Orbit Irrigation 2nd Amended Complaint

Greg S. Ericksen (1002) Attorney at Law 1065 South 500 West P.O. Box 609 Bountiful, UT 84011 Telephone: (801) 299-5519 Facsimile: (801) 299-9799 Mark M. Bettilyon (4798) Liesel B. Stevens (10431) RAY QUINNEY & NEBEKER PC 36 South State Street, Suite 1400 Salt Lake City, Utah 84111 Telephone: (801) 532-1500 Facsimile: (801) 532-7543 Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION

ORBIT IRRIGATION PRODUCTS, INC., a Utah Corporation, Plaintiff, vs. SUNHILLS INTERNATIONAL, LLC, a California limited liability company; and DOES 1-10, Defendants.

SECOND AMENDED COMPLAINT

Consolidated Case No. 1:10-cv-00113 DB

Honorable D. Benson

ORBIT IRRIGATION PRODUCTS, INC., a Utah Corporation, Plaintiff, vs. TAIZHOU DONGFANG LIGHT DECORATIONS CO., LTD., a Chinese company ZHEJIANG HONGCHEN IRRIGATION EQUIPMENTCO., ltd, a Chinese corporation;

[Case No. 1:11-cv-0012-DB]

Case 1:10-cv-00113-DB-PMW Document 38 Filed 04/26/12 of 60

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LUO JUN, an individual; CHINA EXPORT & CREDIT INSURANCE CORPORATION a/k/a SINOSURE, a Chinese corporation; JANICE CAPENER, an individual; DAN CAPENER, an individual; SUNHILLS INTERNATIONAL, LLC., a California limited liability company; RONG PENG, an individual; TIM MIKA, an individual; “MEGAN DOE,” an individual; “MANDY DOE,” an individual; and DOES 3-10, Defendants. Plaintiff ORBIT IRRIGATION PRODUCTS, INC. (“ORBIT”), brings this action against

defendants TAIZHOU DONGFANG LIGHT DECORATIONS CO., LTD., ZHEJIANG

HONGCHEN IRRIGATION EQUIPMENTCO., ltd., LUO JUN, CHINA EXPORT & CREDIT

INSURANCE CORPORATION (“CHINA EXPORT”), JANICE CAPENER, DAN CAPENER,

SUNHILLS INTERNATIONAL, LLC., RONG PENG, TIM MIKA, “MEGAN DOE,”

“MANDY DOE,” and DOES 3-10, and alleges as follows:

THE PARTIES

1. ORBIT designs, manufactures and distributes sprinkler and irrigation products to

various customers around the world with its principal place of operation at 845 North Overland

Road, North Salt Lake, Davis County, State of Utah. Orbit and its predecessor companies have

been in business for over 40 years. During that time, Orbit has put in place the infrastructure and

resources needed to service retailers across the world, including large chain stores such as

Walmart, Home Depot and Lowes. Orbit has also built up significant brand recognition and has

developed a reputation for innovation and excellence.

2. TAIZHOU DONGFANG LIGHT DECORATION CO., LTD, and ZHEJIANG

HONG CHEN IRRIGATION EQUIPMENTCO., ltd., are all companies that manufacture


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various products including sprinkler and irrigation components in a factory located at No. 888-10

Maizhiqiao Road East, Luqiao, Taizhou, Zhejiang, China.

3. For many years ORBIT conducted business with TAIZHOU DONGFANG

LIGHT DECORATION CO., LTD. (“DONG FANG”). When DONG FANG move to a new

location it informed ORBIT that it had changed its name to ZHEJIANG HONG CHEN

IRRIGATION EQUIPMENTCO., ltd.

4. On information and belief, TAIZHOU DONGFANG LIGHT DECORATION

CO., and ZHEJIANG HONG CHEN IRRIGATION EQUIPMENTCO., ltd., are the same

company, alter egos of each other, and/or in conspiracy with one another. These companies have

alternatively called themselves “Hong Chen,” “Dong Fang” and “HCI.” ORBIT is informed and

believes they may also use other names, to hide and obscure their true identity. Hereinafter these

three companies shall be referred to as “HONG CHEN.”

5. On information and belief, LUO JUN owns the majority of shares of HONG

CHEN and controls and manages HONG CHEN, acting as its Vice General Manager.

6. On information and belief, LUO JUN was at all times mentioned an agent, owner

and/or employee of HONG CHEN, acting within the scope of such agency or employment.

7. On information and belief, LUO JUN is a citizen of China.

8. On information and belief, CHINA EXPORT, also known or operating as

SINOSURE, is a Chinese corporation.

9. JANICE CAPENER and DAN CAPENER are former residents of Davis County,

State of Utah, and currently reside in China. Both are former employees of ORBIT.

10. On information and belief, SUNHILLS INTERNATIONAL, LLC

(“SUNHILLS”) was created in the State of California on approximately November 30, 2009, for


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the purpose of selling and distributing consumer lawn and garden equipment and products to

various wholesale and retail outlets in the United States.

11. On information and belief, SUNHILLS conducts business in this judicial district.

12. RONG PENG is a friend and associate of JANICE CAPENER and an agent of

SUNHILLS.

13. On information and belief, SUNHILLS is owned by JANICE CAPENER.

14. TIM MIKA works as an agent and manufacturer’s representative for HONG

CHEN and markets and sells HONG CHEN’s products to HONG CHEN’s customers, including

Walmart.

15. On information and belief, “MEGAN DOE” is either a name used by JANICE

CAPENER, or alternatively, an agent of HONG CHEN.

16. On information and belief, “MANDY DOE” is either a name used by JANICE

CAPENER, or alternatively, an agent of HONG CHEN.

17. On information and belief, Does 3-10 are (a) subsidiaries, divisions, affiliates,

partners, joint venturers or distributors of or for HONG CHEN and/or SUNHILLS; and/or (b)

individuals and/or corporate entities who, directly or indirectly, have knowingly or otherwise

participated in, benefited from, solicited, assisted, or aided in the activities complained of herein,

and/or had the right or ability to control the activities complained of herein and/or (c) persons

and entities in conspiracy with Defendants, including companies who are competitors of ORBIT.

The identities and capacities of Doe Defendants 3-10 are not presently known to ORBIT.

ORBIT will amend this Complaint to include such information when it is ascertained.


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JURISDICTION AND VENUE

18. This is an action for patent infringement arising under the provisions of the Patent

Laws of the United States of America, Title 35 of the United States Code.

19. This is an action for trademark and tradedress infringement and false advertising

arising under the provisions of the Lanham Act, Title 15, Chapter 22 of the United States Code.

20. This is an action for violation of the Computer Fraud & Abuse Act, Title 18,

Section 1030 of the United States Code.

21. This is an action for breach of contract and specific performance under the Utah

Uniform Commercial Code (Title 70A, chapter 2) and other provisions of Utah law, for

misappropriation of trade secrets under the Utah Uniform Trade Secrets Act, and violation of the

Utah Truth in Advertising Act.

22. This is also an action for intentional interference with economic relations,

defamation and injurious falsehood, unfair competition, breach of fiduciary duty, unjust

enrichment, and conspiracy arising under the common law of Utah.

23. In addition, this is an action for declaratory judgment.

24. Subject-matter jurisdiction over ORBIT’s claims is conferred upon this Court by

28 U.S.C. §§ 1331, 1332, and 1338(a).

25. On information and belief, Defendants have contracted to provide goods in the

State of Utah, solicited business in the State of Utah, transacted business within the State of

Utah, conspired with residents of the State of Utah, committed tortious acts causing injury in the

State of Utah and attempted to derive financial benefit from residents of the State of Utah,

including benefits directly related to the instant patent infringement, misappropriation of trade


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secrets, breach of contract, breach of duty of fair dealing, intentional interference, defamation

and injurious falsehood, false advertising, and conspiracy causes of action set forth herein.

26. HONG CHEN and LUO JUN have also agreed that the state and federal courts of

the State of Utah have exclusive jurisdiction over any dispute arising from such contracts or

relating to the goods identified in the contract.

27. On information and belief, Defendants have placed their infringing products into

the stream of commerce and/or advertised or offered to sell their products, throughout the United

States, which products have been offered for sale, sold and/or used in the State of Utah and/or in

the District of Utah.

28. Defendants have committed acts of infringement in this judicial district, are

subject to personal jurisdiction in this judicial district, and/or are doing business in this judicial

district.

29. Defendants have caused tortious injury in this state with intent to harm ORBIT in

this state.

30. Venue is proper in this judicial district under 28 U.S.C. §§ 1391(b) and/or 1400.

GENERAL ALLEGATIONS

Supplier Agreement

31. In November 2004, ORBIT entered into a contract with HONG CHEN and LUO

JUN pursuant to which HONG CHEN agreed to manufacture a limited number of ORBIT’s

products (the “Supplier Agreement”), attached hereto as Exhibit A and hereafter incorporated by

this reference.

32. Under the Agreement HONG CHEN agreed to manufacture for ORBIT sprinkler

irrigation components as identified by ORBIT in purchase orders.


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33. The Supplier Agreement incorporates ORBIT’s Purchase Order Terms and

Conditions and ORBIT’s Standards for Suppliers.

34. To facilitate the supplier relationship, ORBIT provided HONG CHEN with

ORBIT’s proprietary drawings, designs, specifications, technical information, trademarks, logos

and trade dress.

35. Under the Supplier Agreement, HONG CHEN and its agents, including LUO

JUN agreed to keep all such information confidential: “Supplier shall not at any time, during or

after the term of this Agreement, disclose to others and will not take for its own purposes or the

purpose of others any trade secrets, confidential information, knowledge, designs, data, know-

how, or any other information considered ‘confidential’ by the Purchaser. Supplier recognizes

that this obligation applies not only to technical information, designs and marketing, but also to

any business information that the Purchaser treats as confidential. . . . Any information that is not

readily available to the public shall be considered to be a trade secret and confidential.” Ex. A at

8.

36. The Supplier Agreement also makes clear that once HONG CHEN has accepted a

purchase order its “ACCEPTANCE IS EXPRESSLY LIMITED TO ALL OF THE TERMS

AND CONDITIONS OF THIS ORDER, INCLUDING ANY AND ALL ATTACHMENTS.”

Ex. A at 4. HONG CHEN further agreed that “Supplier’s failure to comply with each and every

term of this order shall constitute an event of default and shall be grounds for the exercise by

Purchaser of any of the remedies provided for in these Terms and Conditions.” Id.

37. Such Terms and Conditions include the following:

a. All payments were due “TT60,” which means that payments are not due

until sixty (60) days after the products have been shipped. Id. at 2.


