IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ) ) ) ) ) ) ) ) ) ) ) ) )

Clair Bros. Audio Enterprises, Inc., and ConcertSonics, LLC, Plaintiffs, v. Frank Simon, Defendant.

Civil Action No.

VERIFIED COMPLAINT Plaintiffs Clair Bros. Audio Enterprises, Inc., and ConcertSonics, LLC (collectively Clair) hereby bring the following Complaint for injunctive and other relief against Defendant, Frank Simon for: (i) misappropriation of trade secrets; (ii) conversion of trade secrets; (iii) procuring information by improper means; (iv) breach of contract; and (v) correction of patent inventorship. In support thereof, Plaintiffs aver as follows: THE PARTIES 1. Clair Bros. Audio Enterprises, Inc. is a Pennsylvania corporation with a principal

place of business at 1 Ellen Ave., Lititz, PA 17543. 2. ConcertSonics, LLC is a Pennsylvania limited liability company with a principal

place of business at 1 Ellen Ave., Lititz, PA 17543. 3. On information and belief, Frank Simon is an individual who resides at 4995 Paist

Road, Doylestown, PA 18902.

024285.00108/12327206v.2

JURISDICTION AND VENUE 4. The jurisdiction of this Court is based on 28 U.S.C. 1338(a). This is a civil

action arising under the United States Patent Act. The Court has supplemental jurisdiction over the remaining claims pursuant to 28 U.S.C. 1367(a). 5. Venue is proper under 28 U.S.C. 1391 because this is the judicial district where

the Defendant resides, where a substantial part of the events and injury occurred, and where a substantial part of the misappropriated intellectual property is situated. THE FACTS A. Clair Is a Leading Global Sound Reinforcement Provider That Developed and Patented Sound Enhancement Technology Called ConcertSonics Clair is a leading global sound reinforcement provider, offering a complete array

6.

of state-of-the-art products, technical staff, and services to the professional touring industry. Clair specializes in sound reinforcement, wireless and intercom services, broadcasting, and backline (sound amplification) support. Clair has served the audio needs of the industry for over 40 years and has worked with many famed clients, including Bon Jovi, Elton John, Paul Simon, Willie Nelson, and Godsmack. 7. By focusing on quality and innovation in its products over its 40-plus years in the

business, Clair has gained recognition as an audio industry leader and has won numerous awards for its technical excellence and creativity. B. 8. Early Development of The ConcertSonics Technology Beginning in the early 1990s, Clair began extending its involvement in sound

reinforcement by developing personal sound enhancement devices under the name ConcertSonics. From 1992 to 1997, Clair filed for and received patents on early versions of

-2024285.00108/12327206v.2

ConcertSonic devices. The ConcertSonics device is designed to enhance the audio experience at concerts or other events by delivering a time-delayed sound signal to a concert goer which is synchronized with the live audio broadcast. By synchronizing the sound with the audio

broadcast, the ConcertSonics technology enhances the audio broadcast and improves the experience. The first patents filed and owned by Clair relate to an early version of

ConcertSonics. 9. Clair developed a prototype system of ConcertSonics and tested it during U2s

Zoo TV tour in Philadelphia in 1992-93 timeframe. Clair continued to refine the concept and developed further prototypes throughout the 1990s. 10. In 1997, Clair engaged Lake DSP Pty. Ltd. of Ultimo, Australia to assist with

prototype development. Lake DSP produced a working model of the refined ConcertSonics concept based on design specifications provided by Clair. Lake DSP drafted a confidential write-up of the prototype dated March 1, 2002. Clair continued to develop this version of the prototype as it also designed custom electronic devices that incorporated the refined ConcertSonics concept and worked to resolve issues relating to broadcast rights. C. 11. Frank Simon Meets Clair and Becomes a Used Equipment Salesman In the late 1990s, Simon started doing audio equipment rental- and sales-related

business with Clair. At this time, Simon learns of the existence of ConcertSonics from his visits to Clairs Lititz location (Clair Lititz). D. 12. Frank Simon Had No Prior Technical Training and No Prior Knowledge of ConcertSonics Technology On information and belief, Simon has not had any formal education or training in

sound technology generally, or in ConcertSonics specifically. Simon only became aware of the ConcertSonics technology by working with Clair under a confidential working relationship. -3024285.00108/12327206v.2

13.

