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1COMPLAINT FOR DECLARATORY JUDGMENT

3/8/2012 6:16:07 PM RYOC.016

Kurt M. Rylander, WSBA No. 27819 rylander@rylanderlaw.com Mark E. Beatty, WSBA No. 37076 beatty@rylanderlaw.com RYLANDER & ASSOCIATES PC 406 West 12th Street Vancouver, WA 98660 Tel: 360.750.9931 Fax: 360.397.0473 Attorneys for Plaintiff

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON TACOMA DIVISION RYONET CORPORATION, a Washington Corporation, Plaintiff(s), v. LODSYS, LLC, a Texas limited liability company; and LODSYS GROUP, LLC, a Texas limited liability company, Defendant(s). No. _________________ COMPLAINT FOR DECLARATORY JUDGMENT (An action related to Patents)

COMES NOW Plaintiff, RYONET CORPORATION, by and through undersigned counsel, and by this Complaint seeks declaratory judgment against Defendants LODSYS, LLC and LODSYS GROUP, LLC (collectively Lodsys), and alleges as follows:

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JURISDICTION AND VENUE 1. This is an action for a declaratory judgment that RYONET does

not infringe any valid claim of United States Patent Nos. 5,999,908 (the "'908 patent), 7,133,834 (the "'834 patent), 7,222,078 (the "'078 patent), and 7,620,565 (the "'565 patent), and collectively hereinafter, the Asserted Patents", and for a declaratory judgment that the claims of the Asserted Patents are invalid. 2. The United States Patent & Trademark Office has instituted

reexamination proceedings related to the 078 patent and the 565 patent. 3. Exhibit A hereto, and incorporated herein, is a true and correct

copy of the '908 patent. 4. Exhibit B hereto, and incorporated herein, is a true and correct

copy of the '834 patent. 5. Exhibit C hereto, and incorporated herein, is a true and correct

copy of the '078 patent. 6. Exhibit D hereto, and incorporated herein, is a true and correct

copy of the '565 patent. 7. This action arises under the patent laws of the United States,

Title 35 of the United States Code (35 U.S.C. 1, et seq.), and under the Federal Declaratory Judgment Act (28 U.S.C. 2201 and 2202). 8. This Court has subject matter jurisdiction over this action

pursuant to 28 U.S.C. 1331 (federal question) and 1338(a) (action arising

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under an Act of Congress relating to patents). 9. Plaintiff is informed and believes and on that basis alleges that

this Court has personal jurisdiction over Lodsys because it has constitutionally sufficient contacts with Washington so as to make personal jurisdiction proper in this Court. Plaintiff is informed and believes and on that basis alleges that Lodsys maintains ongoing contractual relationships within this district and conducts or solicits business within this district. 10. Venue is proper in this district pursuant to 28 U.S.C. 1391(b),

(c) and 1400(b). 11. There are presently pending or recently closed numerous

declaratory judgment actions against Lodsys dealing with one or more of the Asserted Patents. In almost all, if not all, of these actions, in California, Wisconsin, Illinois, Arizona, and Texas, Lodsys has been represented by a Seattle firm, with offices only in the State of Washington, named Kelley, Donion, Gill, Huck & Goldfarb PLLC (www.kdg-Iaw.com.

PARTIES 12. Plaintiff, Ryonet Corporation (RYONET), is incorporated in

Washington and has a principal place of business in Clark County, Washington. RYONET is an internet retailer of silk screen printing equipment and supplies. 13. Plaintiff is informed and believes and on that basis alleges that

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Defendant, Lodsys, LLC is a Texas limited liability company and claims to have a principal place of business at 505 East Travis Street, Suite 207, Marshall, Texas, 75670. 14. Plaintiff is informed and believes and on that basis alleges that

Defendant Lodsys Group, LLC is a Texas limited liability company and claims to have a principal place of business at 505 East Travis Street, Suite 207, Marshall, Texas, 75670. 15. Plaintiff is informed and believes and on that basis alleges that

