Case 2:21-cv-02139-TLP-tmp Document 1 Filed 03/09/21 Page 1 of 24 PageID 1
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION AT MEMPHIS
`
`
`CISCO SYSTEMS, INC., a California
`corporation, and CISCO
`TECHNOLOGY, INC., a California
`corporation,
`
`
`Plaintiffs,
`
`
`
`v.
`
`
`LAMINATION SERVICE, INC., a
`Tennessee corporation; LSI GRAPHICS
`LLC, a Tennessee limited liability
`company, EZZELL ENTERPRISE, INC.,
`a Tennessee corporation, HES LIMITED
`(also DBA AS BEIJING DECENET,
`DECENT TECHNOLOGY CO. LTD.,
`HARDWARE FOCUS, QDQB TECH
`HARDWARE, CASSIA NETWORK
`LIMITED, and GLOBAL NETWORKS
`TECHNOLOGY), a Chinese limited
`company, and DOES 1-50,
`
`
`Defendants.
`
`
`
`
`
`
`
`Case No.
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`
`
`
`COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF
`
`Plaintiffs Cisco Systems, Inc. (“CSI”) and Cisco Technology, Inc. (“CTI” and together
`with CSI, “Cisco” or “Plaintiffs”) hereby complain and allege against Defendants
`LAMINATION SERVICE, INC. and LSI Graphics LLC (collectively “LSI ”), EZZELL
`ENTERPRISES, INC., HES Limited, (“HES”), and Does 1-50, inclusive (collectively
`“Defendants”) as follows:
`
`I.
`INTRODUCTION
`1.
`As set forth in detail below, Cisco has uncovered a significant and willful
`infringement scheme by Defendants, which involves the production of counterfeit “Cisco”
`networking products in China, importing those counterfeit products into the United States, and
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`selling those counterfeit products to government and non-government customers. Customers
`purchasing such products are duped into thinking they are in fact getting new, “factory sealed”
`genuine Cisco branded products, causing significant harm not only to the duped customer, but
`also to Cisco, its brand, and its established reputation for producing the highest quality
`networking communications and information technology products and services. Cisco’s
`customers rely on Cisco products to run complex, critical and highly secured networks. But
`counterfeit Cisco products can cause network downtime and substantial business interruption.
`Cisco brings this Action to protect Cisco customers from receiving inferior counterfeit products,
`to put a stop to Defendants’ unlawful and infringing conduct, to enjoin further unlawful and
`infringing conduct, and to recover full damages for the significant harm they have caused.
`II.
`THE PARTIES
`2.
`Plaintiff Cisco Systems, Inc., is a Delaware corporation as of January 25, 2021,
`and at all earlier times mentioned herein was, a California corporation, with its principal place of
`business at 170 W. Tasman Drive, San Jose, California 95134. Plaintiff Cisco Technology, Inc.,
`is, and at all times mentioned herein was, a California corporation with its principal place of
`business at 170 W. Tasman Drive, San Jose, California 95134. CTI owns the trademarks used by
`CSI in marketing Cisco-branded products.
`3.
`Defendant Lamination Service Inc., is, and at all relevant times was, a Tennessee
`for profit corporation. LSI Graphics LLC, is, and at all relevant times was, a Tennessee limited
`liability company. Both defendants are, and at all times relevant were, operating at 2950 Brother
`Blvd., Suite 103, Bartlett, Tennessee.
`4.
`Defendants Ezzell Enterprises Inc. is, and at all relevant times was, a Tennessee
`for profit corporation, operating at 2950 Brother Blvd., Suite 103, Bartlett, Tennessee.
`5.
`Defendant HES is a business entity that, upon information and belief, is a Chinese
`Limited Company with its principal business location in Hong Kong, China. On information and
`belief, HES also does business as “Beijing Decenet,” “Decenet Technology Co., Ltd,”
`“Hardware Focus”, “QDQB Tech Hardware,” “Cassia Network Limited, and “Global Networks
`Technology,” all operating from the same address of Unit 03E, 15/F, Carnival Commercial
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`Building, 18 Java Road, North Point, Hong Kong, and elsewhere in China. Upon information
`and belief, Cisco alleges that HES is affiliated with Acentre Co Limited, operating from No. 10
`Information Road, Haidian District, Beijing, 100193 China. HES conducts business throughout
`the United States, including within the State of Tennessee, by exporting counterfeit products to
`Tennessee and elsewhere in the United States, and engaging in sales transactions with resellers
`of Cisco products. Through this sales practice, HES sells products to resellers in the state of
`Tennessee, including LSI. Cisco is informed and believes, and therefore alleges, that products
`sold by HES to resellers in the United States are ultimately sold to end customers within the
`State of Tennessee and elsewhere in the United States.