At some time in 2006 Simon expressed an interest in assisting Clair to further

develop the ConcertSonics concept. By this time Clair and Simon had a long standing and confidential working relationship associated with equipment sales. E. 14. Clair Engages Simon to Introduce Clair to Sirius for Sales of ConcertSonics Technology In September 2006, Simon arranged for an introduction between Clair and an

acquaintance of his, Dave Horoschak, from the engineering department at Sirius Satellite Radio Inc. (Sirius) for the purpose of investigating Sirius Satellite Radio receivers as a platform for future prototypes for ConcertSonics. F. 15. Simon Learns Specific Details About Clairs Improved ConcertSonics Technology The First Time Under A Nondisclosure Agreement In November 2006, Simon and Clair executed a Nondisclosure and

Confidentiality Agreement (the Simon Agreement). The Simon Agreement is attached as Exhibit 1. From November 2006 through January 2007, Simon communicated with various personnel at Clair regarding the features of ConcertSonics. During this time, Clair provided confidential, trade-secret information regarding ConcertSonics to Simon. 16. In preparation for a first meeting among Simon, Horoschak, and Clair, Clair

drafted a presentation regarding ConcertSonics. The meeting took place at Clair Lititz on November 10, 2006. 17. In consultation with Clair and Sirius, Simon began drafting a Proposal for a Joint

Venture between Clair and Sirius for presentation to Siriuss management. Early drafts were largely nontechnical and contained only a rudimentary description of ConcertSonics based on information provided by Clair. Clair continued providing confidential, trade-secret information regarding ConcertSonics to Simon through at least January 2007.

-4024285.00108/12327206v.2

18.

In December 2006, Clair gave a confidential demonstration of a prototype of its

ConcertSonics device to Horoschak and Simon at Madison Square Garden in New York City during a Z100 concert. 19. In January 2007, Simon prepared a more detailed Summary Proposal for a Joint The Summary

Venture (Summary Proposal) for presentation to management at Sirius.

Proposal incorporated detailed confidential and technical information concerning ConcertSonics provided by Clair. The Summary Proposal went through several rounds of revisions. 20. In February 2007, the Summary Proposal was presented to Sirius. A few days

later, Sirius and XM Satellite Radio announced their merger. G. Unknown to Clair, Simon Files a Series of Patent Applications In Simons Name Covering the ConcertSonics Technology Solely Owned and Invented by Clair On February 2, 2007, using confidential and proprietary information owned by

21.

Clair, Simon filed U.S. Provisional Patent Application No. 60/899,290 (the 290 Application) and listed himself as the sole inventor of the ConcertSonics technology that is actually owned and invented by Clair. A copy of the 290 Application is attached as Exhibit 2. 22. Simon never informed Clair about filing the 290 Application at the time the

application was filed. H. Clair Continues Making Improvements to ConcertSonics technology and Simon Continues to File Patent Applications on Inventions Solely Owned and Invented by Clair In August 2007, Clair forms ConcertSonics, LLC. As Clair continues to develop its ConcertSonic technology, Simon is allowed

23. 24.

access to Clairs proprietary and confidential information pursuant to Simon Agreement.

-5024285.00108/12327206v.2

25.

On January 31, 2008, Simon filed non-provisional patent application, U.S. Patent

Application No. 12/023,852 (the 852 Application) claiming priority to the 290 Application. Again, Simon named himself as the sole inventor of additional ConcertSonics technology that is actually owned and invented by Clair. 26. Simon never informed Clair about filing the 852 Application at the time the

application was filed. I. Simon Intentionally Hid His Unauthorized Patent Filings of Clairs ConcertSonics Technology From Clair And Intentionally Delayed Publication of Patent Documents by The U.S. Patent Office Simon intentionally hid the 852 Application from Clair by filing a Request for

27.

Non-Publication under 35 U.S.C. 122(b) with the U.S. Patent Office not to publish the 852 Application. 28. Under 35 U.S.C. 122(5) the contents of a patent application will be kept secret by

the U.S. Patent Office until the application is issued as a patent, which occurred on August 9, 2011. A copy of the 852 Application and related issued patent US 7,995,770 are attached as Exhibit 3A and B. 29. On information and belief, Simon knowingly filed for non-publication in order to

prevent the application from publishing as a matter of law within 18 months for the earliest priority claim. Under the earliest priority claim, the 290 and the 852 applications would have published and become public knowledge on August 2, 2008. J. 30. Clair Terminates Sirius and Simon Collaborations After several of years of intermittent contact with Sirius, in August 2010 Clair

decided to develop the infrastructure for the ConcertSonics without Sirius. Clair then developed a new internal team without Simon.

-6024285.00108/12327206v.2

31.