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b. “[A]ll goods shall be subject to inspection and test by the purchaser and its

agents or employees and any governmental agency to the extent

practicable at any and all times and places including the period of

manufacture and prior to final acceptance by the customer.” Id. at 5.

c. “THE TIME SPECIFIED HEREIN FOR SHIPMENT OF GOODS IS OF

THE ESSENCE OF THIS AGREEMENT AND FAILURE TO SHIP

WITHIN SUCH TIME SHALL BE CONSIDERED A MATERIAL

BREACH OF THE AGREEMENT.” Id. Such breaches are also subject

to the contractual remedies provided in the Supplier Agreement. Id.

d. “Price Guarantees . . . In the event that prior to final shipment under this

order, Supplier sells or offers to sell to others goods substantially of the

same kind as ordered herein at lower prices and/or terms more favorable to

a third party than those stated in this order, the prices and/or terms herein

shall be deemed automatically revised to equal the lowest prices and/or

most favorable terms at which Supplier shall have sold or shall have

offered such goods and payments shall be made accordingly.” Id.

e. With respect to merchandise which was the subject of purchase orders

HONG CHEN agreed that “Supplier shall warrant to ORBIT that no

merchandise sold to ORBIT infringes the patents, trademarks or

copyrights of others and shall provide to ORBIT all necessary licenses for

selling merchandise sold to ORBIT which is under license from a third

party. Id. at 7.


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f. HONG CHEN further agreed “Indemnification: Supplier shall protect,

defend, hold harmless and indemnify Purchaser from and against any and

all claims, actions, liabilities, losses, costs and expenses, including

reasonable attorney fees and costs, even is such claims groundless,

fraudulent or false, arising out of any actual or alleged infringement of nay

[sic] patent, trademark, tradedress or copyright by any merchandise sold to

the Purchaser hereunder.” Id. at 5.

g. HONG CHEN further agreed that “the goods do not infringe upon or

violate any patent, copyright, trademark, trade name, trade dress or,

without limitation, any other rights belonging to others.” Id. at 4.

h. “Supplier shall protect, defend, hold harmless and indemnify Purchaser

from and against any and all claims, actions, liabilities, losses, costs and

expenses, including attorneys’ fees and court costs, even if such claims are

groundless, fraudulent or false, arising out of any actual or alleged

infringement of any patent, trademark, or copyright by any merchandise

sold to the purchaser hereunder.” Id. at 3.

38. HONG CHEN further agreed that any failure to comply with any of the Supplier

Agreement’s Terms and Conditions would constitute a breach: “failure to comply with each and

every term of [an] order shall constitute an event of default and shall be grounds for the exercise

by Purchaser of any of the remedies provided for in these Terms and Conditions.” Id. at 4.

39. Pursuant to the Supplier Agreement, HONG CHEN was also required to provide

ORBIT with 30-days notice before assigning, factoring, or otherwise transferring the right to

receive payment under the Supplier Agreement. Id. at 1.


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40. In the event of a breach of this term, “Purchaser shall have the right to take

deductions or other set offs against any payment assigned, transferred or factored by the Supplier

and Supplier shall defend and indemnify Purchaser against and hold Purchaser harmless from

any and all lawsuits, claims, actions, damages (including reasonable attorneys fees, court costs,

obligations, liabilities, or liens) arising or imposed in connection with the assignment or transfer

or factoring of any account or right arising thereunder.” Id.

JANICE CAPENER’S Employment with ORBIT

41. JANICE CAPENER was first hired by ORBIT in 2003 as an Administrative

Assistant/Operations Coordinator. On June 16, 2003 JANICE CAPENER signed an

employment agreement with ORBIT (“The 2003 Agreement”).

42. The 2003 Agreement provided that JANICE CAPENER (a) recognized that

ORBIT had proprietary information and trade secrets that were to be protected, safeguarded and

not disclosed; (b) recognized that ORBIT had other proprietary information concerning vendors,

customers and manufacturers that she would hold in strict confidence; (c) that upon her

termination she would return all trade secret and proprietary information in written form to

ORBIT; (d) that her duty to not disclose and to protect confidential information survived the

termination of her employment; (e) that she would not compete or assist others in competing

against ORBIT for a period of 18 months after she ended her employment with ORBIT for any

reason; (f) that on her termination of employment, she would not solicit persons working for

ORBIT to work for or with her; (g) understood that the non-competition, non-disclosure and

non-solicitation obligations contained in the agreement shall be extended for the length of time

that she was in breach of any provisions contained in the agreement; (h) that if she violated an


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material provision of the agreement, ORBIT shall be entitled to all other remedies including

injunctive and equitable relief to prevent a breach of the agreement.

43. In 2005, after ORBIT had invested substantial time and resources in training

JANICE CAPENER, she was given an increase in salary and promoted to General Manager of

ORBIT’s new factory in Ningbo, People’s Republic of China.

44. As General Manager, JANICE CAPENER was in charge of the production of

Orbit® brand products in both the Ningbo factory and in other key third-party factories in various

geographic locations in China.

45. As a result of this change in employment status, on or about May 2, 2005, ORBIT

and JANICE CAPENER entered into an agreement (“The 2005 Agreement”).

46. “The 2005 Agreement” provided that JANICE CAPENER (a) recognized that

ORBIT had proprietary information and trade secrets that were to be protected, safeguarded and

not disclosed; (b) recognized that ORBIT had other proprietary information concerning vendors,

customers and manufacturers that she would hold in strict confidence; (c) that upon her

termination she would return all trade secret and proprietary information in written form to

ORBIT; (d) that her duty to not disclose and to protect confidential information survived the

termination of her employment; (e) that she would not compete or assist others in competing

against ORBIT for a period of 18 months after she ended her employment with ORBIT for any

reason; (f) that on her termination of employment, she would not solicit persons working for

ORBIT to work for or with her; (g) understood that the non-competition, non-disclosure and

non-solicitation obligations contained in the agreement shall be extended for the length of time

that she was in breach of any provisions contained in the agreement; (h) that if she violated an


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material provision of the agreement, ORBIT shall be entitled to all other remedies including

injunctive and equitable relief to prevent a breach of the agreement.

47. As General Manager of the Ningbo facility and employee and agent of ORBIT,

JANICE CAPENER owed ORBIT a fiduciary duty and a covenant of good faith and fair dealing.

ORBIT’s Intellectual Property

48. ORBIT owns U.S. Patent No. 6,874,696 (the “‘696 Patent”) entitled “Adjustable

Sprinkler Riser with Offset Joint,” owns U.S. Patent No. 6,619,570 (the “570 Patent”) entitled

“Telescoping Watering Wand,” owns U.S. Patent No. 6,109,546 entitled “Lawn Sprinkler and

bearing therefore” (the “‘546 Patent”), owns U.S. Design Patent No. 495,026 (the “‘026 Patent”)

entitled “Hose Nozzle,” owns U.S. Design Patent No. 482,428 (the “‘428 Patent”) entitled “Hose

Nozzle,” owns U.S. Patent No. 399,916 (the “916 Patent”) entitled “Missing Apparatus.” The

aforementioned patents are referred to herein as the “Patents.”

49. ORBIT is also the original innovator and designer of several other irrigation-

related products and the originator of certain trademarks, trade dress and logos, including, but

not limited to, the trademark “HARD TOP” with Trademark Registration No. 2,575,043. Orbit

has also sold sprinkler and irrigation products which have a distinctive look and feel, which

consumers and customers of ORBIT have come to associate with ORBIT. ORBIT has further

used distinctive brands, logos and packaging in connection with its sales of sprinkler and

irrigation products. ORBIT has also used distinctive coloring and distinctive product

presentations in catalogs, in trade magazines, on the internet and in retail establishments across

the country. Consumers and customers have come to associate these trademarks and this trade

dress with ORBIT.


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DEFENDANTS’ UNLAWFUL ACTS

Conspiracy

50. ORBIT is informed and believes that starting approximately in 2007, HONG

CHEN and LUO JUN entered into a conspiracy with others to harm ORBIT’s business

relationships with its customers, suppliers and other third parties. The unlawful acts taken in

furtherance of the conspiracy are set forth below.

51. At the same time or subsequently, the conspiracy was joined by JANICE

CAPENER, aka KJ, KJ Peng, Jie Kuang, Janice J. Kuang, and other aliases not yet known to

ORBIT. On information and belief, JANICE CAPENER also uses the names “Megan” and

“Mandy” in emails and otherwise when acting as part of the conspiracy in order to conceal her

identity. Alternatively, “Megan” and “Mandy” are other conspirators whose identity is not yet

known to ORBIT, and are identified as “MEGAN DOE” and “MANDY DOE” herein.

52. The conspiracy also includes DAN CAPENER, a former employee of ORBIT,

SUNHILLS, an entity created for the purposes of furthering the conspiracy, and RONG PENG,

an agent of SUNHILLS.

53. ORBIT is informed and believes that Defendant TIM MIKA joined the

conspiracy once he started working with HONG CHEN in October 2010.

54. ORBIT is further informed and believes that other currently unknown parties,

including potentially other competitors of ORBIT, also participated in the conspiracy.

55. Hereinafter those participating in the conspiracy, including but not limited to

HONG CHEN, LUO JUN, JANICE CAPENER, DAN CAPENER, SUNHILLS, RONG PENG,

TIM MIKA, MEGAN DOE, MANDY DOE, Charlie Crump, Mike Wisdom, and other parties


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not yet known to ORBIT shall be referred to as the “Conspirators” and the actions undertaken by

the Conspirators to harm ORBIT shall be referred to as the “Conspiracy.”

HONG CHEN’S Improper Patents

56. As part of the Conspiracy, commencing in 2007, without ORBIT’s knowledge

and in purposeful violation of ORBIT’s rights, HONG CHEN took ORBIT’s designs, technical

data and physical products and applied for and was granted patents in China on ORBIT’s designs

and products.

57. In applying for these patents, HONG CHEN not only misrepresented itself as the

innovator and creator of the product designs, but it also misrepresented that there were not any

prior disclosures of these designs, even though ORBIT had, prior to the wrongful filing of these

patent applications, advertised, sold, offered to sell and tested these products or slight variations

of these products, both in the United States and in China.

58. Because ORBIT has sold and offered these products for sale and publicly

displayed these products for years prior to the wrongful filing of these patent applications, the

patents are invalid.

59. When the Chinese patents were issued, HONG CHEN did not notify ORBIT of

the patents or otherwise inform ORBIT that it had usurped ORBIT’s rights in these products by

filing these applications.

60. Instead, HONG CHEN continued to solicit more business from ORBIT and

worked to expand the line of products that it manufactured for ORBIT.

61. ORBIT is further informed and believes that commencing in approximately 2009,

HONG CHEN, without ORBIT’s consent or authorization, commenced utilizing ORBIT’s

proprietary names, trademarks, trade dress and confidential information to manufacture products


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which ORBIT had developed. HONG CHEN further created tooling for such products without

ORBIT’s consent. ORBIT is informed and believes that such efforts were undertaken so that

HONG CHEN could force ORBIT to purchase patented products from HONG CHEN – even

though HONG CHEN knew that the patents it had filed were invalid.

