1 2 3 DUANE C.

BLAKE, 4 5 6 7 8 9 10 11 12

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

) ) ) Plaintiff, ) ) v. ) Civil Action No. ____________________ ) PROFESSIONAL COIN GRADING SERVICE; NUMISMATIC GUARANTY ) ) CORPORATION OF AMERICA; and ) COMPLAINT COLLECTORS UNIVERSE, INC., ) ) Defendants. ) (Filed Electronically)

Duane C. Blake (Mr. Blake), by and through his attorneys, Lawrence G. Cetrulo, Esq.

13 and Michael A. Capuano, Esq. of Cetrulo & Capone, LLP, and those certain of counsel 14 attorneys, Kevin T. Duffy, Jr., Esq. and Gary G. Staab, Esq. of Duffy & Staab Attorneys at 15 Law, and David L. Ganz, Esq. and Jerrietta R. Hollinger, Esq. of Ganz & Hollinger, P.C., and for 16 his Complaint against Defendants Professional Coin Grading Service (PCGS), the Numismatic 17 Guaranty Corporation of America (NGC), and Collectors Universe, Inc. (CU), (collectively, 18 Defendants) hereby alleges: 19 20 1. Nature of the Action This action arises out of the misappropriation, re-branding, and wide-scale

21 commercial exploitation of Mr. Blakes coin safeguard, labeling and monitoring system (the
1 22 AURA System) by the Defendants.

23 24
1

2.

Having learned of Mr. Blakes AURA System under the circumstances described

AURA stands for Axially Ultimate Refractory Angles.

25 1 26

1 below, Defendants then wrongfully took it, and have been using it wrongfully and profitably for 2 the past year and a half under the trade names SecurePlus and Plus (+) (by Defendant 3 PCGS), and Plus (+) (by Defendant NGC) (hereinafter, Secure Plus and +). 4 3. Defendants have engaged, and continue to engage, in false commercial advertising

5 of Mr. Blakes AURA System by representing his AURA System to the public, over the Internet 6 and in trade publications such as Coin World, COINage Magazine, Coin Week, Coin News, and 7 elsewhere, as their own, thus depriving Mr. Blake of his rights of ownership, business 8 opportunities, royalties and enjoyment of the other benefits of his creation. 9 4. Defendants actions violate the Federal Lanham Act and give rise to several

10 Massachusetts statutory and common law claims as follows: 11 12 13 14 15 16 5. a. b. c. d. e. f. g. h. i. Violations of 15 U.S.C. 1125(a) (the Lanham Act) (Count I); Conversion (Count II); Breach of Contract (Count III); Breach of the Covenant of Good Faith and Fair Dealing (Count IV); Unjust Enrichment (Count V); Civil Conspiracy (Count VI); Misappropriation of Trade Secrets Mass. G.L. c. 93, 42 (Count VII); Unfair Business Practices Mass. G. L. c. 266, 91 (Count VIII); Injunctive Relief (Count IX).

Mr. Blake, accordingly, asks this Court for relief, including: (i) damages

17 including, but not limited to reasonable royalties, compensatory and consequential damages 18 believed to be in excess of $6,500,000.00 (plus prejudgment interest thereon); (ii) restitution; (iii) 19 treble damages (on the Lanham Act claim); (iv) exemplary damages as may be appropriate; (v) 20 reasonable attorneys fees, expenses and costs incurred in bringing this action; or (vi) enjoinder of 21 Defendants continued use of Mr. Blakes property; and (vii) such other and further relief as the 22 Court may deem just, proper and equitable. 23 24 25 2 26

1 2 6.

The Parties Plaintiff Blake is a United States citizen and resident of the Commonwealth of

3 Massachusetts, living in Norfolk County. Mr. Blake is a life-long coin collector and researcher, 4 and, more recently, coin dealer, doing business in Massachusetts as the Aura Coin Company, and 5 as such, engages in the buying, selling and grading of rare, primarily U.S. coins.2 Mr. Blake is 6 the sole creator and independent owner of the AURA System. Annexed hereto as Exhibit A is 7 true and correct copy of Mr. Blakes pending patent application regarding his AURA System, 8 entitled AURA Devices and Methods for Increasing Rare Coin Value, as filed with the United 9 States Patent and Trademark Office. Said filing, with a priority dating of July 14, 2009, presumes 10 Mr. Blake to be the legal owner of the AURA System.3 11 7. Upon information and belief, defendant Professional Coin Grading Service

12 (PCGS) is a California entity, with its principal place of business at 1921 E. Alton Avenue, 13 Santa Ana, California. PCGS was founded in 1986, and is in the business of providing third14 party grading services for coins submitted to it by consumer members, collectors and dealers. 15 PCGS charges a fee for both PCGS membership and coin grading submissions. PCGS maintains 16 its own website at http://www.pcgs.com. 17 8. Upon information and belief, defendant Numismatic Guaranty Corp. of America

18 d/b/a NGC, is a privately-owned corporation located within the State of New Jersey, and the 19 State of Florida, with its principal place of business at 5501 Communications Parkway, Sarasota, 20 Florida. NGC was founded in 1987, and is in the business of providing independent third-party 21 22 23 24 25 26
Mr. Blake is also an attorney licensed to practice law in Massachusetts and before the United States Patent and Trademark Office (USPTO). As required by 35 U.S.C. 122, this patent application, U.S. Pat. Ser. No. 12/804,141, has been maintained under confidence by both the USPTO and Plaintiff Blake. However, the application has now been made public as specified by federal statute on June 2, 2011. While this application describes the defendants SecurePlus and + systems in detail, a patent infringement count cannot be included herewith as the patent application has not yet been formally issued by the USPTO. Exhibit A is thus submitted for evidentiary purposes at this time. However, a Petition to Make Special for an expedited prosecution based on Third-Party Commercial Infringement is being been filed with the USPTO. When the patent application is issued, Mr. Blake intends to amend this Complaint to add the additional patent infringement count.
3 2