Simon was not included in the new development team because he possessed no

technical or engineering skills relevant to ConcertSonics technology. Simon was invited to a few meetings of ConcertSonics, LLC after the formation of the new team but was later omitted. 32. After the departure of Simon from the project, development of the ConcertSonics

device continued in 2010, with Jim Meyer (Meyer), the Senior Director of Engineering at Clair, as part of the team. Meyer had been Clairs lead technical developer of ConcertSonics since 1997 and was present at most meetings Frank attended where the technical aspects of ConcertSonics were discussed. 33. Based on lessons learned with earlier ConcertSonics prototypes, the new team

continued development of a proprietary algorithm to automatically time-align a wirelessly broadcast encoded sound signal with an audio broadcast. K. 34. Clair Files a Patent Application For its New ConcertSonics Algorithm. Simon Continues Filing Patent Applications. On September 10, 2010, Simon filed U.S. Provisional Patent Application No.

61/403,093 (the 093 Application), and on September 27, 2010, Simon filed U.S. Provisional Patent Application No. 61/404,066 (the 066 Application). The 066 Application describes a correlation algorithm. Copies of the 093 and 066 Applications are attached respectively as Exhibits 4 and 5. 35. On October 7, 2010, Meyer filed U.S. Provisional Patent Application No.

61/390,817 (the 817 Application), assigned to ConcertSonics, LLC. A copy of the 817 Application is attached as Exhibit 6. The 817 Application described the proprietary, inventive algorithm (the ConcertSonics algorithm) for automatically time-aligning a wirelessly broadcast encoded sound signal with an audio broadcast. The 817 Application described use of a crosscorrelation or deconvolution process as part of the algorithm. -7024285.00108/12327206v.2

36.

By early 2011, implementation of the ConcertSonics software was well underway.

Prototype software was tested on a standard mobile device. 37. In June 2011, Clair changed the product name, ConcertSonics, for the sound The software

enhancement development efforts to Aermonix for marketing reasons.

implementing the ConcertSonics algorithm is referred to as the ConcertSonics/Aermonix Software. 38. On August 8, 2011, Simon filed divisional U.S. Patent Application No.

13/205,234 (the 234 Application) containing the same written description as the 852 Application. Simon again named himself as the sole inventor and again filed the application with a request for non-publication, thereby keeping the contents of the application secret until it issued as a patent. A copy of the 234 Application is attached as Exhibit 7. 39. The next day, August 9, 2011, U.S. Patent No. 7,995,770 (the 770 Patent)

issued from the 852 Application to Simon. A copy of the 770 Patent is attached as Exhibit 3B. 40. On September 9, 2011, Simon filed U.S. Patent Application No. 13/229,330 (the

330 Application), claiming priority from the 234, 093, and 066 Applications. Simon again named himself as the sole inventor and again filed the application with a request for nonpublication, thereby keeping the contents of the application secret until it issued as a patent. The face of the 330 Application erroneously indicates that it was a continuation of the 234 Application. 41. On October 7, 2011, Meyer filed U.S. Patent Application No. 13/269,536 (the The 536 Application is

536 Application) claiming priority from the 817 Application. currently assigned to ConcertSonics, LLC and is attached as Exhibit 8.

-8024285.00108/12327206v.2

42.

On February 3, 2012, Simon filed a trademark application for ConcertTronix.

ConcertTronix was registered as a trademark on April 23, 2013. 43. On October 12, 2012, Simon filed U.S. Patent Application No. 13/606,964 (the

964 Application) claiming priority from the 234 Application. The 964 Application is not publicly available. 44. On October 16, 2012, the 234 Application issued as U.S. Patent No. 8,290,174

(the 174 Patent) to Simon. A copy of the 174 Patent is attached as Exhibit 9. 45. On February 15, 2013, Simon filed U.S. Patent Application No. 13/768,700 (the

700 Application) claiming priority from the 330 Application. The 700 Application is not publicly available. 46. On February 19, 2013, the 330 Application issued as U.S. Patent No. 8,379,874

( the 874 Patent) to Simon. A copy of the 874 Patent is attached as Exhibit 10. 47. From the time period(s) of learning of the various patents issued to Simon, Clair

has been in communication with Simon attempting settlement - unfortunately with no success. COUNT I MISAPPROPRIATION OF TRADE SECRETS 48. Clair incorporates by reference herein all preceding and succeeding paragraphs, as

if fully set forth herein. 49. Clairs trade secrets include its ConcertSonics/Aermonix Software, the

proprietary methods embodied therein, and related proprietary information, including, but not limited to, the object and source code for the software, associated files and documentation, the visual expressions, screen formats, report formats, and other design features of the software, and all ideas, methods, algorithms, formulae, plans, and concepts used in developing the software