62. ORBIT is informed and believes that HONG CHEN and LUO JUN filed for these

patents in connection with the Conspiracy and with the aid of one or more Conspirators, and

failed to inform appropriate government officials regarding facts which would have prevented

the patents from issuing, if such facts had been appropriately disclosed to these officials.

JANICE CAPENER’s Access to and Theft of ORBIT Trade Secrets

63. Throughout her employment with ORBIT, JANICE CAPENER was given

increased access to strategic information, trade secrets, names and contacts of ORBIT’S

suppliers, raw material providers, manufacturers, customers, and contacts.

64. While working in management at the Ningbo factory, JANICE CAPENER had

unlimited access to proprietary information relating to that factory, including the exact labor and

material costs of ORBIT’s products, including profit margins, costs of manufacture and

overhead.

65. JANICE CAPENER also had access to information stored on ORBIT’S intranet,

which required the use of a password to gain access to such information.

66. JANICE CAPENER also had access to other financial databases including

databases which ORBIT refers to as its “Customer Master” database, its “Product Master”

database and its “ABCD Sales” database. Access to these files was limited to those employees

given appropriate passwords. Those employees with access to this information knew that the


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information was only to be used for purposes of Orbit’s business and that this data could not be

used for any other purpose.

67. Also in the course of her employment with ORBIT and ORBIT’S contractual

relationship with HONG CHEN, JANICE CAPENER became acquainted with LUO JUN.

68. ORBIT is informed and believes that LUO JUN and JANICE CAPENER became

co-conspirators for the purpose of damaging ORBIT.

69. In April 2009, while JANICE CAPENER was working in management at

ORBIT’s Ningbo facility, JANICE CAPENER formed a company called Augusta Products LLC

(“Augusta”).

70. On information and belief, JANICE CAPENER formed Augusta for the purpose

of competing with ORBIT in violation of her contractual obligations and fiduciary duty.

71. JANICE CAPENER conspired with LUO JUN and HONG CHEN to use Augusta

to compete with ORBIT.

72. Thereafter, JANICE CAPENER rented office space in Centerville, Utah for

Augusta, and she obtained samples of irrigation and hose-end products from HONG CHEN.

73. On May 12, 2009, ORBIT informed JANICE CAPENER that her employment

would be terminated, but that she would remain on ORBIT’s payroll for six months (until

November 15, 2009) during which she would continue to work for ORBIT in a consulting role.

74. On May 13, 2009, from her office in China, JANICE CAPENER, unbeknownst to

ORBIT and without ORBIT’s authorization, intentionally and secretly downloaded highly

confidential financial information and trade secrets from ORBIT’s computer database in Utah.

75. Among other things, ORBIT is informed and believes that JANICE CAPENER

downloaded from ORBIT’S intranet Level 1 financial data relating to most, if not all, of


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ORBIT’S top 25 customer. JANICE CAPENER also downloaded selected entries from the

Customer Master, Product Master and ABCD Sales Report databases.

76. On information and belief, CAPENER downloaded this trade secret data in

conspiracy with LUO JUN and HONG CHEN.

77. On information and belief, DAN CAPENER assisted in stealing these trade

secrets from ORBIT and assisted the conspiracy by processing the data.

78. The information misappropriated by JANICE CAPENER, LUO JUN and HONG

CHEN includes the names, addresses, phone numbers and other detailed information for

ORBIT’s customers; the identification of the factory that manufactured each of the products sold

by ORBIT; ORBIT’s manufacturing costs; ORBIT’s sales prices to retailers in the United States;

ORBIT’s identification of its best-selling products; and data which could be used to calculate

ORBIT’s profit margins.

79. JANICE CAPENER’s theft of its trade secret data and confidential information

from ORBIT’s computers was confirmed when JANICE CAPENER produced the downloaded

information on or about July 15, 2011, in the course of discovery in related litigation before the

Second District Court for the State of Utah.

80. ORBIT, on information and belief, alleges that JANICE CAPENER has also

misappropriated other trade secrets from ORBIT.

81. On information and belief, JANICE CAPENER has provided ORBIT’s trade

secrets to LUO JUN and HONG CHEN and these parties, in combination, have used this data to

gain a competitive advantage in their dealings with U.S. retailers such as Walmart and Home

Depot.


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82. On information and belief, ORBIT’s trade secrets have been provided to others,

including Charlie Crump, TIM MIKA, Mike Wisdom, Walmart, Home Depot, Lowes and

possibly others.

83. In October 2009, while still employed by ORBIT, JANICE CAPENER took

additional steps in preparation for competing with ORBIT, including making plans to start her

own company called SUNHILLS, and preparing a PowerPoint presentation to show to an

individual named Charlie Crump (“Crump”), who she intended to recruit as a sales manager for

SUNHILLS. The PowerPoint presentation contained trade secret data that JANICE CAPENER

had stolen from ORBIT.

84. On or about November 15, 2009, JANICE CAPENER was terminated and left the

employ of ORBIT.

Formation of SUNHILLS

85. Within a couple weeks after leaving ORBIT, JANICE CAPENER had her friend

RONG PENG register SUNHILLS as a limited liability company in the State of California.

JANICE CAPENER had RONG PENG register the company, instead of doing it herself, in a

fraudulent attempt to circumvent her contractual obligations with ORBIT.

86. SUNHILLS sells and distributes consumer lawn and garden equipment and

products, including sprinkler irrigation products, to various wholesale and retail outlets in the

United States, in direct competition with ORBIT.

87. On information and belief, SUNHILLS makes, sells and/or offers for sale or

allows others to make, use, sell, and/or offer for sale infringing products, including, but not

limited to, various sprinkler irrigation products that infringe ORBIT’s Patents and trademarks

described above.


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88. ORBIT is informed and believes that SUNHILLS was formed to act and has acted

as an arm of HONG CHEN’s sales operations in the United States.

89. ORBIT is informed and believes that JANICE CAPENER is an owner of

SUNHILLS and that LUO JUN is either a part owner or partner of SUNHILLS.

90. In November 2009, JANICE CAPENER disclosed ORBIT’S confidential

proprietary information and trade secrets to Crump at Augusta’s office in Centerville, Utah.

JANICE CAPENER met with Crump for the purpose of recruiting him as National Sales

Manager of SUNHILLS, so that she could further hide her activities from ORBIT.

91. During this meeting, Capener showed Crump the PowerPoint presentation she had

prepared which included ORBIT sales data for Home Depot, Lowes, Walmart and Target. The

presentation also provided information concerning the top 20 products Orbit sold to The Home

Depot, specific products Orbit sold to Walmart, the top 15 products Orbit sold to Lowes and the

top 4 products Orbit sold to Target.

92. ORBIT is informed and believes this information was derived from the data

JANICE CAPENER stole from ORBIT.

93. Crump accepted employment with SUNHILLS and immediately started soliciting

business from ORBIT’s customers, including Home Depot, with the use of ORBIT’s trade secret

data stolen by JANICE CAPENER.

94. Thereafter, ORBIT is informed and believes that JANICE CAPENER,

SUNHILLS and LUO JUN utilized the trade secret data stolen by JANICE CAPENER to

identify customers and to identify specific products which were ORBIT’S best selling products

with that specific customer.


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95. ORBIT is further informed and believes that these co-conspirators also utilized

the stolen data to identify factories which were manufacturing some of these ORBIT products

and that the conspirators have contacted these factories to inquire as to whether they would sell

the products to the co-conspirators.

96. In short, by utilizing ORBIT’S stolen data, the co-conspirators have gained a

competitive advantage which allowed them to determine not only which customers they should

contact but the specific products they should offer to that customer. The co-conspirators have

also used Orbit’s confidential data to undercut pricing offered by ORBIT and obtain sourcing

information, so they could offer the exact product sold by Orbit to that customer.

97. The information stolen by the co-conspirators is not available publicly.

98. In early 2010 JANICE CAPENER inquired as to whether ORBIT would let her

out of her obligations including but not limited to her non-compete agreement with ORBIT.

99. On or about February 24, 2010, ORBIT advised JANICE CAPENER in no

uncertain terms by written letter that it would not let her out of her obligations including a non-

compete agreement.

100. Thereafter JANICE CAPENER continued to breach her covenants with ORBIT

by concealing her identity, affiliation with SUNHILLS, and her continued contacts with

ORBIT’S factories, suppliers, customers, employees, third party factories and incidental

suppliers.

101. JANICE CAPENER provided the Conspirators with descriptions and photographs

of ORBIT products, confidential and strategic information and pricing to enable Conspirators to

move forward with its plot to take business away from Plaintiff ORBIT through fraud, deceit and

other improper and illegal conduct.


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102. In furtherance of the Conspiracy, HONG CHEN, LUO JUN, SUNHILLS, and

other Conspirators also induced JANICE CAPENER to breach non-compete agreements

JANICE CAPENER has with ORBIT and further induced her to misappropriate trade secret

information from ORBIT.

103. On information and belief and in furtherance of the Conspiracy, JANICE

CAPENER and Charlie Crump used email addresses provided by HONG CHEN and acted as

agents of HONG CHEN.

JANICE CAPENER’s Violation of a TRO Issued in Related State Court Action

104. On July 13, 2010, the Second District Court for the State of Utah in Davis County

issued a Temporary Restraining Order (TRO) against JANICE CAPENER, which enjoined her

from competing against ORBIT.

105. JANICE CAPENER received a copy of the TRO on July 15, 2010, while she and

Charlie Crump were in China visiting HONG CHEN, which intended to manufacture the

products SUNHILLS planned to sell in the United States.

106. With full knowledge of the TRO, JANICE CAPENER and Crump continued to

prepare for and attend meetings scheduled with ORBIT’s customers. Thereafter, JANICE

CAPENER used aliases in her communications with Home Depot and other ORBIT customers.

107. With full knowledge, and in blatant disregard, of the TRO, JANICE CAPENER,

HONG CHEN, and LUO JUN have continued to seek business from ORBIT’s customers and

otherwise compete with ORBIT.

108. ORBIT is informed and believes that HONG CHEN induced Crump to act as its

agent and/or employee to engage in conduct on behalf of SUNHILLS and/or HONG CHEN in

violation of the TRO.


22

109. While in the process of transferring from SUNHILLS to join HONG CHEN as an

employee and/or agent, Crump had second thoughts about his involvement in the conspiracy and

broke off his relationship with SUNHILLS and HONG CHEN.

110. In October 2010, MEGAN DOE recruited TIM MIKA on behalf of HONG

CHEN and TIM MIKA was hired as a manufacturer’s representative for HONG CHEN to

replace Crump. TIM MIKA represents HONG CHEN in its dealings with U.S. retailers,

including Walmart.