Lodsys LLC and Lodsys Group LLC are alter egos of each other and/or that Lodsys Group is a mere continuation of Lodsys LLC, and that Lodsys Group LLC is otherwise liable fully for, and liable as if it was the same as, Lodsys, LLC. Hereinafter, Lodsys LLC and Lodsys Group LLC will be referred to simply as Lodsys. 16. Plaintiff is informed and believes and on that basis alleges that

Mark Small is the Chief Executive Officer of Lodsys, LLC and Lodsys Group LLC; and that Mr. Small conducts Lodsys' business from an office located in Wisconsin. 17. Plaintiff is informed and believes and on that basis alleges that

Lodsys owns the Asserted Patents. 18. Plaintiff is informed and believes and on that basis alleges that,

Lodsys agents and/or employees executives have made numerous trips to the State of Washington related to the Asserted Patents, and for licensing

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negotiations Corporation,

with

Washington Inc.

based and

companies

including Corporation

Microsoft (formally

Smilebox,

Photobucket

Photobucket, Inc.) among others, and potentially Intellectual Ventures. 19. Plaintiff is informed and believes and on that basis alleges that

Lodsys has engaged in, and continues to engage in, substantial licensing and other relationship, contracts, and financing in the State of Washington and with residents of the State of Washington. 20. Plaintiff is informed and believes and on that basis alleges that

Lodsys conducts business and engages in contracts and other substantive contact in the State of Washington, and by such extensive conduct, resides in the State of Washington.

THE PRESENCE OF AN ACTUAL CONTROVERSY 21. Plaintiff pays to third party vendor Provide Support $250 per

month to use the Provide Support customer chat service. 22. On January 3, 2012, Mr. Small of Lodsys sent a letter by Federal

Express to Ryan Moor, President of RYONET. A copy of this letter is attached hereto as Exhibit E. 23. The January 3, 2012 letter stated that it regarded RYONETs use

of Provide Supports customer chat service as Infringement of U.S. Patent Nos. 5,999,908, 7,133,834, 7,222,078, and 7,620,565 (Abelow) 24. The January 3, 2012 letter also stated:

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We have reviewed your use of the Lodsys Patents and have prepared the enclosed claim chart demonstrating at least one instance of how you utilize the inventions embodied in the Lodsys Patents. The images used in the charts are representative only and in addition to the charted claim of the referenced patent, you should consider the remaining claims of that patent and the other Lodsys Patents both with respect to the charted utilization and to other products and services offered by you. 25. The January 3, 2012 letter also stated that Lodsys has, among

others, ''retained the firm[] of Kelley, Donion, Gill, Huck & Goldfarb PLLC (www.kdg-Iaw.com) based in Seattle, Washington, to assist the company in licensing of the Lodsys Patents." 26. The January 3, 2012letter also stated: Notice Lodsys LLC reserves all rights with regard to the '908, '834, '078, and '565 patents, including: (1) the fight to seek damages anytime within the last six years that your company started to make use of Lodsys' patented technology; (2) the right to change its royalty rates at any time; (3) the right to change this licensing program at any time without notice, including variance to conform to applicable laws. You should not rely on any communication or lack of communication from Lodsys, Kelley, Donion, Gill, Huck & Goldfarb PLLC, or The Davis Firm Group as a relinquishment of any of Lodsys' rights. 27. The January 3, 2012 letter also included an "Infringement Claim

Chart," setting forth how RYONETs use of Provide Supports Live Chat on through RYONETs online store allegedly infringes claim 1 of the '078 patent. 28. Upon information and belief, Lodsys is solely a licensing entity,

does not practice the inventions described in the Asserted Patents, and without enforcement it receives no benefits from the Asserted Patents.

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29.

