Case: 1:09-cv Document #: 21 Filed: 07/09/09 Page 1 of 44 PageID #:76

(1)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

)

IQ BIOMETRIX, INC., )

)

) JURY TRIAL DEMANDED

Plaintiff, )

)

v. ) Case No. 09-cv-03180

) Honorable Rebecca R. Pallmeyer

) PERFECT WORLD ENTERTAINMENT, INC.,

PERFECT ONLINE HOLDING LIMITED AND PERFECT WORLD CO, LTD.

) ) )

)

Defendants. )

)

IQ BIOMETRIX’S AMENDED COMPLAINT FOR PATENT INFRINGEMENT

Plaintiff IQ Biometrix, Inc. (“IQ Biometrix”), for its amended complaint against Defendants Perfect World Entertainment, Inc. (“Perfect World Ent.”), Perfect World Co., Ltd.

(“Perfect World Co.”), and Perfect Online Holding Limited (“Perfect Online”) (Perfect World Ent., Perfect World Co., and Perfect Online referred to collectively as “the Perfect World Group”

or “Defendants”), hereby demands a jury trial and alleges as follows:

NATURE OF THE ACTION

1. This is an action for patent infringement arising under the patent laws of the United States, 35 U.S.C. §§ 271 et seq.

Case: 1:09-cv-03180 Document #: 21 Filed: 07/09/09 Page 1 of 44 PageID #:76

(2)

2 PARTIES¹

2. Plaintiff IQ Biometrix, owner of the patents identified below, is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 1525 Lakeville Drive, Suite 200, Kingwood, Texas 77339. IQ Biometrix provides facial image composite software marketed under the name FACES. The FACES software is used by thousands of law enforcement agencies worldwide, including the CIA and the FBI, as well as the U.S. Military. The FACES software has received numerous awards, including the Crime Stoppers International President’s Award and the National Parenting Center Seal of Approval Award.

3. Upon information and belief, Defendant Perfect World Entertainment, Inc. (also referred to as “PW USA”) is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 2200 Bridge Parkway, Suite 201, Redwood City, California 94065.

4. Upon information and belief, Defendant Perfect World Co., Ltd. is a company organized and existing under the laws of the Cayman Islands, with its principal place of business at 8th Floor, Huakong Building, No. 1 Shangdi East Road, Haidian District, Beijing 100085, People’s Republic of China.

5. Upon information and belief, Defendant Perfect Online Holding Limited (also referred to as “PW Hong Kong”) is a company organized and existing under the laws of Hong Kong.

1 Pursuant to a consent order entered by the Court on June 17, 2009 (D.E. 15), Wagware Systems, Inc., a defendant named in the original complaint, is no longer a party in this case.

(3)

3 JURISDICTION AND VENUE

6. This action arises under the patent laws of the United States, Title 35, United States Code.

7. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a).

8. Upon information and belief, Perfect World Ent. has done substantial business in the State of Illinois and has committed and continues to commit acts of patent infringement in this judicial district.

9. Upon information and belief, Perfect World Co. and its wholly owned subsidiaries have done substantial business in the State of Illinois and have committed and continue to commit acts of patent infringement in this judicial district.

10. Upon information and belief, Perfect Online and its wholly owned subsidiaries have done substantial business in the State of Illinois and have committed and continue to commit acts of patent infringement in this judicial district.

11. Upon information and belief, this Court may exercise personal jurisdiction over each of the Defendants because each has at least minimum contacts with this forum as a result of business regularly conducted within the State of Illinois and this judicial district. Such jurisdiction exists generally as well as specifically as a result of, at least, the Defendants offering to sell and/or selling products in this judicial district that are claimed to infringe claims of one or more of U.S. Patents Nos. 6,731,302 and 7,289,647. Each Defendant’s conduct and connections with this judicial district are and have been such that it reasonably should have anticipated being brought into court in this judicial district.

(4)

4 12. Venue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391 and 1400(b).

INFRINGEMENT OF U.S. PATENT NO. 6,731,302

13. On May 4, 2004, the United States Patent and Trademark Office duly and legally issued U.S. Patent No. 6,731,302 (“the ’302 patent”), entitled “Method and Apparatus for Creating Facial Images.” IQ Biometrix has been assigned sole title to the ’302 patent and has the right to sue and recover for infringement. A copy of the ’302 patent is attached as Exhibit A to this Complaint.

14. Upon information and belief, through its products and online presence, including, but not limited to, the Perfect World International online game, the Perfect World Group have been and are infringing one or more claims of the ’302 patent directly, contributorily and/or by inducement, in violation of 35 U.S.C. § 271.

15. IQ Biometrix has been damaged by Defendants’ infringement of the ’302 patent.

INFRINGEMENT OF U.S. PATENT NO. 7,289,647

16. On October 30, 2007, the United States Patent and Trademark Office duly and legally issued U.S. Patent No. 7,289,647 (“the ’647 patent”), entitled “System and Method for Creating and Displaying a Composite Facial Image.” IQ Biometrix has been assigned sole title to the

’647 patent and has the right to sue and recover for infringement. A copy of the ’647 patent is attached as Exhibit B to this Complaint.

17. Upon information and belief, through its products and online presence, including, but not limited to, the Perfect World International online game, the Perfect World Group have been and

(5)

5 are infringing one or more claims of the ’647 patent directly, contributorily and/or by inducement, in violation of 35 U.S.C. § 271. IQ Biometrix has been damaged by Defendants’

infringement of the ’647 patent.

PIERCING THE CORPORATE VEIL

18. IQ Biometrix incorporates by reference each preceding paragraph of this Complaint as if fully restated herein and further alleges as follows:

19. Upon information and belief, each Defendant is directly and/or indirectly infringing the

’302 and ’647 patents.

