IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION BUYERS DIRECT

INC., Plaintiff, v. WALGREEN CO., Defendant. ) ) ) ) ) ) ) ) ) )

Case No. 5:13-cv-819 Plaintiff Demands Trial by Jury

COMPLAINT Plaintiff Buyers Direct Inc. (BDI) brings this action against Walgreen Co. (Walgreens or Defendant) for infringing BDIs design patent and misappropriating snoozies! trade dress, causing consumer confusion, and engaging in unfair competition. Because Defendant sold or offered for sale products infringing BDIs patent, copied its trade dress, confused consumers and engaged in unfair competition (and continues to do so), BDI seeks damages, an accounting, the imposition of a constructive trust upon Defendants illegal profits and injunctive relief. THE PARTIES 1. BDI is a North Carolina corporation with its principal place of business in Wilson, North Carolina. 2. Walgreens is an Illinois corporation with its principal place of business and principal office at 300 Wilmot Road MS #3301, Deerfield, IL 60015, and may be served with process through its registered agent, Corporation Service Company, 327 Hillsborough St., Raleigh, NC 27603.

JURISDICTION AND VENUE 3. This is an action for design patent infringement under 35 U.S.C. 271, trade dress infringement and unfair competition under 43(a) of the Trademark Act of 1946, as amended (the Lanham Act), and unfair competition under North Carolina statutory and common law. 4. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. 1331 and 1338, and 15 U.S.C. 1121. Because the state law claims are so related to BDIs claims under federal law that they form part of the same case or controversy and derive from a common nucleus of operational facts, this Court has supplemental jurisdiction over BDIs claims based on state law pursuant to 28 U.S.C. 1367(a). 5. This Court has personal jurisdiction over Walgreens because it (a) has sold infringing products and committed unfair competition in the state of North Carolina, within the Eastern District of North Carolina; (b) has purposefully directed its activities toward the state of North Carolina; and (c) has established systematic and continuous contacts with the state of North Carolina, including maintaining retail stores in the Eastern District of North Carolina. 6. Venue is proper in this District pursuant to 28 U.S.C. 1391 and 1400 because Walgreens has sold and offered to sell infringing products in this District, and Walgreens has a sufficient connection with the Eastern District of North Carolina to make venue proper in this District, all as alleged in this Complaint. BACKGROUND 7. BDI is a supplier of retail products, including the patented foot-covering known as snoozies! in the United States and in particular, North Carolina. BDI has achieved 2

market success for snoozies! because of the distinctive and unique design of the snoozies! product. 8. Since the fall of 2008, snoozies! have been offered for sale in many retail outlets and specialty retailers throughout North Carolina and in a number of different states. 9. BDI has promoted and advertised snoozies! products in various trade publications and at trade shows that publicize and promote the sale of such retail soft goods. 10. On August 18, 2009, United States Design Patent No. D598,183 (the 183 Patent), directed to the ornamental appearance of a slipper, was duly and legally issued by the United States Patent and Trademark Office. A copy of the 183 Patent is attached as Exhibit A. 11. On December 22, 2009, Marshall P. Bank, the sole inventor of the 183 Patent, assigned all rights in the 183 Patent to BDI. Since that date, BDI has been, and still is, the owner of the 183 Patent. 12. BDI is the exclusive authorized manufacturer and distributor of products embodying the design of the 183 Patent in the retail market in the United States. BDIS CONTACT WITH WALGREENS AND WALGREENS INFRINGEMENT 13. In September of 2011, representatives from Walgreens and BDI began communicating about selling snoozies! in Walgreens stores. 14. At that time, BDI provided Walgreens with written notice that BDI is the owner of the 183 Patent and that the 183 Patent covers the snoozies! line of products. 15. In January of 2012, representatives from BDI and Walgreens engaged in further discussions regarding the sale of snoozies! in Walgreens stores. In addition, BDI

provided Walgreens with samples of snoozies! and reiterated BDIs ownership of the 183 Patent. 16. After several months of discussion, Walgreens unexpectedly informed BDI that it would not purchase snoozies! for sale in Walgreens stores. 17. In January of 2013, representatives from BDI and Walgreens met again to discuss selling snoozies! in Walgreens stores. snoozies!. 18. In or about March of 2013, Walgreens contacted BDI and expressed both a readiness and an intent to draft purchase orders for snoozies!. 19. Thereafter, however, Walgreens did not submit any orders for snoozies!, and instead ceased all communication with BDI. unanswered. 20. In October, 2013, BDI learned that Walgreens was using, selling, and offering for sale in interstate commerce a retail slipper product called Slipper Grips. Slipper Grips are slippers that infringe BDIs patent and trade dress rights. 21. Notwithstanding its knowledge of the 183 Patent and the infringement, Walgreens continues to use, sell, or offer for sale Slipper Grips, thereby intentionally infringing the 183 Patent and BDIs trade dress. 22. The purpose of this action, inter alia, is to cause Walgreens to cease and desist in offering Slipper Grips for sale and distribution and to enjoin Walgreens from continuing to offer the infringing product for sale at any Walgreens store. BDIs attempts to contact Walgreens went BDI again provided Walgreens with samples of

