Elf Cocoon v. Philip Stein - Teslar trademark complaint.pdf

THE UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF FLORIDA

Miami Division

Case No. 16-cv-20571-FAM

ELF COCOON, LLC, an Indiana limited

liability company; ILONKA HAREZI,

individually; and COURTLAND REEVES,

individually,

Plaintiffs,

vs.

PHILIP STEIN HOLDING, INC.,

a Florida corporation f/k/a PHILIP STEIN

INC.; PSTEIN, INC., a Florida corporation

f/k/a TESLAR INSIDE CORPORATION;

WILHELM STEIN; and RINA STEIN,

Defendants.

____________________________________/

AMENDED COMPLAINT

Plaintiffs ELF COCOON, LLC (“Elf”), ILONKA HAREZI (“Harezi”), and

COURTLAND REEVES (“Reeves” and, collectively with Elf Cocoon and Harezi, “Plaintiffs”),

by and through undersigned counsel, hereby file their Complaint against PHILIP STEIN

HOLDING, INC. (“Philip Stein”), a Florida corporation formerly known as Philip Stein, Inc.,

PSTEIN, INC., a Florida corporation formerly known as Teslar® Inside Corporation (“Stein II”),

Wilhelm Stein (“Wilhelm”), and Rina Stein (“Rina” and, collectively with Philip Stein, Stein II,

and Wilhelm, “Defendants”), and allege as follows:

1. Plaintiffs are bringing this action as a result of infringement of Plaintiffs’

trademark, counterfeiting, erosion of both Plaintiffs’ good will and the distinctiveness of

Plaintiff’s mark, false association and misrepresentations engaged in by Defendants, unfair

Case 1:16-cv-20571-FAM Document 13 Entered on FLSD Docket 03/30/2016 Page 1 of 117

2 SCHLESINGER & ASSOCIATES, P.A.

800 BRICKELL AVENUE SUITE 1400 MIAMI, FLORIDA 33131 TELEPHONE 305.373.8993 FAX 305.373.8098

competition, passing off, and trademark dilution.1 Plaintiffs are also bringing this matter as a

result of Defendants’ breach of a Settlement Agreement between the parties dated October 1,

2009.

PARTIES

2. Plaintiffs Harezi and Reeves are officers and owners of Elf, an Indiana Limited

Liability Company. Said Plaintiffs are residents of Franklin, Tennessee.

3. Elf is the owner of the famous TESLAR® trademark, which was registered on

November 6, 2001 with the U.S. Patent and Trademark Office and issued U.S. Trademark

Registration No. 2,504,442 (the “TESLAR® Mark”). The TESLAR® Mark is incontestable

pursuant to §15 of the Lanham Act (15 U.S.C. §1065) and is a fanciful mark. A true and correct

copy of a printout from the U.S. Patent and Trademark Office’s online database showing the

status of the TESLAR® Mark is attached herein as EXHIBIT A.

4. Elf has been the owner of the TESLAR® Mark at all material times discussed

herein, having received an assignment of all right, title, and interest in and to the TESLAR®

Mark from Reeves in September, 2003. Plaintiffs and/or their licensees have been using the

TESLAR® Mark and trade name in interstate commerce since the original registration of said

mark in 2001. Plaintiffs and/or their licensees have displayed the TESLAR® Mark with the ®

symbol and/or with the words “Reg. U.S. Pat & Tm. Off.” or “Registered in U.S. Patent and

Trademark Office” continuously since the issuance of the registration on November 6, 2001.

5. Harezi and Reeves invented TESLAR® technology in 1986, and same is

engineered to reinforce the human body’s electromagnetic biofield and produce an enhanced

natural earth signal associated with calm, relaxation, meditation, and enhanced performance.2

1 This list of Defendants’ bad acts is not exhaustive.




6. Plaintiffs and/or their licensees have spent significant sums marketing and

offering products featuring the TESLAR® Mark since its creation, which has given rise to

consumer demand for TESLAR® items around the world. Marketing and promotion for the

TESLAR® brand has included Internet and print advertising in the United States and abroad, as

well as trade shows such as the 2012 Hong Kong Watch Fair. As such, the TESLAR® Mark has

become widely known both domestically and internationally.

7. Indeed, the TESLAR® Mark has become associated to such an extent with the

sale of timepieces related to personal well-being that, as discussed infra, consumers and retailers

make reference to the TESLAR® Mark (both in the sale of products and in social media) even in

its absence from a product.

8. The TESLAR® Mark has become famous as a result of:

i. its distinctiveness;

ii. the duration and extent of its use in interstate commerce over an extended

period of time;

iii. the duration and extent of the marketing and publicity it has received

throughout the years, which has been significant;

iv. the geographical extent of the trading area in which it is used (same has

been global in nature);

v. the channels of trade for the goods with which it is and has been used;

Continued from previous page 2 Engineered to reinforce the human body’s electromagnetic biofield, the TESLAR® chip can be

used to create a “zero-point” (or “scalar”) non-Hertzian, non-linear waveform—that is, a waveform which is completely balanced in energy—when placed in proximity to a battery (which creates an electric field) and a quartz crystal (which creates a magnetic field). This “zero-point” waveform corresponds to the earth’s natural frequency and produces a calming, meditative effect when placed on the wrist.




vi. the degree of recognition of the TESLAR® Mark in the trading areas and

channels of trade in which it is and has been used;

vii. the registration of the TESLAR® Mark on the U.S. Patent & Trademark

Office’s Principal Register.