111. ORBIT is informed and believes that individual Mike Wisdom works with TIM

MIKA as an agent of HONG CHEN in furtherance of the Conspiracy.

112. MEGAN DOE’s email communications with TIM MIKA on behalf of HONG

CHEN do not include a last name and her identity is unclear. ORBIT is informed and believes

that MEGAN DOE is acting on behalf of HONG CHEN as a member of the conspiracy to harm

ORBIT’S business. Alternatively, MEGAN DOE is JANICE CAPENER.

113. The name “Mandy” has also appeared in email correspondence on behalf of

HONG CHEN, without any last name or other identification. ORBIT is informed and believes

that MANDY DOE is acting on behalf of HONG CHEN as a member of the conspiracy to harm

ORBIT’S business. Alternatively, MANDY DOE is JANICE CAPENER.

114. ORBIT is informed and believes that other individuals have been hired by HONG

CHEN to take Crump’s prior role and engage in the conspiracy for the purpose of unlawfully

competing with ORBIT and violating court orders.

115. ORBIT is further informed and believes that HONG CHEN has provided TIM

MIKA and others with the proprietary trade secret data stolen from ORBIT by JANICE

CAPENER for the purpose of enabling him to unfairly compete with ORBIT.


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HONG CHEN’S Price Increases and Failure to Ship Products

116. In 2009 and 2010, as anticipated by and pursuant to the terms of the Supplier

Agreement, HONG CHEN accepted purchase orders from ORBIT and agreed to ship products to

ORBIT. Despite HONG CHEN’s acceptance of these purchase orders, commencing in the

summer and fall of 2010, HONG CHEN began demanding increased prices for the products it

had agreed to ship, claiming that it was facing price increases from its own vendors and suppliers

of raw materials. In fact, as part of its course of dealing with HONG CHEN, ORBIT would

provide HONG CHEN with initial selling season forecasts and other data, to allow HONG

CHEN to lock in prices with raw material suppliers. Such information was provided so that

HONG CHEN could meet prices provided in ORBIT’s advanced forecasts and in its purchase

orders.

117. Even though the Supplier Agreement and related terms of ORBIT purchase orders

prevented HONG CHEN from raising prices on items subject to accepted purchase orders,

ORBIT agreed to pay higher prices, due in part to the pressures associated with ORBIT’s

seasonal business and ORBIT’s need to satisfy customer demands.

118. Still, as shipping deadlines approached, HONG CHEN and/or LUO JUN refused

to ship products by the accepted purchase orders’ deadlines unless ORBIT agreed to pay for the

ordered products in full before they were shipped and to accept all products without inspection.

119. HONG CHEN’s and/or LUO JUN’s demands were contrary to the terms of the

Supplier Agreement, which provided that payments were due “TT60,” which means that

payments are not due on purchase order until sixty (60) days after the products have been

shipped.


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120. The Supplier Agreement also provides that all ordered goods must be provided in

good and undamaged condition and fit for their intended use.

121. To this end, the Agreement requires that “[a]ll goods shall be subject to inspection

and test by the purchaser and its agents or employees and any governmental agency to the extent

practicable at any and all times and places including the period of manufacture and prior to final

acceptance by the customer.”

122. Critical for ORBIT’s seasonal and time-sensitive business, the Supplier

Agreement also requires HONG CHEN and LUO JUN to ship ordered product during shipment

windows identified in accepted purchase orders.

123. The Supplier Agreement provides that “THE TIME SPECIFIED HEREIN FOR

SHIPMENT OF GOODS IS OF THE ESSENCE OF THIS AGREEMENT AND FAILURE TO

SHIP WITHIN SUCH TIME SHALL BE CONSIDERED A MATERIAL BREACH OF THE

AGREEMENT AND SUBJECT TO” the contractual remedies provided in the Supplier

Agreement.

124. As noted in greater detail below, ORBIT is informed and believes that HONG

CHEN and LUO JUN took the actions of raising prices and refusing to ship products as part of

the Conspiracy, to cause ORBIT to look bad in the eyes of its customers so that HONG CHEN,

LUO JUN, SUNHILLS and the other Conspirators could take business away from ORBIT by

supplying products at lower pricing directly to ORBIT customers.

Defendants’ Use of Trade Secrets, Misrepresentations, Bribery

125. The Conspirators have falsely informed ORBIT customers, including but not

limited to Walmart, Home Depot and Lowes, that ORBIT is nothing more than a middleman and

that the Conspirators in fact manufacture all or most of the products sold by ORBIT in the


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United States. The Conspirators also falsely claim that they are the innovators of ORBIT

products when in fact Conspirators did not innovate, but instead usurped the innovations of

ORBIT.

126. In truth, HONG CHEN has manufactured only a limited number of items for

ORBIT and the vast majority of the products ORBIT sells to its customers in the United States

are manufactured by ORBIT and/or by other suppliers based on designs provided by ORBIT.

Thus, when HONG CHEN tells ORBIT customers that HONG CHEN is ORBIT’s “main

supplier” or that ORBIT is merely a “trading company,” or otherwise suggests that HONG

CHEN is the primary manufacturer, supplier and innovator of ORBIT products, such statements

are false, misleading and deceptive and are made to harm ORBIT and to make ORBIT’s

customers believe that others, including the Conspirators, are in fact the innovators and the

primary persons behind ORBIT’s success, when in fact ORBIT is the innovator and the company

providing successful products in the market.

127. SUNHILLS has also falsely told customers that ORBIT was merely a middle

man. SUNHILLS did not manufacture any of the products it was offering to retailers and instead

offered products manufactured by HONG CHEN and, on information and belief, other

manufacturers in China. SUNHILLS also often used actual ORBIT products and pictures of

ORBIT products in sales presentations made to retailers and falsely represented that those

products were SUNHILLS products. In such instances, SUNHILLS removed ORBIT’s logo

from photos and products so customers would not know they were being deceived. In

performing these acts and the other acts described herein, ORBIT is informed and believes

SUNHILLS acted as HONG CHEN’S agent and in conspiracy with HONG CHEN.


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128. ORBIT is further informed and believes the Conspirators have also utilized

financial data, customer lists, product lists and other data stolen from ORBIT, including data

stolen by JANICE CAPENER and similar data in the possession of HONG CHEN, LUO JUN,

and SUNHILLS, but subject to the confidentiality restrictions in the Supplier Agreement. Such

information has been used to legitimize claims made to ORBIT customers that ORBIT is nothing

more than a middleman. Such data has also been used to determine, as noted above, which of

ORBIT’s products were the most profitable, so that Defendants could focus their sales efforts on

Orbit’s most profitable products.

129. ORBIT is also informed and believes that Defendants provided ORBIT customers

with data concerning which products were that customers top selling products. This information

was provided to ORBIT customers to help establish, in the customers mind, that SUNHILLS and

HONG CHEN were the manufacturers of all products and to re-enforce that ORBIT was merely

a “middle man.”

130. Because such information should be known only to ORBIT and the specific

retailer, the unlawful possession and use of this information created assurances, in the minds of

these retailers, that the false claims made by the Conspirators were in fact true.

131. ORBIT is further informed and believes the Conspirators have used ORBIT’s

stolen data to locate other factories in China and have used this data to further circumvent and

harm ORBIT’s business relationships in China.

132. ORBIT is further informed and believes the Conspirators have offered bribes,

both in China and in the United States, to gain market share and further the objectives of the

Conspiracy.


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HONG CHEN Sold Products to Competitors at Lower Prices

133. In addition, under the Supplier Agreement, HONG CHEN and LUO JUN

guaranteed the prices of the products ordered by ORBIT against HONG CHEN’s “own price

decline and against legitimate competition” until the date of shipment.

134. Specifically, the Supplier Agreement provides that “[i]n the event that prior to

final shipment under this order, Supplier sells or offers to sell to others goods substantially of the

same kind as ordered herein at lower prices and/or terms more favorable to a third party than

those stated in this order, the prices and/or terms herein shall be deemed automatically revised to

equal the lowest prices and/or most favorable terms at which Supplier shall have sold or shall

have offered such goods and payments shall be made accordingly.”

135. During the second half of 2010, when HONG CHEN and/or LUO JUN were

raising ORBIT’s prices and then refusing to ship accepted purchase orders, ORBIT is informed

and believes HONG CHEN and/or LUO JUN sold and offered to sell products to SUNHILLS, at

prices lower than the prices HONG CHEN was then offering to ORBIT. ORBIT is further

informed and believes that contrary to the terms of the Supplier Agreement, HONG CHEN

offered such products to other competitors of ORBIT including John Doe competitors that are

not yet known to ORBIT, at prices lower than those offered to ORBIT. ORBIT is further

informed and believes that contrary to the terms of the Supplier Agreement, HONG CHEN, LUO

JUN and SUNHILLS have offered ORBIT products to ORBIT customers, including Walmart,

Home Depot and Lowes at prices lower than those HONG CHEN offered to ORBIT. ORBIT is

further informed and believes that Defendants offered these products to SUNHILLS, ORBIT

customers and competitors at lower prices, during the time frame when Defendants were raising

prices to ORBIT. Many of the products offered to SUNHILLS and ORBIT’s customers were


28

products based on or which utilized ORBIT’s proprietary designs, logos, patents, trademarks and

trade dress. ORBIT is further informed and believes HONG CHEN has offered to sell ORBIT

proprietary products on the Internet, without authorization or consent from ORBIT. Orbit is

further informed and believes that HONG CHEN has represented, on the internet and elsewhere

that it is ORBIT, that ORBIT is a subsidiary of HONG CHEN and otherwise claimed to be

associated with ORBIT.

136. ORBIT is further informed and believes that the actions described in this section

were part of the Conspiracy and that one or more Conspirators, including JANICE CAPENER,

SUNHILLS, LUO JUN, TIM MIKA, MEGAN DOE, MANDY DOE and other John Doe

Defendants as yet not yet known, encouraged HONG CHEN to breach its agreement with

ORBIT, to offer prices lower then those offered to ORBIT, and, in fact, to increase prices to

ORBIT while lowering prices to others, and that all such activities were part of the Conspiracy to

damage ORBIT, take business away from ORBIT and unlawfully compete with ORBIT. As an

additional part of the Conspiracy, ORBIT is also further informed and believes that HONG

CHEN purposefully sold certain products to ORBIT using inferior materials which did not

comply with ORBIT’s specifications.

137. After HONG CHEN and LUO JUN refused to ship several accepted purchase

orders, ORBIT notified HONG CHEN and/or LUO JUN that they were in breach of the Supplier

Agreement and demanded that HONG CHEN and LUO JUN comply with the parties’ contract

and ship the products ordered in the accepted purchase orders under the terms and conditions of

the parties’ executed contract and cease infringing on ORBIT’s patents and otherwise misusing

ORBIT’s protected designs and other information.


