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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 1 of 14
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`CTC INTERNATIONAL. INC., d/b/a
`UBUNTU,
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`THE SUPPLY CHANGE, LLC,
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
` AUSTIN DIVISION
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`Case No.______________
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`Plaintiff
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`Defendant
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`ORIGINAL COMPLAINT
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`Plaintiff CTC International, Inc. d/b/a UBUNTU (“CTC”) files this Original Complaint
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`against Defendant The Supply Change, LLC (“Supply Change”).
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`PARTIES
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`1.
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`Plaintiff, CTC, is a nonprofit corporation that is organized under the laws of the State
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`of Texas having its principal place of business at 908 W. Mary Street, Austin, Travis County, Texas
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`78704.
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`2.
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`Defendant, Supply Change, is a for-profit corporation that was incorporated under the
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`laws of the State of Texas since 2015. Defendant had its principal place of business at 815-A Brazos
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`Street #571, Austin, Travis County, Texas 78701.
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`3.
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`On May 28, 2020, without notice to Plaintiff, Supply Change filed articles of
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`organization in the State of California that converted Supply Change from a limited liability
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`corporation in Texas to a limited liability corporation in California under California law.
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`4.
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`On December 22, 2020, in the midst of settlement negotiations with Plaintiff and
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`without notice to Plaintiff, Supply Change filed a Notice of Termination with the Secretary of State
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 2 of 14
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`for the State of Texas intended to terminate its limited liability corporation in Texas. Plaintiff did not
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`discover this covert termination until Defendant’s registered agent in Texas suddenly refused to
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`accept a notice letter to Defendant sent by certified mail. At the time of the termination of Defendant
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`Supply Change as a Texas limited liability corporation, Defendant was fully aware of Plaintiff’s
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`claims set forth herein and yet failed and refused to address such claims in the termination process as
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`required by Texas law.
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`5.
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`Under applicable Texas law, the terminated Texas limited liability company continues
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`in existence until the third anniversary of the effective date of the entity’s termination for purposes
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`of an action brought against the terminated entity. If an action on an existing claim against a
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`terminated entity is brought, the terminated entity continues to survive until all judgments, orders and
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`decrees have been fully executed. TEX. BUS. ORG. CODE §11.356.
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`6.
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`Under the above-described circumstances and to the extent necessary, Plaintiff’s
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`action has been brought against Defendant’s terminated Texas limited liability corporation and
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`against Defendant’s converted California limited liability corporation.
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`7.
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`Both as a converted California limited liability corporation and as a terminated Texas
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`limited liability corporation, Defendant may be served with process by service upon its registered
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`agent, Ms. Chrissie Lam, 973 Pleasant Hill Road, Lafayette, California 94549.
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`JURISDICTION
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`8.
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`The Court has jurisdiction over the lawsuit because the suit arises under a federal
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`statute, 15 U.S.C. §1125(a). Plaintiff is the owner of an unregistered mark that is entitled to assert a
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`claim under the Lanham Act’s “likelihood of confusion” standard, which prohibits use of a mark in
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`a way that is likely to deceive or cause confusion about the nature or origin of a produce or service.
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`15 U.S.C. §1125(a)(1).
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 3 of 14
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`9.
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`The Court has supplemental jurisdiction under 28 U.S.C §1367 over Plaintiff’s claims
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`of breach of contract against Defendant, because Plaintiff’s claims are so related to the claims within
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`the Court’s original jurisdiction that they form part of the same case or controversy under Article 3
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`of the U.S. Constitution. Specifically, the parties entered into a written agreement in which Defendant
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`expressly recognized Plaintiff’s right, title, and interest in certain service marks and expressly agreed
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`not to engage in any activities or commit any acts, directly or indirectly, that would impair Plaintiff’s
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`right to such marks or diminish the value of its marks. Defendant further agreed not to apply for,
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`acquire, or claim any interest in Plaintiff’s service marks. Defendant’s breaches of said agreement
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`with respect to Plaintiff’s marks are directly related to Plaintiff’s claims under 15 U.S.C. §1125(a)(1),
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`and Defendant’s other breaches of said agreement are inextricably intwined with infringement claims.