9. Philip Stein, a Florida corporation with a principal place of business in Miami,

Florida, owns the PHILIP STEIN® trademark. Philip Stein manufactures, markets, and sells

wristwatches and other products under the mark PHILIP STEIN®.

10. The PHILIP STEIN® mark was originally filed for registration on the Principal

Register by Teslar Inside Corporation (discussed infra) on February 13, 2006. The PHILIP

STEIN® mark was registered on December 19, 2006 with registration number 3,187,112.

Recently, another PHILIP STEIN® mark was applied for on October 10, 2014, and same has

been published for opposition but has not yet been registered by the U.S. Trademark Office.

11. Defendants Rina and Wilhelm are residents of Miami-Dade County, Florida, are

over the age of eighteen, and are otherwise sui generis. Rina and Wilhelm are a married couple.

12. Defendant Stein II is also a Florida corporation with its principal place of business

in Miami-Dade County, Florida.

JURISDICTION AND VENUE

13. This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C.

§ 1121 and 28 U.S.C. § 1331, § 1338 and § 1367 because the action involves claims arising

under the federal Lanham Act (beginning at 15 U.S.C. § 1051) and trademark laws of the United

States, as well as related state claims for unfair competition and violations of Florida law. This

Court also has jurisdiction over the subject matter of this action pursuant to a Settlement




Agreement dated October 1, 2009 wherein this Court retained jurisdiction to enforce said

agreement.

14. Venue is proper in the Southern District of Florida pursuant to 28 U.S.C.

§1391(b) because substantial parts of the events and/or omissions giving rise to the claims

asserted herein occurred in the Southern District of Florida, and Defendants Rina and Wilhelm

reside within the Southern District’s jurisdictional borders. Furthermore, Defendants Philip Stein

and Stein II have their principle places of business in this District. Venue is also proper pursuant

to the parties’ October 1, 2009 Settlement Agreement.

FACTUAL BACKGROUND: PRIOR VENTURE AND LITIGATION

15. In or around 2002, as a result of the reputation and good will of both the

TESLAR® Mark and the TESLAR® technology, Harezi, Reeves, and Elf entered into a joint

venture with Rina, Wilhelm, and Philip Stein to place TESLAR® technology chips inside the

PHILIP STEIN® line of wristwatches.

16. Watches bearing the TESLAR® Mark have also been sold at luxury department

stores across the United States such as Bloomingdale’s, Neiman Marcus, and Nordstrom’s. Such

TESLAR® watches have also been sold around the world in comparable stores. The watches

with TESLAR® technology that were sold via the joint venture with Defendants were under the

brand PHILIP STEIN TESLAR.

17. TESLAR®-branded watches quickly attracted notoriety after launch, were worn

by famous celebrities, and were selected as Oprah Winfrey’s “Favorite Things” in 2003 and

2005. Defendant Wilhelm often discusses this publically –even in currently pending litigation in

state court—with no mention of the fact that the watch –made famous as a gift from Madonna to

Oprah—contained TESLAR® technology.




18. As discussed below, Defendants unabashedly and incessantly misrepresent that

the watches selected by Oprah Winfrey in 2003 and 2005 contained their allegedly proprietary

technology when, in fact, the watches contained TESLAR® technology.

19. Although the aforementioned joint venture between Plaintiffs and Defendants was

run as a successful partnership under an entity named Teslar Inside Corporation (“TIC”), the

relationship soured, and Philip Stein, Rina, and Wilhelm purchased the interests of Harezi,

Reeves, and Elf (“the TESLAR interests”) in TIC in 2008 through a FINAL SETTLEMENT

AND STOCK PURCHASE AGREEMENT.

20. Because of the TESLAR® Mark, TIC’s name had to be changed to PStein, Inc.

(Stein II).

21. So as to latch on to the image that PHILIP STEIN® watches continued to offer

the same technology that they did during the partnership with Plaintiffs, the Defendants created

what they term “Natural Frequency Technology” (“NFT”) after the 2008 buyout.

22. NFT purports to cause more vivid dreams,3 make people feel more relaxed, help

them sleep longer, is allegedly “for the flowing of the Chi,”4 and can be utilized to turn metal,

glass, and ceramic5 into “an antenna...[to]…pick up natural, beneficial frequencies, enhance

them, and send them to our bodies.”6

23. A Philip Stein representative also made a statement to the effect that studies have

been conducted as to NFT at Stanford University and at Kennedy Space Center, a facility of the

3 Statement of Dr. Michael Breus from http://www.thesleepdoctor.com.

4 Statement of Wilhelm in a video entitled “Philip Stein Watches Will Stein President of the Philip Stein Group” by Star Luxe.

5 Statement of Wilhelm in a video entitled “Philip Stein Sport Diamond Collection Natural Frequency Launch @ 10 N Orchard Singapore.”

6 Id. at fn. 4.




National Aeronautics and Space Administration (which, apparently, allocated time away from

interplanetary space exploration, extragalactic astrophysics, and cosmology so as to study a

PHILIP STEIN® product).7

24. Unfortunately, since the 2008 purchase of the aforementioned interests by Rina,

Wilhelm, and Philip Stein, the conduct and activities of Defendants has been reprehensible,

culminating in a myriad of litigation by both sides. One such lawsuit was filed on April 6, 2009

(Case No. 09-20893 CIV-HUCK) and was settled by the parties on October 1, 2009. The 2009

litigation shall be referred to herein as the “federal litigation.”