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138. HONG CHEN refused. Instead, ORBIT is informed and believes HONG CHEN

has manufactured and sold products to ORBIT customers and competitors that had been

originally ordered by ORBIT.

139. ORBIT is further informed and believes that the Conspirators intended, as part of

the Conspiracy, to preclude ORBIT from having products to sell to its customers and then

offered the products originally manufactured or ordered to be manufactured for ORBIT to

ORBIT’s customers as part of the Conspiracy and in furtherance of the objectives of the

Conspiracy.

Factoring ORBIT’s Debt

140. Pursuant to the Supplier Agreement, HONG CHEN AND LUO JUN are required

to provide ORBIT with 30-days notice before assigning, factoring, or otherwise transferring the

right to receive payment under the Supplier Agreement.

141. Contrary to this provision and in furtherance of the Conspiracy, HONG CHEN

and LUO JUN assigned certain debt owed to it by ORBIT to defendant CHINA EXPORT.

142. This debt was assigned because HONG CHEN, LUO JUN and JANICE

CAPENER and the other co-Conspirators knew that the plans described above would likely

result in ORBIT’s refusal to pay sums otherwise owed to HONG CHEN.

Breach of the Supplier Agreement and Right to Set Off

143. As provided in the Supplier Agreement “failure to comply with each and every

term of [an] order shall constitute an event of default and shall be grounds for the exercise by

Purchaser of any of the remedies provided for in these Terms and Conditions.”

144. Upon their failure to comply with this provision, “Purchaser shall have the right

to take deductions or other set offs against any payment assigned, transferred or factored by the


30

Supplier and Supplier shall defend and indemnify Purchaser against and hold Purchaser harmless

from any and all lawsuits, claims, actions, damages (including reasonable attorneys fees, court

costs, obligations, liabilities, or liens) arising or imposed in connection with the assignment or

transfer or factoring of any account or right arising thereunder.”

145. The Supplier Agreement provides additional remedies to those provided under the

Utah Uniform Commercial Code.

146. In addition to damages, the Supplier Agreement provides ORBIT with the right to

withhold payment to HONG CHEN and LUO JUN based on their failure to comply with any

term, guarantee, or warranty.

HONG CHEN Accuses ORBIT of Patent Infringement

147. After ORBIT learned that HONG CHEN refused to honor the terms of its

previously accepted purchase orders, ORBIT approached other suppliers in China regarding

manufacturing products to replace those that HONG CHEN and LUO JUN refused to produce.

Shortly before one such factory in China was set to ship such products to the United States, the

factory was informed by Chinese custom officials that HONG CHEN had accused them of patent

infringement and the products were held at a Chinese port.

148. At the same time, this factory was also accused of other alleged irregularities

associated with exporting products to ORBIT in the United States. ORBIT is informed and

believes that the custom officials were provided with false and misleading information provided

to it by HONG CHEN, LUO JUN or other Conspirators.

149. Because these products were produced by this factory to replace products that

were the subject of prior purchase orders accepted by HONG CHEN they are subject to the

provisions of the Supplier Agreement and purchase orders noted above, which required HONG


31

CHEN to indemnify ORBIT should products manufactured pursuant to the terms of purchase

orders be the subject of patent infringement allegations.

150. In communications between LUO JUN and ORBIT representatives in China,

LUO JUN has informed ORBIT that he has the ability to stop ORBIT from shipping any

products out of China unless ORBIT agrees to certain compensation demands requested by LUO

JUN.

151. LUO JUN has further informed ORBIT that he will continue to solicit ORBIT’s

customers and assert his patents against other ORBIT products unless ORBIT meets his financial

demands.

152. As noted above, the patents which HONG CHEN and LUO JUN have obtained in

China were obtained fraudulently. HONG CHEN and LUO JUN both knew the products which

were the subject of these patents did not meet the criteria needed for patentability. For example,

among other things, these products have been freely available in China and elsewhere for many

years prior to the date the patent applications were filed.

153. ORBIT is further informed and believes that the actions and activities described in

this section of the Complaint, including the filing of patent applications and wrongful

accusations of patent infringement are part of the Conspiracy and have been enabled by one or

more Conspirators.

False Claims in Asia

154. In furtherance of the Conspiracy and again in an effort to harm ORBIT by

reducing the number of suppliers willing to work for ORBIT, Conspirators have engaged in a

systematic effort to inform suppliers in China of false facts concerning ORBIT, including false

facts concerning ORBIT’s credit worthiness and its ability to pay debts when due.


32

155. Among other things, ORBIT is informed and believes that the Conspirators have

told other suppliers in China and CHINA EXPORT that ORBIT breaches its agreements and

fails to pay its obligations when due. ORBIT suppliers and the principals of ORBIT suppliers

have also been threatened with harm, if they conduct business with ORBIT.

156. In addition, ORBIT is informed and believes that the Conspirators have also

informed others in China that the Conspirators have the ability to influence government officials

in China and will prevent and preclude products which are being manufactured from ORBIT

from leaving China. In fact, Conspirators caused at least one container of ORBIT goods to be

detained in China, forcing ORBIT to post a bond to gain the release of the container, after a

delay of several weeks.

157. ORBIT is further informed and believes Defendant CHINA EXPORT has also

made false claims regarding ORBIT to factories and suppliers in China.

Infringement

158. On information and belief, over the course of the parties’ relationship, and now

with increasing regularity, HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, MANDY

DOE, and SUNHILLS have and continue to make, sell and/or offer for sale or allow others to

make, use, sell and/or offer for sale products that infringe on ORBIT’s patents, trademarks and

trade dress.

159. Upon information and belief, HONG CHEN, LUO JUN, TIM MIKA, MEGAN

DOE, MANDY DOE, and SUNHILLS have and continue to manufacture, market, and sell over

the internet and directly to ORBIT’s existing customers products based on ORBIT’s proprietary

information, which they represent as their own, including the products made for ORBIT pursuant

to purchase orders accepted by HONG CHEN.


33

FIRST CLAIM FOR RELIEF PATENT INFRINGEMENT – 35 U.S.C. § 271

(Against Defendants HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, MANDY

DOE, SUNHILLS, JANICE CAPENER and DOES 3-10)

160. ORBIT realleges and incorporates by this reference the preceding paragraphs of

the Complaint as if fully set forth herein.

161. On April 5, 2005, the ‘696 Patent was duly and legally issued to the assignee,

ORBIT.

162. On September 16, 2003, the ‘570 Patent was duly and legally issued to the

assigned, ORBIT.

163. On August 29, 2009, the ‘546 Patent was duly and legally issued and is now

owned by ORBIT.

164. On August, 24, 2004, the ‘026 Patent was duly and legally issued to the assignee,

ORBIT.

165. On November 18, 2003, the ‘428 Patent was duly and legally issued to the

assignee, ORBIT.

166. On October 20, 1998, the ‘916 Patent was duly and legally issued.

167. ORBIT is the exclusive licensee of the ‘916 Patent.


DOE, MANDY DOE, JANICE CAPENER, and SUNHILLS have infringed and continue to

infringe the ‘696 Patent, the ‘570 Patent, the ‘546 Patent, the ‘026 Patent, the ‘428 Patent and the

‘916 Patent, (the “Patents”) by making, using, selling and/or offering to sell, or inducing or

contributing to the infringement of the Patents in the United States, including the State of Utah.


34

169. HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, MANDY DOE, JANICE

CAPENER and SUNHILLS and the Conspirators are liable for infringement of the Patents

pursuant to 35 U.S.C. § 271.

170. Defendants’ acts of infringement have caused damage to ORBIT, and ORBIT is

entitled to recover from Defendants the damages sustained by ORBIT as a result of their

wrongful acts in an amount subject to proof at trial.

171. As a consequence of the infringement complained of herein, ORBIT has been

irreparably damaged to an extent not yet determined and will continue to be irreparably damaged

by such acts in the future unless HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE,

MANDY DOE, JANICE CAPENER, and SUNHILLS are enjoined by this Court from

committing further acts of infringement.

172. Upon information and belief, one or more of Defendants’ acts of infringement

were made or will be made with knowledge of the Patents. Such acts constitute willful

infringement and make this case exceptional pursuant to 35 U.S.C. §§ 284 and 285 and entitle

ORBIT to enhanced damages and reasonable attorneys’ fees.

SECOND CLAIM FOR RELIEF BREACH OF CONTRACT

(Against Defendants HONG CHEN AND LUO JUN)


this Complaint as if fully set forth herein.

174. ORBIT has performed its obligations under the Supplier Agreement and has been

ready, willing and able to receive goods purchased from HONG CHEN and LUO JUN.


35

175. As set forth herein, HONG CHEN and LUO JUN have breached one or more of

the provisions of the Supplier Agreement; these breaches constitute a material breach of the

Supplier Agreement.

176. On information and belief, prior to shipment of ORBIT’s outstanding orders,

HONG CHEN and LUO JUN offered and/or sold to third parties goods of substantially the same

kind at lower prices and more favorable terms than HONG CHEN and LUO JUN agreed to

provide to ORBIT.

177. On information and belief, HONG CHEN and LUO JUN also disclosed and took

for their own purpose and the purpose of others, ORBIT designs, data, and other confidential

information.

178. Moreover, HONG CHEN and LUO JUN failed to match the lower prices and

more favorable terms that they provided to ORBIT competitors and/or other third parties,

including SUNHILLS; instead, HONG CHEN and LUO JUN insisted that ORBIT pay prices

above those agreed to in accepted purchase orders and listed in initial selling season forecasts.

179. HONG CHEN and LUO JUN wrongfully refused to ship goods identified in

ORBIT purchase orders until ORBIT agreed to alter the price, payment terms, and inspection

rights agreed to in the Supplier Agreement and purchase orders.

180. To date, HONG CHEN and LUO JUN have failed to ship at least four accepted

purchase orders within the agreed shipment windows, despite ORBIT’s demands that HONG

CHEN and LUO JUN deliver the goods ordered. Defendants have further failed and refused to

meet the selling season requirements for these products consistent with the Supplier Agreement

and course of conduct between the parties.


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181. HONG CHEN and LUO JUN have also filed patent applications and enforced

patents in China, threatened economic harm and threatened to sue other ORBIT suppliers in

China, contrary to ORBIT’s rights at law and in the Supplier Agreement.

182. As a direct result of these breaches, ORBIT has been damaged in an amount to be

proven at trial.

183. Pursuant to the remedies provided in the Supplier Agreement and Utah law,

ORBIT has withheld payments owed to HONG CHEN and LUO JUN as a set off or partial

payment of the damages it has incurred as a result of HONG CHEN’s and LUO JUN’s breaches.