COUNT 1 (INFRINGEMENT OF U.S. PATENT NO. D598,183) 23. BDI repeats and reincorporates by reference the allegations set forth in paragraphs 1 through 22, inclusive. 24. Defendant is and has been infringing the 183 Patent by using, selling, and/or offering to sell a product called Slipper Grips. 25. As a direct result of Defendants infringement of the 183 Patent, BDI has suffered irreparable injury and monetary damages. If Defendants infringement is not permanently enjoined, BDI will continue to suffer irreparable injury and monetary damages. 26. Upon information and belief, Defendants infringement of the 183 Patent is intentional, willful, and wanton under 35 U.S.C. 284, and makes this an exceptional case under 35 U.S.C. 285. COUNT II (TRADE DRESS INFRINGMENT) 27. BDI repeats and reincorporates by reference the allegations set forth in paragraphs 1 through 26, inclusive. 28. BDIs snoozies! have a distinctive, immediately recognizable and non-functional overall look and feel that constitutes protectable trade dress that distinguishes BDIs footcoverings from those of competitors. The foot-coverings, which are presented outside of packaging, are made of a soft, malleable material on both the top and bottom portions of the foot-covering, the soft, malleable top portion is formed into a wide, rounded covering over the top of the foot that extends over the toes, and a protrusion of fleece material extends out from and floats above the foot entry of the foot-covering. An annotated image of BDIs snoozies! highlighting the above-described features is shown below. 5

Protrusion of fleece material extends out from and floats above the foot entry

Soft, malleable material on both the top and bottom portions of the footcovering

Soft malleable top portion formed into a wide, rounded covering over the top of the foot that extends over the toes

29. BDI invested significant time, money and effort in developing snoozies! foot-coverings, resulting in significant commercial success and public recognition of its distinctive design, appearance and trade dress. 30. As a result of BDIs advertising and promotion of snoozies! foot-coverings by itself and others, the trade and purchasing public have come to associate the distinctive trade dress of snoozies! with a single producer or source. Accordingly, the snoozies! trade dress has acquired secondary meaning in the marketplace as to the origin of the product. 31. The distinctive trade dress of snoozies! is non-functional and ornamental. 32. Defendant has sold or offered for sale, and continues to sell or offer for sale Slipper Grips, which copy and are confusingly similar in appearance to the trade dress of snoozies!, and therefore are likely to deceive and confuse the purchasing public as to the source or origin of Slipper Grips in violation of 15 U.S.C. 1125(a). 33. Defendant has engaged in wrongful conduct with the willful purpose of misleading, deceiving or confusing customers and the public as to the origin and authority of the Slipper Grips, thereby trading on BDIs goodwill, reputation and creative designs. 34. Defendants conduct constitutes willful infringement of BDIs protectable trade dress, making this an exceptional case within the meaning of 15 U.S.C. 1117. 35. Defendants infringing activity has caused BDI irreparable injury and monetary damages.

36. If Defendants infringements are not permanently enjoined, BDI will continue to suffer irreparable injury and monetary damages. 37. BDI has no adequate remedy at law for Defendants wrongful conduct because (a) BDIs unique snoozies! design patent and trade dress have no readily determined market value; (b) Defendants sale and offers for sale of the imitation slipper design constitutes such harm that BDI cannot be made whole by any monetary award alone; and (c) Defendants wrongful conduct is continuing, notwithstanding its knowledge of the established trade dress. COUNT III UNFAIR AND DECEPTIVE TRADE PRACTICES UNDER NORTH CAROLINA LAW N.C. GEN STAT 75-1.1 38. BDI repeats and reincorporates by reference the allegations set forth in paragraphs 1 through 37, inclusive. 39. BDI is based in North Carolina and is therefore entitled to the protections afforded under the laws of the State of North Carolina. 40. BDI invested significant money and effort in advertising and promoting its snoozies! foot-coverings and as a result, snoozies! are associated with BDI by the trade and purchasing public. 41. The acts and conduct of Defendant as alleged above constitute unfair methods of competition and unfair or deceptive acts or practices in or affecting North Carolina commerce, as defined by N.C. Gen. Stat. 75-1.1. 42. As a direct and proximate result of Defendants conduct, BDI has suffered and will continue to suffer substantial pecuniary damages, including but not limited to losses and

