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Winston Company v. Redman & Associates et. al

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Winston Company v. Redman & Associates et. al.

Text of Winston Company v. Redman & Associates et. al

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA (1) WINSTON COMPANY, INC., an Oklahoma Corporation Plaintiff, vs. (2) REDMAN & ASSOCIATES, LLC , a foreign limited liability company; (3) MELVIN REDMAN, an individual; and (4) WAL-MART STORES, INC., a foreign corporation Defendants. Case No.: 12-CV-646-CVE-TLW

COMPLAINT COMES NOW the Plaintiff, Winston Company, Inc. (Winston) and for its cause of action against the Defendants states and alleges as follows: JURISDICTION AND VENUE 1. This action is brought pursuant to 35 U.S.C. 271 for patent infringement,

and thus this Court has subject matter jurisdiction over the action. 2. 3. Additionally, this Court has diversity jurisdiction over this matter. Winston Company, Inc., is an Oklahoma corporation with its principal

place of business in Tulsa, Oklahoma. 4. Upon information and belief, Redman & Associates, LLC (R&A) is an

Arkansas limited liability company with its principal place of business in Arkansas. 5. Upon information and belief, Melvin Redman (Redman) is a resident of

Bentonville, Arkansas.

6.

Upon information and belief, Wal-Mart Stores, Inc. (Wal-Mart) is a

Delaware corporation with its principal place of business in Arkansas. 7. The amount in controversy in this action is in excess of $75,000.00,

exclusive of interest and costs. 8. This Court has personal jurisdiction over Redman and R&A, as they have

had systematic contacts with Tulsa, Oklahoma and the Northern District of Oklahoma, both related to the subject matter of this case and otherwise. 9. This Court has personal jurisdiction over Wal-Mart, as it has purposefully

availed itself of this market with systematic contacts, including building numerous WalMart stores within the Northern District of Oklahoma and selling the specific products at issue in those stores. 10. Venue is proper in this District, as many of the complained-of acts have

occurred in this District, and Redman and R&A have consented to the venue by virtue of the Teaming Agreement (as set forth below). RELEVANT FACTS 11. Winston is a family-owned company that has sold chemicals and related

itemsincluding household chemicals, pond treatment, pet chemicals, and automotive chemicalsto stores such as Wal-Mart for many years. 12. In November 2009, Winston was made aware of an issue with another

Wal-Mart vendor. Winston brokered a deal with Wal-Mart and the other interested parties (including Disney Enterprises, Inc.) to assume goods that the other Wal-Mart vendor was unable to properly supply to Wal-Mart. These goods were largely Disney-

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branded toys, particularly 6-volt powered battery-operated ride-on toys known as quads. 13. After this deal, Winston was appointed as the vendor of record for Wal-

Marts and Disneys 6-volt ride-on toy business, delivering millions of dollars of toys every year to be sold in Wal-Mart stores nationwide. These toys were mainly quads, scooters, and bicycles. 14. Around the time of the deal, Winston made contact with Defendant

Melvin Redman to assist with its vendor relationship with Wal-Mart. Redman was a longtime high-level employee with Wal-Mart before leaving and beginning his own business known as Redman & Associates. Redman represented that he and/or R&A could assist Winston with its vendor relationship and contracts with Wal-Mart. 15. As a result of Redmans representations, Winston entered into a Teaming

Agreement with R&A to create a Venture to provide certain products to Wal-Mart. See Teaming Agreement, attached as Exhibit 1. The Teaming Agreement provided that R&A would manage and maintain the sales and supply chain for the Products (which were identified as quads, scooters, and bicycles) and Winstons relationship with WalMart, and assist with licensing and other agreements with parties such as Disney, Marvel, and Golden Wheel America. Winston agreed to do a host of other things, including maintaining accounts, obtaining financing, using its Wal-Mart vendor number, creating budgets and financial statements, and other finance-related responsibilities. Additionally, the Teaming Agreement provides that it shall be construed in accordance with the laws of the State of Oklahoma.

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16.

