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Robert L. Rimberg, Esq. (RR2453) Joel S. Schneck, Esq.

(JS7019) GOLDBERG & RIMBERG PLLC 115 Broadway, Suite 302 New York, New York 10006 (212) 697-3250 jss@grlawpllc.com and Gerry J. Elman, Esq. (GE2468) Elman Technology Law, P.C. 12 Veterans Square Media, PA 19063 (610) 892-9942 elmanfax@elman.com Attorneys for Plaintiff UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK NAFTALI KUGEL, Plaintiffs, -againstDAVID SCHOTTENSTEIN, SIROTA HOLDING COMPANY, LLC, S. A. COLLAR STAYS WHOLESALE LLC, S. A. COLLAR STAYS RETAIL LLC, SWISS STAYS, Defendants. COMPLAINT Docket No.

JURY TRIAL DEMANDED

Plaintiff, Naftali Kugel (Kugel or Plaintiff), by his attorneys, Goldberg & Rimberg, PLLC, as and for his complaint for fraud, fraud on the United States Patent Office, to correct a named inventor pursuant to 35 U.S.C. 256, unjust enrichment, conversion, and related claims against the defendants, alleges as follows upon information and belief:

INTRODUCTION 1. This action is brought against the individual and corporate defendants who have

taken and appropriated Plaintiffs invention for pecuniary gain without compensating plaintiff for same. 2. Plaintiff conceived and invented an extendable collar stay (the Inventive Stays).

Plaintiff personally performed the conception, creation, and refinement of such invention, from idea to the structure, functionality and design of the final product. 3. Defendant David Schottenstein, thereafter filed and obtained a U.S. design patent

for the Inventive Stays, falsely identifying himself as the sole inventor, for patent US D 671, 715S (the Patent) and assigned ownership of the Patent to defendant Sirota Holding Company, LLC. 4. This action is being filed in order to redress the wrongs committed by defendants

to essentially rob Plaintiff of his creation and reap the profits from the sales of same. JURISDICTION 5. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C.

1331, 1332, and 1338 because: (a) Plaintiffs claims involve United States patent law, (b) Plaintiffs claims arise under the laws of the United States, and (c) there is diversity of citizenship between Plaintiff and Defendants; and pursuant to this Courts supplemental jurisdiction, 28 U.S.C. 1367. VENUE 6. Venue is proper in this Court pursuant to 28 U.S.C. 1391(b) in that a substantial

part of the events or omissions giving rise to the claims herein occurred within the Eastern District of New York.

7.

Venue is also proper in this judicial district pursuant to 18 U.S.C. 1965(b)

because, to the extent any Defendant may reside outside of this district, the ends of justice require such Defendant or Defendants to be brought before this Court. PARTIES 8. Kings. 9. Upon information and belief, defendant David Schottenstein (Schottenstein) is Plaintiff Kugel is an individual residing in the State of New York, County of

an individual residing in the State of Florida. 10. Upon information and belief, defendant Sirota Holding Company, LLC (Sirota)

is an Ohio corporation with its principal place of business in Ohio. 11. Upon information and belief, defendant S.A. Collar Stays Retail, Wholesale LLC

(S.A. Wholesale) is an Ohio company with its principal place of business located in Florida. 12. Upon information and belief, defendant S.A. Collar Stays Retail, LLC (S.A.

Retail) is an Ohio company with its principal place of business located in Florida. 13. Upon information and belief, Sirota does business under the trade nameSwiss

Staysand also uses the term Swiss Stays as a trademark for the Inventive Stays identified below in par. 20. 14. Upon information and belief, Schottenstein owns or otherwise controls defendants

Sirota, S.A. Wholesale and S.A. Retail. 15. Upon information and belief, Schottenstein is the founder of clothing

manufacturer Astor and Black Custom Clothiers (A&B).