-9024285.00108/12327206v.2

and/or incorporated into the software. This proprietary information is subject to protection under Pennsylvania law. 50. This proprietary information derives independent economic value by not being

accessible, through proper means, to Clairs competitors, who can profit from its use or disclosure. 51. Clair has taken reasonable measures to maintain the secrecy of its proprietary

information, including signing the Simon Agreement with Simon. 52. Simon potentially will or already has used, disclosed and/or otherwise

misappropriated Clairs proprietary information, such as by way of incorporating Clairs proprietary information into the 770, 174, and 874 Patents (the Patents Issued to Simon). 53. As a consequence of the foregoing, Clair stands to suffer irreparable harm and

monetary injury. 54. Clairs rights to its ConcertSonics/Aermonix Software and related proprietary

information have been or are likely to be violated by Simon and/or Simons potential future contractors, suppliers, licensees, or assigns, some of which are likely to be competitors of Clair, and any such violations justify that Simon be restrained from further engaging in certain activities. 55. Clair has established a likelihood of success on the merits of its claims and the

need for injunctive relief to protect against the infliction of irreparable harm. 56. Clair will suffer irreparable harm and loss if Simon and/or Simons potential

future contractors, suppliers, licensees, or assigns are permitted to use, disclose, retain, reverse engineer, or otherwise capitalize upon Clairs ConcertSonics/Aermonix Software and related proprietary information. - 10 024285.00108/12327206v.2

57. 58.

Clair has no adequate remedy at law. Greater injury will be inflicted upon Clair by the denial of injunctive relief than

would be inflicted upon Simon by the granting of such relief. 59. The issuance of injunctive relief will serve the public interest in the protection of

trade secrets and related proprietary and confidential business information and from enforcement of reasonable contractual obligations. COUNT II CONVERSION OF TRADE SECRETS 60. Clair incorporates by reference herein all preceding and succeeding paragraphs, as

if fully set forth herein. 61. Simon acquired possession of and/or is unreasonably withholding patents,

including the 770, 174, and 874 Patents, to Clairs ConcertSonics/Aermonix Software, knowhow, and related proprietary information. 62. Clair, as a rightful owner of this property, has demanded that Simon cease and

desist from asserting sole rights to the ConcertSonics/Aermonix Software and all related proprietary information because he is not the sole owner of the 770, 174, and 874 Patents conferring those rights. Simon has failed comply with Clairs demands. 63. As a consequence of the foregoing, Clair stands to suffer irreparable harm and

monetary injury. COUNT III PROCURING INFORMATION BY IMPROPER MEANS 64. Clair incorporates by reference herein all preceding and succeeding paragraphs, as

if fully set forth herein.

- 11 024285.00108/12327206v.2

65.

Under Restatement of Torts 759 as applied in Den-Tal-Ez, Inc. v. Siemens

Capital Corp., 566 A.2d 1214, 1228-29 (Pa. Super. Ct. 1989), Simon has procured Clairs confidential business information, including its proprietary information, by improper means, including by misrepresenting his intention to honor the terms of the Simon Agreement he signed and legally bound himself to. 66. Simons improper procurement of Clairs business information has proximately

caused injury to Clair, specifically including the threat of immediate and irreparable harm for which there is no adequate remedy at law. 67. As a consequence of the foregoing, Clair stands to suffer irreparable harm and

monetary injury. COUNT IV BREACH OF CONTRACT 68. Clair incorporates by reference herein all preceding and succeeding paragraphs, as

if fully set forth herein. 69. After improperly procuring and keeping Clairs proprietary information and

confidential business information, Simon breached the terms of the Simon Agreement by filing the 290, 852, 093, 066, 234, 330, and 964 Applications (the Applications Filed by Simon) claiming sole inventorship of these applications. 70. Simon, by his conduct and by his express and implicit representations to Clair, is

estopped from requiring literal performance in accordance with the terms of the Agreement or any other agreement that Clair and Simon might have signed. The parties course of

performance, including Simons signing the Simon Agreement, confirms the parties understanding that exact compliance with the terms of the Agreement was either contemplated

- 12 024285.00108/12327206v.2

and/or required. Clair relied upon Simons conduct and representations by continuing to expend its resources, provide its expertise, and disclose its proprietary and confidential business information with the understanding that the Simon Agreement was ongoing and not subject to unlawful breach. 71. As a consequence of Simons breach of the Simon Agreement, Clair stands to

suffer irreparable harm and monetary injury. Accordingly, Clair seeks specific performance of the Simon Agreement in the form of Simon ceasing and desisting his assertion of the sole patent rights to the ConcertSonics/Aermonix Software. Clair also seeks damages in excess of $35,000, the amount necessary to prepare, file, and maintain the Patents Issued to Simon and the Applications Filed by Simon. COUNT V CORRECTION OF INVENTORSHIP 72. Clair incorporates by reference herein all preceding and succeeding paragraphs, as

if fully set forth herein. 73. The Patents Issued to Simon and the Applications Filed by Simon fail to name the

proper inventor. 74. Specifically, Meyer is the proper inventor, or at a minimum a co-inventor of all of

the Patents Issued to Simon and the Applications Filed by Simon. 75. Pursuant to 35 U.S.C. 102(f), the Court should correct the inventorship of the

patents and applications to name the proper inventor.