25. Plaintiffs brought the original Complaint in the federal litigation upon learning of

Defendants’ unauthorized manufacture and distribution of wristwatches and trade dress which

utilized the TESLAR® Mark and which falsely stated connections with Plaintiffs, their brand,

and their technology.

26. On or about October 1, 2009, Plaintiffs and Defendants filed a Joint Stipulation of

Dismissal with Prejudice in the federal litigation.

27. Defendants breached the 2009 Settlement Agreement by violating multiple

provisions of same, giving rise to causes of action by Plaintiffs against Defendants for breach of

the 2009 Settlement Agreement (as well as other causes of action).

28. Also, pursuant to the terms of the 2009 Settlement Agreement and prior to

litigation, the parties were to make a good faith attempt to settle any differences arising out of the

7 Statement of Philip Stein representative in a video entitled “Philip Stein Sport Diamond

Collection Natural Frequency Launch @ 10 N Orchard Singapore.”




agreement through mediation. Said mediation took place on January 8, 2016 and an impasse was

reached.

GENERAL ALLEGATIONS: DEFENDANTS’ CONDUCT

29. As in 2008-09, Plaintiffs have again learned that, years after PHILIP STEIN

TESLAR inventory should have been exhausted, Defendants have been continuing to

manufacture and sell PHILIP STEIN® watches bearing the TESLAR® Mark, have been using

the TESLAR® Mark in commerce, and have also utilized the TESLAR® Mark on product

packaging.

30. In 2012, Defendants also interfered with the sale of products stemming from a

subsequent TESLAR® venture with a Hong Kong entity,8 and Defendants’ conduct is the subject

of a state court case in the Eleventh Judicial Circuit Court in and for Miami-Dade County,

Florida, case number 2016-000741 CA 11.

31. Moreover, subsequent to the 2009 Settlement Agreement, Defendants have been

purposefully passing off NFT as being TESLAR® technology. This has occurred all over the

world and on the Internet, and Defendants’ shameless conduct is easily gleaned from the plethora

of materials widely available to this day online via websites such as YouTube.com. This is

especially damaging to Plaintiffs because, upon information and belief, most PHILIP STEIN®

products are sold via the Internet, and, as such, consumers are likely to often be exposed to

Defendants’ statements and bad acts while in the course of looking to purchase timepieces.

32. Several of the clear misrepresentations by the Defendants are as follows:

8 From 2010-2012, the TESLAR® trademark and technology was licensed to be utilized in

CHOUETTE brand watches.




i. “In 2003, actually, we put [NFT] into our watch brand and into our

watches and that’s where it all started then.” (Statement of Wilhelm in

video entitled “Founder of Philip Stein talks about responsible luxury.”)

ii. “We were introduced to a technology –frequency technology—in 2002.”

(Statement of Wilhelm in video entitled “Hong Kong Watch and Clock

Fair Honorary Guest Speaker Will Stein.”)

iii. “It all started, actually, in 2002, when, uh, my wife, uh, Rina and I were

introduced to frequency technology and, you know, we didn’t know

anything about it but we were told that the frequency technology can

actually impact positively, uh, on your body.” (Statement of Wilhelm in

video entitled “Philip Stein Sport Diamond Collection Natural Frequency

Launch @ 10 N Orchard Singapore.”)

iv. “Well, Oprah, actually, she was one of the first personalities or celebrities,

um, that came across our brand and, uh, she called us and she said I loved

the fact that it has the dual time zone, cuz, you know, when she travels,

even from east to west coast, you have the ability to change, uh, the

different time zones. She liked the interchangeability, uh, of the bands

and, you know, the fact that it had the natural frequency technologies and

she introduced it on her show in, uh, in November of 2003, um, Oprah’s

favorite things.” (Statement of Wilhelm in video entitled “Philip Stein

Watches Will Stein President of the Philip Stein Group.”)

v. “We started the company in 2003 in the United States and we started off

as a watch brand, uh, but it’s not just any watch but it was a watch—it is a

watch—with natural frequency technology and it’s so to speak a well-

being benefit watch.” (Statement of Wilhelm in video entitled TFWA

2013 – The Philip Stein Story with Robin Steinberg National Critics

Choice.”)

33. The statements above are purposeful misrepresentations designed to cause

consumer confusion between the TESLAR® brand technology and NFT (and the PHILIP

STEIN® brand).

34. The statements cause a false association in the minds of the consuming public

between the TESLAR® brand technology previously installed in PHILIP STEIN® watches and

the current NFT that is used. Within the statements, Wilhelm, on behalf of himself and all

Defendants, outright misleads the consuming public that NFT has been in PHILIP STEIN®




watches since 2003, thus passing off NFT and PHILIP STEIN® as TESLAR® so as to unfairly

take advantage of the mark’s good will and unfairly compete with TESLAR®.

35. NFT (and, thus PHILIP STEIN®) has been the subject of ridicule by both

skeptics and litigants across the country.

36. In Cara Shapiro v. Philip Stein Holding, Inc., case no. BC465645 (Superior Court

for the State of California for the County of Los Angeles), an individual filed suit on behalf of

herself and all consumers of PHILIP STEIN® products for violations of the California Health &

Safety Code and Consumer Legal Remedies Act, false advertising, fraud, and other remedies

under California law. The Complaint in Cara is attached hereto as EXHIBIT B and is available

in the public records of the California judicial system, which, in turn, are available to any person

with Internet access, anywhere in the world.