1 grading services for coins submitted to it by consumer members, collectors and dealers. NGC 2 charges a fee to consumers and dealers for both membership and coin grading submissions. NGC 3 maintains a website at http://www.ngccoin.com. 4 9. Upon information and belief, Collectors Universe, Inc., (CU), is a publicly-

5 traded Delaware corporation founded on February 3, 1999, with its principal place of business in 6 California. CU is a related entity to PCGS, as PCGS is the coin division of CU, and CU is also 7 believed to have its principal place of business at 1921 E. Alton Avenue, Santa Ana, California. 8 CU is primarily in the business of providing independent third-party authentication and grading 9 of coins, stamps, memorabilia and other collectibles. As a result of the close relationship between 10 CU and PCGS, many of the factual allegations and claims regarding PGCS herein apply with 11 equal force to CU. CU maintains a website at http://www.collectors.com. 12 13 10. Jurisdiction, Venue And Choice Of Law The Court has complete diversity of citizenship jurisdiction over this action under

14 28 U.S.C. 1332, federal question jurisdiction under 28 U.S.C. 1331 (for Mr. Blakes Lanham 15 Act claim), and supplemental jurisdiction under 28 U.S.C. 1367(a) as to the state law claims. 16 11. Venue is proper in this District under 28 U.S.C. 1391(a) and 1391(c), as the

17 unlawful acts of defendants, including advertising and promotion of the Secure Plus and + 18 Systems in Boston, Massachusetts, and telephone, e-mail and Internet communications relating to 19 this action have been made by and between the parties and disseminated to others via 20 correspondence, print media, regular mail, electronic mail, and the Internet in Massachusetts, and 21 have been intended by defendants to reach Massachusetts. Furthermore, defendants have actively 22 transacted, advertised and promoted their Secure Plus and + goods and services in Boston, 23 Massachusetts.4 24 25 26
For example, in August 2010, both PCGS and NGC were in attendance and doing business at the American Numismatic Association Annual Coin Show in Boston, Massachusetts.
4

12.

Upon information and belief, PCGS and NGC Authorized Dealers sell defendants

2 Secure Plus and + related goods and services within Massachusetts. 3 13. Upon information and belief, PCGS and NGC advertise and sell Secure Plus and

4 + related goods and services within Massachusetts. 5 6 14. 15. An actual case or controversy has arisen between the parties in this District. Massachusetts choice of law is proper in this case and should be applied as to Mr.

7 Blakes claims sounding in both contract and tort. 8 9 16. General Averments and Allegations The U.S. rare coin market is a highly active multi-million dollar industry, and

10 much of that market is influenced and/or controlled by the close-knit cottage industry of third11 party coin grading services (TPGS), like Defendants, through their grading and labeling of 12 sonically-sealed, or slabbed coins with viewable grading labels, large independent coin auction 13 houses, and third-party Authorized Dealers who sell these graded and labeled coins to the 14 public. 15 17. Defendants PCGS and NGC are widely considered within the rare coin market to

16 be the premier TPGS not only within the United States, but throughout the entire world. 17 18. PCGS claims it has graded and labeled over 18 million coins with a declared value

18 of over $18 billion since 1986, as well as over 2 million coins in just the last 12 months. 19 20 19. 20. NGC claims it has graded and labeled over 20 million coins since 1987. Although the rare coin market is large and growing, many old school protocols

21 still exist and are typically honored. For example, handshake agreements are commonplace, and 22 the failure to keep ones word may result in blacklisting. 23 21. When TPGS such as Defendants PCGS and NGC grade and label a coin, they

24 do so by first making an assessment of a particular raw coins condition. They then place the 25 5 26

1 coin inside a sealed, tamper-resistant hard plastic holder, known as a slab, and insert a label 2 inside a compartment within the slab separate from the coin to indicate the grade (i.e., the 3 physical condition) of that particular coin.5 4 22. The coin is then placed into the stream of commerce and marketed to the public in

5 the sealed slab. Thus, an ungraded raw coin becomes a graded coin as a result of the 6 grading and labeling process and methodologies. 7 23. The purported benefit of third-party grading and labeling of a coin is to remove

8 uncertainty as to its condition and authenticity (important determinants of rare coin value) so that 9 collectors and non-expert investors alike may be thereafter assured that those qualities have been 10 properly and expertly determined. 11 24. Nevertheless, there remain imperfections in the marketplace. For example, the

12 grading of coins is still largely fragmented depending on grading source, and highly subjective. 13 Doctored coins are being passed off as original. Furthermore, there are significant differences 14 in the properties of coins valued by collectors that are not reflected in the coins graded and 15 labeled condition. 16 17 25. Mr. Blakes Development of the AURA System Mr. Blake first began developing his AURA System in 2008 to address some of

18 those imperfections. 19 26. A practical application of Mr. Blakes AURA innovations was reflected when Mr.