`6.
`Cisco is currently unaware of the true names and capacities of Does 1 through 50,
`inclusive, whether individual, corporate, associate, or otherwise. Due to the surreptitious nature
`of Defendants’ actions, the identities of Does 1 through 50 have been concealed from Cisco,
`preventing Cisco from identifying them by name. After discovery, which is necessary to
`ascertain the true names and capacities of Does 1 through 50, Cisco will amend this Complaint to
`show the true names and capacities of these Doe defendants and allege the necessary identifying
`details.
`7.
`Cisco is informed and believes, and thereon alleges, that each of the Defendants
`designated herein as a Doe is legally responsible, in some manner, for the events and happenings
`herein referred to, and legally caused damages to Cisco as herein alleged.
`8.
`At all times relevant to this action, each defendant, including those fictitiously
`named defendants, was the agent, servant, employee, partner, joint venturer, representative,
`subsidiary, parent, affiliate, alter ego, or co-conspirator of the other defendants and was acting
`within the scope of that agency, service, employment, partnership, joint venture, representation,
`affiliation, or conspiracy, and each is legally responsible for the acts and omissions of the others.
`9.
`Indeed, as alleged in further detail below, each Defendant played a necessary role
`in the infringing distribution chain that ultimately resold counterfeit and otherwise infringing
`Cisco branded products to the public. As such, each Defendant is jointly and severally liable for
`the damages caused by the unlawful conduct.
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`III.
`JURISDICTION
`10.
`This is an Action for violations of the Trademark Act of 1946, 15 U.S.C. §§ 1051
`et seq. (the “Lanham Act”), and related causes of action. This Court has original subject matter
`jurisdiction over this Action pursuant to the provision of the Lanham Act, 15 U.S.C. § 1121, as
`well as under 28 U.S.C. §§ 1331 and 1338(a) and (b).
`11.
`This Court has supplemental subject matter jurisdiction over the pendent state law
`claims under 28 U.S.C. § 1367, because these claims are so related to Cisco’s claims under
`federal law that they form part of the same case or controversy and derive from a common
`nucleus of operative facts.
`12.
`This Court has personal jurisdiction over Defendants, who have engaged in
`business activities in this district, misled consumers in this district, knowingly and purposefully
`directed business activities at this district, and have committed tortious acts, knowing Cisco
`would suffer any injuries in this district.
`13.
`Cisco is informed and believes, and thereon alleges, that both LSI’s and Ezzell
`Enterprise Inc.’s owners and management are citizens and residents of the State of Tennessee,
`and/or are doing business in the State of Tennessee, and/or participated in or undertook
`obligations or rights arising out of the subject events and happenings herein referred to, engaged
`in actions or omissions, either intentional or negligent, regarding the subject events and
`happenings herein referred to, and/or benefited unjustly from the efforts, work, and goods of
`Cisco.
`
`14.
`Cisco is informed and believes, and thereon alleges, that Defendant HES (and its
`associated DBA’s listed above) is doing business in the State of Tennessee, and/or participated in
`or undertook obligations or rights arising out of the subject events and happenings herein
`referred to, engaged in actions or omissions, either intentional or negligent, regarding the subject
`events and happenings herein referred to, and/or benefited unjustly from the efforts, work, and
`goods of Cisco.
`
`IV. VENUE
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`15.
`Venue is proper in this district, pursuant to 28 U.S.C. § 1391, because a
`substantial part of the events or omissions giving rise to Cisco’s claims occurred in this judicial
`district, and a substantial part of the property that is the subject of the action is situated in this
`district. Venue is further proper in this district, pursuant to 28 U.S.C. § 1400(a), as Defendants
`or their agents may be found in this district.
`
`V.
`
`FACTUAL ALLEGATIONS RELEVANT TO CISCO, ITS INTELLECTUAL
`PROPERTY, AND DEFENDANTS’ UNLAWFUL SCHEME
`
`A.