On February 11, 2011, Lodsys filed a lawsuit in the Eastern

District of Texas against twelve companies alleging infringement of one or more of the Asserted Patents. That case is styled Lodsys, LLC v. Brother International Corporation, et al., Case No. 2:11-cv-00090. 30. On May 31, 2011, Lodsys filed another lawsuit in the Eastern

District of Texas against seven additional companies, all developers of Apple iPhone applications, alleging infringement of the Asserted Patents. The case is styled Lodsys, LLC v. Combay, Inc., et al., C.A. No. 2:ll-cv-000272. 31. On June 10, 2011, Lodsys filed another lawsuit in the Eastern

District of Texas against ten additional companies, alleging infringement of the Asserted Patents. The case is styled Lodsys, LLC v. Adidas America, Inc., et al., C.A. No. 2:ll-cv-00283. 32. On July 5, 2011, Lodsys filed another lawsuit in the Eastern

District of Texas against six additional companies, alleging infringement of the Asserted Patents. The case is styled Lodsys, LLC v. DriveTimeAutomotive Group, Inc. et al., C.A. No. 2:11-cv-309. 33. In all four Texas cases, counsel of record to Lodsys are Kelley,

Donion, Gill, Huck & Goldfarb, PLLC, based in Seattle, WA, and The Davis Finn, P.C., based in Longview, Texas. 34. Plaintiff is informed and believes and on that basis alleges that

Kelley, Donion, Gill, Huck & Goldfarb, PLLC, based in Seattle, WA has and continues to represent Lodsys in all cases relating to the Asserted Patents.

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35.

By Lodsys' actions, RYONET is in reasonable apprehension of an

imminent patent infringement suit relating to the Asserted Patents. 36. RYONET denies that it infringes any valid claim of the Asserted

Patents. RYONET now seeks a declaratory judgment that it does not infringe any valid claim of the Asserted Patents. 37. Plaintiff is informed and believes and on that basis alleges that

that Defendant has a relationship to or with and/or has transactions related to or with a Seattle based company known as Intellectual Ventures, LLC.

COUNT ONE--DECLARATORY JUDGMENT OF NON-INFRINGEMENT OF THE '908 PATENT 38. 39. Plaintiff re-alleges every paragraph in this Complaint. RYONETs website does not infringe any valid claim of the '908

Patent threatened by Lodsys. 40. An actual controversy exists between RYONET and the

Defendants as to whether or not RYONET has infringed, or is infringing, the '908 Patent; has contributed, or is contributing, to infringement of the '908 Patent; or has induced, or is inducing, infringement of the '908 Patent. 41. The controversy is such that, pursuant to Federal Ru1e of Civil

Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that by its activities RYONET has not infringed and is not infringing any valid and enforceable claim of the '908 Patent threatened

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by Lodsys; has not contributed to infringement and is not contributing to infringement of the '908 Patent; and/or has not induced infringement and is not inducing infringement of the '908 Patent. Such a determination and declaration is necessary and appropriate at this time.

COUNT TWO--DECLARATORY JUDGMENT OF NON-INFRINGEMENT OF THE '834 PATENT 42. 43. Plaintiff re-alleges every paragraph in this Complaint. RYONETs website does not infringe any valid claim of the '834

Patent threatened by Lodsys. 44. An actual controversy exists between RYONET and the

Defendants as to whether or not RYONET has infringed, or is infringing, the '834 Patent; has contributed, or is contributing, to infringement of the '834 Patent; or has induced, or is inducing, infringement of the '834 Patent. 45. The controversy is such that, pursuant to Federal Ru1e of Civil

Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that by its activities RYONET has not infringed and is not infringing any valid and enforceable claim of the '834 Patent; has not contributed to infringement and is not contributing to infringement of the '834 Patent; and/or has not induced infringement and is not inducing infringement of the '834 Patent. Such a determination and declaration is necessary and appropriate at this time.

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COUNT THREE--DECLARATORY JUDGMENT OF NON-INFRINGEMENT OF THE '078 PATENT 46. 47. Plaintiff re-alleges every paragraph in this Complaint. RYONETs website does not infringe any valid claim of the '078

Patent threatened by Lodsys. 48. An actual controversy exists between RYONET and the

Defendants as to whether or not RYONET has infringed, or is infringing, the '078 Patent; has contributed, or is contributing, to infringement of the '078 Patent; or has induced, or is inducing, infringement of the '078 Patent. 49. The controversy is such that, pursuant to Federal Ru1e of Civil

Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that by its activities RYONET has not infringed and is not infringing any valid and enforceable claim of the '078 Patent threatened by Lodsys; has not contributed to infringement and is not contributing to infringement of the '078 Patent; and/or has not induced infringement and is not inducing infringement of the '078 Patent. Such a determination and declaration is necessary and appropriate at this time.