20 Blake assembled a high-end collection of rare Matte Proof Lincoln Cents on the Registry as an 21 honorarium to his father, named the William Blake Memorial Eye Appeal and Pedigree 22 23 24 25 6 26
5

Coins can be graded adjectivally (poor, fair, good, very good, fine, very fine, extremely fine, about uncirculated, and mint state i.e. uncirculated), or numerically, using a scale of 1 to 70 where the label for a graded coin may contain a number from 1 (lowest or poor) to 70 (highest, or uncirculated). Between the numbers 60 and 70, coins are designated by different levels of Mint State, or uncirculated. This 1-70 grading scale, known as the Sheldon System, has been in use since 1948.

1 Collection.6 2 27. While building that collection, Mr. Blake became very aware that the elements of

3 coin quality known as eye appeal can be extremely important to the value of a coin.7 4 28. Mr. Blake came to believe that the identification and labeling of eye appeal on a

5 coins grading label could unlock additional commercial potential for the more appealing of two 6 otherwise physically identical coins of the same labeled grade. 7 29. In other words, Mr. Blake believed that if rare coins could be graded and labeled

8 according to their eye appeal, then high end coins within a grade, that is, those with better eye 9 appeal, could be separated from other coins of the same technical grade, and coin buyers would 10 be willing to pay a premium for such high end coins within the same grade. Therefore, the 11 inherent value of the better or premium rare coin within the same Sheldon System grade 12 would be increased. 13 30. Mr. Blake also realized that, as a result recent technological advances, a coin could

14 be digitally photographed and recorded during the grading process, such that its stored image 15 could be consulted during future submissions of the same coin to help determine whether any 16 alterations or modifications to the coins condition had occurred. 17 31. Mr. Blake further reasoned that his AURA System could be used to determine

18 whether coins which had been already graded had subsequently been intentionally altered and/or 19 modified. Thus, through the use of his AURA System, Mr. Blake intended to help curtail at 20 least for graded coins the pernicious practice known in the industry as coin doctoring.8 21 22 23 24 25 26
7 6

In early 2008, Mr. Blake began formally assembling the collection, and described as follows: In this [Eye Appeal] collection, some of the finest toned matte proofs in existence have been assembled. All are high end for their grades. (Emphasis added.) Eye appeal takes into account such properties as luster, contact marks, toning, and sharpness of strike.

Coin doctoring is employed by unscrupulous individuals who treat rare coins with chemicals and/or heat in an effort to increase their eye appeal, and hence the condition and value of the coin. Coin doctoring is considered unlawful if done with fraudulent intent. Understanding that this activity was a major impediment to insurance company coverage of rare coins for theft or alteration, Mr. Blake designed his AURA System to help resolve this problem.

32.

Lastly, Mr. Blake saw the numismatic industry as fragmented, with multiple

2 TPGS, including PCGS and NGC, competing with one another using disparate standards for 3 grading premium quality coins. Mr. Blake believed that his AURA System could provide the 4 industry with a way for third-party grading companies to utilize the same technical eye appeal 5 and high/low end coin recognition systems to further promote certainty and uniformity of grading 6 standards for the rare coin market. 7 33. On July 14, 2009, Mr. Blake filed U.S. Prov. Pat. App. Ser. No.: 61/226,263,

8 entitled Determining, Labeling and Monitoring the Eye Appeal of a Coin as a first step in 9 protecting his AURA System. 10 34. Mr. Blake filed a U.S. federal trademark registration on July 21, 2009 for the

11 brand AURA which was assigned U.S. TM App. Ser. Num.: 77785578, in the goods and 12 services Class 42 for Coin grading services. 9 13 35. On July 14, 2010, Mr. Blake filed U.S. Pat. App. Ser. No.: 12/804,141, entitled

14 AURA devices and methods for increasing rare coin value claiming priority from Mr. Blakes 15 263 application. 16 17 36. Mr. Blakes Confidential Disclosures to Defendants Because both PCGS and NGC were well-positioned in the coin grading industry,

18 Mr. Blake intended to couple his AURA System with the industrial and marketing assets of one 19 or all Defendants, in order to conduct market testing to determine whether the rare coin market 20 would accept his AURA System. 21 37. If the rare coin market did accept Mr. Blakes AURA System, he intended to offer

22 a royalty-bearing license to the grading company or companies that wished to adopt and promote 23 it. Mr. Blake believed that the AURA System would be of the highest commercial benefit to the 24 (..continued) 25 26
9

Mr. Blakes AURA Trademark application was abandoned on September 27, 2010 due to Defendants wrongful acts.

1 company or companies which tested, proved, licensed and ultimately promoted his ideas to 2 consumers. 3 38. In late 2008, Mr. Blake contacted PCGS to discuss market testing his AURA

4 System. Mr. Blake first approached PCGS founder and Collectors Universe CEO David Hall. 5 Upon information and belief, Hall, independently of his positions with PCGS and CU, is also a 6 private dealer in rare coins through his own coin company, David Hall Rare Coins. 7 39. Hall referred Mr. Blake to PCGS President Don Willis. After having several

8 discussions with Willis explaining the publicly-known aspects of his AURA System, Willis 9 abruptly declined Mr. Blakes proposal for a market testing arrangement with a terse Thanks but 10 no thanks. 11 40. Soon thereafter, in the spring of 2009, believing that any PCGS testing of his

12 AURA System was now a dead letter, Mr. Blake approached NGC Senior Numismatist David 13 Lange with a similar request regarding Mr. Blakes desire to test-market his ideas through NGC. 14 41. Lange introduced Mr. Blake to NGC Marketing Director Scott Schechter, as the