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`10.
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`Additionally, in view of Defendant’s conversion of a Texas limited liability
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`corporation into a California limited liability corporation, this Court has diversity of citizenship
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`jurisdiction under 28 U.S. Code §1332. This is a civil action where the matter in controversy exceeds
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`the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States.
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`VENUE
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`11.
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`Venue is proper in this district under 28 U.S.C. §1391(b)(1), because Defendant,
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`Supply Change, resided in this district during the period where the events or omissions giving rise to
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`this claim occurred and had its principal place of business in this district.
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`12.
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`Venue is also proper in this district under 28 U.S.C. §1391(b)(2), because a substantial
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`part of the events or omissions giving rise to this claim occurred in this district.
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`CONDITIONS PRECEDENT
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`13.
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`All conditions precedent have been performed or have occurred.
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 4 of 14
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`FACTUAL BACKGROUND
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`Plaintiff CTC is a non-profit corporation that works with Maasai craftswomen in
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`14.
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`Kenya to create sophisticated handmade products for sale in the United States and in international
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`markets. CTC not only provides facilities for such work, but also provides these African artisans
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`with marketing expertise and avenues that allows them to access to income in a way that is supportive
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`of their culture and lifestyle. Since its beginning in 2011, CTC has expanded to several locations in
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`Kenya, and the number of Maasai craftswomen participating in this enterprise has grown
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`significantly. Although the handmade products produced by these craftswomen in Kenya continues
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`to grow, the best-selling products have generally been distinctive handmade beaded message
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`bracelets. CTC’s distinctive African beaded message bracelets have been designed, produced, and
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`marketed in the United States and in other international markets since 2012.
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`15.
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`In 2013, Plaintiff entered into a lump sum independent contractor agreement with
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`Defendant for the development of one new product in one new market, specifically a wine bag (“Save
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`the Wino”). This limited scope contract ended according to its terms without dispute.
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`16.
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`Plaintiff then entered into a Consulting Service Agreement (“Agreement”) with
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`Defendant on March 1, 2015, in which Defendant agreed to perform certain consulting and
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`professional services for Plaintiff under the terms and conditions of the parties’ Agreement. A copy
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`of the parties’ Agreement is attached hereto as Exhibit A.
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`17.
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`Section 12 of the Agreement concerned the parties’ respective service marks,
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`trademarks, and trade names that were already owned and used the by parties at the time of entering
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`into the Agreement. These marks were then specifically identified and expressly incorporated into
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`the parties’ Agreement as Annex 2 of the Agreement. Annex 2 clearly described and identified the
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`distinctive “Beaded message bracelets (e.g. LOVE bracelet)” as a mark owned by Plaintiff.
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 5 of 14
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`18.
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`All marks identified as marks in Annex 2 as owned by Plaintiff were well-known and
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`“famous” prior to the date of the Agreement. Plaintiff’s distinctive African beaded message bracelets
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`are marks that have been advertised and sold in the United States and internationally since 2014 in
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`high end retail establishments, as well as by direct sales through Plaintiff’s website. Such marks
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`were in use by Plaintiff prior to the Agreement and are marks to which Defendant has never had any
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`valid claim. Representative samples of Plaintiff’s distinctive beaded message bracelets, including
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`its iconic LOVE beaded message bracelet, is attached hereto as Exhibit B.
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`19.
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`Defendant expressly agreed in Section 12(A) of the Agreement “not to engage in any
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`activities or commit any acts, directly or indirectly, that may contest, dispute, or otherwise impair
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`[Plaintiff’s] right, title, and interest [in Plaintiff’s marks listed in Annex 2), nor … cause diminishment
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`of value of said trademarks or trade names through any act or representation.” Defendant further
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`agreed in Section 12(A) “not to apply for, acquire, or claim any right, title, or interest in or to any
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`such service marks, trademarks, or trade names, or others that may be confusingly similar to
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`[Plaintiff’s marks identified in Annex 2) through advertising or otherwise.”
