Nikken Inc. & Nikken President Club Members are being sued for $31,000,000.00!

Read about the lawsuit against:

NIKKEN INC.
KURT FULLE
CHARLES COCHRAN
DAVID BALZER
MAC MACDONALD
PATRICIA TERRY
DAVE JOHNSON
VALERIE JOHNSON
DENNIS WILLIAMS
and RUTH WILLIAMS

Nikken Inc. and Top Distributors Dave Johnson and Valerie Johnson, Mac Macdonald and Patricia Terry, Dennis Williams and Ruth Williams sued.

Imagenetix after top distributors for $31 million.

The Royal Ambassadors "sell and distributes Kenzen Joint, CM Complex Cream and Kenzen Pet Joint, hereinafter "the accused products".
"Because Defendants infringement is willful, Plaintiff further requests under 35 U.S.C. § 284 that the damages be tripled, resulting in a total patent damages estimate of $31,000,000."


From left to right: Dave Johnson and Valerie Johnson, Mac Macdonald and Patricia Terry, Ruth Williams and Dennis Williams.

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PARTIES

1. Plaintiff IMAGENETIX, INC is a corporation organized and existing under the laws of the State of Nevada and has a principal place of business at 10845 Rancho Bernardo Road, Suite 105, San Diego, CA 92127.
2. Defendant NIKKEN INC., is a corporation organized and existing under the laws of the State of California and has a principal place of business at 52 Discovery Inrine, CA,92618-3105. NIKKEN INC., manufactures, sells, offers to sell and distributes Kenzen® Joint, CM Complex Cream and Kenzen Pet Joint, hereinafter "the accused products".
3. On information and belief Defendant KURT FULLE is the President and CEO of NIKKEN INC., and is employed at the address of 52 Discovery Irvine, CA, 92618-3105.

Defendant KURT FULLE actively promotes, sells, and markets the accused products for NIKKEN INC.
  
1. On information and belief, Defendant CHARLES COCHRAN resides at 1599 Chilton Street, Arroyo Grande, CA 93420 and acts as a corporate speaker on behalf of NIKKEN, INC. for the accused products.  Defendant CHARLES COCHRAN actively promotes the accused products, in part, by lending his credentials as a doctor of chiropractics research to the active compounds found in the accused products.  As recently as March 2, 2011 Defendant Charles Cochran delivered a presentation of the accused products at a NIKKEN INC. corporate presentation specifically aimed at promoting and marketing the accused products.  Further, Defendant CHARLES COCHRAN has been contracted by NIKKEN to specifically develop formulations of the accused products.

2. On information and belief, Defendant DAVID BALZER is employed at the address of 52 Discovery Irvine, CA, 92618-3105 and is a product Consultant and Technical Advisor /Sci-Board Chairman to NIKKEN INC.  Defendant DAVID BALZER actively promotes the accused products, and as recently as March 2, 2011 hosted a NIKKEN INC. corporate presentation specifically aimed at the introduction of the recently re-formulated accused products to distributors.

3. On information and belief, Defendants MAC MACDONALD and PATRICIA TERRY are husband and wife, and reside at 10028 Point Ln SW Lakewood, WA 98499.  These defendants have entered into a sales/distribution contract with Defendant NIKKEN INC. to sell NIKKEN’S product line, including the accused products.  On information and belief, these defendants have been extremely successful earning approximately $1,500,000 from the NIKKEN INC. contracts, and earning the distinction of a “NIKKEN ROYAL AMBASSADOR” actively promoting the products of NIKKEN INC. and acting as ambassadors of NIKKEN. 
  
4. On information and belief, Defendants DAVE JOHNSON and VALERIE JOHNSON are husband and wife, and reside at 718 Calvert Ln, Fort Washington, MD 20744¬6501. These defendants have entered into a sales/distribution contract with Defendant NIKKEN INC. to sell NIKKEN’S product line, including the accused products.  On information and belief, these defendants have been extremely successful earning approximately $1,800,000 from the NIKKEN INC. contracts, and earning the distinction of a “NIKKEN ROYAL AMBASSADOR” actively promoting the products of NIKKEN INC. and acting as ambassadors of NIKKEN INC. 
   