15 appropriate person within NGC to discuss the matter. 16 42. On July 22, 2009, Blake wrote an email to Lange and Schechter about NGC

17 licensing the AURA System. 18 19 43. 44. Schechter expressed interest in Mr. Blakes AURA System. In anticipation of further discussions, Mr. Blake transmitted by email on July 26,

20 2009, a Confidentiality Agreement (the Agreement), for Schechter and NCG to review. 21 45. Two days later, on July 28, 2009, Mr. Blake received an email message from

22 Schechter suggesting a telephone call, and after a series of emails, a telephone call was scheduled 23 between them. Schechter called Mr. Blake on August 18, 2009 at the agreed time at his home in 24 Massachusetts. By then Mr. Blake had filed his patent and trademark applications, and he so 25 9 26

1 informed Schechter. 2 46. At the beginning of that telephone call, Schechter stated that he had misplaced the

3 Agreement, so Mr. Blake immediely emailed another copy to Schechter. Schechter then expressly 4 agreed to treat all disclosures made by Mr. Blake as highly confidential. Schechter further agreed 5 to return a signed Agreement to Blake. 6 47. Mr. Blake and Schechter then had a lengthy discussion about Mr. Blakes AURA

7 System and its possible market testing by NGC. 8 48. During the call, Mr. Blake described to Schechter his prior unsuccessful proposal

9 to PCGS and Willis. 10 49. Also during that call, in reliance upon Schechters agreement to treat his AURA

11 System confidentially and to abide by the other terms of the Agreement, Mr. Blake disclosed to 12 Schechter components of the AURA System and valuable information from the patent 13 application. Among other proprietary information disclosed by Mr. Blake to Schechter was Mr. 14 Blakes idea that incremental grades be placed on coin holder labels for beautiful high-end coins, 15 and his proposed imaging solution to the coin doctoring problem. 16 50. Mr. Blake further disclosed his marketing plans to introduce the new value-added

17 methods into the numismatic community. Mr. Blake and Schechter also discussed the possibility 18 that, were the rare coin market to accept Mr. Blakes AURA System, then Mr. Blake and NGC 19 would in good faith negotiate the terms of a license agreement to NGC. Schechter said that he 20 was impressed with Mr. Blakes ideas and believed that a market test was a viable way to 21 proceed. 22 51. NGCs Schechter told Mr. Blake that he understood that the information being

23 disclosed was sensitive and valuable, and assured him that confidence would be maintained by 24 NGC. 25 10 26

52.

In that August 18, 2009 call, Schechter not only orally agreed that NGC would

2 abide by the terms of the Agreement, he further represented to Mr. Blake that the Agreement 3 would be signed and returned, including the provision specifying that the entirety of what was 4 relayed by Mr. Blake to Schechter that day and prior to that day would remain confidential and 5 subject to the Agreement. 6 53. Schechter, while sounding positive and excited about working together with Mr.

7 Blake on market testing the AURA System, told Mr. Blake that because he was busy with other 8 marketing initiatives, he, Schechter, would re-initiate contact with Mr. Blake in the fall of 2009 9 after he had had a chance to review the AURA System with other NGC executives. 10 54. Mr. Blake waited over a month but did not hear back from Schechter; nor did he

11 receive the promised signed Agreement. 12 55. On September 29, 2009, Mr. Blake followed up with another email to Schechter,

13 attaching yet a third copy of the Agreement. However, neither Schechter nor any other NGC 14 representatives contacted Mr. Blake then or ever again. 15 56. Mr. Blake followed up with a final email communication to Schechter, with a

16 fourth copy of the Agreement attached on March 28, 2010. 17 57. However, neither Schechter, nor any other NGC representative responded to any

18 of Mr. Blakes communications after August 18, 2009. 19 20 Defendants Conversion and For-Profit Use in Commerce of Mr. Blakes AURA System 58. In early 2010, CU President David Hall started a PCGS message board

21 communication string entitled The Big One is Coming March 25 and dedicated to the topic of 22 what turned out to be the upcoming Secure Plus opening announcement. 23 59. From January to March 25, 2010, Hall, using the pseudonym Home Run Hall

24 disclosed and advertised Blakes proprietary and confidential AURA System on the Message 25 11 26

1 Board by asking all and any PCGS members (both coin collectors and dealers of all levels) to 2 attempt to guess the substance of the Big One correctly. A prize of $1,000.00 was offered to 3 any person who in fact could correctly guess the nature of the upcoming Big One 4 announcement. 5 60. On March 25, 2010, Defendants PCGS and NGC made a dual announcement from

6 a press conference in Houston, Texas that both PCGS and NGC would be adding, when 7 appropriate, in addition to the numeric Sheldon System grade placed within their coin labels as 8 was done historically, a Plus or more accurately, a + symbol on the label after the numeric 9 grade to indicate a coin of a higher quality within its specific grade (i.e., a coin grade 65+ 10 would be considered a better, more valuable coin than a coin graded a plain 65). 11 61. The new grading methodologies announced on March 25, 2010 were named the

12 SecurePlus and the + labeling methodologies by PCGS and NGC, respectively. Since that 13 time, PCGS and NGC have offered the Secure Plus and Plus (+) grades to consumers 14 throughout the United States. 15 62. Upon hearing this news, Mr. Blake immediately emailed Schechter and demanded

16 to discuss the meaning of the new + initiatives in light of their past confidential 17 communications about Mr. Blakes AURA System. 18 19 63. 64. Schechter did not respond in any way to Mr. Blakes email. Defendants market branding descriptions regarding the Secure Plus and +