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`20.
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`Section 6 of the Agreement concerned ownership of subsequently created intellectual
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`property of the parties and provided that only work created by Defendant for Plaintiff during the term
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`of the Agreement (March 1, 2015, through date of termination) remained the property of Defendant.
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`Nevertheless, Section 6 provided that Defendant granted Plaintiff exclusive use of its intellectual
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`property from the effective date of the Agreement until twelve (12) months after the date of
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`termination.
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`21.
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`Section 7 of the Agreement provided that, during the term of the Agreement,
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`Defendant agreed not to accept work or enter into any contracts or accept other obligations
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`inconsistent or incompatible with the terms and conditions of the parties’ Agreement;
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 6 of 14
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`22.
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`An Amendment to the Agreement, effective January 31, 2016 (“Amendment”),
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`provided for (1) a revised Section 5 with changes in the compensation structure of the Agreement
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`(payment by Defendant for products ordered from Plaintiff and commission payments to Defendant
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`by Plaintiff) and (2) a revised Section 6, pursuant to which Defendant granted Plaintiff exclusive,
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`transferable, and perpetual use of all its intellectual property created during the term of the Agreement
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`except for the #loveisproject property identified in Annex 2 of the Consulting Agreement. However,
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`pursuant to the Amendment, Plaintiff was also granted exclusive use of a certain #loveisproject
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`beaded, red leather tie bracelet;
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`23.
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`The Amendment expressly provided that, except for the changes to Section 5 and
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`Section 6 identified above, the terms of the original Agreement remained unchanged. No changes
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`were made to Annex 2 in the Amendment that identified the parties’ marks.
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`24.
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`Defendant continued to perform services after the Amendment under the revised
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`compensation provided in the Amendment, which included cultivating new customers for Plaintiff
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`and engaging in the sale of Plaintiff’s products. Over the next few years, Defendant placed purchase
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`orders for Plaintiff’s products totaling $84,577.00 for which only $66,305.38 was paid (inclusive of
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`credit for Defendant’s earned commissions), leaving a current balance owed to Plaintiff of
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`$18,271.00. Plaintiff has kept record of all charges made and all payments received and other credits
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`to Defendant’s account.
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`25.
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`For a time period yet to be determined and on a scale yet to be calculated, Defendant
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`has engaged in activities and committed acts that, directly or indirectly, contest, dispute, or otherwise
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`impair CTC’s right, title, and interest in the service marks, trademarks, and trade names owned by
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`CTC and incorporated into Article 12 of the Agreement as Annex 2. Under its “LoveIsProject” brand
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`name, Defendant has been advertising, marketing and selling beaded message bracelets, including
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 7 of 14
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`LOVE bracelets, virtually identical to those designed and created by Plaintiff in blatant and direct
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`violation of express provisions of Section 12 and Annex 2 of the parties’ Agreement. Such obvious
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`infringement has caused diminishment of value of Plaintiff’s mark and has created a likelihood of
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`confusion among consumers viewing Defendant’s infringing mark. An example of Defendant’s
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`blatant infringement of Plaintiff’s marks, specifically its imitation beaded LOVE bracelet, is attached
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`hereto as Exhibit C. In fact, incidents of actual confusion among Defendant’s customers have
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`already occurred.
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`26.
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`On January 27, 2017, in an egregious direct breach of the parties” Agreement,
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`Defendant included “bracelets” in a trademark application that attached specimens virtually identical
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`to Plaintiff’s iconic LOVE bracelet. See Exhibit D attached hereto.
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`27.
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`Recently, Plaintiff has discovered Defendant selling its infringing beaded message
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`bracelets on Amazon.com, which will necessitate notice to Amazon.com of Defendant’s infringement
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`against Plaintiff’s trademark.
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`28.