FACTS AND ALLEGATIONS Plaintiffs Conception, and Creation of Stays, Agreement as to Equity Ownership 16. 17. Plaintiff is an industrial designer specializing in fashion oriented products. Plaintiff is a creative individual who has made multiple inventions believed to

have significant utility and value. 18. In or about late 2009, Plaintiff and Schottenstein were in communication

regarding a few different inventions created by Plaintiff for which Schottenstein had expressed interest in investing. 19. Between late 2009 and June 2010 Schottenstein offered to invest in multiple

inventions created by Plaintiff. 20. In or about June 2010, during one of their many conversations, Plaintiff and

Schottenstein discussed the idea of a potential one size fits all collar stay (the Inventive Stays). 21. While Schottenstein agreed that the Inventive Stays would potentially be a

substantial money maker, he had no knowledge as to how it could be transformed into functional product. 22. 23. It was agreed that Plaintiff would create and design the Inventive Stays. It was further agreed between Plaintiff and Schottenstein that Schottenstein would

pay the costs associated with developing and perfecting the Inventive Stays and Plaintiff and Schottenstein would own the rights to the Inventive Stays, with 80% ownership going to Schottenstein and 20% going to Plaintiff. 24. Plaintiff agreed to the 80/20 ownership split because Schottenstein, by way of his

company, A&B, was set up to promote, distribute, and sell the Inventive Stays. 4

25.

After their initial discussions regarding the Inventive Stays, Plaintiff set about

designing the product to determine whether it would be feasible. 26. Plaintiff evaluated various types of functions that might work for the Inventive

Stays, including sliding, spinning, and other possible formats for the Inventive Stays. 27. functional. 28. Stay thing? 29. On June 9, 2010, Plaintiff emailed Schottenstein, asking how many collar On June 7, 2010, Schottenstein emailed Plaintiff, asking, Sketch on the Collar Plaintiff experimented with different ways that the Inventive Stays might become

holders do you think you could sell a month? Schottenstein, responded, a shit ton, get that design done. 30. On June 10, 2010, Schottenstein emailed Plaintiff asking, when will we have

drawings done for extendable collar stays?? 31. On June 11, 2010, Plaintiff responded to Schottensteins June 10, 2010 inquiry,

stating, Im finishing the collar stay, done drawing, but it has some technical problems in the functionality which Im fixing, gonna work on that tonight. 32. On June 25, 2010, Plaintiff updated Schottenstein as to Plaintiffs design and

implementation of the Inventive Stays stating, getting collar stay, rotable 3d design so we can go straight to prototype after legal is taken care of. 33. After working most of the summer of 2010 on creating the Inventive Stays, on

October 5, 2010, Plaintiff emailed Schottenstein multiple renderings of Plaintiffs creation, stating, Hey, here is one sequence of how the collar stay can work, it most probably is the cheapest too, there are a lot of ways it can function, but I think this is best. If you want to move

forward with his, I can have a 3D model made right away, and prototyped. Let me know what you think. 34. Commensurate with their agreement that Plaintiff would have a 20% ownership in

the Inventive Stays, Plaintiff wrote to Schottenstein on October 5, 2010, I am not earning money from this, (until it sells) the money if [sic] for the cost of getting it done . . . that is. 35. In response to Plaintiffs October 5, 2010 email, Schottenstein replied, Can we

do better on price? 36. reality. 37. Plaintiff located factories to create prototypes for the Inventive Stays and refined Thereafter, Plaintiff continued to work on turning the Inventive Stays into a

the item until it was a finished functioning product. 38. Schottenstein was aware of Plaintiffs substantial work in locating a manufacturer

and refining the Inventive Stays, as well as the costs which would be incurred in the mass production of the item. 39. Schottenstein, who, upon information and belief, had no background in industrial

design, and did not even know what a rivet was, provided virtually no input in the design of the product. 40. On February 14, 2011, after Plaintiff and Schottenstein exchanged emails

regarding production costs and time-tables, Plaintiff wrote Schottenstein, I asked them, this is the way they work. In fact if they didn't know me already they would charge the full fee upfront (as every other factory does). I'll tell you what, Don't pay me the 3k for the design/development, send the 50% over to them, we'll approve the final product and pay the rest. Ill send over a rough contract for my 20%. and Ill finish up with the collar stay case. I really want to get this selling quickly. it can be everywhere. It is my first priority now. 41. Schottenstein responded, OK. 6

42.