The Teaming Agreement provided that neither party would directly or

indirectly sell or participate in the purchase, sale or distribution of the Products during the term of the Agreement except through the Venture without written consent of the other party. See Exhibit 1 at paragraph 4. 17. The Teaming Agreement further provided that in the event of a breach of

the Agreement, the non-breaching party may seek recovery of damages suffered, including its attorney fees and costs. See Exhibit 1 at paragraph 7. See also paragraph 21 (prevailing party of any litigation brought to enforce the terms of the Teaming Agreement is entitled to attorney fees and costs). 18. During the course of the relationship between Redman, R&A, and

Winston, Winston determined a new type of box would be beneficial to the display of its quads. Specifically, they determined that a box that would still enable customers to view the product and even see if a child would fit properly on the quad would have more utility than a disassembled quad inside a closed box, and was not currently being provided in the marketplace. As a result, Winston created such a box for use with the quads it provided Wal-Mart. 19. The box design became the subject of a Design Patent, specifically Patent

# D666,903. See Patent # D666,903, attached as Exhibit 2. (the 903 Patent ) The Application was filed in June 2011, listing the following inventors: John Ralph McIntosh (then and current Chief Operating Officer at Winston), Melvin C. Redman, and Neal Winston Zahn, (then and current President of Winston). Together with the Application, all three listed inventors signed a Patent Assignment, assigning all rights, title, and interest in the Patent to Winston Company, Inc. See Assignment, attached as Exhibit 3.

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That Assignment was filed with the U.S. Patent and Trademark Office on June 8, 2011, signed by all three inventors. 20. Additionally, a Patent Application was filed for a Utility Patent on the

box. That Application was also filed in June 2011, listing the same three inventors. See Application # 13/161,288, attached as Exhibit 4. Likewise, an Assignment of all rights, title, and interest in the Utility Patent was executed by McIntosh, Redman, and Zahn and filed with the U.S. Patent and Trademark Office on June 16, 2011. Assignment, attached as Exhibit 5. 21. The Venture between R&A and Winston that was governed by the See Second

Teaming Agreement went forward in 2010 and 2011 with success. Winston provided millions of dollars in merchandise to Wal-Mart for sales in its stores. In fact, on Black Friday (the day after Thanksgiving) in 2011, two Winston quads were the top two toys sold at Wal-Mart nationwide (by revenue). 22. In January 2012, Wal-Mart began receiving complaint calls from

customers regarding the quads. The issue was that the manufacturer (located in China) had (without Winston knowing) included the wrong battery and charger combination, so they would not charge. This led to thousands of returns and complaints that negatively impacted Winstons payment for the products. 23. As a result, in early 2012, the Venture determined it would need to use a

separate vendor number owned by R&A to vend certain products, as a one-time solution. Since that time, however, R&A and/or Redman havewithout consent or actual notice to Winstontaken over and improperly severed Winstons relationship with the Chinese

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manufacturer and Wal-Mart and begun vending the quads to Wal-Mart directly, outside the structure of the Venture. 24. R&A and/or Redman have been using the boxes designed by Winston and

which are covered by the 903 Patent and pending Utility Patent, directly infringing upon the 903 Patent and pending Utility Patent, which are owned in whole by Winston. 25. On November 1, 2012, Neal Zahn went to a local Wal-Mart located at

111th Street and South Memorial Drive in Bixby, Oklahoma. He noted Wal-Mart was displaying the infringing quad/box combinations in a section that is being prepared for the Christmas toy season. See Photograph of display, attached as Exhibit 6. Zahn purchased a Spider-Man quad that is contained in one of the patented boxes. See

Photograph of purchased quad side-by-side with quad in basic patented box, showing they are identical, attached as Exhibit 7. The Spider-Man quad box clearly states the name of Redman & Associates, LLC in the upper right corner. Photograph, attached as Exhibit 8. 26. Zahn made a purchase demonstrating the patent infringement for profit by See Close-up

R&A and Wal-Mart. See Receipt, attached as Exhibit 9. 27. These photographs are evidence of the infringement upon the 903 Patent

and pending Utility Patent by all Defendants, as well as the breach of the Teaming Agreement by R&A, by sale of products using the box design that is the subject of the 903 Patent and pending Utility Patent. 28. During all times relevant, Redman made numerous trips to Tulsa To wit, Redman met

individually and in his capacity as representative of R&A.

numerous times with representatives of Arvest Bank, the lender who provided financing

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for the Venture; he met with the insurance providers for the Venture; he met with the Winston employees involved in the Venture; and he met with Neal Zahn to team build and discuss subjects relevant to the Venture. These visits occurred all the way through 2012. 29. Further, Redman and

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