37. The allegations in the Cara Complaint are scathing, accusing Philip Stein of

culpability as a result of statements made with regard to NFT. Some of the allegations are as

follows:

i. “In selling Defendants’ Products, Defendants made similar and consistent

misrepresentations through Defendants’ websites, in-store marketing, and

other forms of advertising, that the Natural Frequency Technology

contains properties that it does not.” See Cara Complaint at ¶4.

ii. “In lacking the requisite scientific substantiation required by law,

Defendants have committed per se violations of…[California law]…and

committed fraud.” Id. at ¶5.

iii. “In addition, Defendants’ advertising for the Defendants’ Products

violates numerous Federal Trade Commission (“FTC”) Guidelines on the

proper and legal way to advertise health devices, including the FTC’s

recent Guides Concerning the Use of Endorsements and Testimonials in

Advertising.” Id. at ¶6.

iv. “As a result of Defendants’ marketing practices, Plaintiff and members of

the class have suffered injury in fact and have lost money by purchasing a

product that is scientifically impossible to be “as advertisied.” Id. at ¶7.




v. “The complete absence of reliable scientific proof that the Natural

Frequency Technology does anything for consumers is equivalent to

Defendants selling consumers nothing more than an expensive sugar-pill.”

Id.

vi. “Defendants affirmatively misrepresented the health benefits of the

Defendants’ Products in order to convince the public to purchase and use

them, resulting in profits to Defendants, all to the damage and detriment of

the consuming public.” Id. at ¶17.

vii. “Given the complete lack of scientific evidence, any anecdotal reports of

the Defendants’ Products providing any of the advertised benefits is

nothing more than a demonstration of the “placebo effect” and cannot

serve as a legitimate scientific basis to support Defendants’ claims for

Defendants’ Products.” Id. at ¶25.

38. Clearly, every instance wherein Defendants pass off their technology as Plaintiffs’

TESLAR®-branded technology causes an association between both trademarks that harms

Plaintiffs’ reputation, and it also undermines the distinctiveness of Plaintiffs’ mark.

39. The consumer confusion that is stemming from Defendants’ acts can be easily

demonstrated. A search for the words “Philip Stein,” “Teslar,” or “Philip Stein Teslar” on social

media sites such as Twitter.com, on auction websites such as eBay.com, or through a search

engine immediately reveals how consumers have been made to believe that the TESLAR® Mark

and technology remain available within PHILIP STEIN® products and/or are associated with

PHILIP STEIN® products to this day.

40. The attached COMPOSITE EXHIBIT C showcases how consumers are

referring to PHILIP STEIN® as “Philip Stein Teslar” even in the complete absence of the

TESLAR® Mark anywhere on the product or its packaging. Indeed, as the picture below shows,




even sophisticated jewelry dealers such as J.R. Dunn Jewelers have been and are confusing the

two:10

Again, this is the result of the continuous, on-going, and rampant misrepresentations by

Defendants and the resulting infringement upon Plaintiffs’ mark and good will.

41. Perhaps the most flagrant violation of Plaintiffs’ trademark rights by Defendants

is the creation and sale of counterfeit products and trade dress that have been sold and distributed

around the world.

42. Pictured herein is a watch that was not sold, distributed, or manufactured for

distribution during the PHILIP STEIN TESLAR joint venture. The watch is referred to as the

“Philip Stein Men’s Teslar Sports Rubber Strap Chronograph Watch” (“the race track watch”),

which, as demonstrated by the attached COMPOSITE EXHIBIT D, was advertised for sale in

10 The picture embedded in the instant Complaint is a J.R. Dunn advertisement for PHILIP

STEIN TESLAR but showing conventional PHILIP STEIN® watches that should have no association to TESLAR®.




Esquire Magazine and also sold subsequent to October 2009 via the Internet on websites such as

Overstock.com and Ashford.com.

The race track watch is, by definition, a counterfeit11 product as it purports to be a genuine

TESLAR® item and is not.

43. Defendants also created a subsequent product similar to the race track watch but

without the TESLAR® Mark. Unfortunately, consumer confusion with relation to the origin of

the race track watch continues as resellers and consumers to this day believe the later watch is

also a TESLAR® item. See the ebay.com listing attached herein as part of COMPOSITE

EXHIBIT C.

44. Moreover, although Defendants represented in the October 1, 2009 Settlement

Agreement that at that time they only had 76 PHILIP STEIN TESLAR watches in inventory,

there are hundreds of watches bearing the TESLAR® Mark being advertised on Internet

websites, such as Amazon.com. Many of these watches for sale are represented to have

11 The Lanham Act defines the term counterfeit in the trademark context: A “counterfeit” is a

spurious mark which is identical with, or substantially indistinguishable from, a registered mark.




TESLAR® technology when, in fact, they have NFT and thereby injure the TESLAR® brand by

creating a false association (regardless of dilution).

45. Defendants have purposefully refrained from instructing their dealers as to the

fact that NFT is being used in PHILIP STEIN® watches in lieu of TESLAR® chips, a

requirement under Section 2(a) of the 2009 Settlement Agreement.

46. Although Section 2(a) of the October 1, 2009 Settlement Agreement required

Defendants to instruct their active distributors and resellers to remove all point of sale materials

bearing the TESLAR® mark from public display, watches have been sold in the Caribbean with

NFT but in boxes that utilize the TESLAR® Mark.