20 methodologies are virtually identical to the AURA System as contained in Mr. Blakes pending 21 AURA patent application. 22 65. Upon information and belief, NGC representative Schechter and/or others at NGC

23 disclosed Mr. Blakes AURA System to PCGS. 24 25 12 26 66. Upon information and belief, PCGS and NGC analyzed the information that was

1 disclosed by Mr. Blake to Schechter, and together, in an attempt to convert and use his AURA 2 System for themselves, renamed and rebranded the AURA System disclosed to Schechter as their 3 Secure Plus and + methodologies. 4 67. NGC and PCGS, having now both adopted the + grading designation, have in

5 fact tested and proved the commercial viability of the AURA System and established the AURA 6 System as a new commercially valuable rare coin industry grading standard, but without having 7 to pay Mr. Blake any licensing or other fee for the benefits they so derived. 8 68. Mr. Blake expended significant resources to develop his proprietary AURA

9 System, including the costs related to compensating patent counsel, and costs associated with the 10 preparation and filing expenses of patent and trademark applications, all of which are in the 11 prosecution stages before the USPTO. 12 69. Upon information and belief, the rare coin market has since accepted the new +

13 labeling methodology, and PCGS and NGC have both made substantial profits on their Secure 14 Plus and Plus (+) labeling programs and the + labeled products offered to consumers. 15 70. Upon information and belief, the increased value of coins given a + designation

16 by Defendants has been widely recognized in the marketplace. 17 71. Upon information and belief, Hall, the founder of PCGS, and President of

18 Collectors Universe, has personally profited from the Defendants conversion of Mr. Blakes 19 AURA System and their subsequent implementation of the Secure Plus and Plus (+) 20 labeling programs through, among other things, the increase in value of coins given a + 21 designation owned by and sold through his own coin company, David Hall Rare Coins. 22 23 72. 73. Mr. Blake never intended his AURA System to be used to mislead the public. However, upon information and belief, PCGS has engaged in exaggerated and

24 misleading commercial advertising while promoting the Secure Plus labeling methodology in 25 13 26

1 violation of a 1990 FTC Consent Decree (to which PCGS still remains subject) that will tend to 2 damage the image and marketability of Mr. Blakes AURA System. 3 74. Mr. Blake has been damaged, and continues to be damaged by Defendants use of

4 Mr. Blakes re-branded AURA System, NGCs direct and indirect breach of the Agreement, their 5 bad faith, and, among other false claims, their claims that Mr. Blakes proprietary AURA System 6 is their own. Mr. Blake has been unlawfully deprived of opportunities to license his valuable 7 AURA System to other third-party grading services, and the Defendants behavior has 8 necessitated this lawsuit. 9 10 11 75. COUNT I Violation of Section 43(a) of the Lanham Act (15 U.S.C. 1125(a) Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

12 of the Complaint as if fully restated and realleged herein. 13 76. Defendants, through national commercial advertising and promotion in interstate

14 commerce, used false advertising to confuse and deceive the public both within and outside of the 15 rare coin market (i.e., coin collectors, dealers, investors, customers and prospective customers) by 16 falsely representing that Defendants are the creators and owners of Secure Plus and + 17 labeling methodologies, which, in reality are the AURA System owned by Mr. Blake. 18 77. Such representations constitute false designations as to the true origin of the

19 Secure Plus and + labeling methodologies, as well as false descriptions and representations 20 of the Secure Plus and + labeling methodologies (i.e., Mr. Blakes AURA System) in 21 violation of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a). 22 78. Upon information and belief, Defendants intended to confuse and deceive, and in

23 fact have confused and deceived, coin collectors, coin dealers, investors, customers and 24 prospective customers in and outside of the rare coin market into believing that NGC and PCGS 25 14 26

1 have in fact independently created and singularly own the Secure Plus and + labeling 2 methodologies, and have the right to grant licenses to one another, and openly and publicly sell 3 products created with such labeling methodologies, as well, when in fact Defendants have stolen 4 the intellectual property rights behind these labeling methodologies from Mr. Blake. 5 79. Coin collectors, coin dealers, investors, customers and prospective customers have

6 been and/or are likely to have been, and are presently being confused and deceived into believing 7 that NGC and PCGS are the creators and owners of the Secure Plus and + labeling 8 methodologies and Defendants are actually harming the rare coin market as a result of creating 9 and furthering these false representations. 10 80. Defendants false and misleading statements have deceived and/or are likely to

11 deceive a substantial segment of their intended audience. 12 81. Defendants misleading activities are material and have influenced and/or are

13 likely to influence coin collectors, coin dealers, investors, customers and prospective customers 14 purchasing decisions regarding Defendants products and coin collectors, coin dealers, investors, 15 customers and prospective customers decisions about whether to participate in Defendants 16 programs and purchase Defendants services. 17 82. As a direct and proximate result of Defendants unlawful conduct, the goodwill

18 associated with Mr. Blake and his ideas and plans concerning his AURA System have been 19 and/or are likely to be diminished. 20 83. As a direct and proximate result of Defendants unlawful conduct, Mr. Blake has

21 suffered and/or is likely to suffer damages in the form of lost royalties in an amount that are 22 presently believed to be in excess of $6,500,000.00, and irreparable injury to his business 23 reputation. 24 25 15 26 84. Defendants violations of 15 U.S.C. 1125(a) are intentional and willful, and

1 entitle Mr. Blake to recover restitution and damages in an amount to be determined at trial. 2 85. Defendants intentional and willful violations of 15 U.S.C. 1125(a) entitle Mr.

