Group, LLC v. Bailey, 280 S.W.3d 657, 662 (Mo. Ct.

App. 2009). A plaintiff need not have an existing contract with a third party to maintain a claim

for tortious interference. Stehno v. Sprint Spectrum, L.P., 186 S.W.3d 247, 251 (Mo. 2006). It is

sufficient that a plaintiff have a probable future business relationship that gives rise to a

reasonable expectancy of financial benefit. Id.

First, MotoVox had business relationships and valid business expectancies with Kmart,

Sears, and Alco, among others, at the time of Defendants interference. From 20112014, these

three retailers sold MBX Minibikes and their sales represented the vast majority of total MBX

Minibike sales in each year from 20112014. Covey Decl. at 26-27. Given these extensive


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prior dealings, MotoVox had a legitimate expectation of a future relationship going forward.

Cole v. Homier Distrib. Co., Inc., 599 F.3d 856, 862 (8th Cir. 2010).

Second, Defendant Employees not only knew of MotoVoxs prior relationship with

Kmart, Sears, and Alcothey helped build and maintain it. Specifically, Messrs. Rice worked

for MotoVox in sales-related positions as the VP of Sales and sales manager and thus had access

to all information about MotoVoxs relationship with these retailers. Covey Decl. at 34, 46.

Third, Defendants intentionally interfered with the relationship between MotoVox and

the retailers. After Defendants left MotoVox, they went to work for Monster Moto in almost

identical positions. Id. at 38, 41. Messrs. Rice began selling Infringing Products to Sears,

Kmart, and Alco. Id. The retailers orders from MotoVox dropped, and are down one-third to

one-half from historical averages. Id. at 81. Moreover, representatives of Sears and Kmart

have verbally confirmed to the President of MotoVox that they have shifted some of their

business to Monster Moto. Id.

Fourth, there is no justification for Defendants interference. Although competitors, in

certain circumstances, are privileged in the course of competition to interfere with others

contractual relationships, this is not such a case. Bancroft Life & Casualty, ICC, Ltd. v.

Intercontinental, 456 F. Appx.184, 189 (3d Cir. 2012). Here, the Employees were under

contractual obligations not to willfully act contrary to the best interests of [MotoVox] in a

manner that has a direct, material, adverse impact upon [MotoVox] and not to disclose

MotoVoxs Trade Secrets. This is not a case where the parties were legitimate competitors and

interfered with MotoVoxs business expectancies in the ordinary course of competition. To

the contrary, Defendants became competitors with MotoVox in the minibike market only as a

result of their infringement, trade secret misappropriation, and breach of contract. Additionally,


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Messrs. Olen and Tony Rice, Umsted, and Francis are all current MotoVox unit holders with

ongoing fiduciary duties to MotoVox.

Finally, damages clearly resulted from the intentional interference. MotoVox orders

from these retailers are down between one-third and one-half. Covey Decl. at 81.

III. MOTOVOX WILL SUFFER IRREPARABLE HARM

MotoVox has provided overwhelming evidence of irreparable harm, in various forms, if

Defendants are not enjoined.

A. Reputational Harm and Lost Customer Goodwill

[C]ustomer confusion and reputational harm [flowing from infringement] are the sorts

of damage the irreparable harm prong is designed to address. Titan Tire Corp. v. Case New

Holland, Inc., 2007 U.S. Dist. LEXIS 74173, *34-35 (S.D. Iowa Oct. 3, 2007). When the

failure to grant preliminary relief creates the possibility of permanent loss of customers to a

competitor or the loss of goodwill, the irreparable injury prong is satisfied. R.J. Reynolds

Tobacco Co. v. Phillip Morris, Inc., 60 F. Supp. 2d 502, 509 (M.D. N.C. 1999).

Here, Monster Moto has infringed the 798 Patent and introduced Infringing Products

using a frame that look substantially the same as the Frame Design of the MBX Minibikes but is

of vastly lower quality. This has and will continue to create confusion and harm MotoVoxs

reputation and goodwill it has worked so hard to earn among customers. Covey Decl. at 71-

86. See Titan Tire Corp, 2007 U.S. Dist. LEXIS 74173 at *34 (finding irreparable harm where

the defendants infringing tire would create confusion and harm [plaintiff design-patent-

holders] reputation and permanently damage their brand standing in the marketplace.); Rauch

Indus., Inc. v. Radko, 2007 WL 3124647, *2 (W.D. N.C. Oct. 25, 2007) (finding irreparable

harm where defendants sale of a lower quality knock

7142014 Monster Moto Case

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