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`Inasmuch as Plaintiff’s marks were expressly identified and disclosed in the Parties’
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`written Agreement and Defendant had expressly agreed to respect Plaintiff’s marks, together with the
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`fact that Defendant had become personally familiar with Plaintiff’s marks while working as Plaintiff’s
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`consultant, each and every imitation beaded message bracelet sold by Defendant since entering into
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`the Agreement that mimics Plaintiff’s distinctive marks constitutes willful infringement, as such
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`conduct occurred with actual knowledge of the infringing activity.
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`29.
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`Upon information and belief, Defendant has also accepted work and/or entered into
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`contracts and obligations inconsistent or incompatible with the terms and conditions of the Agreement
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`and injurious to Plaintiff.
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`30.
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`Additionally, Defendant has issued a multitude of purchase orders for products from
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 8 of 14
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`Plaintiff that total more than $84.577.00. Although the merchandise requested by Defendant’s
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`purchase orders has been delivered to and accepted by Defendant, full payment has not yet been
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`received by Plaintiff. After the agreed commission of 5% set forth in the Amendment is credited to
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`Defendant, the unpaid balance still owed on Defendant’s purchase orders is $18,271.62.
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`31.
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`Finally, Defendant has engaged in a course of business disparagement directed at
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`Plaintiff with the intent to damage Plaintiff’s business reputation.
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`32.
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`On April 28, 2021, after discovery of Defendant’s infringing activities and after
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`settlement negotiations failed, Plaintiff terminated its Agreement with Defendant for cause in
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`accordance with Article 9 of the parties’ Agreement. Unaware that Defendant had covertly
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`terminated its Texas limited liability corporation on December 22, 2020, the notice of termination
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`was sent to Defendant’s registered agent in Texas. After discovery of the termination when
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`Defendant’s registered agent refused service of this notice, Plaintiff sent another notice of termination
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`for cause to Defendant’s converted California limited liability corporation on July 9, 2021.
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`33.
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`As a result of Defendant’s multiple and willful breaches of the parties’ Agreement and
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`other legal duties owed to Plaintiff, Plaintiff has suffered damages including but not limited to loss
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`of business opportunities, loss of sales, loss of revenues, and loss of profits, as well as unpaid debt
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`and damage to its business reputation.
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`34.
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`Further, Defendant’s above-described breaches of the parties’ Agreement and other
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`unlawful activities constitute violations of the Lanham Act, 15 U.S.C. §1125(a)(1), as well as
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`breaches of other legal duties owed to Plaintiff under applicable federal, state, and common law.
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`35. Upon information and belief, Defendant’s acts of infringement, dilution, and unfair
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`competition complained of herein have been willful, intentional, and in bad faith, with full knowledge
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`and conscious disregard of CTC’s rights. In view of the egregious nature of Defendant’s actions, this
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 9 of 14
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`is an exceptional case within the meaning of Section 35(a) of the Lanham Act, 15 U.S.C. § 1117(a).
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`36.
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`All conditions precedent to the following causes of action have been performed or
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`have occurred.
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`COUNT I – VIOLATION OF LANHAM ACT SECTION 1125
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`37.
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`All prior paragraphs are incorporated herein by reference as if fully set forth at length.
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`A. Civil action for monetary damages – 11 U.S.C. §1125(a)
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`38.
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`This is an action for violations of the Lanham Act §43(a), 15 U.S.C. §1125(a), for
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`trademark infringement of an unregistered trademark. Plaintiff is the owner of an unregistered mark
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`and is entitled to recover damages for any reproduction, counterfeit, copy, or colorable imitation that
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`is likely to deceive or cause confusion about the nature or origin of a product or services. 11 U.S.C.
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`§1125(a)(1). Plaintiff has used its mark in commerce over a period of years to designate particular
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`goods or services, specifically distinctive leather beaded message bracelets handmade by Maasai
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`craftswomen in Kenya for sale in the United States, and in international markets. Plaintiff’s mark is
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`inherently distinctive and/or has acquired secondary meaning.
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`39.