47. Defendants have also failed to take commercially reasonable steps to ensure their

active distributors and resellers remove all point of sale materials which bear the TESLAR®

mark, and Defendants failed to take steps to ensure that both they, as parties to the 2009

Settlement Agreement, and their active distributors and resellers did not use the TESLAR®

Mark in commerce.

48. Furthermore, Defendants are using the TESLAR® Mark to sell and advertise their

products on their own website, philipstein.com.

49. As the below screen shots of the PHILIP STEIN® homepage evince, the

TESLAR® Mark is listed as a search result on the PHILIP STEIN® website and is being used as

a meta-tag, and, when clicked, the results are PHILIP STEIN® items that have nothing to do

with Plaintiffs, their mark, or their brand.




The search results for “Teslar men’s watch” list at least one item in every product category on

the PHILIP STEIN® homepage. Although the words are difficult to see because the central




banner image on the PHILIP STEIN® homepage partially obscures results,12 the word “Teslar”

appears no less than twenty-two times as a proposed search term/tag on the homepage. Indeed,

even words associated solely with TESLAR® technology and not NFT –such as the terms

“scalar wave” and “quantum technology”—also appear with the TESLAR® Mark.

50. As Plaintiffs have discovered, use of the TESLAR® Mark in commerce by

Defendants and their distributors/resellers comes in varying forms, from listing the mark on

products and Internet sale displays to using the mark as meta-tags in the source code of Internet

pages in violation of Plaintiffs’ trademark rights. See attached EXHIBIT E, a report dated

September 11, 2015 which catalogues various use of the TESLAR® Mark in source code and on

the Internet to sell PHILIP STEIN® products.

51. The aforementioned September 11, 2015 report outlines that the TESLAR® Mark

is being used as a meta-tag on the pages of several PHILIP STEIN® distributors such as

Nordstrom’s, Topper Jewelers, Neiman Marcus, and Gemnation. The use of the TESLAR®

Mark in this way causes not only source confusion, but also initial interest confusion that drives

income-generating Internet traffic to the websites of both Defendants and the sellers of PHILIP

STEIN® products.

52. On or about May of 2015, Plaintiffs’ representative, Helen Williams

(“Williams”), inquired as to and purchased a PHILIP STEIN® watch over the Internet that was

advertised as containing a TESLAR® chip. The watch was not manufactured prior to October

2009, and is in fact one of Defendants’ newer watch models, FRUITZ.

12 When the central image of the homepage fades to a different picture, the obscuration wanes

and the other search results/tags are clearly visible.




53. The representative of the website, Ashford.com, whom Williams chatted with

online, specifically explained that the website purchased the watches directly from the

manufacturer (Philip Stein), and also that the PHILIP STEIN® watches had TESLAR® chips in

them. The watch was advertised on the website as a PHILIP STEIN TESLAR watch, and

Williams copied and pasted the watch advertisement information from the website page for the

particular watch into the chat to confirm same. Subsequently, Williams received an email from

Ashford.com stating as follows:

This is in response to your feedback that the watch you received was advertised as

having Teslar technology and when you received it it shows as having natural

frequency technology. We have been in touch with the manufacturer and they

have assured us that it is the same technology. If you would like to contact them

yourself to confirm you can do so at:

Philip Stein

169 East Flagler St

Suite 1500

Miami, Fl 33131

855-533-3939

A true and correct copy of the chat log and email are attached herein as EXHIBIT F.

54. Naturally, so as to confuse the public as to what is and has been inside PHILIP

STEIN® watches over the years, Defendants have also failed to provide information on their

website (as required by Section 4 of the Settlement Agreement) that it no longer uses TESLAR®

chips in new watches and, instead, uses NFT.

55. Additionally, although Defendants were required to order a watch strap machine

to remove the TESLAR® marking from watch straps, there is no evidence that such a machine

has been ordered, and there are continuing sales of straps bearing the TESLAR® mark on the

Internet.




56. As described above, the unlicensed and unauthorized use in commerce of the

TESLAR® Mark and trade name by Defendants has caused massive consumer confusion, is

likely to continue causing same, and has diluted the TESLAR® Mark and brand by associating it

with Plaintiffs’ NFT technology. Defendants have also infringed upon Plaintiffs’ rights in the

TESLAR® Mark by blurring its distinctiveness and engaging in conduct which was designed

to—and actually did—secure for Defendants the good will associated with and attributable to the

TESLAR® Mark.

57. The goodwill associated with the TESLAR® Mark and brand is being, and will

continue to be, negatively and severely impacted if Defendants are not prohibited from engaging

in the aforementioned activity that creates a likelihood of consumer confusion about the origin of

products, the sponsorship of products, and the association between sources.

58. Defendants’ actual use of Plaintiffs’ protected trademark and their attempts to

misrepresent and latch onto the good will of the TESLAR® brand and technology –both before

and after the 2009 Settlement Agreement—clearly demonstrates a likelihood that Defendants

will continue to dilute and harm the TESLAR® Mark, and, as such, that Plaintiffs would be

harmed if an injunction were not to issue. The high probability of harm is clearly evinced by the

litany of infringing activities the Defendants have historically engaged in despite multiple

promises in the 2008 STOCK PURCHASE AGREEMENT and the 2009 Settlement Agreement

to refrain from doing so.

59. Plaintiffs are entitled to recover their attorneys’ fees based upon the terms of the

2009 Settlement Agreement between the parties, as well as a result of Defendants’ willful,

wanton, and reckless conduct, which renders the instant case “exceptional” as defined in 15

U.S.C. §1117(a) (Lanham Act § 35).