3 Blake to recover his reasonable attorneys fees. 4 86. Defendants violations of 15 U.S.C. 1125(a) are intentional and willful, and

5 entitle Mr. Blake to treble damages in an amount to be determined at trial. 6 87. Defendants wrongful conduct is a substantial factor in directly and proximately

7 causing damage to Mr. Blake as described above, and he will continue to be harmed so long as 8 Defendants wrongful conduct continues. Mr. Blake is therefore entitled to damages as described 9 above. 10 11 12 88. COUNT II Conversion Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

13 of the Complaint as if fully restated and realleged herein. 14 89. As a result of wrongfully taking, sharing and profiting from Mr. Blakes AURA

15 System, Defendants have wrongfully exercised dominion over Mr. Blakes personal property and 16 royalty streams, over which Mr. Blake has expended significant time and money to create and 17 develop. 18 90. Defendants exercise of dominion over Mr. Blakes proprietary AURA System is

19 without right because Defendants were not authorized or licensed to take, share and/or use the 20 AURA System. Furthermore, Defendants actions constitute the conversion of Mr. Blakes 21 property, and Defendants have deprived Mr. Blake, the rightful owner, of the benefits of his own 22 property. As such, Defendants wrongfully converted Mr. Blakes property to their own 23 commercial use and benefit, or have conferred the commercial use and benefit of Mr. Blakes 24 property upon others, and without providing any remuneration or credit to Mr. Blake. 25 16 26

91.

As a direct and proximate result of Defendants conversion of Mr. Blakes

2 property, Plaintiff has expended significant time and money investigating Defendants actions in 3 an effort to uncover the full extent of their wrongdoing. In addition, if Defendants continue to 4 use Mr. Blakes AURA System for their or others benefit, or further disseminate or 5 commercially benefit from Mr. Blakes proprietary AURA System, Mr. Blake will suffer 6 substantial additional damages. 7 92. As a direct and proximate result of Defendants conversion of Mr. Blakes AURA

8 System, Mr. Blake has suffered and will continue to suffer damages in an amount that is presently 9 believed to be in excess of $6,500,000.00, and injury to his business reputation. 10 11 12 93. COUNT III Breach of Contract (vs. Defendant NGC) Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

13 of the Complaint as if fully restated and realleged herein. 14 94. The Agreement emailed to Schechter employs the following restrictions regarding

15 the development and licensing of Mr. Blakes Confidential Information (as defined therein) 16 through NGC: 17 18 19 20 21 95. The Agreement contains the following No-Grant provisions regarding Mr. Blakes Mr. Blake agrees to disclose the Information to Receiving Party [NGC] solely for the following purpose (the Purpose): To allow Receiving Party to access, develop and customize, and assist with specifications needed for licensing, purchase, and/or manufacturing goods and/or services relating to the Information, including project planning and raising capital.

22 Confidential Information as provided to NGC: 23 24 25 17 26 Nothing contained in this Agreement shall be construed as a grant by Mr. Blake, expressly or impliedly, of any rights, by license or otherwise, on or with respect to any patent, other intellectual property, copyrights, trademarks, trade secrets, or rights in software

1 2 3 96.

or other inventions, discovery or improvement relating to the Information, which is developed, made, conceived, or acquired prior to or after the date of this Agreement. The Agreement contains the following restrictions regarding the ownership of Mr.

4 Blakes Confidential Information: 5 6 7 8 9 10 97. The Agreement contains the following restrictions regarding the legal handling of In the event that the Receiving Party (NGC or any third party, including PCGS) makes an inventive contribution to an enhancement of the Information, as defined by United States patent law or state statutes or common law, during the Term of this Agreement, the Receiving Party agrees to assign its interest in any such invention, inventive contribution or enhancement to Mr. Blake.

11 Mr. Blakes Confidential Information within NGC and to third parties, such as PCGS: 12 13 14 15 16 17 18 19 98. Because of the representations and assurances given by Schechter, Mr. Blake In consideration of its receipt of the Information, Receiving Party agrees that the Information shall be considered confidential and proprietary to Mr. Blake, and that Receiving Party shall (a) Not disclose the Information (or any portion or copy thereof) except to its employees when necessary under the Purpose, and not publish the Information or disclose it to any third party; and (b) Not use the Information (or any portion or copy thereof) for any purpose except the Purpose expressly set forth above. Prior to disclosing Information to any agents, employees and representatives, Receiving Party will advise them of the confidential and proprietary nature of the Information and secure in writing the agreement of such persons to comply with the terms of this Agreement.

20 disclosed his confidential and valuable AURA System to NGC, though subject to the above21 enumerated paragraphs of the Agreement. 22 99. After initially inducing Mr. Blake to disclose the details of his confidential AURA

23 System, and despite numerous opportunities to speak, NGC remained silent, never in any way 24 indicating it did not agree to be bound by the terms of the Agreement. 25 18 26

100.