1. On information and belief, Defendants DENNIS WILLIAMS and RUTH WILLIAMS are husband and wife, and reside at 12426 SW 276th St, Vashon, WA 98070-8305.  These defendants have entered into a sales/distribution contract with Defendant NIKKEN INC. to sell NIKKEN’S product line, including the accused products.  On information and belief, these defendants have been extremely successful under the NIKKEN INC. contract earning the distinction of a “NIKKEN ROYAL AMBASSADOR” actively promoting the products of NIKKEN INC. and acting as ambassadors of NIKKEN.

2. Defendants NIKKEN INC., KURT FULLE, CHARLES COCHRAN, DAVID BALZER, MAC MACDONALD, PATRICIA TERRY, DAVE JOHNSON, VALERIE JOHNSON, DENNIS WILLIAMS, and RUTH WILLIAMS are referred to collectively herein as “Defendants”.

3. On information and belief, Defendant NIKKEN INC. has numerous other distributors within its distribution network that sell and market the accused products, but the names and addresses are not currently known to Plaintiff.  These individuals may include, but are not limited to, those earning the distinction of “NIKKEN ROYAL DIAMOND” members.  Once these individuals are identified, Plaintiffs will petition this Court to individually name and serve each distributor as defendants to this lawsuit. 
JURISDICTION AND VENUE
1.    Defendants are subject to personal jurisdiction in the Central District of California (the “District”) because Defendants have caused tortious injury in this District through acts committed both inside and outside the District, including the unlawful conduct relating to the patent-in-suit and as further detailed below.

2. Defendant NIKKEN INC. maintains a place of business in the District at 52 Discovery Irvine, CA, 92618-3105. NIKKEN INC. is subject to personal jurisdiction in the District because NIKKEN INC. regularly solicits business in the District or derives substantial revenue from sales of goods –including the accused products – in the District. Additionally, NIKKEN INC. has engaged in a persistent course of conduct in the District.

1.  On information and belief, Defendant KURT FULLE is subject to personal jurisdiction because he is a resident of the State and is employed by Defendant NIKKEN INC. at 52 Discovery Irvine, CA, 92618-3105.  Defendant KURT FULLE actively promotes, sells and markets the accused products for NIKKEN INC.

2.    On information and belief, Defendant CHARLES COCHRAN is subject to personal jurisdiction in that he is a resident of this State and has entered into distribution and promotion contract with NIKKEN INC. in this District to sell and actively promote the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  As part of his contractual obligations, Defendant CHARLES COCHRAN actively promotes the accused products, in part, by lending his credentials as a doctor of chiropractics research the active compounds found in the accused products.  As recently as March 2, 2011 Defendant Charles COCHRAN made a corporate presentation specifically aimed at promoting and marketing the accused products.  Further, Defendant CHARLES COCHRAN has entered into contracts with NIKKEN INC. to specifically develop formulations of the accused products.

3. On information and belief, Defendant DAVID BALZER is subject to personal jurisdiction in that it is believed that he has entered into a product consultant and product technology advisory contract with NIKKEN INC. in this District to sell and actively promote the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  As part of his contractual obligations, Defendant DAVID BALZER actively promotes the accused products, in part, by creating and publishing corporate presentations targeted specifically at the accused products, including a presentation as recently as March 2, 2011.

4. On information and belief Defendant MAC MACDONALD is subject to personal jurisdiction in that he has entered into distribution sales contract with NIKKEN INC. in this District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  On information and belief, Defendant MAC MACDONALD has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN INC.’s top sales agents), and actively promotes the accused products and acts as an ambassador of NIKKEN.

1.    On information and belief, Defendant PATRICIA TERRY is subject to personal jurisdiction in that she has entered into distribution sales contracts with NIKKEN INC. in this District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  On information and belief, Defendant PATRICIA TERRY has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN’S top sales agents), and actively promotes the accused infringing products and acts as an ambassador of NIKKEN INC.

2.    On information and belief, Defendant DAVE JOHNSON is subject to personal jurisdiction in that he has entered into distribution sales contract with NIKKEN INC. in this District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  On information and belief, Defendant DAVE JOHNSON has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN’S top sales agents), and actively promotes the accused infringing products and acts as an ambassador of NIKKEN INC.

3.    On information and belief, Defendant VALERIE JOHNSON is subject to personal jurisdiction in that she has entered into distribution sales contracts with NIKKEN INC. in this District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  On information and belief, Defendant VALERIE JOHNSON has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN’S top sales agents), and actively promotes the accused products and acts as an ambassador of NIKKEN INC.

