• Twin-Star Files New 337 Complaint Regarding Certain Electric Fireplaces
  • December 16, 2011 | Authors: Alexander B. Englehart; Eric W. Schweibenz
  • Law Firm: Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P. - Alexandria Office
  • On December 13, 2011, Twin-Star International, Inc. of Delray Beach, Florida and TS Investment Holding Corp. of Miami, Florida (collectively, “Twin-Star”) filed a complaint requesting that the ITC commence an investigation pursuant to Section 337.

    The complaint alleges that Shenzhen Reliap Industrial Co., Ltd. of China (“Reliap”), Yue Qiu Sheng, a.k.a. Jason Yue of China (“Yue”), and Whalen Furniture Manufacturing Inc. of San Diego, California (“Whalen”) (collectively, the “Proposed Respondents”) unlawfully engage in unfair methods of competition and unfair acts in connection with the importation into the U.S., sale for importation, and/or sale within the U.S. after importation of certain electric fireplaces, components thereof, manuals for same, and products containing same and in relation to certain processes for manufacturing or relating to same.  According to the complaint, the unfair methods of competition and unfair acts at issue include the Proposed Respondents’ misappropriation of Twin-Star’s trade secrets, the Proposed Respondents’ infringement of Twin-Star’s registered copyrights, Yue’s breach of contract, and Reliap’s and Whalen’s tortious interference with Twin-Star’s contractual relations.

    According to the complaint, the technology at issue relates to electric fireplaces.  In particular, the complaint states that “[a]n electric fireplace is a kinetic sculpture approximating the size and look of a real, wood burning fireplace.”  The complaint further states that an electric fireplace “replicates the moving flames, burning embers, and charred wood of a real wood-burning fireplace” and that the electric fireplace “may incorporate an electric heater to simulate heat radiated by a real wood-burning fireplace.”

    The complaint refers to Twin-Star’s trade secrets, Twin-Star’s component supplier list, Twin-Star’s customer list, the Twin-Star manufacturing process, the development of the Twin-Star technology, Twin-Star’s manufacturing specifications, hardware and software for a “Twin-Star Prototype 3 LED Functional Indicator Display,” and certain Twin-Star registered copyrights - including the “E1 MANUAL,” “E22 MANUAL,” “KINETIC SCULPTURE 1,” and “KINETIC SCULPTURE 2” - as the intellectual property at issue.

    In the complaint, Twin-Star alleges that the Proposed Respondents import and sell Reliap Electric Fireplaces and user manuals therefor and that the Proposed Respondents wrongfully entered into the electric fireplace products industry through the misappropriation of Twin-Star’s trade secrets.  According to the complaint, Yue was formerly employed by Twin-Star and, since the termination of his employment, Yue has misappropriated Twin-Star’s trade secrets in connection with the formation of his own new company Reliap.  The complaint also accuses the Proposed Respondents of infringing Twin-Star’s registered copyrights.  The complaint further states that Yue has breached his Stockholder Agreement with Twin-Star through his wrongful solicitation of customers, wrongful use and/or disclosure of confidential information, and unfair competition through the breach of non-competition provisions.  Lastly, the complaint alleges that Reliap and Whalen have engaged in unfair competition through their tortious interference with Yue’s contractual relations with Twin-Star.

    Regarding domestic industry, Twin-Star states that a domestic industry exists “because of market realities,” including:  (a) Twin-Star’s design and distribution of electric fireplace products and their related technology in the U.S.; (b) Twin-Star’s manufacturing-related and other activities relating to its electric fireplace technology in the U.S.; (c) Twin-Star’s substantial investment in exploitation, including engineering and research and development of its electric fireplace technology in the U.S.; (d) Twin-Star’s significant employment of labor and capital relating to its electric fireplace technology in the U.S.; and (e) Twin-Star’s significant investment in facilities and equipment relating to its electric fireplace technology in the U.S.

    As to related litigation, Twin-Star refers to ITC Inv. No. 337-TA-791, where Twin-Star is alleging that Reliap and Yue have violated Section 337 in connection with their sale and importation of certain electric fireplaces, components thereof, manuals for same, and products containing same and in relation to certain processes for manufacturing or relating to same.  Twin-Star also refers to district court cases in the Southern District of California and the District of Delaware.

    With respect to potential remedy, Twin-Star requests that the Commission issue an exclusion order, a cease and desist order, and an order instructing the Proposed Respondents to immediately and verifiably turn over to Twin-Star all documents and things in their possession, custody, or control that contain or embody one or more of Twin-Star’s trade secrets or any information derived from or based on one or more of Twin-Star’s trade secrets.