Case 5:18-cv-07568 Document 1 Filed 12/17/18 Page 1 of 32 DAVID J. MICLEAN (SBN 115098) 1 [email protected] 2 CARMEN M. AVILES (SBN 251993) [email protected] 3 DANIELLE MIHALKANIN (SBN 271442) [email protected] 4 MICLEAN GLEASON LLP 411 Borel Avenue, Suite 310 5 San Mateo, CA 94402 6 Telephone: (650) 684-1181 Facsimile: (650) 684-1182 7 Attorneys for Plaintiff 8 AlterG, Inc. 9 10 UNITED STATES DISTRICT COURT 11 NORTHERN DISTRICT OF CALIFORNIA 12 ALTERG, INC., a Delaware corporation, Case No. 13 Plaintiff, 14 COMPLAINT FOR: v. 15 (1) PATENT INFRINGEMENT (2) BREACH OF CONTRACT 16 BOOST TREADMILLS LLC, a California Limited (3) TRADE SECRET Liability Company; SEAN WHALEN; MICHAEL MISAPPROPRIATION 17 JAMES BEAN; THOMAS ALLEN; and Does 1 to (18 U.S.C. § 1836) 20, (4) BREACH OF FIDUCIARY DUTY 18 (5) INTERFERENCE WITH CONTRACT 19 Defendants. (6) INTERFERENCE WITH PROSPECTIVE ECONOMIC 20 ADVANTAGE (7) FALSE ADVERTISING 21 (15 U.S.C. § 1125(a)) (8) TRADE LIBEL 22 (9) UNFAIR COMPETITION (B&P § 17200) (10) CONSPIRACY 23 24 DEMAND FOR JURY TRIAL 25 26 27 28 30 31 COMPLAINT – JURY TRIAL DEMANDED Case 5:18-cv-07568 Document 1 Filed 12/17/18 Page 2 of 32 1 Plaintiff AlterG, Inc. brings this action against its former employee Defendants and their new 2 company for the wholesale and intentional infringement and misappropriation of AlterG intellectual 3 property, and breach of confidentiality and non-disclosure obligations. AlterG hereby alleges as 4 follows: 5 PARTIES 6 1. Plaintiff AlterG, Inc. (“AlterG”) is incorporated under the laws of the state of Delaware 7 and has a regular and established place of business at 48368 Milmont Drive, Fremont, California 94538. 8 2. Defendant Boost Treadmills LLC (“Boost”) is a limited liability company incorporated 9 under the laws of the state of California with a business address of 2155 Cornell Street, Palo Alto, 10 California 94306. 11 3. Defendant Sean Whalen (“Whalen”) is a former employee of AlterG, an affiliate of Boost 12 and a resident of Santa Clara County, California. 13 4. Defendant Michael James Bean (“Bean”) is a former employee of AlterG, a founder of 14 Boost and a resident of the state of Idaho. 15 5. Defendant Thomas Allen (“Allen”) is a former employee of AlterG, a founder of Boost 16 and a resident of Alameda County, California. 17 6. The true names of Does 1-20 are unknown at this time but are believed to have 18 contributed to the injury sustained by AlterG, and AlterG therefore sues these defendants by such 19 fictitious names. Does 1-20 were, at all times relevant to this action, employees or agents of one or 20 more Defendants. When the true names and capacities of the fictitiously named Defendants are 21 ascertained, AlterG will amend the Complaint to reflect their true names. 22 7. Defendants Boost, Whalen, Allen, Bean, and Does 1-20 are referred to herein as 23 “Defendants.” 24 8. AlterG is informed and believes, and thereon alleges, that each of the Defendants was, at 25 all times relevant to this action, the agent, employee, representing partner, affiliate, or joint venturer of 26 the remaining Defendants and was acting within the course and scope of that relationship. AlterG is 27 further informed and believes, and thereon alleges, that each of the Defendants gave consent to, ratified, 28 and/or authorized the acts alleged herein to each of the remaining Defendants. 30 1 31 COMPLAINT – JURY TRIAL DEMANDED Case 5:18-cv-07568 Document 1 Filed 12/17/18 Page 3 of 32 1 JURISDICTION AND VENUE 2 9. This is an action inter alia, for patent infringement and trade secret misappropriation. 3 This Court has exclusive jurisdiction of such action under 28 U.S.C. §§ 1331 and 1338 (a) and (b) and 4 18 U.S.C. § 1836. 5 10. This Court also has supplemental jurisdiction over all state law claims that form part of 6 the same case or controversy pursuant to 28 U.S.C. § 1367. 7 11. Venue in this district is proper under 28 U.S.C. § 1391 because a substantial part of the 8 events giving rise to the claim occurred in this district, Defendants reside in the State in which this 9 district is located and/or do business in this State, and because the contracts at issue were entered into in 10 this State. 11 12. This Court has personal jurisdiction over Defendants. Defendants regularly and 12 continuously do business in this District and have directly and/or indirectly infringed the Patents-In-Suit 13 in this District. Defendants worked in this District for AlterG and entered contractual obligations in this 14 State. 15 16 FACTUAL BACKGROUND 17 A. Introduction 18 13. This is an action for patent infringement, trade secret misappropriation, breach of 19 contract, and other claims arising from Defendants infringement of AlterG patents and misuse of AlterG 20 confidential, proprietary, and trade secret information to create a competing company, Defendant Boost. 