damages in an amount to be determined at trial. Defendants conduct justifies an award of treble damages pursuant to N.C. Gen. Stat. 75-16. 43. Because much of the damage suffered by BDI as a result of Defendants conduct is and will be irreparable, for which BDI has no adequate remedy at law, BDI is further entitled to preliminary and permanent injunctive relief. 44. Defendant has willfully engaged in the acts and practices alleged in this Complaint. For these reasons, BDI is further entitled to recover attorneys fees from Defendant under N.C. Gen. Stat. 75-16.1(1). COUNT IV NORTH CAROLINA COMMON LAW UNFAIR COMPETITION 45. BDI realleges and incorporates by reference, each and every allegation set forth in Paragraphs 1 through 44, inclusive. 46. The acts and conduct of Defendant set forth above constitutes unfair competition in North Carolina at common law. 47. BDI, as a result of such conduct, has suffered and will continue to suffer losses and damages in an amount to be determined at trial. 48. As much of the damage covered by Defendants conduct is and will be irreparable, for which BDI has no adequate remedy at law, BDI is further entitled to preliminary and permanent injunctive relief. COUNT V FOR IMPOSITION OF A CONSTRUCTIVE TRUST UPON THE ILLEGAL PROFITS OF DEFENDANT 49. BDI realleges, and incorporates by this reference, each and every allegation set forth in paragraphs 1 through 48, inclusive. 9

50. Defendants conduct constitutes deceptive and wrongful conduct in the nature of passing off the infringing materials as genuine BDI snoozies! foot-coverings. 51. By virtue of its wrongful conduct, Defendant has illegally received money and profits that rightfully belong to BDI. 52. Upon information and belief, Defendant holds the illegally received money and profits in the form of bank accounts, real property, or personal property that can be located and traced. 53. Defendant holds the money and profits it has illegally received as constructive trustee for the benefit of BDI. COUNT VI ACCOUNTING AGAINST DEFENDANT 54. BDI realleges, and incorporates by this reference, each and every allegation set forth in paragraphs 1 through 53, inclusive. 55. BDI is entitled, pursuant to 35 U.S.C. 284, to recover any and all profits of Defendant that are attributable to its acts of infringement. 56. BDI is entitled, pursuant to 35 U.S.C. 284, to actual damages sustained by virtue of Defendants acts of infringement. 57. The specific amount of money due from Defendant to BDI is unknown to BDI and cannot be ascertained without a detailed accounting by Defendant of the precise number of units of infringing material offered for distribution and distributed by Defendant.

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PRAYER FOR RELIEF WHEREFORE, BDI prays that this Court enter a judgment as follows: 1. That the Court enter an order declaring that Defendant hold in trust, as constructive trustee for the benefit of BDI, its illegal profits obtained from its distribution of infringing slippers, and requiring Defendant to provide BDI a full and complete accounting of all amounts due and owing to BDI as a result of Defendants illegal activities. 2. That the Court order Defendant to pay BDIs general, special, actual, and statutory damages as follows: a. BDIs damages and Defendants profits pursuant to 17 U.S.C. 504(b), or in the alternative, enhanced statutory damages pursuant to 17 U.S.C. 504(c)(2), for Defendants willful infringement; b. BDIs damages and Defendants profits pursuant to 15 U.S.C. 1117(a), trebled pursuant to 15 U.S.C. 1117(b) for Defendants willful violation of BDIs trade dress or, in the alternative, statutory damages pursuant to 15 U.S.C. 1117(c) for each infringing product; and c. BDIs damages and Defendants profits pursuant to North Carolina common law; 3. That the Court order Defendant to pay to BDI both the costs of this action and the reasonable attorneys fees incurred by it in prosecuting this action; and 4. That the Court grant to BDI such other and additional relief as is just and proper, including a permanent injunction pursuant to 35 U.S.C. 283 and 15 U.S.C. 1116.

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JURY DEMAND BDI demands a trial by jury on all issues. November 26, 2013 Respectfully submitted, /s/ Alex J. Hagan Alex J. Hagan, Esq. (NC State Bar No. 19037) ELLIS & WINTERS LLP Post Office Box 33550 Raleigh, NC 27636 Telephone: (919) 865-7000 Facsimile: (919) 865-7010 Email: alex.hagan@elliswinters.com Local Civil Rule 83.1 Counsel Andrew S. Chamberlin, Esq. (NC State Bar No. 17369) ELLIS & WINTERS LLP 333 N. Greene Street, Suite 200 Greensboro, NC 27401 Telephone: (336) 217-4193 Facsimile: (336) 217-4198 Email: andrew.chamberlin@elliswinters.com Local Civil Rule 83.1 Counsel Andrew M. Ollis (VA State Bar No. 39051) Tia D. Fenton (VA State Bar No. 70078) Special Notices of Appearance Forthcoming OBLON, SPIVAK, MCCLELLAND, MAIER & NEUSTADT, L.L.P 1940 Duke Street Alexandria, VA 22314 Telephone: (703) 413-3000 Facsimile: (703) 413-2220 Email: Aollis@oblon.com

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