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`Defendant’s unauthorized use of Plaintiff’s mark in commerce constitutes a
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`misleading or false designation of origin intended to misrepresent the nature, characteristics, qualities,
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`or geographic origin of such goods, which has caused and is likely to continue to cause confusion
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`among consumers, unjustly obtained profits by Defendant, and economic loss to Plaintiff in an
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`amount to be proven at time of trail.
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`40.
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`As a direct and proximate result of the above-mentioned acts, practices, and conduct
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`by Defendant, Plaintiff has been substantially damaged in its business reputation and goodwill and
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`will likely continue to be so damaged until Defendant’s infringing activity is ended.
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`41.
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`Accordingly, Plaintiff is entitled to recover all costs of the action, Defendant’s profits,
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 10 of 14
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`and all actual damages sustained by Plaintiff from the first date that Defendant’s infringing beaded
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`message bracelets were marketed and sold through the last date that such infringing activity occurred.
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`42.
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`Due to Defendant’s willful and knowing breach of a written Agreement that expressly
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`obligated Defendant to respect Plaintiff’s mark, this action constitutes an exceptional case that would
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`further entitle Plaintiff to recover attorney’s fees.
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`B.
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`43.
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`44.
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`Injunctive relief for unfair competition and dilution by blurring - 11 U.S.C. §1125(c)
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`As set forth hereinabove, Plaintiff is the owner of a famous mark that is distinctive.
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`The similarity between Plaintiff’s famous mark and Defendant’s knowing imitation
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`impairs the distinctiveness of Plaintiff’s famous mark and harms the reputation of Plaintiff. Plaintiff’s
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`mark has lost, and will continue to lose, its ability to serve as a unique identifier of Plaintiff’s product.
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`Defendant’s continued use of its infringing mark has caused, and will continue to cause, irreparable
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`harm and injury to Plaintiff and to Plaintiff’s reputation and goodwill, for which Plaintiff has no
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`adequate remedy at law.
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`45.
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`Defendant’s continued wrongful acts pose a threat of future injury to the general public
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`and to Plaintiff’s business, identity, goodwill and reputation, which necessitates the award of
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`injunctive relief. Plaintiff is entitled to injunctive relief against Defendant who has commenced use
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`of Plaintiff’s mark in commerce that is likely to cause dilution by blurring or dilution by garnishment.
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`11 U.S.C. §1125(c). Defendant’s wrongful imitation of Plaintiff’s mark in its beaded message
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`bracelets must cease immediately.
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`COUNT II - BREACH OF CONTRACT
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`46.
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`47.
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`All prior paragraphs are incorporated herein by reference as if fully set forth at length.
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`As set forth hereinabove, a valid enforceable contract existed between Plaintiff and
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`Defendant, and Plaintiff is a proper party to bring suit for Defendant’s breaches of the parties’
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`Agreement. Plaintiff performed its contractual obligations, but Defendants breached the parties’
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 11 of 14
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`contract repeatedly, including but not limited to the following material breaches:
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`• Engaging in acts, directly or indirectly, that contested, disputed or otherwise impaired
`Plaintiff’s right, title, and interest in Plaintiff’s service marks, trademarks, and trade names
`that were identified and listed in Annex 2, which were already owned and used by Plaintiff at
`the time of the Agreement and which were exclusively reserved to Plaintiff when incorporated
`into the Agreement. Such acts by Defendant were in direct violation of Section 12 of the
`Agreement;
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`• Failing to perform services in accordance with applicable laws in violation of Section 4(B)(iii)
`of the Agreement;
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`• Accepting work, entering into contracts, and/or accepting obligations inconsistent with or
`incompatible with Defendant’s obligations to Plaintiff in violation of Section 7 of the
`Agreement; and
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`• Failing to pay for products ordered from Plaintiff after receipt, which had been supplied and
`delivered by Plaintiff pursuant to the parties’ Agreement.
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`48.
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`Defendant’s material breaches of the parties’ Agreement caused injury and damage to
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`Plaintiff. Consequently, Plaintiff is entitled to recover from Defendant full and complete damages
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`owed and remedies available for breach of contract under applicable law and the parties’ Agreement.