60. All conditions precedent to this action have been satisfied, waived, excused, or

performance would be futile.

COUNT I

BREACH OF SETTLEMENT AGREEMENT

61. Plaintiffs re-allege paragraphs 1 through 60 as if they were specifically set forth

herein and further allege as follows.

62. This is an action for breach of the 2009 Settlement Agreement, a true and correct

copy of which is attached herein as EXHIBIT G.

63. The October 1, 2009 Settlement Agreement resolved the prior litigation between

the same parties involved in the instant case, and it was executed by Plaintiff Harezi as

Managing Director of Plaintiff Elf, Plaintiff Harezi in her individual capacity, Plaintiff Reeves in

his individual capacity, Defendant Wilhelm in his capacity as President of Defendant Philip Stein

and as President of Defendant Stein II, Defendant Rina in her individual capacity, and Defendant

Wilhelm in his individual capacity.13

64. By engaging in the following activities,14 Defendants have breached the 2009

Settlement Agreement:

i. using the TESLAR® mark in interstate and international commerce

without authorization or license;

ii. engaging in misrepresentations and making false statements designed to

associate TESLAR® with NFT (and, generally, the PHILIP STEIN®

brand);

13 Although the signatures of Defendants Rina and Wilhelm are not on the signature page, they

initialed pages 1-12 of the 2009 Settlement Agreement in their individual capacities.

14 This list of Defendants’ acts in violation of the Settlement Agreement is not exhaustive.




iii. creating, distributing, and selling counterfeit products and other products

bearing the TESLAR® mark;

iv. failing to instruct sellers, distributors, and re-sellers of PHILIP STEIN®

products as to the fact that NFT is being utilized in PHILIP STEIN®

watches in lieu of TESLAR® chips;

v. failing to take commercially reasonable steps to ensure that active

distributors and resellers remove point of sale materials bearing the

TESLAR® mark;

vi. failing to provide information on its website that it no longer uses

TESLAR® chips in new watches and, instead, uses NFT;

vii. failing to order the required watch strap machine.

65. The aforementioned actions breach, at minimum, the following provisions of the

Settlement Agreement: Section 2, Section 4, Section 7, and Section 13.

66. The 2009 Settlement Agreement is/was supported by adequate and sufficient

consideration, namely the prior resolution of the litigations and promises exchanged by the

parties.

67. Plaintiffs have fulfilled all of their obligations under the 2009 Settlement

Agreement.

68. As described, Defendants have breached the 2009 Settlement Agreement.

69. Defendants’ acts have been willful, wanton, and intended to benefit Defendants at

Plaintiffs’ expense.




70. As a direct and proximate result of Defendants’ breach of the 2009 Settlement

Agreement, Plaintiffs have been damaged in an amount to be proven at trial, but believed to be

not less than $10 million USD ($10,000,000.00).

WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter a

judgment in their favor for damages, interest, costs and attorney’s fees (pursuant to both Section

11(b) of the Settlement Agreement and 15 U.S.C. § 1117), and any such other and further relief

as this Honorable Court deems just and proper.

COUNT II

TRADEMARK INFRINGEMENT – LANHAM ACT § 32

71. Plaintiff Elf re-alleges paragraphs 1 through 60 as if they were specifically set

forth herein and further alleges as follows.

72. Plaintiff Elf is the owner of a federal trademark registration for the mark

TESLAR®, a mark which is itself both fanciful and inherently distinctive. The TESLAR® mark

has been used in interstate commerce for goods and services for an extended period both prior to

and subsequent to registration with the U.S. Patent & Trademark Office.

73. As a result of its registration of the TESLAR® Mark, extensive use of the mark in

interstate and international commerce, and widespread marketing and advertising of the mark

and its products, Plaintiff Elf has created a strong association in the minds of consumers between

the TESLAR® Mark and the sale of wristwatches, timepieces, and well-being technology

embedded in wristwatches and timepieces.

74. Without Plaintiff Elf’s authorization, consent, and without any license whatsoever

from Plaintiff Elf, Defendants have used the TESLAR® Mark and/or marks that are confusingly

similar to the TESLAR® Mark to promote its own products, to sell its own products, and to




improperly create an association between the TESLAR® Mark and brand, TESLAR®

technology, the PHILIP STEIN® brand, and Philip Stein’s NFT.

75. Defendants’ acts –which include counterfeiting and purposeful

misrepresentations—have caused actual consumer confusion and have deceived consumers as to

the source, sponsorship, endorsement, and affiliation of Defendants’ goods and have deceived

consumers into believing that Defendants’ goods are associated with, endorsed, sponsored, or

authorized by Plaintiff Elf and the TESLAR® Mark/brand.

76. As a result of Defendants’ aforementioned conduct and activities, Plaintiff Elf has

suffered monetary and other damages.

77. Defendants’ unlawful acts have been willful, wanton, and intended to benefit

Defendants at Plaintiff Elf’s expense and the expense of the TESLAR® Mark and brand.

78. Defendants’ acts constitute trademark infringement in violation of 15 U.S.C. §

1114 (Lanham Act, § 32).

79. There is no adequate remedy at law to fully compensate Plaintiff Elf and make it

whole for the damages that have been caused by Defendants’ unlawful acts and any subsequent

and additional infringement of Plaintiff Elf’s TESLAR® Mark by Defendants, unless future

unlawful acts and infringement of this nature are permanently enjoined by this Court.