WHEREFORE, by virtue of the foregoing acts complained of, Clair demands judgment in its favor and against Simon as follows:

- 13 024285.00108/12327206v.2

a.

An order immediately enjoining and restraining Simon, both directly and

indirectly, and whether acting alone or in concert with others, including any contractors, suppliers, licensee, or assigns or others with whom Simon has or will become affiliated or associated, until hearing and thereafter until further Order of the Court, from (i) using or disclosing any version of the ConcertSonics/Aermonix Software,

the source and object code for the ConcertSonics/Aermonix Software, any associated files and documentation, the visual expressions, screen formats, report formats and other design features of the ConcertSonics/Aermonix Software, all ideas, methods, algorithms, formulae, plans, and concepts used in developing and/or incorporated into the ConcertSonics/Aermonix Software (collectively Proprietary Items). (ii) (iii) making or retaining any copy of any Proprietary Item; creating, recreating, or re-engineering the source and object code for the

ConcertSonics/Aermonix Software, or reverse engineering, decompiling or disassembling the ConcertSonics/Aermonix Software; (iv) modifying, adapting, translating or creating derivative works based upon

the code of the ConcertSonics/Aermonix Software or the documentation relating to such code, or combining or merging any part of the source and object code of the ConcertSonics/Aermonix Software or the documentation relating to such code with or into any other software or documentation; (v) offering, licensing, or selling corporate actions products and/or services

incorporating all or part of a Proprietary Item; (vi) removing, erasing or tampering with any copyright or other proprietary

notice printed or stamped on, affixed to, or encoded or recorded in any Proprietary Item, or - 14 024285.00108/12327206v.2

failing to preserve or reproduce all or any copyright and other proprietary notices in any copy of any Proprietary Item made by or on behalf of Simon; (vii) selling, marketing, licensing, sublicensing, distributing, or otherwise

granting to any person or entity, including any outsourcer, vendor, consultant or partner, any right to use any Proprietary Item, whether on Simons behalf or otherwise; and (viii) offering the use and/or functionality of any version of the

ConcertSonics/Aermonix Software. b. An order requiring that Simon and all persons acting in concert or participation

with Simon, including any agent, employee, officer, or representative of Simon or any third party contractor/supplier or competitive entity with whom Simon is or will become affiliated or associated and who receive notice of this Order, shall (i) Software; (ii) promptly return to Clair all copies of any and all versions of the discontinue all use of any and all versions of the ConcertSonics/Aermonix

ConcertSonics/Aermonix Software and any related Proprietary Items; (iii) provide written notice to Clair certifying the name and address of any third

party contractor/supplier or competitive entity to whom Simon disclosed any part of the ConcertSonics/Aermonix Software and related Proprietary Items and that a copy of this Order has been served on every third party contractor/supplier or competitive entity named; and (iv) provide written notice to Clair certifying that all copies of any and all

versions of the ConcertSonics/Aermonix Software and related Proprietary Items have been permanently deleted from whatever computer and/or database it may be on. c. Specific performance of the nondisclosure provisions of the Simon Agreement; - 15 024285.00108/12327206v.2

d. e.

Issue an order correcting the inventorship of the Patents Issued to Simon. Damages in an amount in excess of $35,000 to compensate Clair for Simons

breach of the Agreement and violation of Pennsylvania law of trade secret misappropriation and conversion; f. Conveyance of all right, title, and interest in and to the Patents Issued to Simon

and the Applications Filed by Simon from Simon to Clair; g. conduct; h. i. Attorneys fees and costs of this action; and Such other relief as the Court deems just and proper. Exemplary, consequential and punitive damages as a result of Simons bad faith

Dated: July 2, 2013

By _________________________________________ BLANK ROME LLP Alfred W. Zaher Joel Dion Peter Zacharias One Logan Square 130 North 18th Street Philadelphia, PA 19103 215-569-5500 Counsel for Clair Bros. Audio Enterprises, Inc. Concertsonics, LLC

- 16 024285.00108/12327206v.2