Mr. Blakes contract with NGC, as set forth in the Agreement, is valid and

2 enforceable. 3 101. By failing to perform the duties set out in the contract and converting Mr. Blakes

4 AURA System, NGC breached the Agreement. 5 6 102. 103. NGCs breach of contract is willful and knowing. As a direct and proximate result of NGCs breach of contract, Mr. Blake has

7 suffered and continues to suffer substantial financial and reputational damages for which NGC is 8 liable. 9 10 11 12 13 COUNT IV Breach of Covenant of Good Faith and Fair Dealing (vs. Defendant NGC) 104. Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

14 of the Complaint as if fully restated and realleged herein. 15 105. Mr. Blake disclosed his AURA System to NGC in good faith and pursuant to the

16 oral assurances from NGC Director of Marketing Scott Schechter that his disclosures relating to 17 his AURA System would remain confidential, and within NGC. 18 106. Mr. Blake further disclosed his AURA System to NGC relying on the belief that

19 he and NGC would do market testing of his AURA System in order to gauge the interest of the 20 rare coin market in Mr. Blakes AURA System. 21 107. Mr. Blake further relied on NGCs assurances that a license agreement would be

22 negotiated should such market testing prove positive. 23 108. Mr. Blake further reasonably relied on the fact that NGC, while having ample

24 opportunity to dispel any expressed doubts, remained silent, and in no way communicated 25 19 26

1 anything to contradict Mr. Blakes belief that he and NGC had a legally enforceable, valid and 2 accepted agreement in place regarding Mr. Blakes AURA System that was communicated to 3 NGC by Mr. Blake. 4 5 109. 110. Mr. Blake acted in good faith and on that reasonable belief. In all contracts governed by Massachusetts law, there is an implied covenant of

6 good faith and fair dealing that neither party shall do anything that will have the effect of 7 destroying or injuring the right of the other party to receive the fruits of his contract. 8 111. The actions of NGC, as described above, constitute a violation of the covenant of

9 good faith and fair dealing inherent in the contract with Mr. Blake, and at Mr. Blakes great 10 expense and injury. 11 112. As a direct and proximate result of NGCs breach of the covenant of good faith

12 and fair dealing, Mr. Blake has suffered and continues to suffer substantial damages for which 13 NGC is liable. 14 15 16 113. COUNT V Unjust Enrichment (and Quantum Meruit) Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

17 of the Complaint as if fully restated and realleged herein. 18 114. Defendants have impermissibly gained valuable benefits for themselves and

19 continue to gain such benefits at Mr. Blakes expense. These benefits include substantial profits 20 they are making from Mr. Blakes proprietary AURA System, including the full use and benefit 21 of a valuable federal patent application, copyright and other proprietary information related 22 thereto. 23 115. Mr. Blake reasonably and honestly bargained for, and has a right to valuable

24 benefits and a reasonable expectation of receiving value for the use of his developed property in 25 20 26

1 return. 2 116. It is unjust for Defendants to commit the acts described herein, and it would be

3 inequitable for Defendants to retain the full benefit conferred to them at Mr. Blakes expense 4 without in any way compensating Mr. Blake for the value of those benefits. 5 117. As a direct and proximate result of Defendants unlawful conduct, Mr. Blake has

6 suffered and/or is likely to suffer damages in the form of lost royalties in an amount not presently 7 known, and injury to his business reputation. Defendants unlawful conduct is intentional and 8 willful, and entitles Mr. Blake to be made whole in an amount to be determined at trial, but 9 believed to be in an amount not less than $6,500,000.00. 10 11 12 118. COUNT VI Civil Conspiracy Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

13 of the Complaint as if fully restated and realleged herein. 14 119. Upon information and belief, Defendants knew that Mr. Blake held an ownership

15 interest in the AURA System and that he therefore had an interest in the outcome of the Secure 16 Plus and + marketing campaign and proceeds from the development and sales of Secure 17 Plus and + labeled products. 18 120. Upon information and belief, PCGS and NGC knew that excluding Mr. Blake

19 from participation in the Secure Plus and + programs would cause the profits derived from 20 Secure Plus and + sales to be entirely retained by PCGS and NGC, and that the failure to 21 compensate Mr. Blake constituted a breach of NGCs Agreement with Mr. Blake. 22 121. Upon information and belief, NGC, acting in concert with PCGS and against Mr.

23 Blakes interests, excluded Mr. Blake from the Secure Plus and +product development and 24 market testing discussions in order to deprive, or with the natural and probable effect of 25 21 26

1 depriving, Mr. Blake of any proceeds of the Secure Plus and + labeling methodologies2 derived revenues. 3 122. Upon information and belief, NGC and PCGS knowingly and actively participated

4 in and provided substantial assistance to each other in furthering NGCs breach of its Agreement 5 with Mr. Blake, and the exclusion of Mr. Blake from the development, testing, and profits 6 derived from the valuable Secure Plus and + programs. 7 123. Upon information and belief, as a result of NGCs and PCGS conspiracy with one

8 another, Mr. Blake suffered, and continues to suffer, direct harm, including being deprived of his 9 rightful share of the proceeds from the valuable Secure Plus and + programs in an amount 10 to be determined by the trier of the fact after trial, but believed to be in an amount not less than 11 $6,500,000.00. 12 13 14 15 16 17 124. Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs COUNT VII Misappropriation of Trade Secrets and Confidential Information Pursuant to Massachusetts G.L. c. 93, 42

18 of the Complaint as if fully restated and realleged herein. 19 125. Upon information and belief, Defendant NGC obtained Mr. Blakes trade secrets

20 and confidential information pursuant to a confidential relationship with Mr. Blake. 21 126. Upon information and belief, defendant PCGS obtained Mr. Blakes trade secrets

22 and confidential information pursuant to its relationship with NGC. 23 127. Defendants have used Mr. Blakes trade secrets and confidential information for