80. All of Defendants’ infringing activities have been performed through use in

interstate and international commerce.

81. Given all of the aforementioned, this is an exceptional case under 15 U.S.C. §

1117.

WHEREFORE, Plaintiff Elf prays for judgment against defendants for damages

including Defendants’ profits, damages sustained by Plaintiff Elf, damages in an amount of three




times Defendants profits’ pursuant to 15 U.S.C. § 1117(b) or statutory damages under 15 U.S.C.

§ 1117(c) (whichever is greater), interests, costs, attorney’s fees, and any other further relief as

the Court deems just and honorable.

COUNT III

COUNTERFEITING – LANHAM ACT § 32



83. Plaintiff Elf is the owner of a federal trademark registration for the mark

TESLAR®, a mark which is itself both fanciful and inherently distinctive. The TESLAR ® mark

has been used in interstate commerce for goods and services for an extended period both prior to

and subsequent to registration with the U.S. Patent & Trademark Office.

84. As a result of its registration of the TESLAR® Mark, extensive use of the mark in

interstate and international commerce, and widespread marketing and advertising of the mark

and its products, Plaintiff Elf has created a strong association in the minds of consumers between

the TESLAR® Mark and the sale of wristwatches, timepieces, and well-being technology

embedded in wristwatches and timepieces.

85. Without Plaintiff Elf’s authorization, consent, and without any license whatsoever

from Plaintiff Elf, Defendants have created products sold in interstate and international

commerce –such as the race track watch—that use the TESLAR® Mark and which purport to

emanate from Plaintiff Elf but which in fact do not.

86. The products created by Defendants bearing the unauthorized TESLAR® Mark –

i.e., the counterfeit goods—are for the same goods and services for which the TESLAR® Mark

is registered.




87. Defendants’ acts have caused actual consumer confusion and have deceived

consumers as to the source, sponsorship, endorsement, and affiliation of Defendants’ goods and

have deceived consumers into believing that Defendants’ goods bearing the TESLAR® Mark are

genuine TESLAR® Mark products.

88. As a result of Defendants’ aforementioned conduct and activities, Plaintiff Elf has

suffered monetary and other damages.

89. Defendants’ unlawful acts have been willful, wanton, and intended to benefit

Defendants at Plaintiff Elf’s expense and the expense of the TESLAR® Mark and brand.

90. Defendants’ actions constitute unlawful and actionable counterfeiting of a

trademark.

91. There is no adequate remedy at law to fully compensate Plaintiff Elf and make it


and additional counterfeiting of Plaintiff Elf’s TESLAR® Mark by Defendants, unless future

unlawful acts and infringement of this nature are permanently enjoined by this Court.

92. All of Defendants’ activities have been performed through use in interstate and

international commerce.


1117.

WHEREFORE, Plaintiff Elf prays for judgment against defendants for damages

including Defendants’ profits, damages sustained by Plaintiff Elf, damages in an amount of three

times Defendants profits’ pursuant to 15 U.S.C. § 1117(b) or statutory damages under 15 U.S.C.

§ 1117(c) (whichever is greater), interests, costs, attorney’s fees, and any other further relief as

the Court deems just and honorable,




COUNT IV

UNFAIR COMPETITION – LANHAM ACT § 43(a)



95. Defendants’ above-referenced activities –such as the passing off of NFT as

TESLAR® technology, false associations and designations of origin for products, and improper

use of the TESLAR® Mark—cause irreparable injury to Plaintiffs in violation of 15 U.S.C. §

1125(a) (Lanham Act, §43(a)).

96. Defendants’ conduct has deceived –and unless restrained will continue to

deceive—the consumers and the public at large, and Defendants’ conduct has injured and (unless

restrained) will continue to injure Plaintiffs and the public, including consumers, causing

damages to Plaintiffs in an amount to be determined at trial, as well as other irreparable injury to

the goodwill and reputation of Plaintiff Elf and the TESLAR® Mark and brand.

97. Defendants’ conduct has been designed to limit the competition it received from

Plaintiffs, as well as to unfairly compete with Plaintiffs by latching onto the good will of the

TESLAR® brand by creating false and misleading associations. All of the aforementioned

actions by Defendants –from passing off one technology as the other—is utterly unjust and

unfair.

98. Defendants’ actions have caused mistake, have deceived as to affiliation,

connection, and association with the TESLAR® Mark and TESLAR® products, and have

deceived as to the origin, sponsorship, and approval of PHILIP STEIN® products by Plaintiffs

and the TESLAR® brand.

99. Defendants have also engaged in commercial advertising and promotions that

misrepresent the nature, characteristics, and qualities of their products by improperly associating




PHILIP STEIN® products and technology with that of Plaintiffs’ goods, services, and

commercial activities.

100. There is no adequate remedy at law to fully compensate Plaintiffs and make them


and additional unfair competition by Defendants, unless future unlawful acts and unfair

competition of this nature are permanently enjoined by this Court.

101. All of Defendants’ improper activities have been performed through use in

interstate and international commerce.

102. Plaintiffs have been damaged by Defendants’ bad acts.


1117.

WHEREFORE, Plaintiffs respectfully request that this Court enter a judgment in their

favor for damages, costs, interest, attorney’s fees, and any such other and further relief as this

Court deems just and proper.

COUNT V

UNFAIR COMPETITION – FLORIDA LAW



105. Defendants’ above-referenced activities –such as the passing off of NFT as

TESLAR® technology, false associations and designations of origin for products, and improper

use of the TESLAR® Mark—cause irreparable injury to Plaintiffs.