At all times during the creation of the Inventive Stays, Plaintiff was the main

contact with the factories creating same. 43. In early June, 2011, Schottenstein started to drag his feet as far as paying small

costs associated with production of the Inventive Stays, requiring Plaintiff to pay such costs himself. 44. By email dated June 7, 2011, Plaintiff wrote,

Good morning David, When we initially spoke about the collar stay project you confirmed with me that I will design, develop, engineer and prototype the product in exchange for 20% and you will cover costs to be done. You told me to keep it under 4 thousand dollars and assured me you will reimburse me for what I lay out. I explained to you many times and we spoke a couple weeks back and you told me to send you receipts. The process and costs were as follows: 1) Conceptual drawings and basic function. 2) 2D illustrations and measurements. 3) 3D CAD modeling, dimensions, engineering, materials. 4) Rapid soft prototyping, (the plastic prototypes I showed you. This is to validate the design before going ahead further). 5) Solid prototyping. (the aluminum prototypes made in metal to ensure how thin we can go without it breaking and to confirm sizing). 6) Final prototyping phase which means they take my 3D file (that I had created for us) and use it produce the final prototype with CNC machine)(Ferra Designs). I have sent you receipts. I have kept it in your budget. I have delivered the final piece, and am ready to do anything else needed to be done. Please keep to your side of the deal and deliver on your promise. I am sending a reminder for the PayPal request to Amanda right now and expect her to have the go ahead to fill it out first thing in the morning because I am leaving town for the Chag and it is extremely important that the money be by me before hand. I am counting on it. Thank you. All the best, Naftali 45. Schottenstein responded to Plaintiffs June 7, 2011 email stating, Please resend

me receipts so I can see. I do remember you getting some small piece of equity but I thought my only costs were Ferra. 7

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Plaintiff then forwarded receipts to Schottenstein, and stated,

David when we made our agreement it was way before you knew anything about ferra. I have updated you throughout every phase and step and development of the product and you should already be fully aware of all we just discussed. Were you just gonna guess a number of my equity percentage when you decided to? It is unfair that you do not remember these things and then I have to fight for them. 47. Schottenstein ended up paying some of the invoices which were forwarded to him

by Plaintiff and never disputed Plaintiffs 20% ownership interest in the Inventive Stays. 48. Instead, Schottenstein continued to communicate with Plaintiff about the

production of the Inventive Stays. 49. Plaintiff continued to work on the creation of the Inventive Stays during the

remainder of 2011 and at the beginning of 2012. 50. In February 2012, Plaintiff worked with Schottenstein to come up with possible

logos for the Swiss Stay, a name thought of by Schottenstein as a result of Plaintiffs design for the Inventive Stays including a pair of pivots, similar to a Swiss Army knife.. 51. In February 2012, Schottenstein requested ideas from Plaintiff for packaging to go

with the Inventive Stays. 52. In April 2012, at Schottensteins request, Plaintiff refined the Inventive Stays

specs in order to address a functionality issue. Schottensteins Fraud on the Patent Office 53. At all times, it was Plaintiffs expectation and understanding that he would be

identified as the inventor on any patent for the Inventive Stays.

54.

Upon information and belief, in or before March 2011, Schottenstein instructed

his attorney, Corinne Marie Pouliquen, Esq., to file a patent application with United States Patent Office. 55. On March 9, 2011, Ms. Pouliquen submitted a design patent application for the

look of the Inventive Stays. Plaintiff received no information as to the specifics of such patent application filing, neither who was being named as inventor nor that it was an application for a design patent and not a utility patent. 56. At all times, it was understood by Plaintiff that he was properly being identified

as an inventor of the structure, functionality and design of the Inventive Stays. 57. The basis for Plaintiffs belief was: (a) the fact that it was Plaintiff who

conceived, designed, developed, engineered, prototyped and refined the Inventive Stays, (b) the Schottenstein represented to Plaintiff that Plaintiff was being identified as the inventor of the Inventive Stays and (c) in an email dated March 21, 2011 written to Plaintiff and cced to Ms. Pouliqune, Schottenstein wrote, Corrine can we add some type of magnet feature to the patent? We would probably need two patents? The main thing is to get our extendable collar stay patented immediately if not already finished. (Emphasis Added.) 58. Upon information and belief, without Plaintiffs knowledge, Schottenstein

fraudulently represented to Ms. Pouliquen that Schottenstein was the sole inventor of the design of the Inventive Stays. 59. As a result of Schottensteins fraud, Schottenstein was identified as the sole

inventor of the design of the Inventive Stays. 60. On December 4, 2012, the aforementioned design patent for the Inventive Stays

was granted to Schottenstein, U.S. Patent No. D 671, 715S ( 715 Design Patent).