24 the benefit of themselves and unknown others, and such use constitutes misappropriation of Mr. 25 22 26

1 Blakes trade secrets and confidential information. 2 128. Mr. Blake has taken reasonable steps to protect his trade secrets and confidential

3 information by instituting confidentiality agreements, filing a United States Patent application, 4 and adopting other procedures regulating the access to, designation of, and dissemination of his 5 proprietary and confidential information. 6 129. Mr. Blake has the right to exclusive ownership, enjoyment, and use of his trade

7 secrets and confidential information. 8 130. Defendants continue to harm Mr. Blake by such misappropriation of trade secrets

9 and confidential information. 10 131. Mr. Blake has suffered direct and consequential harm as a result of Defendants

11 misappropriation of Mr. Blakes trade secrets and confidential information, and is entitled to 12 damages therefor. 13 132. By posting Mr. Blakes proprietary and confidential information on the Internet,

14 the Defendants have misappropriated and publicly disclosed Mr. Blakes trade secrets and 15 confidential information. 16 133. Upon information and belief, Defendants had the ability to implement incremental

17 +-type grading before March 25, 2010, yet choose not to do so. 18 134. Upon information and belief, although PCGS and NGC shared the + element

19 of Mr. Blakes AURA System, PCGS did not license or in any way share the Secure element of 20 Secure Plus with NGC. 21 22 135. 136. Upon information and belief, PCGS started the Collectors Registry in 2001. Upon information and belief, David Hall Rare Coins sold a collection of valuable

23 Secure Plus and + labeled coins in 2011 for over $4,000,000. 24 25 23 26 137. Mr. Blake is an aggrieved party pursuant to G.L. c. 93, 42A.

138.

Upon information and belief, as a result of Defendants misappropriation and

2 disclosure of Mr. Blakes trade secrets and confidential information, Mr. Blake suffered, and 3 continues to suffer, direct harm, including being deprived of his rightful share of the proceeds 4 being derived from the valuable Secure Plus and + numismatic marketplace, and Mr. Blake is 5 thus entitled to damages in an amount to be determined by the trier of the fact after trial. 6 7 8 139. COUNT VIII Unfair Business Practices Pursuant to Massachusetts G. L. c. 266, 91 Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

9 of the Complaint as if fully restated and realleged herein. 10 140. By reason of their wrongful conduct as enumerated herein, including, but not

11 limited to NGCs breach of contract, Defendants conversion, promotion, advertising and 12 commercial exploitation of Mr. Blakes AURA System, and their false and misleading statements 13 in their marketing materials, websites and other communications disseminated throughout the 14 marketplace, Defendants have violated Massachusetts General Laws c. 266, 91. 15 141. Upon information and belief, a reasonable person would have been deceived

16 and/or misled by many of Defendants statements made herein, and related to this case. 17 142. Defendants wrongful conduct is a substantial factor in directly and proximately

18 causing damage as described above to Mr. Blake, and he will continue to be harmed so long as 19 Defendants wrongful conduct continues. 20 21 22 143. COUNT IX Injunctive Relief Mr. Blake hereby realleges and incorporates by reference the foregoing paragraphs

23 of the Complaint as if fully restated and realleged herein. 24 25 24 26 144. Plaintiff demands that Defendants cease the violation of his intellectual property,

1 as described in Counts I VIII above. 2 145. In the absence of cessation of the aforementioned actions, Plaintiff has no

3 adequate remedy at law and hence seeks the above-sought relief, or alternatively, to enjoin any 4 repetition of the objectionable conduct. 5 6 PRAYER FOR RELIEF WHEREFORE, Plaintiff Duane Blake respectfully requests that judgment be entered by

7 this Honorable Court in his favor against the Defendants as follows: 8 1. Awarding Mr. Blake damages including, but not limited to reasonable royalties,

9 compensatory and consequential damages in excess of $6,500,000.00, including prejudgment 10 interest thereon; 11 12 2. 3. Awarding restitution as appropriate for the equitable and common law violations; Awarding treble damages (on the Lanham Act claim) and exemplary damages

13 according to proof; 14 4. Awarding reasonable attorneys fees, expenses and costs incurred in bringing and

15 prosecuting this action; or 16 17 5. 6. Enjoinder of any repetition by Defendants of the objectionable conduct; and Awarding Mr. Blake such other and further relief as the Court may deem just,

18 proper and equitable. 19 JURY TRIAL DEMANDED. 20 Mr. Blake hereby requests a trial by jury on all claims so triable. 21 22 23 24 25 25 26 Respectfully submitted, Plaintiff, Duane C. Blake, By his counsel,

1 2 3 4 5 6 August 31, 2011 7 Of Counsel: 8 Kevin T. Duffy, Jr., Esq. Gary G. Staab, Esq. 9 Duffy & Staab - Attorneys at Law 10 Glenville Street 10 Greenwich, CT 06820 (203) 531-3300 11 David L. Ganz, Esq. 12 Jerrietta R. Hollinger, Esq. Ganz & Hollinger, P.C. 13 1394 Third Avenue New York, NY 10075 14 (212) 517-5500 15 16 17 18 19 20 21 22 23 24 25

/s/ Lawrence G. Cetrulo Lawrence G. Cetrulo, Esq. BBO # 080000 Michael A. Capuano, Esq. BBO # 670389 Cetrulo & Capone LLP Two Seaport Lane, 10th Floor Boston, MA 02210 Tel: (617) 217-5500 Fax: (617) 217-5200

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