4.    On information and belief, Defendant DENNIS WILLIAMS is subject to personal jurisdiction in that he has entered into distribution sales contract with NIKKEN INC. in this  District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District.  On information and belief, Defendant DENNIS WILLIAMS has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN’S top sales agents), and actively promotes the accused products and acts as an ambassador of NIKKEN INC.

1. On information and belief, Defendant RUTH WILLIAMS is subject to personal jurisdiction in that she has entered into distribution sales contracts with NIKKEN INC. in this District to sell the accused products, has ordered and received the accused products from this District and has sold those products throughout this State including within this District. On information and belief, Defendant RUTH WILLIAMS has earned the distinction of a “NIKKEN ROYAL AMBASSADOR” (a distinction given only to NIKKEN’S top sales agents), and actively promotes the accused products and acts as an ambassador of NIKKEN INC.

2. Venue for this action is proper in the District pursuant to 28 U.S.C. §§ 1391 and 1400 because a significant portion of Defendants’ infringing activities have occurred in the District.

3.    This Court has subject matter jurisdiction pursuant to the patent laws of the United States, 35 U.S.C. §§ 1 et seq., and pursuant to 28 U.S.C. §§ 1331 and 1338(a).  The state law unfair competition claim arises under, inter alia, California Business and Professions Code § 17200 et seq. The Court has supplemental jurisdiction over the related state law claims pursuant to 28 U.S.C. §1367.
BACKGROUND FACTS
24. On October 29, 1996, the United States patent Office duly issued United States Patent No. 5,596,676 entitled “METHOD FOR THE TREATMENT OF OSTEOARTHRITIS” to Harry W. Diehl.  A true copy of the ‘676 Patent is attached hereto as Exhibit A.  The ‘676 patent relates to a method of treating “the symptoms of non-rheumatoid arthritis by administering to the afflicted subject a therapeutically effective amount of cetyl myristoleate either orally, topically, or parenterally.” ‘676 Patent Abstract.

25. The ‘676 Patent has been assigned to Plaintiff by virtue of an assignment dated April 8, 2009 and recorded with the United States Patent Office on January 6, 2010, which can be found at reel/frame 023731/0714.
 
26. The original inventor of the ‘676 Patent, Harry Diehl, is a highly recognized figure in the bone/joint wellness fields, and in particular is recognized as the pioneer of cetyl myristoleate. In fact, during a NIKKEN INC. corporate presentation on March 2, 2011, hosted by Defendants Dr. CHARLES COCHRAN and DAVID BALZER, Defendants state: “In our joint compound, and this is the newly formulated joint compound, and I’m proud to say that it not only uses and is endorsed by the Diehl Estate, we call it “The Real Diehl”, this formulation was put together by Dr. Charles Cochran, Dr. Chuck Cochran, who’s going to join us in a couple of minutes to talk about what he’s done, to talk about his life with CM [cetyl myristoleate] and why he put this formulation together the way he did.”

1. A complete copy of the slides presented and published by Defendants CHARLES COCHRAN, DAVID BALZER, and NIKKEN INC. during this presentation are attached hereto as Exhibit B.

2. NIKKEN INC. produces several products, including Kenzen® Joint and CM Complex Cream for human use, both of which are advertised to contain cetyl myristoleate to support bone and joint health. NIKKEN INC. also produces Kenzen® Pet Joint for dogs and cats, which is also advertised to contain cetyl myristoleate to support bone and joint health.  Plaintiffs pre-litigation testing confirms that Kenzen® Joint, CM Complex Cream and Kenzen® Pet Joint (i.e., the accused products) all contain cetyl myristoleate, as do the publications from the Defendants. See Exhibits B and C.
29. Defendants actively promote these products for the treatment of osteoarthritis.  Defendants further promote the active ingredient in these products – cetyl myristoleate – as the component responsible for beneficial treatment of osteoarthritis.  See Exhibits B and C.
During a NIKKEN INC. corporate presentation conducted by Defendants CHARLES COCHRAN and  DAVID BALZER on March 2, 2011, Defendants states: “It’s a high potency CM [cetyl myristoleate] complex supporting collagen, bone, and connective tissue repair, lubricates the joints, aids in joint mobility, is highly bio available, and, of course, is endorsed by the Diehl Estate.  And you can see from the supplement facts that are here that what we’ve done is we have focused extraordinarily at keeping it clean, keeping it simple, keeping it effective.  We have a high potency CM complex which is more than a gram.  It’s 1155 milligrams composed of no less than 40% cetyl myristoleate.”