`Cisco’s Business And History
`16.
`Founded in 1984, Cisco is the worldwide leader in developing, implementing, and
`providing the technologies behind networking communications, and information technology
`products and services. Cisco develops and provides a broad range of networking products and
`services that enable seamless communication among individuals, businesses, public institutions,
`government agencies, and service providers. Specifically, the thousands of engineers who work
`at Cisco develop and provide networking and communications hardware, software, and services
`that utilize cutting-edge technologies to transport data, voice, and video within buildings, across
`cities and campuses, and around the world.
`17.
`Since its founding, Cisco has pioneered many of the important technologies that
`created and enabled global interconnectivity. During the past three decades, Cisco has invested
`billions of dollars, and the time and dedication of thousands of its engineers, in the research,
`development, and sale of industry leading networking and communications products and
`services.
`18.
`Cisco has also built up tremendous goodwill and brand reputation among
`consumers, including corporate and government consumers, through significant investment in
`advertising, promoting, and delivering products, software, and services of the highest quality
`under Cisco’s trade name and the family of Cisco-related trademarks (the “Cisco Marks”). Cisco
`has used the family of Cisco Marks to identify goods and services as being genuine and
`authorized, and therefore, the Cisco Marks are well-recognized signifiers of Cisco’s best-in-class
`products, software, and services.
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`B.
`Cisco’s Trademarks
`19.
`CTI owns all rights, title, and interest in the Cisco Marks, which are included on
`the Principal Register of the U.S. Patent and Trademark Office. The Cisco Marks are well-
`known. They are used in connection with Cisco’s networking hardware and software products
`and services. They include, but are not limited to, the following marks that are used in interstate
`commerce:
`
`Mark
`
`CISCO
`CISCO
`CISCO
`
`
`
`
`
`Registration Number
`1,542,339
`2,498,746
`3,709,076
`
`3,759,451
`
`3,763,903
`
`Registration Date
`June 6, 1989
`October 16, 2001
`November 10, 2009
`
`March 9, 2010
`
`March 23, 2010
`
`3,978,294
`
`June 14, 2011
`
`CISCO
`
`20.
`The Cisco Marks are distinctive, having no meaning outside of their use by Cisco
`in its course of business operations and in its advertising to distinguish its products and services.
`Cisco uses the Cisco Marks to advertise through a wide variety of media including television,
`radio, newspapers, magazines, billboards, direct mail, and web sites.
`21.
`Cisco has attained one of the highest levels of brand recognition among
`consumers due to its extensive advertising and promotional efforts and its continuous use of its
`core Cisco Marks for the past three decades. As a result of Cisco’s longstanding and widespread
`use and promotion of the Cisco Marks, Cisco customers around the globe have come to rely
`upon the Cisco Marks to identify Cisco’s high-quality hardware, software, and services. Many
`of Cisco’s products are purchased by the U.S. Government, the military, hospitals, and by other
`industries, in critical and life-essential applications.
`22.
`Cisco’s customers associate Cisco’s famous and well-known trademarks,
`including, among others, CISCO and the Cisco Logo exclusively with Cisco and Cisco’s
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`products and services. When consumers encounter these marks and decide to purchase goods and
`services identified by these marks, they expect to receive genuine Cisco products that have been
`produced by Cisco. Moreover, when consumers purchase products that are advertised as “new
`factory sealed,” they believe that they are purchasing genuine products manufactured by Cisco
`that have not been tampered with from the time the product was sealed in its shipping packaging.
`Thus, knowing that these products are not actually “new factory sealed” would be highly
`relevant and material to a consumer’s purchasing decision.
`C.
`Counterfeit And Otherwise Materially Different “Cisco” Products
`23.
`Counterfeit products that bear markings similar to the Cisco Marks provide
`customers with a false assurance that the products they have purchased (1) are reliable and
`conform with Cisco’s high standards, (2) come with applicable warranties, (3) can be placed
`under a Cisco service support contract (i.e., SMARTnet) without the need for payment of extra
`amounts for inspection and relicensing, and (4) come with all of the necessary accessories sold
`with the product that have been selected and approved by Cisco for use with the product.
`24.