106. Defendants’ conduct has deceived –and unless restrained will continue to

deceive—the consumers and the public at large, and Defendants’ conduct has injured and (unless

restrained) will continue to injure Plaintiffs and the public, including consumers, causing




damages to Plaintiffs in an amount to be determined at trial, as well as other irreparable injury to

the goodwill and reputation of Plaintiff Elf and the TESLAR® Mark and brand.

107. Defendants’ conduct has been designed to limit the competition it received from

Plaintiffs, as well as to unfairly compete with Plaintiffs by latching onto the good will of the

TESLAR® brand by creating false and misleading associations. All of the aforementioned

actions by Defendants –such as passing off one technology as the other—is utterly unjust and

unfair.

108. Defendants’ actions have caused mistake, have deceived as to affiliation,

connection, and association with the TESLAR® Mark and TESLAR® products, and have

deceived as to the origin, sponsorship, and approval of PHILIP STEIN® products by Plaintiffs

and the TESLAR® brand.

109. Defendants have also engaged in commercial advertising and promotions that

misrepresent the nature, characteristics, and qualities of their products by improperly associating

PHILIP STEIN® products and technology with that of Plaintiffs’ goods, services, and

commercial activities.

110. There is no adequate remedy at law to fully compensate Plaintiffs and make them


and additional unfair competition by Defendants, unless future unlawful acts and unfair

competition of this nature are permanently enjoined by this Court.

111. All of Defendants’ improper activities have been performed through use in

intrastate, interstate, and international commerce.

112. Plaintiffs have been damaged by Defendants’ bad acts.




WHEREFORE, Plaintiffs respectfully request that this Honorable Court enter a

judgment in their favor for damages, costs, interest, attorney’s fees, and any such other and

further relief as this Honorable Court deems just and proper.

COUNT VI

TRADEMARK DILUTION – LANHAM ACT § 43(c)



114. The actions of Defendants as described supra have diluted the reputation,

distinctiveness, and value of Plaintiff Elf’s famous TESLAR® Mark.

115. Defendants’ misrepresentations and statements that associate NFT with the

TESLAR® trademark and the TESLAR® technology cause dilution by tarnishment.

116. Defendants’ aforementioned activities also cause dilution by blurring by

impairing the distinctiveness of the TESLAR® trademark.

117. Defendants, in connection with the marketing and promotion of their goods,

services, and the conduct of their business, have used in interstate and international commerce

the words, terms, names, symbols or any combinations thereof related to Plaintiff Elf famous

TESLAR® trademark.

118. Defendants’ conduct was willfully intended and targeted to tarnish the reputation,

distinctiveness, and value of Plaintiff Elf’s famous TESLAR® trademark.

119. Defendants’ violations of the § 43(c) of the Lanham Act have damaged Plaintiff

Elf and will continue damaging said party unless enjoined by the Court.

120. Plaintiff Elf has suffered monetary damages as a result of Defendants’ unlawful

acts in an amount to be determined at trial.

121. This is an exceptional case under 15 U.S.C. § 1117.




WHEREFORE, Plaintiff respectfully requests that this Court enter a judgment in its

favor for damages, costs, interest, attorney’s fees, and any such other and further relief as this

Court deems just and proper.

COUNT VII

TRADEMARK DILUTION – Fla. Stat. Sec. 494.151



123. The actions of Defendants as described supra have diluted the reputation,

distinctiveness, and value of Plaintiff Elf’s famous TESLAR® Mark.

124. Defendants’ misrepresentations and statements that associate NFT with the

TESLAR® trademark and the TESLAR® technology cause dilution by tarnishment.

125. Defendants’ aforementioned activities also cause dilution by blurring by

impairing the distinctiveness of the TESLAR® trademark.

126. Defendants, in connection with the marketing and promotion of their goods,

services, and the conduct of their business, have used in intrastate (in Florida), interstate, and

international commerce the words, terms, names, symbols or any combinations thereof related to

Plaintiff Elf famous TESLAR® trademark.

127. Defendants’ conduct was willfully intended and targeted to tarnish the reputation,

distinctiveness, and value of Plaintiff Elf’s famous TESLAR® trademark.

128. Defendants’ violations of Plaintiff Elf’s trademark rights have damaged Plaintiff

Elf and will continue damaging said party unless enjoined by the Court pursuant to Fla. Stat. §

495.151.

129. Plaintiff Elf has suffered monetary damages as a result of Defendants’ unlawful

acts in an amount to be determined at trial.




WHEREFORE, Plaintiff respectfully requests that this Court enter an injunction against

Defendants, as well as a judgment in its favor for damages, costs, interest, attorney’s fees, and

any such other and further relief as this Court deems just and proper.

JURY DEMAND

Plaintiffs demand a jury trial on all causes of action alleged herein which are triable by

jury.

Dated: March 9, 2016.

Respectfully submitted, SCHLESINGER & ASSOCIATES, P.A. Attorneys for Plaintiff 800 Brickell Avenue, Suite 1400 Miami, FL 33131 Phone: (305) 373-8993 Facsimile: (305) 373-8098 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] By: /s/ Michael J. Schlesinger MICHAEL J. SCHLESINGER Florida Bar No. 141852 ROBERT R. JIMENEZ Florida Bar No. 72020


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Elf Cocoon v. Philip Stein - Teslar trademark complaint.pdf

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