1.    Defendants have been and are infringing, contributing to infringement, and/or inducing others to infringe the ‘676 Patent by making, using, offering for sale, selling and/or importing the accused products. Defendants’ acts of infringement have occurred within this district and elsewhere throughout the United States.

2.    Defendants have willfully infringed the ‘676 Patent by continuing its acts of infringement after being on notice of this patent.

3.    Defendants have made and continue to make willfully false statements regarding the accused products, and as a result of those statements Plaintiff has suffered injury. 
COUNT 1: PATENT INFRINGEMENT

1.    Plaintiff hereby realleges and incorporates by this reference paragraphs 1 through 32 above as though fully set forth herein.
2.    In violation of 35 U.S.C. § 271, Defendants have infringed and are continuing to infringe, literally and/or under the doctrine of equivalents, the ‘676 patent by practicing one or more claims of the ‘676 patent, in its manufacture, use, offering for sale, sale and importation of the accused products, and by contributing to this infringement and inducing others to infringe. 
3.    Plaintiff currently estimate the present and future damages of approximately $10,300,000 based on the Defendants’ historical sales of these products, as has been discerned by Plaintiff. However Plaintiff reserves the right to adjust this damages estimate based on evidence adduced at trial.
36. Because Defendants infringement is willful, Plaintiff further requests under 35 U.S.C. § 284 that the damages be tripled, resulting in a total patent damages estimate of $31,000,000.

37. Plaintiff has been damaged by Defendants’ infringement and, unless Defendants are enjoined Defendants will continue their infringing activity and Plaintiffs will continue to be damaged.
COUNT 2: UNFAIR COMPETITION CAL. BUSINESS AND PROFESSION CODE § 17200

38. Plaintiff hereby realleges and incorporates by this reference paragraphs 1 through 37 above as though fully set forth herein.

39. Defendants CHARLES COCHRAN, DAVID BALZER and NIKKEN INC. have made statements that the Diehl estate has endorsed the accused products: “In our joint compound, and this is the newly formulated joint compound, and I’m proud to say that it not only uses and is endorsed by the Diehl Estate, we call it ‘The Real Diehl.’ …  The Kenzen joint compound, as it has been formulated by Dr. Cochran, our new formulation, what we’re allowed to say is, yes, it’s a high potency complex.  It supports collagen, bone, and connective tissue repair, lubricates the joints, aids in joint mobility, is highly bio available, and, of course, endorsed by the Diehl Estate.”

1.    On information and belief, this statement is willfully false and intended to form an endorsement and connection between the inventor of the ‘676 Patent, Harry Diehl, and the accused products.  
2.    Defendants prominently display the words “Real Diehl” on its products and in its promotional marketing materials, along with a logo on its label, intending to further create an endorsement and connection between the inventor of the ‘676 Patent and the accused products.  

The “Real Diehl” Logo Placed on NIKKEN INC. Products  that Contain Cetyl Myristoleate
1.    Defendants false statement have caused injury to Plaintiffs by deceptively suggesting to the public that the accused products are endorsed by the ‘676 Patent inventor and therefore cannot infringe the ‘676 Patent in violation of California Business and Profession Code § 17200 et seq. Defendants false statements are intended to create the appearance that the accused products are legitimately made and sold.  
2.    In addition to the damages to Plaintiff, a civil penalty of two thousand five hundred dollars ($2,500) for each sale, which constitutes a violation of the Cal. Business and Professional Code Sec. 17200, is appropriate and will result in severe multi-million dollar penalties.

44. Unless enjoined by the Court, Defendants will continue to perform the acts complained of herein and cause said damage and injury, all to the immediate and irreparable harm of Plaintiff.
COUNT 3: UNFAIR COMPETITION CAL. BUSINESS AND PROFESSION CODE § 17200

45. Plaintiff hereby realleges and incorporates by this reference paragraphs 1 through 44 above as though fully set forth herein.

46. Defendants have made statements that the formulation of the accused products will yield better therapeutic results: “We have a high potency CM complex which is more than a gram.  It’s 1155 milligrams composed of no less than 40% cetyl myristoleate.  …  We started with a 40% cetyl myristoleate product, and the original formula, Dave, had anywhere from 25% to 30% cetyl myristoleate.  We’ve been able to concentrate that and distill that to a point where now we can actually make a 40% cetyl myristoleate product available, but we’ve also increased the levels of the cetyl oleate. …
\
Q: An in a nutshell, what you’ve essentially told us is that you have the correct balance, the correct proportions of these various cetyl esters so that we get the maximum effect from what you’ve put together in the complex.