`In addition to harm to customers, the sale of counterfeit Cisco products also harms
`Cisco in many ways. Among these, counterfeit Cisco products which fail or degrade create the
`false impression that Cisco products are unreliable, thereby improperly tarnishing Cisco’s
`reputation and causing Cisco to suffer lost sales and future business opportunities. When
`customers purchase Cisco-branded parts that are counterfeit and unreliable, their image of Cisco
`is diminished and Cisco’s opportunity to sell genuine, high-quality products to those customers
`may be lost forever. As a result, Cisco suffers substantial and irreparable harm to its brand,
`image, business, and goodwill with the public. Cisco also suffers lost sales when customers
`purchase counterfeit products instead of genuine Cisco products.
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`D.
`
`Impact on Health, Safety, and National Security Caused By Counterfeit
`Cisco Products
`
`25.
`Cisco products are part of the backbone of the United States information
`technology network. Many of Cisco’s products are purchased by U.S. governmental entities, the
`military, hospitals, and by other industries, and are used in important and life-essential
`applications. Critical governmental and other infrastructure is built on, and relies upon, Cisco
`products to maintain the security of data storage and transfer.
`26.
`The importance of critical functions being able to rely upon the quality of Cisco
`products cannot be overstated. Cisco firewalls, for example, ensure the integrity of government,
`medical, and business data and communications. Many critical government functions rely upon
`the performance of high-quality Cisco products, as compared to non-genuine products. In a
`criminal trial involving counterfeit Cisco products sold to the U.S. Marines, a Marine (Staff
`Sargent Lee Chieffalo) testified that he specifically demanded genuine Cisco products when he
`ordered them, because if the networks that the “Cisco” products were in failed due to
`substandard counterfeit products, “Marines could die.”
`27.
`Based upon publicly available databases of government contracts, Cisco alleges
`on information and belief that LSI has had 370 federal government contracts during the period
`from 1983 to 2019, 117 of which were signed since January 1, 2010. At least 15 of these
`contracts specifically included the sale of Cisco-branded products. Federal agencies to whom
`LSI has sold Cisco-branded products include: United States Army, Centers for Disease Control
`and Prevention, Nuclear Regulatory Commission, Federal Emergency Management Agency,
`Department of Veterans Affairs, and Internal Revenue Service.
`28.
`LSI also claims to sell an integrated software and hardware solution to manage
`badge access to secure facilities. LSI’s website claims: “Currently, BMS [Badge Management
`System] is considered an industry leader for high-end, customizable photo-ID card software, and
`
`is being used by a wide range of organizations throughout the nation ranging from The New
`
`Jersey State Police and The University of Florida to the Metropolitan Nashville Public School
`
`System and The Senate and House of Representatives of the United States. Over the past two
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`decades, LSI has solidified our position in the card personalization software market and has also
`
`become a significant player in the ID/Access card hardware, hardware support, supplies, and
`
`accessories markets. We currently have a dedicated staff of 14 individuals in our ID/Access card
`
`division, which includes sales, marketing, software programming, system integration teams, and
`hardware service/support” LSI’s website does not make clear whether Cisco products are
`integrated into this offering. .
`29.
`Based upon publicly available databases of government contracts, Cisco alleges
`on information and belief that Thomas Ezzell, who is listed on the Tennessee Secretary of State
`website as the Registered Agent for Ezzell Enterprise, Inc., has entered into 11 federal
`government contracts with Defense Logistics Agency and Department of Veteran Affairs during
`the period from 2016 to 2018.
`30.
`On August 25, 2020, Chinese law enforcement authorities raided a total of seven
`sites in China connected with HES to search for counterfeit Cisco products. The raids
`culminated in the seizure of over 1,200 counterfeit Cisco products, including counterfeit “Cisco”
`switches, routers, wireless controllers, power supplies, and transceivers. Of great concern,
`Chinese authorities also seized 500 counterfeit Cisco labels, eight rolls of counterfeit Cisco
`security labels, and 50 counterfeit Cisco Carton Boxes. This is evidence that HES has been
`running a very active and sophisticated counterfeiting operation from China, pumping out large
`quantities of counterfeit “Cisco” products. Cisco alleges upon information and belief that a
`significant amount of the counterfeit products ended up in the United States, because more Cisco
`products are used in the United States than anywhere else in the world.
`E.
`Cisco’s Warranty and Support Programs
`31.