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`COUNT III – INJURY TO BUSINESS REPUTATION AND DILUTION UNDER
`TEXAS BUSINESS & COMMERCE CODE
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`All prior paragraphs are incorporated herein by reference as if fully set forth at length.
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`49.
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`50.
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`Plaintiff is the owner of a mark that is famous and distinctive in this state, inherently
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`or through acquired distinctiveness. Plaintiff’s distinctive beaded message bracelets crafted by
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`Maasai artisans are widely recognized by the public throughout this state as a designation of source
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`of the goods of Plaintiff. These distinctively marked goods have been advertised and marketed in
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`this state since 2012.
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`51.
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`52.
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`Defendant willfully intended to cause dilution of Plaintiff’s famous mark.
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`Under applicable Texas law, Plaintiff is entitled to injunctive relief and other remedies
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`pursuant to Section 16.103 of the TEXAS BUSINESS & COMMERCE CODE.
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`53.
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`Because Defendant committed its wrongful acts with knowledge of Plaintiff’s mark
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 12 of 14
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`and/or in bad faith under the circumstances referenced hereinabove, Plaintiff is entitled to recover
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`three times the amount of profits and damages and an award of reasonable attorney’s fees pursuant
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`to Section 16.104 of the TEXAS BUSINESS & COMMERCE CODE.
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`DAMAGES
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`54.
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`55.
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`All prior paragraphs are incorporated herein by reference as if fully set forth at length.
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`As a direct and proximate result of Defendant’s infringement conduct, Plaintiff
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`suffered the following injuries and damages:
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`a.
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`b.
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`c.
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`Actual damages, including but not limited to diverted sales and lost profits, or,
`in the alternative, a reasonable royalty based on nature and scope of
`Defendant’s use and profitability of infringing use;
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`Injury to business reputation and loss of goodwill; and
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`Corrective advertising to correct public confusion caused by infringement.
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`56. With respect to the unpaid debt at issue herein based upon a contract for the sale of
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`goods, Plaintiff is owed $18,271.00 to be paid by Defendant, together with accrued prejudgment
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`interest. Where a buyer wrongfully fails to make a payment due on delivery, a seller is entitled to
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`recover damages as provided under applicable provisions of the TEXAS UNIFORM COMMERCIAL CODE
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`(”UCC”). TEX. BUS. & COM. CODE §2.703. Recover of damages under the UCC includes not only
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`the unpaid price of the goods, but also incidental damages. TEX. BUS. & COM. CODE §2.709.
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`Incidental damages to a seller include any commercially reasonable charges, expenses, or
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`commissions resulting from the breach, which includes but is not limited to prejudgment interest.
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`TEX. BUS. & COM. CODE §2.710.
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`ATTORNEY’S FEES AND COSTS
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`All prior paragraphs are incorporated herein by reference as if fully set forth at length.
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`Plaintiff is represented by an attorney and has asserted a valid claim based on an oral
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`57.
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`58.
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`Case 1:21-cv-00676-RP Document 1 Filed 08/02/21 Page 13 of 14
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`or written contract and/or a sworn account. TEXAS CIVIL PRACTICE AND REMEDIES CODE §38.001.
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`Prior to filing this action, Plaintiff presented its claim to Defendant in accordance with applicable
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`provisions of TEXAS CIVIL PRACTICE AND REMEDIES CODE §38.002, and payment for the just amount
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`owed was not tendered by Defendant before the expiration of the 30th day after the claim was
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`presented. Accordingly, Plaintiff is entitled to recover (1) reasonable attorney’s fees and (2) costs
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`in this action. TEXAS CIVIL PRACTICE AND REMEDIES CODE §38.001.
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`59.
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`Due to Defendant’s willful and knowing breach of a written Agreement that obligated
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`Defendant to respect Plaintiff’s mark, this constitutes an exceptional case that would also entitle
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`Plaintiff to recover attorney’s fees under the Lanham Act, 11 U.S.C. §1125(a).