A: Exactly. And, at the same time, eliminated some of the other potentially, maybe, fatty acids that were not really conducive to proper health.  So we got rid of some of the bad guys and we increased the really good guys to really therapeutic levels.” March 2, 2011 Presentation.

1. Defendants have also made statements that the accused products containing cetyl myristoleate are superior to the competition because the cetyl myristoleate in the accused products is in liquid form.
2. On information and belief, Defendants have absolutely no scientific or factual basis for these statements or suggestions.  These statements are completely unsupported and intended to induce the public into purchasing the accused products over other competing products, including those produced by Plaintiffs.  NIKKEN INC. provides marketing materials on various NIKKEN INC. distributor internet websites which reference clinical study results which were conducted using Plaintiff’s product and falsely stating the study results were as a result of using the newly reformulated accused products.

1. Defendants’ false statements have caused injury to Plaintiffs by deceptively suggesting a superior product with no scientific basis, and these statements were made solely to promote the accused products over the competition in violation of California Business and Profession Code § 17200 et seq.
2. In addition to the damages to Plaintiff, a civil penalty of two thousand five hundred dollars ($2,500) for each sale, which constitutes a violation of the Cal. Business and Professional Code Sec. 17200, is appropriate and will result in severe multi-million dollar penalties.
3. Unless enjoined by the Court, Defendants will continue to perform the acts complained of herein and cause said damage and injury, all to the immediate and irreparable harm of Plaintiff.
COUNT 4: UNFAIR COMPETITION LANHAM ACT, 15 U.S.C. § 1125
1. Plaintiff hereby realleges and incorporates by this reference paragraphs 1 through 51 above as though fully set forth herein.
2. Defendants have made statements that the Diehl estate has endorsed the accused products as described above. On information and belief, those statements are willfully false and misleading.  This statement is literally false and not mere puffery. 
3. That statement actually deceived and had the capacity to deceive a substantial segment of the audience, and this deception was material, in that it was likely to influence the purchasing decision.
55. The Defendants sold the accused products through interstate commerce. 
56. Defendants false statement have caused injury to Plaintiffs by deceptively suggesting to the public that the accused products are endorsed by the ‘676 Patent inventor and therefore cannot infringe the ‘676 Patent in violation of 15 U.S.C. § 1125.  Defendants false statements are intended to create the appearance that the accused products are legitimately made and sold.
57. Unless enjoined by the Court, Defendants will continue to perform the acts complained of herein and cause said damage and injury, all to the immediate and irreparable harm of Plaintiff.
COUNT 5: UNFAIR COMPETITION LANHAM ACT, 15 U.S.C. § 1125
1. Plaintiff hereby realleges and incorporates by this reference paragraphs 1 through 57 above as though fully set forth herein.
2. Defendants have made statements regarding the therapeutic effects of its formulation, and that the active ingredient (i.e., cetyl myristoleate) is superior to the competition because the cetyl myristoleate in the accused products is in liquid form, as detailed above.  On information and belief, these statements are literally false and it is believed lack scientific substantiation and not mere puffery
3. These statements actually deceived and had the capacity to deceive a substantial segment of the audience, and this deception was material, in that it was likely to influence the purchasing decision.
61. The Defendants sold the accused products through interstate commerce. 
1. Defendants’ false statements have caused injury to Plaintiffs by deceptively suggesting a superior product with no scientific basis, and these statements were made solely to promote the accused products over the competition in violation of 15 U.S.C. § 1125.  
2. Unless enjoined by the Court, Defendants will continue to perform the acts complained of herein and cause said damage and injury, all to the immediate and irreparable harm of Plaintiff.
3.  WHEREFORE, Plaintiff prays that this Court enter judgment in its favor on each and every claim for relief set forth above and award it relief, including, but not limited to the following:
• a preliminary and permanent injunction restraining and enjoining Defendants, their principals, officers, agents, servants, employees, attorneys, successors and assigns and all those in active concert or participation with Defendants

Above information obtained from:
http://www.businessforhome.org/2011/05/nikken-distributors-sued/