`Cisco supports its products through several means, including: (1) a warranty
`program that varies based on the product, ranging from 90 days to a limited lifetime warranty
`(“Warranty”), and (2) a more comprehensive suite of service and support offered to customers
`for a fee, collectively called SMARTnet Service (“SMARTnet”). The Cisco Warranty is non-
`transferable and is provided solely to the original End User of the equipment. A SMARTnet
`contract entitles the holder of the contract to receive software updates and upgrades for the
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`hardware that is covered by the contract, access to Cisco’s Technical Assistance Center
`(“TAC”), and oftentimes advance replacement of the product if it fails and TAC cannot assist the
`customer to make it operational. Cisco SMARTnet contracts are available to the original End
`User of the product, unless the product is inspected and re-licensed by a subsequent End User, in
`which case the subsequent End User is entitled to purchase a SMARTnet contract. Only
`Authorized Channel Partners are permitted to sell SMARTnet contracts, and then only to End
`Users for products purchased through Cisco’s authorized sales channel.
`F.
`Cisco’s Sales and Distribution Channels
`32.
`Cisco is one of the United States’ largest and most innovative companies. The
`volume of Cisco’s yearly sales revenue of hardware, software, and related services is
`approximately $50 billion dollars world-wide. In order to support this global market, for the
`great majority of its sales, Cisco relies upon a system of independent distributors and resellers
`located throughout the world. This system is commonly used in the IT hardware and networking
`industry. These independent distributors and resellers, referred to as “Authorized Channel
`Partners” or “Authorized Resellers,” typically represent several other equipment manufacturers,
`in addition to Cisco. Among other things, Cisco’s distribution system allows it to maintain
`expertise and a local presence in regions of the world where there would not otherwise be
`sufficient business to support it.
`33.
`Authorized Resellers are required to enter into contractual relationships with
`Cisco that allow them to purchase Cisco products and services at a partner discount from Cisco’s
`authorized distributors. The most common contractual relationship is called an Indirect Channel
`Partnership Agreement (“ICPA”). This agreement requires Authorized Resellers to purchase
`Cisco products and services only from Cisco or authorized distributors and to sell those products
`and services only to end customers for their internal use (“End Users”).
`34.
`Cisco’s Authorized Resellers are the direct interface with the customers who use
`Cisco’s products and services. Cisco’s Authorized Resellers identify sales opportunities, provide
`technical assistance in selecting products, recommend solutions to address their customers’
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`unique needs, conduct pre-sales and sales support, supply the needed products, and providing
`post-sales support for the products.
`G.
`LSI’s History Of Unlawful Importation of Counterfeit Cisco Products
`35.
`On information and belief, Defendants operate a complex scheme, without the
`consent of Cisco, to import, distribute, transport, sell, or assist in or cause the sale, importation,
`distribution, or transportation in interstate commerce of products bearing unauthorized
`reproductions, copies, counterfeits, and colorable imitations of the Cisco Marks.
`36.
`U.S. Customs and Border Patrol has seized a number of counterfeit Cisco
`products imported by LSI, including those shown below:
`
`Description
`
`Importer
`
`Exporter
`
`Seizure
`Notice #
`2016-4197-
`103531-01
`
`2017-4197-
`102410-01
`
`Date of
`Import
`4-Aug-16
`
`22-Apr-17
`
`2018-4197-
`000353-01
`
`14-Jun-18
`
`2018-4197-
`001108-01
`
`2018-4197-
`001154-01
`
`5-Sep-18
`
`6-Sep-18
`
`2018-4197-
`102177-01
`
`14-Mar-18
`
`3 Counterfeit
`Cisco Switches
`WS-C2960-
`24TT-L
`
`19 Cisco Products LSI (2950 Brother
`Blvd. Apt. 103,
`Bartlett, TN 38133)
`Lamination
`Services Inc. (2950
`Brother Blvd., Suite
`103, Bartlett, TN
`38133)
`LSI (2950 Brother
`Blvd. Apt. 103,
`Bartlett, TN 38133)
`
`10 Counterfeit
`Cisco Switches
`WS-X4748-RJ45-
`E
`2 Cisco Switches LSI (2950 Brother
`Boulevard, Bartlett,
`TN 38133)
`Lamination
`Services Inc. (2950
`Brother Blvd., Suite
`103, Bartlett, TN
`38133)
`Lamination
`Services Inc. (2950
`Brother Blvd., Suite
`103, Bartlett, TN
`38133)
`
`1 Counterfeit
`Cisco Switch
`
`2 Counterfeit
`Cisco Switches
`
`Yuheng Data
`Hardware Intl.