61. 62.

Schottenstein caused the 715 Design Patent to be assigned to defendant Sirota. Schottenstein deprived Plaintiff of the opportunity to seek a utility patent for the

structure and functionality of the Inventive Stays by controlling the prosecution of the 715 Design Patent, resulting in the grant of the 715 Design Patent before any utility patent for the Inventive Stay was filed, and precluding the valid filing thereafter of a utility patent for such subject matter as disclosed in the granted design patent. Schottensteins Frauds and Breaches of Contract 63. Upon information and belief, Schottenstein caused Sirota, S.A. Wholesale, and

S.A. Retail (collectively referred to as the Swiss Stays entities) to market and sell the Inventive Stays under the trademark Swiss Stays. 64. Upon information and belief, the Swiss Stays entities have sold and will sell a

substantial amount of the Inventive Stays. 65. Schottenstein has refused to honor his agreement that Plaintiff would have a 20%

ownership interest in the Inventive Stays. 66. Instead, Schottenstein, who is substantially wealthier than Plaintiff, now asserts

that Plaintiff should receive only 20% of the royalties paid by a wholesaler for the Inventive Stays. 67. Schottenstein. 68. In marketing the Inventive Stays, Schottenstein presents a bogus back-story Plaintiff never agreed to have his 20% ownership interest liquidated by

behind his purported invention. Schottensteins story includes a tale that he developed the Inventive Stays when such is a complete fabrication.

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69.

At the most, Schottenstein presented Plaintiff with a problem and it was Plaintiff

who invented the solution and designed the Inventive Stays. AS AND FOR A FIRST CLAIM (Fraud on the United States Patent and Trademark Office) 70. Plaintiff repeats and reallges the facts and allegations contained in paragraphs 1

through 69 above as if fully set forth herein. 71. Schottenstein falsely represented to the United States Patent and Trademark

Office that he was the inventor of the design, or look, of the Inventive Stays, as depicted and claimed in the 715 Design Patent. 72. As a result of Schottensteins fraud, he should be divested of his designation as

inventor of the 715 Design Patent. 73. 74. Plaintiff should instead be designated as the inventor of , the 715 Design Patent. In addition, this action is exceptional pursuant to 35 U.S.C. 285 warranting

that Plaintiff is entitled to all of its attorneyss fees in prosecuting Schottensteins fraud on the United States Patent and Trademark Office claim. AS AND FOR A SECOND CLAIM (Correction of Named Inventor Pursuant to 35 U.S.C. 256) 75. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through 74 above as if set forth herein. 76. Patent. 77. Plaintiff should have been designated as the inventor, or at least a joint inventor, Schottenstein was mistakenly designated as the sole inventor of the 715 Design

of the 715 Design Patent.

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78.

Plaintiff seeks an order pursuant to 35 U.S.C. 256 that the 715 Design Patent be

corrected to designate Plaintiff as the inventor of same, or in the alternative, as a joint inventor of same. AS AND FOR A THIRD CLAIM (Breach of Contract) 79. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through 78 above as if set forth herein. 80. It was agreed between Schottenstein and Plaintiff that Plaintiff would have a 20%

ownership interest in the Inventive Stays. 81. same. 82. As a result of Schottensteins breach of contract, Plaintiff has been damaged in an Schottenstein has breached his agreement with Plaintiff and refused to honor

amount to be determined at trial, but believed to be at least $20,000,000. AS AND FOR A FOURTH CLAIM (Fraud) 83. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through 82 above as if set forth herein. 84. Schottenstein represented to Plaintiff that Plaintiff would be a 20% owner of the

companies which owned and sold the Inventive Stays. 85. Plaintiff relied upon Schottensteins express representations in inventing and

developing the Inventive Stays. 86. 87. Plaintiff has been damaged as a result of Schottensteins fraudulent statements. Additionally, Schottensteins fraud on the patent office has deprived Plaintiff of

the possibility of seeking a regular, utility patent.