21 Defendants’ brazen disregard for AlterG’s intellectual property and their own contractual obligations to 22 AlterG is the genesis for this action. 23 B. AlterG Is the Anti-Gravity Leader for Rehabilitation and Training 24 14. Started in 2005, AlterG is an American start-up medical device company in Fremont, 25 California that first introduced the Anti-Gravity Treadmill1 for physical therapy and athletic training. 26 AlterG is now the leading provider of impact reduction treadmills for rehabilitation and medical use, and 27 1 Anti-Gravity Treadmill is a registered trademark of AlterG in the United States Patent and Trademark 28 Office. 30 2 31 COMPLAINT – JURY TRIAL DEMANDED Case 5:18-cv-07568 Document 1 Filed 12/17/18 Page 4 of 32 1 the company that first introduced “Differential Air Pressure” technology instead of harnesses or water- 2 based systems for unweighting and impact reduction. AlterG has inspired and empowered people to 3 achieve their physical aspirations by using unique gravity-defying technology to redefine what is 4 possible in physical rehabilitation and training. AlterG products allow orthopedic rehabilitation and 5 training by offsetting the weight of the user and include high-end gait analytics and precision calibration. 6 The AlterG Anti-Gravity Treadmill is used by physical therapy patients as well as premier professional 7 athletes to recover from injuries and surgeries by allowing training and rehabilitation without the full 8 body weight on the injured or repaired extremity. AlterG was the innovation pioneer in developing this 9 anti-gravity technology and, in a relatively short time from its founding, became the recognized leader in 10 anti-gravity training and rehab. 11 15. One of the keys drivers of AlterG’s success is its patented Differential Air Pressure 12 (“DAP”) technology. AlterG’s DAP technology was developed from lessons learned in space travel and 13 the work of a former NASA engineer. As astronauts were spending increasing periods of time in a zero- 14 gravity environment, an unintended consequence emerged – a loss of weight and bone density. 15 Defendant Whalen’s father was the NASA engineer, and Whalen recognized that the converse reduction 16 of gravity’s effect on people on earth could have significant benefits in a vast array of applications. 17 Whalen thereafter founded AlterG and was significantly involved in the invention and development of 18 several of the Company’s key technologies and products. Whalen was also involved in, and for 19 extended periods worked alone on, the confidential research and development of products that AlterG 20 decided not to commercialize. AlterG’s DAP products use a pressurized bag to provide a counterforce 21 to the subject’s body weight, reducing their effective weight on the treadmill surface. Increased lifting 22 force in a small and distributed area results in very little force on the body and the “altered gravity” 23 effect. The results are unrestricted mobility with normal gait, stride length, and movement mechanics 24 without the full body weight on the affected limb or joint. 25 C. AlterG Gains Traction for Athletes and Patients 26 16. In 2005, AlterG started gaining traction in the sports industry. The Nike Oregon Project, 27 runner and coach Alberto Salazar, the Oakland Raiders, and the Golden State Warriors tested and used 28 the AlterG prototype. In 2007, the Washington Wizards were the first professional sports team to 30 3 31 COMPLAINT – JURY TRIAL DEMANDED Case 5:18-cv-07568 Document 1 Filed 12/17/18 Page 5 of 32 1 purchase the AlterG P200 model, and, by 2008, the Miami Heat, Golden State Warriors, Chicago Bulls, 2 Houston Rockets, Houston Texans, and Phoenix Suns all purchased the P200 for their training rooms. 3 Premier athletes like LeBron James, Kevin Durant, and Steph Curry have used the AlterG Anti-Gravity 4 Treadmill for rehabilitation and training 5 17. Today, more than 200 professional sports teams including hockey, football, soccer, 6 basketball and more than 500 university teams use AlterG systems. AlterG systems are in use by the 7 United States Military treating service members in the Navy, Army, Marines, and Special Forces on 8 more than 100 military bases in the United States and overseas. Additionally, over 3,000 units are in use 9 in hospitals, physical therapy centers, and nursing facilities, helping patients rehabilitate lower extremity 10 injuries and surgical repairs, as well as providing aerobic conditioning, weight control, gait training for 11 neurological conditions, and strengthening and conditioning for the elderly. In 2010, AlterG won the 12 gold medal for Medical Design Excellence Award. 13 18.