`
`Grace Xiong
`
`Global NT
`
`YW
`
`My Technology
`
`Clare
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`Description
`
`Importer
`
`Exporter
`
`Seizure
`Notice #
`2018-4197-
`102178-01
`
`Date of
`Import
`14-Mar-18
`
`2019-4197-
`000087-01
`
`2019-4197-
`000117-01
`
`2019-4197-
`003219-01
`
`10-Oct-18
`
`11-Oct-18
`
`13-Aug-19
`
`2019-4197-
`003220-01
`
`13-Aug-19
`
`2019-4197-
`003238-01
`
`3-Jul-19
`
`2019-4197-
`003239-01
`
`14-Aug-19
`
`2 Counterfeit
`Cisco Switches
`
`5 Each of Cisco
`Switches
`
`Lamination
`Services Inc. (2950
`Brother Blvd., Suite
`103, Bartlett, TN
`38133)
`LSI (2950 Brother
`Boulevard, Bartlett,
`TN 38133)
`4 Cisco Switches LSI (2950 Brother
`Blvd. #103 Bartlett,
`TN 60103)
`Ezzell Enterprises
`Inc. (2950 Brother
`Blvd., Bartlett, TN
`38133)
`Ezzell Enterprises
`Inc. (2950 Brother
`Boulevard Bartlett,
`TN 38133)
`Ezzell Enterprises
`Inc. (2950 Brother
`Boulevard Bartlett,
`TN 38133)
`Ezzell Enterprises
`Inc. (2950 Brother
`Blvd., Bartlett, TN
`38133)
`
`2 Each Cisco
`Switches C9300-
`24P-A
`
`2 Each Cisco
`Switches C9300-
`24P-A
`
`2 EA Cisco
`Switch
`
`2 Each Cisco
`Switches C9300-
`24P-A
`
`Kevin
`
`YW
`
`DHL-Beijing
`
`JM Utou Space
`
`My Technology
`
`My Technology
`
`JM Utou Space
`
`37.
`On November 11, 2019, Cisco’s outside counsel sent a Cease & Desist letter to
`Ezzell Enterprises with regard to the three CBP seizures in August 2019 of six switches. Britt
`Daniel, President of LSI, responded by email on November 19. He stated that the products came
`from HES. He claimed that LSI had not “officially order[ed]” them. He also provided an email
`chain with “Ed” at HES, using the email address of ed@hesid.com. Ed provided a chart of eight
`C9300-24P-A switches, broken down into four shipments of two switches each, and stated
`“Below units which I discussed with Eric we have shipped to you last 2 days. We are still
`waiting for your po to process invoices. Can you please send po asap?”
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`H.
`
`LSI’s Prior History Of Unlawful Sales of Counterfeit Cisco Products
`1. Sale of Counterfeit Transceivers to City of Toledo (2012)
`38.
`On or around October 23, 2012, LSI sold 52 Cisco-branded GLC-LH-SM
`transceivers to the City of Toledo. Cisco evaluated one of the GLC-LH-SM transceivers and
`determined it was counterfeit.
`39.
`On January 8, 2013, Cisco’s outside counsel sent a Cease and Desist letter to LSI
`regarding this sale and requested documents regarding this transaction. LSI provided
`documentation indicating that LSI sourced the products from CentricsIT, an unauthorized broker
`in Georgia.
`
`2. Sale of Counterfeit Transceivers to United States Army (for New
`York National Guard) (2013).
`
` On or about November 18, 2013, Cisco was contacted by the United States Army
`40.
`regarding two Cisco-branded SFP-GE-Ts purchased from LSI. The Army provided the LSI
`Packing List and photographs of the units for analysis. A manufacturer for Cisco, Methode
`Electronics, examined two SFP-GE-T transceivers that LSI supplied to the Army, and
`determined that the two units were counterfeit.
`41.