184. ORBIT notified HONG CHEN and LUO JUN of its intention and reasons for

doing so.

185. In violation of the Supplier Agreement, HONG CHEN and LUO JUN transferred

the right to receive payment to an insurance company without first notifying ORBIT.

186. As a consequence, ORBIT is also now without knowledge concerning who is the

proper party to receive such payments.

187. On January 6, 2010, CHINA EXPORT sent ORBIT a letter demanding payment

from ORBIT.

188. CHINA EXPORT advised ORBIT that HONG CHEN and LUO JUN had

reported an unpaid balance to CHINA EXPORT as its insurer.

189. CHINA EXPORT indicated that this was a covered insurance claim and that

CHINA EXPORT was now pursuing payment of the unpaid balance.

190. Under the terms of the Supplier Agreement, ORBIT has a right of offset. Any

funds not used as an offset (if any) should be provided to such party as the Court deems is the

appropriate party to receive such funds.


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191. ORBIT is being irreparably harmed by HONG CHEN’s and LUO JUN’s

breaches, and ORBIT has no adequate remedy at law. ORBIT is therefore entitled to temporary,

preliminary, and permanent injunctions barring HONG CHEN and LUO JUN from engaging in

further acts in breach of the Supplier Agreement.

THIRD CLAIM FOR RELIEF BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING




193. HONG CHEN and LUO JUN have a duty of good faith and fair dealing in

connection with the Supplier Agreement.

194. HONG CHEN and LUO JUN have breached their duty of good faith and fair

dealing by, among other things, depriving ORBIT of the fruits of its bargain under the Supplier

Agreement, and by entering into a contract that they knew they did not intend to perform.

195. HONG CHEN and LUO JUN have further breached their duty of good faith and

fair dealing by engaging in the Conspiracy and conspiring with the Conspirators to damage

ORBIT.

196. As a result of HONG CHEN’s and LUO JUN’s breach of their duty of good faith

and fair dealing, ORBIT has been damaged in an amount to be proven at trial.

197. Moreover, ORBIT is being irreparably harmed by HONG CHEN’s and LUO

JUN’s breaches, and ORBIT has no adequate remedy at law. ORBIT is therefore entitled to

temporary, preliminary, and permanent injunctions barring HONG CHEN and LUO JUN from

engaging in further acts in breach of the Supplier Agreement.


38

FOURTH CLAIM FOR RELIEF SPECIFIC PERFORMANCE




199. Between August and November of 2010, HONG CHEN and LUO JUN accepted

at least 50 ORBIT purchase orders.

200. The Supplier Agreement and accepted purchase orders are sufficiently clear,

definite, and certain to make possible an order of specific performance.

201. Notwithstanding, HONG CHEN and LUO JUN refused and continue to refuse to

deliver the ordered products.

202. ORBIT has no adequate remedy at law for HONG CHEN’s and LUO JUN’s

failure to perform and ORBIT cannot be adequately compensated by an award of money

damages.

203. The sprinkler irrigation products manufactured by HONG CHEN and LUO JUN

for ORBIT are unique. These products were manufactured by HONG CHEN and LUO JUN

based on ORBIT’s protected designs, specifications, patents, trademarks and trade dress to meet

ORBIT’s particular needs and specifications.

204. Replacement products are not readily available in the open market.

205. As a result of the HONG CHEN’s and LUO JUN’s refusal to perform the

contract, ORBIT has been damaged in an amount to be proven at trial.

206. Moreover, ORBIT is being irreparably harmed by HONG CHEN’s and LUO

JUN’s breaches, and ORBIT has no adequate remedy at law. ORBIT is therefore entitled to


39

temporary, preliminary, and permanent injunctions ordering HONG CHEN and LUO JUN to

specifically perform their obligations under the Supplier Agreement.

FIFTH CLAIM FOR RELIEF DECLARATORY JUDGMENT

(Against Defendants HONG CHEN, LUO JUN and CHINA EXPORT)



208. In light of HONG CHEN’s and LUO JUN’s improper transfer of the right to

payment in violation of the Supplier Agreement, ORBIT is operating under a legal cloud such

that a justiciable controversy actually exists between ORBIT and the Defendants.

209. ORBIT is entitled to a declaration of the parties’ rights as follows:

a. Defendants HONG CHEN and LUO JUN breached the Supplier Agreement by

transferring their right to payment without first notifying ORBIT.

b. In light of this breach, as well as the breaches plead above, ORBIT is entitled to

withhold payment as a deduction or setoff against the payment.

c. CHINA EXPORT is barred from bringing any action or proceeding whatsoever,

or making any threat, against ORBIT or ORBIT suppliers concerning allegations

that ORBIT owes payment to CHINA EXPORT or ORBIT fails to pay claims

when due.

d. HONG CHEN and LUO JUN wrongfully patented ORBIT products in China and

such patents should be transferred to the control of ORBIT.

210. ORBIT is further entitled to an injunction requiring Conspirators to stop their

unlawful activities.


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SIXTH CLAIM FOR RELIEF INTENTIONAL INTERFERENCE WITH ECONOMIC RELATIONS

(Against Defendants HONG CHEN, LUO JUN, CHINA EXPORT, TIM MIKA, MEGAN DOE, MANDY DOE, JANICE CAPENER, DAN CAPENER, SUNHILLS, RONG PENG,

and DOES 3-10)



212. This is a cause of action for intentional and willful interference with ORBIT’s

existing and prospective economic and contractual relationships.

213. At all material times ORBIT had economic and contractual relationships with

retail customers, third-party factories, vendors, employees and managers at various facilities

around the world, as well as suppliers of incidental services including packaging and freight

services.

214. At all material times Defendants above named or each of them knew or should

have known that ORBIT had patents, trademarks, trade dress and copyrights in and to their

products and the depiction of their products.

215. That at all material times, conspiring Defendants offered the proprietary products

of ORBIT to its major customers as if they were their own.

216. That at all material times, conspiring Defendants offered the proprietary products

of ORBIT on web sites, in catalogues and sales brochures, holding themselves out as owners of

these proprietary products.

217. Upon information and belief, Defendants have made false or misleading

statements and representations to third parties, including statements to ORBIT’s customers and


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ORBIT suppliers, regarding ORBIT’s products and designs, as well as the nature of its business

model.

218. ORBIT is also informed and believes HONG CHEN, LUO JUN and CHINA

EXPORT have made false claims regarding ORBIT’s ability to pay its debts and has otherwise

discouraged such suppliers from working with ORBIT.

219. Defendants have made additional false and damaging representations as described

in this Complaint.

220. ORBIT is further informed and believes Defendants have attempted to purchase

products from ORBIT’s vendors in China, using the data stolen by JANICE CAPENER and

otherwise disrupted ORBIT’s relationship with these vendors.

221. Without access to ORBIT’s trade secrets, Defendants would not have access to or

knowledge of the specific vendors supplying ORBIT with its products.

222. ORBIT is further informed and believes that Defendants and others have

encouraged JANICE CAPENER to violate court orders and to compete against ORBIT in

violation of these orders, further harming ORBIT’s economic interests.

223. Upon information and belief HONG CHEN also applied for patents on ORBIT’s

designs and specifications, with knowledge that DONFANG and/or LUO JUN did not invent or

create the designs and with knowledge and belief that ORBIT created and owned the designs and

that ORBIT had disclosed the products and designs to the public for many years.

224. After ORBIT insisted on enforcing the terms of its contract with HONG CHEN

and refused to pay price increases, HONG CHEN asserted infringement of its Chinese patents

after manufacturing ORBIT’s products for several years, and after accepting purchase orders for

the products and manufacturing the products that were to be shipped directly to ORBIT’s


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customers. HONG CHEN and LUO JUN have further interfered with ORBIT’s economic

relationships by using ORBIT trade secrets in manners not authorized by the Supplier

Agreement, utilizing trade secrets stolen by the Capeners and by entering into the other acts of

the Conspiracy and acting with and on behalf of the Conspirators as noted above.

225. ORBIT is also informed and believes that the Conspirators either have improperly

influenced officials in China and perhaps others and/or claimed to have the ability to influence

government officials and others to prevent products from being shipped outside of China and/or

to gain business opportunities in the United States.

226. All of these actions constitute an intentional interference with ORBIT’s

customers, including Walmart, Home Depot and Lowes.

227. These actions have also interfered with ORBIT’s relationships with its other

suppliers in China, specifically the actions of CHINA EXPORT and HONG CHEN have created

concerns among other Chinese manufacturers that ORBIT may withhold funds from them if they

manufacture products for ORBIT.

228. The above actions constitute actions taken for an improper purpose and/or by

improper means.

229. Defendants have caused damage to ORBIT, its business, goodwill, and reputation,

and these actions constitute wrongful and intentional interference with ORBIT’s economic

relations.

230. Because these acts are willful and malicious ORBIT is also entitled to punitive

damages.


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SEVENTH CLAIM FOR RELIEF TORTIOUS INTERFERENCE

(Against Defendants LUO JUN, SUNHILLS, JANICE CAPENER, and DAN CAPENER)



232. Upon information and belief, Defendants have intentionally induced HONG

CHEN to breach its agreement with ORBIT. As described in greater detail above, these actions

have been undertaken as part of the Conspiracy and in connection with the Conspirators.

233. These actions were undertaken for improper purposes and by use of improper

means.

234. As a legal consequence of this conduct, ORBIT has been damaged, in amounts to

be proven at trial.


damages.

EIGHTH CLAIM FOR RELIEF TORTIOUS INTERFERENCE WITH JANICE CAPENER’S CONTRACT


DOE, SUNHILLS, RONG PENG and DOES 3-10)



237. Upon information and belief, HONG CHEN, LUO JUN, TIM MIKA,

SUNHILLS, MEGAN DOE, MANDY DOE, and RONG PENG have intentionally induced

JANICE CAPENER to breach her non-compete agreements with ORBIT. As described in


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greater detail above, these actions have been taken as part of the Conspiracy and in connection

with the Conspirators.

238. Orbit is further informed and believes that HONG CHEN, LUO JUN, TIM

MIKA, SUNHILLS, MEGAN DOE, MANDY DOE, and RONG PENG have encouraged

JANCE CAPENER to violate court orders and to compete against ORBIT in violation of these

orders, further harming ORBIT’s economic interests.

239. These actions were taken for improper purposes and by the use of improper

means.


be proven at trial.


damages.

NINTH CLAIM FOR RELIEF DEFAMATION AND INJURIOUS FALSEHOOD


DOE, CHINA EXPORT, SUNHILLS, JANICE CAPENER, and DOES 3-10)




DOE, MANDY DOE, SUNHILLS, JANICE CAPENER, and/or CHINA EXPORT have

knowingly made false statements about ORBIT or its products and/or services.

