IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN ...

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Case 1:12-cv-00558-LY Document 1 Filed 06/27/12 Page 8 of 1434. In January 2012, the annual International Consumer Electronics Show was held inLas Vegas, Nevada. During the show, the SharkEye cases manufactured from PC withoutSharkEye’s consent failed and shattered in front of several prominent industry product reviewers,further damaging the reputation of the SharkEye Cases.35. Later that month, SharkEye’s CEO met with Defendants to discuss their failure tolaunch additional models and the massive failures of the iPhone 4 cases made of PC. At themeeting, Defendants failed to provide adequate information or a cohesive strategy for rectifyingthe situation.36. In March 2011, SharkEye’s CEO and principal investor once against met withDefendants. During the meeting, they expressed their displeasure with Defendants’ lack oforganization, lack of ownership of projects related to the SharkEye cases, lack of follow up, andfailure to launch new models. Mr. Reddy admitted that Case-Mate had experienced major issuesand had “realigned.”37. SharkEye also notified Defendants that it had come to their attention thatDefendants were manufacturing and selling cases that are directly competitive with and that offersimilar protection to the Licensed Products, including without limitation, the “Phantom” case, inbreach of Section 3.2(b) of the ELA. SharkEye pointed out to Mr. Reddy that the Phantom casewas specifically discussed during the negotiation of the ELA and that SharkEye made it clearthat if Case-Mate intended to sell the Phantom and other rugged cases, SharkEye would notexecute the ELA. SharkEye reminded Mr. Reddy that during discussions regarding this criticalissue, SharkEye was ready to walk away from the negotiating table but Mr. Reddy ultimatelyagreed that either Case-Mate would not sell the Phantom or would pay SharkEye the sameroyalty on sales of Phantom and other rugged cases as it agreed to pay on sales of the SharkEyePLAINTIFF SHARKEYE, LLC’S ORIGINAL COMPLAINTAND JURY DEMAND PAGE 8
Case 1:12-cv-00558-LY Document 1 Filed 06/27/12 Page 9 of 14cases. Mr. Reddy responded by saying that he would “think on it for a day.” The meeting wasconcluded with the request that Defendants commit to the SharkEye cases and launch moremodels. Mr. Reddy admitted that selling only one model was not a viable marketing plan.38. In March 2011, because Defendants did not address any of the issues andproblems mentioned above, in order to mitigate SharkEye’s damages, a proposal pursuant towhich SharkEye offered to perform some of Defendants’ key responsibilities in return for beingreimbursed for its expenses was sent to Defendants. SharkEye also asked Defendants to issue apress release confirming that the previous failures related to the use of PC had been corrected.Defendants failed to do so.39. In early May 2011, SharkEye’s CEO once again contacted Mr. Reddy andcomplained that Defendants were not adequately responding to SharkEye’s requests or providingsufficient information.40. In mid-June 2011, Mr. Reddy called SharkEye’s CEO and claimed that theSharkEye cases were not selling and were too large.41. During the same call, Mr. Reddy admitted that competitors were selling at leasthalf a million rugged cases every month. Most of these cases, including Defendants’ Phantomcase, are actually larger than the SharkEye Case. It was decided that an additional call would beheld in three days.42. Instead of calling SharkEye’s CEO in three days, Mr. Reddy instructed hisgeneral counsel to send a letter repudiating Defendants’ obligations under the ELA and statingthat it “is not able to go forward with the production and sale of cases” and that it “intends tocease further production of our Tank case” (the “Repudiation Letter”).PLAINTIFF SHARKEYE, LLC’S ORIGINAL COMPLAINTAND JURY DEMAND PAGE 9
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