`Following this determination, on December 16, 2013, Cisco’s counsel sent LSI a
`second cease and desist letter regarding this sale of counterfeit SFP-GE-Ts. On December 17,
`2013, LSI responded and identified CentricsIT as the source of the products, and provided
`documentation regarding the same. In other words, LSI sourced Cisco transceivers from the
`same source that sold it counterfeit transceivers months earlier in complete disregard of the
`Cease and Desist letter LSI received regarding that earlier transaction..
`42.
`On January 16, 2014, Cisco’s counsel sent LSI a follow-up letter requesting that
`all other “Cisco” products purchased from CentricsIT be quarantined. In response, Britt Daniel
`of LSI stated the counterfeit items sold to the Army National Guard would be returned to Cisco
`and that the other products had been returned to CentricsIT.
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`3. Sale of Counterfeit Transceivers to JR International (2015)
`43.
`In or about July 2015, an end user in Colombia reported a failed SFP-GE-T
`transceiver to Cisco, which determined that the product was counterfeit. The end user identified
`a Cisco partner in Colombia as the source of the transceiver, and the partner provided invoices
`showing that unauthorized reseller JR International sold them the transceiver.
`44.
`Cisco’s counsel sent a cease and desist letter to JR International, which
`cooperated by identifying that it purchased the counterfeit transceiver from LSI; JR International
`provided documents showing a purchase order of 67 SFP-GE-T transceivers from LSI on April
`6, 2015. During this period, Cisco’s counsel had been communicating with Mason Ezzell, III at
`LSI regarding the sales of counterfeit Cisco products to the Government. Cisco’s counsel sent a
`follow-up letter to LSI based on this new information provided by JR International.
`45.
`LSI replied to Cisco’s counsel on December 14. LSI claimed that it purchased the
`transceivers in question from Digital Devices in England for $85.00 each. The global list price
`for these transceivers was $440.00.
`4. Sale of Counterfeit Network Modules to Sourcing Solutions (2015)
`46.
`On November 4, 2015, CBP seized a shipment of five counterfeit Cisco catalyst
`modules. Cisco’s counsel sent a cease and desist letter to the importer, Sourcing Solutions, on
`March 8, 2016. Sourcing Solutions cooperated with Cisco’s demand and confirmed that their
`vendor for the seized products was LSI. The five products were WS-X6716-10G-3C modules.
`The list price for these products is $40,000 each. LSI sold the products to Sourcing Solutions for
`$7,000 each, which is a remarkably low price and a major indicator that the product was suspect.
`47.
`Cisco requested that Sourcing Solutions quarantine other products from LSI in
`their possession, so that Cisco could examine them to determine whether they were genuine or
`counterfeit. Sourcing Solutions supplied photographs of five additional products sourced from
`LSI that remained in their possession. A Cisco engineer reviewed the photographs and
`determined that they were counterfeit.
`48.
`On June 10, 2016, Cisco’s outside counsel sent a cease and desist letter to LSI.
`This letter informed LSI that it had previously been put on notice three times due to its sale of
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`counterfeit products, and noted the significant price disparity between its offering and genuine
`products.
`49.
`On June 23, 2016, LSI’s Vice President, Brett K. Daniels, responded to the June
`10, 2016 cease and desist letter. In his response, Mr. Daniels claimed that LSI had “no intention
`of selling any counterfeit equipment from any manufacturer, including Cisco.” Mr. Daniels
`claimed that LSI was willing to cooperate with Cisco’s investigation. Mr. Daniels identified the
`vendor of the counterfeit products that LSI had supplied to Sourcing Solutions as Hardware
`Focus Limited.
`50.
`Hardware Focus Limited is identified on the invoice provided by LSI as having an
`address at Unit 03E, 15/F, Carnival Comm, 18 Java Road, Hong Kong, China. This is the same
`address provided by HES. LSI purchased the five WS-X6716-10G-3C units from Hardware
`Focus Limited for $5,600 each. LSI sold the same units to Sourcing Solutions for $6,900 per
`unit. The Global List Price set by Cisco for these units is $40,000.
`LSI’S WILLFULNESS
`51.
`Cisco contends that at the time of each sale noted herein, LSI was on notice that it
`was selling counterfeit Cisco products. Cisco sent LSI its first Cease and Desist letter in January
`2013. Cisco sent four more Cease and Desist letters to LSI, but LSI continued its infringing
`conduct. LSI continued to sell counterfeit Cisco products and import counterfeit Cisco products