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88.

Plaintiff demands judgment against Schottenstein for his fraudulent

representations in an amount to be determined at trial, but believed to be at least $20,000,000. AS AND FOR A FIFTH CLAIM (Constructive Trust) 89. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through88 above as if set forth herein. 90. Based upon Schottensteins agreement with Plaintiff, it was intended that Plaintiff

would have a 20% interest in all of the companies which owned and sold the Inventive Stays. 91. Plaintiff seeks a determination that he is in fact a 20% equity owner in all of the

Swiss Stay entities. 92. Plaintiff demands judgment that 20% of Sirota, S.A. Retail and S.A. Wholesale is

being held in Constructive Trust for Plaintiff. AS AND FOR A SIXTH CLAIM (Accounting) 93. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through92 above as if set forth herein. 94. Plaintiffs attempts to enforce his contractual rights to the Inventive Stays and

companies with rights thereto have been rebuffed by Schottenstein. 95. Schottenstein has refused to provide any information to Plaintiff as to the sales of

the Inventive Stays. 96. Plaintiff is entitled to an accounting of all monies received by Schottenstein,

Sirota, S.A. Retail and S.A. Wholesale with respect to the Inventive Stays.

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AS AND FOR A SEVENTH CLAIM (Unjust Enrichment) 97. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through 96 above as if set forth herein. 98. 99. Plaintiff invested substantial time and energy in inventing the Inventive Stays. Defendants, Schottenstein, Sirota, S.A. Retail and S.A. Wholesale, have received

and continue to receive monies as a result of Plaintiffs contribution to the creation of the Inventive Stays. 100. Defendants have been unjustly enriched by their sale of the Inventive Stays,

without Plaintiff receiving his just compensation. 101. As a result of Defendants unjust enrichment, Plaintiff has been damaged in an

amount to be determined at trial, but believed to be at least $20,000,000. AS AND FOR AN EIGHTH CLAIM (Declaratory Judgment) 102. Plaintiff repeats and reallages the facts and allegations contained in paragraphs 1

through 101 above as if set forth herein. 103. 104. entities. WHEREFORE, Plaintiff demands judgment against defendants: a. On his First Claim, divesting Schottenstein of his designation as the inventor of the 715 design patent, plus all attorneys fees in prosecuting the fraud on the United States Patent and Trademark Office claim; Plaintiff seeks a determination that he is the inventor of the Inventive Stays. Plaintiff seeks a determination that he is a 20% owner of all of the Swiss Stays

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b. On his Second Claim, pursuant to 35 U.S.C. 256 that the 715 Design Patent be corrected to designate Plaintiff as the inventor of same, or in the alternative, as a joint inventor of same. c. On his Third Claim, in an amount to be determined at trial, but believed to be at least $20,000,000; d. On his Fourth Claim, in an amount to be determined at trial, but believed to be at least $20,000,000; e. On his Fifth Claim, a judgment that 20% of Sirota, S.A. Retail and S.A. Wholesale is being held in constructive trust for Plaintiff; f. On his Sixth Claim, an order requiring an accounting of all monies received by Schottenstein, Sirota, S.A. Retail and S.A. Wholesale with respect to the Inventive Stays; g. On his Seventh Claim, in an amount to be determined at trial, but believed to be at least $20,000,000; h. On his Eighth Claim, a determination that Plaintiff is the inventor of the Inventive Stays as well as a 20% owner of all companies which possess any rights with respect to the Inventive Stays; plus

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i. All attorneys fees and other costs associated with prosecuting this action. Dated: New York, New York February 7, 2013 /S/ Joel S. Schneck _____________________ Robert L. Rimberg (RR2453) Joel S. Schneck (JS7019) 115 Broadway, Suite 302 New York, New York 10006 (212) 697-3250 and Gerry J. Elman (GE2468) Elman Technology Law, P.C. 12 Veterans Square Media, PA 19063 (610) 892-9942 elmanfax@elman.com Attorneys for Plaintiff

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