COUNT FOUR--DECLARATORY JUDGMENT OF INVALIDITY OF THE '078 PATENT 50. Plaintiff re-alleges every paragraph in this Complaint.

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51.

Based on the above-stated conduct, RYONET is informed and

believes that the Defendants contend that RYONET infringes one or more claims of the '078 Patent. 52. RYONET denies that it infringes any valid and enforceable claim

of the '078 Patent threatened by Lodsys, and avers that the assertions of infringement cannot be maintained consistently with statutory conditions of patentability and the statutory requirements for disclosure and claiming that must be satisfied for patent validity under at least one of 35 U.S.C. 101, 102, 103, and 112. 53. Accordingly, an actual controversy exists between RYONET and

the Defendants as to the validity of the '078 Patent. The controversy is such that, pursuant to Federal Rules of Civil Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that the '908 Patent is invalid. Such a determination and declaration is necessary and appropriate at this time.

COUNT FIVE--DECLARATORY JUDGMENT OF NON-INFRINGEMENT OF THE '565 PATENT 54. 55. Plaintiff re-alleges every paragraph in this Complaint. RYONETs website does not infringe any valid claim of the '565

Patent threatened by Lodsys. 56. An actual controversy exists between RYONET and Defendants as

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to whether or not RYONET has infringed, or is infringing, the '565 Patent; has contributed, or is contributing, to infringement of the '565 Patent; or has induced, or is inducing, infringement of the '565 Patent. 57. The controversy is such that, pursuant to Federal Ru1e of Civil

Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that by its activities RYONET has not infringed and is not infringing any valid and enforceable claim of the '565 Patent; has not contributed to infringement and is not contributing to infringement of the '565 Patent; and/or has not induced infringement and is not inducing infringement of the '565 Patent. Such a determination and declaration is necessary and appropriate at this time.

COUNT SIX--DECLARATORY JUDGMENT OF INVALIDITY OF THE '565 PATENT 58. 59. Plaintiff re-alleges every paragraph in this Complaint. Based on the above-stated conduct, RYONET is informed and

believes that the Defendants contend that RYONET infringes one or more claims of the '565 Patent. 60. RYONET denies that it infringes any valid and enforceable claim

of the '565 Patent threatened by Lodsys, and avers that the assertions of infringement cannot be maintained consistently with statutory conditions of patentability and the statutory requirements for disclosure and claiming that

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must be satisfied for patent validity under at least one of 35 U.S.C. 101, 102, 103, and 112. 61. Accordingly, an actual controversy exists between RYONET and

the Defendant as to the validity of the '565 Patent. The controversy is such that, pursuant to Federal Rules of Civil Procedure 57 and 28 U.S.C. 2201 et seq., RYONET is entitled to a declaration, in the form of a judgment, that the '565 Patent is invalid. Such a determination and declaration is necessary and appropriate at this time.

PRAYER FOR RELIEF WHEREFORE Plaintiff prays for judgment in its favor as follows: A. For judgment in favor of Plaintiff against Defendants on all claims; B. Declaring that Plaintiffs website does not infringe any valid claim of the Asserted Patents; C. Declaring that the one or more claims of the Asserted Patents are invalid under one or more of 35 U.S.C. 101, 102, 103, and 112; D. Awarding Plaintiffs its reasonable attorneys fees and costs, including costs for experts, pursuant to State and Federal law, including 35 U.S.C. 285 E. Awarding RYONET such other and further relief as this Court deems is just and proper.

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14COMPLAINT FOR DECLARATORY JUDGMENT
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DEMAND FOR A JURY TRIAL RYONET hereby demands a trial by jury on all counts so triable. DATED This March 8, 2012 /s/ Kurt M.Rylander_________________ KURT M. RYLANDER, WSBA 27819 /s/ Mark E. Beatty__________________ MARK E. BEATTY, WSBA 37076 RYLANDER & ASSOCIATES PC 406 West 12th Street Vancouver, WA 98660 Tel: (360) 750-9931 Fax: (360) 397-0473 E-mail: rylander@rylanderlaw.com Of Attorneys for Plaintiff