20. Upon information and belief, Perfect World Ent. is wholly owned by Perfect Online.

21. Upon information and belief, Perfect Online is wholly owned by Perfect World Co.

22. Upon information and belief, Perfect Online and Perfect World Ent. lack any separate mind, will or existence of their own and are mere instrumentalities, agents and alter-egos of Perfect World Co.

23. Adherence to the fiction of the separate corporate existences of Perfect World Co., Perfect Online and Perfect World Ent. would promote injustice and inequitable consequences due to the following facts pleaded herein on information and belief:

• In December 2007, Perfect World Co. incorporated Perfect Online (“PW Hong Kong”), a wholly owned subsidiary, in Hong Kong. As of June 19, 2009, Perfect Online (PW Hong Kong) has had no operations in Hong Kong since its inception.

• Perfect World Ent. (“PW USA”) was established by Perfect World Co., as a wholly owned subsidiary, in April 2008 to capture potential business opportunities in North America.

(6)

6

• Perfect World Co. describes Perfect Online and Perfect World Ent. as two of its

“controlled entities.”

• Perfect World Co.’s subsidiaries are entities in which Perfect World Co., directly or indirectly, controls more than one half of the voting power, or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

• In September 2008, March 2009 and June 2009, Perfect World Co. launched localized versions of its games Perfect World II, Pocketpet Journey West and Zhu Xian, respectively, in North America through Perfect World Ent. Perfect World Ent.

currently operates three of Perfect World Co.’s games in North America.

• Prior to 2007, Perfect World Co. did not participate in any operating activities. In 2007, Perfect World Co. started to enter into transactions that were denominated in U.S. dollars and received cash in U.S. dollars in these transactions.

• Perfect World Co. and its various subsidiaries and variable interest entities hold themselves out in the United States as one entity by virtue of official reports filed with the United States Securities and Exchange Commission. These reports reflect the business activities of Perfect World Co. and its subsidiaries, collectively, and use the terms “we,” “us,” “our company,” “our” and “Perfect World” to refer to Perfect World Co. and its subsidiaries.

• As of June 19, 2009, the Perfect World Co. Board of Directors has determined that it has no present plan to declare and pay any dividends on its shares in the foreseeable future. With the exception of another Perfect World Co. subsidiary, Beijing Perfect World Software Co., Ltd. (“PW Software”), the Perfect World Co. subsidiaries do not intend to declare dividends to their immediate holding companies.

• Alan Ming Chen, Senior Vice President of Perfect World Co., is also the Chief Executive Officer of Perfect World Ent. Likewise, Bill Weizheng Wang, Vice President of Perfect World Co. is Vice President of Perfect World Ent.

• Perfect World Co. operates games in the United States through its subsidiary, Perfect World Ent.

24. In the interest of substantial justice, the corporate veils of Perfect Online and Perfect World Ent. should be pierced, and liability should be thus imposed directly upon Perfect World Co. for its patent infringement, as well as the patent infringement by Perfect Online and Perfect World Ent. as pleaded herein.

(7)

7 JURY DEMAND

25. Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, IQ Biometrix hereby respectfully requests a jury trial on all issues and claims so triable.

PRAYER FOR RELIEF

WHEREFORE, IQ Biometrix prays for judgment as follows:

(A) That the Perfect World Group have infringed the ’302 and ’647 patents;

(B) That the corporate veils separating Perfect World Ent. from Perfect Online and Perfect World Co. be pierced and disregarded such that Perfect World Co. bears direct liability for infringement of the ’302 and ’647 patents, whether by Perfect World Co., Perfect World Ent., or Perfect Online;

(C) That Perfect World Co., Perfect Online and Perfect World Ent. and their officers, agents and employees, successors and assigns and those persons in active concert or participation with any of them be permanently enjoined from direct and indirect infringement of the ’302 and

’647 patents;

(D) That an accounting be had for the damages to IQ Biometrix arising out of Defendants’ infringing activities together with prejudgment interest and costs, and that such damages be awarded to IQ Biometrix;

(E) That this case be deemed exceptional under 35 U.S.C. § 285, and that reasonable attorney fees, expenses and costs incurred in this action be awarded to IQ Biometrix; and

(8)

8 (F) That IQ Biometrix be awarded such other and further relief as this Court deems just and proper.

Dated: July 9, 2009 Respectfully submitted, KIRKLAND & ELLIS LLP

By: /s/ Barry F. Irwin, P.C..

Barry F. Irwin, P.C. (# 6211213) Matthew D. Satchwell (#6290672) Margaret M. Dolan (# 6292715) 300 N. LaSalle Street

Chicago, Illinois 60654 312.862.2000 (Telephone) 312.862.2200 (Facsimile) [email protected]

[email protected] [email protected]

Counsel for Plaintiff IQ Biometrix, Inc.

(9)

9 CERTIFICATE OF SERVICE

I, Barry F. Irwin, an attorney, hereby certify that I caused a copy of the foregoing document, IQ BIOMETRIX’S AMENDED COMPLAINT FOR PATENT INFRINGEMENT, to be served via the Court’s electronic filing service (ECF), upon all counsel of record. Documents required to be served by Fed.R.Civ.P. 5(a) have been served.

Dated: July 9, 2009 /s/ Barry F. Irwin, P.C.

Barry F. Irwin, P.C. (# 6211213) KIRKLAND & ELLIS LLP 300 N. LaSalle Street Chicago, Illinois 60654

312.862.2000 (Telephone) 312.862.2200 (Facsimile) [email protected] Counsel for Plaintiff IQ Biometrix, Inc.

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

(32)

(33)

(34)

(35)

(36)

(37)

(38)

(39)

(40)

(41)

(42)

(43)

(44)