244. Upon information and belief, recipients of statements understood the meaning of

the defamatory meaning of the statements.


45

245. Upon information and belief, Defendants’ conduct was intentional and has caused

economic harm to ORBIT and has harmed ORBIT’s reputation.

246. The actions of HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, MANDY

DOE, JANICE CAPENER and SUNHILLS constitute business defamation.

247. The actions of HONG CHEN, LUO JUN, TIM MIKA, JANICE CAPENER,

MEGAN DOE, MANDY DOE, and SUNHILLS constitute injurious falsehood.


be proven at trial.


damages.

TENTH CLAIM FOR RELIEF FALSE ADVERTISING – 15 U.S.C. § 1125


DOE, SUNHILLS, JANICE CAPENER and DOES 3-10 and DOES 3-10)



251. HONG CHEN and SUNHILLS sell and offer to sell ORBIT-designed products as

their own and as the result of their own innovation.

252. The misrepresentations of HONG CHEN, LUO JUN, TIM MIKA, JANICE

CAPENER, MEGAN DOE, MANDY DOE, and SUNHILLS, in commercial advertising and/or

promotion, including sales and marketing calls and appointments, that HONG CHEN and/or

SUNHILLS is the innovator of the products it manufactures, that ORBIT acts as its middle man

and that they manufacture most of ORBIT’s products are literally false and/or misleading as they


46

misrepresent the nature, characteristics, and/or qualities of their products and/or commercial

activities.

253. Defendants’ false and/or misleading representations of fact are made in interstate

commerce.

254. Defendants’ misrepresentations regarding their relationship with ORBIT and their

role in producing ORBIT brand sprinkler irrigation products are material in that consumers rely

on these misrepresentations when making purchasing decisions.

255. As a result of Defendants’ actions in commercial advertising and promotion, there

is actual deception or at least a tendency to deceive a substantial portion of the intended

audience.

256. Defendants’ actions are likely to cause injury and/or a loss in goodwill, thus

violating 15 U.S.C. § 1125(a).

257. On information and belief, Defendants’ actions are willful and deliberate.

258. Defendants’ false and/or misleading advertising has caused ORBIT actual

damages in an amount to be proven at trial. Such damages should be trebled as allowed by 15

U.S.C. § 1117(a).

259. ORBIT is further entitled to recover Defendants’ profits, the amount of which is

currently unknown by ORBIT, and which amount should be trebled as allowed by 15 U.S.C. §

1117(a).

260. This is an exceptional case pursuant to 15 U.S.C. §1117(a), and ORBIT is

therefore entitled to recover its attorney fees from Defendants.

261. Pursuant to 15 U.S.C. § 1117(a), ORBIT is also entitled to recover its costs of

suit.


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262. ORBIT is being irreparably harmed by Defendants’ false and/or misleading

advertising and ORBIT has no adequate remedy at law. ORBIT is therefore entitled to

preliminary and permanent injunctive relief barring Defendants from engaging in further acts

violative of 15 U.S.C. § 1125(a).

ELEVENTH CLAIM FOR RELIEF VIOLATION OF TRUTH IN ADVERTISING – UTAH CODE § 13-11a-3





264. HONG CHEN and SUNHILLS sell and offer to sell ORBIT-designed products as

their own and as the result of their own innovation.

265. The misrepresentations of HONG CHEN, LUO JUN, TIM MIKA, JANICE

CAPENER, MEGAN DOE, MANDY DOE, and SUNHILLS, in commercial advertising and/or

promotion, including sales and marketing calls and appointments, that HONG CHEN and/or

SUNHILLS is the innovator of the products it manufactures, that ORBIT acts as its middle man

and that they manufacture most of ORBIT’s products are literally false and/or misleading as they

misrepresent the nature, characteristics, and/or qualities of their products and/or commercial

activities.

266. Defendants’ misrepresentations regarding their relationship with ORBIT and their

role in producing ORBIT brand sprinkler irrigation products cause likelihood of confusion or of

misunderstanding as to, inter alia, the source, sponsorship, approval, or certification of goods.

267. On information and belief, Defendants’ actions are willful and deliberate.


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268. Defendants’ false and/or misleading advertising has caused ORBIT actual

damages in an amount to be proven at trial.

269. Pursuant to Utah Code § 13-11a-4(c), ORBIT is also entitled to recover its costs

of suit and attorneys’ fees.

TWELFTH CAUSE OF ACTION TRADEMARK INFRINGEMENT – 15 U.S.C. § 1114




the Complaint as if fully set forth herein

271. Upon information and belief, the use of the trademark HARD TOP by Defendants

in connection with its sprinkler and irrigation products is identical to ORBIT’s federally

registered mark, namely U.S. Trademark Reg. No. 2,575,043.

272. Additionally, the goods sold by Defendants in connection with the HARD TOP

mark are closely related and/or identical to and sold and marketed through the same channels and

to the same consumers as the goods sold by ORBIT in connection with its federally registered

mark.

273. Accordingly, the use of HARD TOP in connection with sprinkler and irrigation

products is likely to cause confusion, or cause mistake, or to deceive consumers in light of

ORBIT’s federally registered mark.


in connection with its sprinkler and irrigation products has infringed ORBIT’s rights pursuant to

the Lanham Act, 15 U.S.C. § 1114 and under the common law.


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275. Upon information and belief, ORBIT has suffered actual damages as a result of

Defendants’ trademark infringement in an amount to be proven at trial. Additionally, the harm

to ORBIT arising from Defendants’ acts is not fully compensable by money damages. ORBIT

has suffered, and continues to suffer, irreparable harm that has no adequate remedy at law and

that will continue unless Defendants’ conduct is preliminarily and permanently enjoined.

276. Upon information and belief, Defendants’ continued use of a confusingly similar

trademark is willful and intentional. As a result, ORBIT is further entitled to treble damages and

an award of costs and attorneys’ fees.

THIRTEENTH CAUSE OF ACTION TRADEMARK AND TRADE DRESS INFRINGEMENT – 15 U.S.C. § 1125






in connection with its sprinkler and irrigation products as well as its marketing and sale is similar

to the ORBIT federally registered mark, namely HARD TOP U.S. Trademark Reg. No.

2,575,043.

279. In addition, ORBIT has sold sprinkler and irrigation products which have a

distinctive look and feel which consumers and customers of ORBIT have come to associate with

ORBIT. ORBIT has further used distinctive brands, logos and packaging in connection with its

sales of sprinkler and irrigation products. ORBIT has also used distinctive coloring and a

distinctive presentation of products in catalogs and trade magazines or the internet and in stores.

Such distinctive trademarks and trade dress (hereinafter “ORBIT Trademarks and Trade Dress”)


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are rights belonging to ORBIT and rights which have been wrongfully misappropriated by

Defendants.

280. Additionally, the sprinkler and irrigation goods sold by Defendants are closely

related to and sold and marketed through the same channels and to the same consumers as the

goods sold by ORBIT in connection with ORBIT Trademarks and Trade Dress.

281. Accordingly, the use by Defendants of ORBIT’s Trademarks and Trade Dress in

connection with sprinkler and irrigation products is likely to cause confusion, or cause mistake,

or to deceive consumers in light of ORBIT’s pre-existing rights.

282. Upon information and belief, the use of the ORBIT’s Trademarks and Trade

Dress by Defendants in connection with their sprinkler and irrigation products has infringed

ORBIT’s rights pursuant to the Lanham Act, 15 U.S.C. § 1125 and under the common law.

283. Upon information and belief, ORBIT has suffered actual damages as a result of

Defendants’ infringement in an amount to be proven at trial. Additionally, the harm to ORBIT

arising from Defendants’ acts is not fully compensable by money damages. ORBIT has suffered,

and continues to suffer, irreparable harm that has no adequate remedy at law and that will

continue unless Defendants’ conduct is preliminarily and permanently enjoined.

284. Upon information and belief, Defendants’ continued use of confusingly similar

trademarks and trade dress is willful and intentional. As a result, ORBIT is further entitled to

treble damages and an award of costs and attorneys’ fees.


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FOURTEENTH CAUSE OF ACTION UNFAIR COMPETITION, UTAH CODE ANN. §§13-5A-102, 103 AND UTAH

COMMON LAW

(Against Defendants HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, MANDY DOE, SUNHILLS, JANICE CAPENER, and DOES 3-10)


the Complaint as if fully set forth herein

286. ORBIT owns all right, title and interest in and to U.S. Trademark Reg. No.

2,575,043. ORBIT also has common law rights in the ORBIT’s Trademarks and Trade Dress for

use in association with various products, including sprinkler and irrigation products, as well as

the marketing and sales of such products.

287. Upon information and belief, the use of ORBIT’s Trademarks and Trade Dress by

Defendants in connection with the sale and offer to sell of Defendants’ sprinkler and irrigation

products has infringed ORBIT’s rights, as noted above.

288. Additionally, the goods sold by Defendants are closely related to the goods sold

by ORBIT.

289. Accordingly, the use of ORBIT’s Trademarks and Trade Dress in connection with

sprinkler and irrigation products is likely to cause confusion, or cause mistake, or to deceive

consumers in light of ORBIT’s pre-existing rights.

290. By engaging in the above-described activities, Defendants have infringed

ORBIT’s Trademarks and Trade Dress thereby engaging in unfair competition under Utah Code

Ann. §§13-5a-102, 103 and under Utah common law.

291. ORBIT has suffered actual damages as a result of unfair business practices by

Defendants in an amount to be proven at trial. Additionally, the harm to ORBIT arising from


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these acts by Defendants is not fully compensable by money damages. ORBIT has suffered, and

continues to suffer irreparable harm that has no adequate remedy at law and that will continue

unless this unfair conduct by Defendants is preliminarily and permanently enjoined.

Furthermore, ORBIT is entitled to its attorneys’ fees and costs.

FIFTEENTH CLAIM FOR RELIEF MISAPPROPRIATION OF TRADE SECRETS


DOE, and DOES 3-10)



293. Information regarding ORBIT’s designs and technical data, customer lists and

data, and financial information acquired by Conspirators pursuant to an employment or

contractual relationship with ORBIT are proprietary and confidential and constitute trade secrets

under the Utah Uniform Trade Secrets Act, Utah Code Ann. § 13-24-1 (2010) (“Proprietary

Information”).

294. The Proprietary Information is known only to ORBIT and certain of its authorized

employees and agents, and is not generally known to or ascertainable by the public. The

information thereby derives independent economic value.

295. ORBIT engages in extensive efforts to keep the Proprietary Information secret,

including restricting disclosure of such Proprietary Information only to those employees and

agents who have a specific need to know such information.

296. ORBIT is informed and believes, and on that basis alleges that, by their actions

described herein, Conspirators have willfully and maliciously misappropriated and continue to

misappropriate Proprietary Information of ORBIT by improper means.


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297. ORBIT is being irreparably harmed by the Conspirators’ misappropriation of

ORBIT’s Proprietary Information, and has no adequate remedy at law. ORBIT is therefore

entitled to injunctive relief barring the Conspirators, including HONG CHEN, LUO JUN, TIM

MIKA, MEGAN DOE and MANDY DOE from misappropriating ORBIT’s Proprietary

Information.

298. Furthermore, ORBIT has been damaged by the Conspirators’ misappropriations

of ORBIT’s Proprietary Information in an amount to be determined at trial, and the Conspirators

have been unjustly enriched by their misappropriations.

299. ORBIT is also entitled to recover double its damages and its attorneys’ fees in

light of the Conspirators’ willful and malicious misappropriations of ORBIT’s Proprietary

Information.

SIXTEENTH CLAIM FOR RELIEF VIOLATION OF COMPUTER FRAUD & ABUSE ACT (“CFAA”), 18 U.S.C. § 1030

(Against Defendants JANICE CAPENER, HONG CHEN,

LUO JUN, and DAN CAPENER)



301. ORBIT’s computer system, which was illegally accessed by JANICE CAPENER,

is used in interstate commerce and is a protected computer under the CFAA.

302. With the assistance of DAN CAPENER, JANICE CAPENER intentionally

accessed a protected computer at ORBIT and obtained information without authorization and

through conduct that exceeded any authorized access.


54

303. Through her unauthorized and illegal conduct, JANICE CAPENER obtained

information of value. On information and belief, the value of any improper use of ORBIT’s

computer by JANICE CAPENER was in excess of $5,000.

304. JANICE CAPENER and DAN CAPENER acted in combination and conspiracy

with and/or as the agent for HONG CHEN AND LUO JUN. HONG CHEN AND LUO JUN

have knowingly and intentionally encouraged and participated in the foregoing wrongful conduct

by JANICE CAPENER, to the benefit of HONG CHEN and LUO JUN, and are thereby liable or

vicariously liable for such conduct.

305. By the foregoing conduct, JANICE CAPENER, DAN CAPENER, HONG CHEN

and LUO JUN violated the provisions of 18 U.S.C. § 1030(a) and are liable to ORBIT under 18

U.S.C. § 1030(g).

SEVENTEENTH CLAIM FOR RELIEF BREACH OF FIDUCIARY DUTY

(Against Defendants JANICE CAPENER and DAN CAPENER)



307. As an employee, manager and consultant for ORBIT, JANICE CAPENER had

fiduciary duties to ORBIT.

308. As an employee and agent for ORBIT, DAN CAPENER had fiduciary duties to

ORBIT.

309. Defendants’ contractual breaches, defamation, competition, interference, and

other wrongful conduct violated their fiduciary duties to ORBIT.


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310. ORBIT has been damaged by Defendants’ breaches of her fiduciary duties in an

amount to be proven at trial.

EIGHTEENTH CLAIM FOR RELIEF UNJUST ENRICHMENT

(Against Defendants HONG CHEN, LUO JUN, TIM MIKA, SUNHILLS, MEGAN DOE,

MANDY DOE, RONG PENG, DAN CAPENER, JANICE CAPENER and DOES 3-10)



312. As a direct and proximate result of Defendants’ unlawful conduct, Defendants

have been unjustly enriched to ORBIT’s detriment.

313. By their conduct, Defendants have misappropriated the business success, contacts,

relationships, and goodwill generated by ORBIT over the past years and are thereby unjustly

enriched.

314. ORBIT is entitled to judgment in an amount to be proven at trial for the unjust

enrichment conferred upon Defendants to the detriment of ORBIT.

NINETEENTH CLAIM FOR RELIEF CONSPIRACY

(Against All Defendants)



316. Defendants knowingly joined and agreed to a plan to misappropriate ORBIT’s

trade secrets, interfere with its existing and potential customer relationships, and other business

relationships in violation of applicable law.


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317. Defendants combined with each other and the Conspirators to make the

misrepresentations and omissions described in this Complaint.

318. Each of the misrepresentations and omissions described herein and the

transactions which led to them were overt acts undertaken in furtherance of these conspiracies.

319. As a direct result, ORBIT has been damaged in an amount to be proven at trial.

320. Based on Defendants’ intentional and malicious conduct, ORBIT also is entitled

to recover punitive damages from Defendants.

PRAYER FOR RELIEF

WHEREFORE, ORBIT respectfully prays for the following relief:

1. Judgment that HONG CHEN, LUO JUN, TIM MIKA, SUNHILLS, MEGAN

DOE, MANDY DOE, and JANICE CAPENER have each infringed the ‘696 Patent, the ‘570

Patent, the ‘546 Patent, the ‘026 Patent, the ‘428 Patent and the ‘916 Patent.

2. An order requiring HONG CHEN, LUO JUN, TIM MIKA, SUNHILLS, MEGAN

DOE, MANDY DOE, and JANICE CAPENER to account for and pay to ORBIT all damages

caused by their infringement of the 696 Patent, the ‘570 Patent, the ‘546 Patent, the ‘026 Patent,

the ‘428 Patent and the ‘916 Patent, whether lost profits or a reasonable royalty, and to enhance

such damages by three times in light of Defendants’ willful infringement, all in accordance with

35 U.S.C. § 284;

3. Judgment that Defendants’ use of ORBIT Trademarks and Trade Dress, or

trademarks and trade dress confusingly similar thereto, is likely to cause confusion and will

result in unfair competition under Federal and State law.

4. Entry of a permanent injunction pursuant to 35 U.S.C. § 283 enjoining HONG

CHEN, LUO JUN, TIM MIKA, SUNHILLS, MEGAN DOE, MANDY DOE, and JANICE


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CAPENER, their officers, agents, servants, employees and those persons in active concert or

participation with them from further acts of patent infringement, trademark infringement and

trade dress and the entry of a permanent judgment enjoining HONG CHEN,LUO JUN, TIM

MIKA, SUNHILLS, MEGAN DOE, MANDY DOE, and JANICE CAPENER, and their

officers, agents, servants, employees and those persons in active concert or participation with

them from competing against Orbit or from engaging in any further acts violative of Federal and

State law.

5. And order requiring HONG CHEN and LUO JUN to transfer the Chinese patents

to ORBIT.

6. An order that ORBIT be granted pre-judgment and post-judgment interest on the

damages caused to it by reason of Defendants’ patent infringement;

7. A declaration by the Court that this is an exceptional case and that ORBIT be

granted its reasonable attorneys’ fees in accordance with 35 U.S.C. § 285 and 15 U.S.C.

§1117(a);

8. A judgment for punitive damages, three times ORBIT’s actual damages, in an

amount to be determined at trial.

9. Judgment that HONG CHEN and LUO JUN have breached their contracts and

duty of good faith and fair dealing with ORBIT, interfered with ORBIT’s contracts and business

relations, misappropriated ORBIT trade secrets, violated the CFAA, were unjustly enriched, and

engaged in false advertising, unfair competition, defamatory conduct, and conspiracy.

10. Judgment that TIM MIKA, MEGAN DOE, and MANDY DOE interfered with

ORBIT’s economic relations, misappropriated ORBIT’s trade secrets, were unjustly enriched,

and engaged in defamation, false advertising, unfair competition and conspiracy.


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11. An order compelling HONG CHEN, LUO JUN, TIM MIKA, MEGAN DOE, and

MANDY DOE, to account to ORBIT for their profits arising from the acts complained of herein,

and that ORBIT be awarded treble HONG CHEN’s, LUO JUN’s, TIM MIKA’S, MEGAN

DOE’s, MANDY DOE’s, profits, in accordance with the accounting demanded.

12. An order that the Supplier Agreement and accepted purchase orders for ORBIT

sprinkler irrigation parts be specifically performed.

13. A declaratory judgment barring CHINA EXPORT from pursuing payment under

the Supplier Agreement, from making defamatory statements about ORBIT, and from

blacklisting ORBIT in China.

14. Judgment that JANICE CAPENER intentionally interfered with ORBIT’s

contracts and economic relations, breached her fiduciary duty to ORBIT, violated the CFAA,

was unjustly enriched, and engaged in false advertising, defamatory conduct, unfair competition,

and conspiracy.

15. An order compelling JANICE CAPENER to account to ORBIT for her profits

arising from the acts complained of herein, and that ORBIT be awarded treble JANICE

CAPENER’s profits, in accordance with the accounting demanded.

16. Judgment that SUNHILLS, RONG PENG, and DAN CAPENER intentionally

interfered with ORBIT’S contracts and economic relations, were unjustly enriched, and engaged

in false advertising, defamatory conduct, unfair competition, and conspiracy.

17. Judgment awarding ORBIT the amount by which Defendants were unjustly

enriched.

18. For an order that Defendants promulgate advertising to correct and/or prevent any

consumer confusion, false associations, or false representations they have created or made in the


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marketplace, and/or compensate ORBIT for the advertising and other expenditures necessary to

dispel any such consumer confusion, false associations, or false representations.

19. For an order that Defendants cancel all pending orders for any products that were

or are the subject of false and/or misleading advertising, including, without limitation,

advertising that misrepresents the nature, quality, or characteristics of their products.

20. For a declaration of the parties’ respective rights as indicated above.

21. An order awarding pre- and post-judgment interest.

22. An award for ORBIT’s costs of suit, including reasonable expenses and attorneys

fees.

23. Such other and further relief as contemplated by this Complaint and/or as the

Court deems just and proper.

JURY DEMAND

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, ORBIT demands a trial by

jury of all issues so triable.

DATED this 26th day of April, 2012.

RAY QUINNEY & NEBEKER P.C. By /s/ Liesel B. Stevens

Mark M. Bettilyon Liesel B. Stevens Greg S. Ericksen Attorneys for Plaintiffs


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CERTIFICATE OF SERVICE

On the 26th day of April, 2012, the foregoing SECOND AMENDED COMPLAINT

was filed electronically with the Clerk of the United States District, District of Utah Central

Division, using the CM/ECF system which sent notification of such filing to the following:

Michael G. Brady BRADY LAW CHARTERED St. Mary’s Crossing 2537 W. State Street, Suite 200 Boise, ID 83702 �

Frank J. Dykas DYKAS & SHAVER LLP P. O. Box 877 Boise, ID 83701-0877�

Kenneth R. Shemin SHEMIN LAW FIRM, PLLC 3333 Pinnacle Hills Parkway, Suite 603 Rogers, AR 72758 �

Jean-Claude Mazzola WILSON ELSER MOSKOWITZ EDELMAN & DICKER, LLP 150 East 42nd Street New York, NY 10017-5639 �

/s/ Jeanette Evans

1171466


Orbit Irrigation 2nd Amended Complaint

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Transcript of Orbit Irrigation 2nd Amended Complaint