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Biomed's Product, Assets & Trademark Shanghaied by Former Member of Board.

CHICAGO, June 29, 2009 -- Chicago-based Medicilon Inc. filed suit today in the U.S. District Court for the Northern District of Illinois when a former member of its board of directors established a competing business selling the same organic reagent under a similar name.

Medicilon was founded in 2003 by Dr. Chun-Lin Chen, Dr. Jintao Zhang, and the defendant Mao Chen. At the time of incorporation, Mr. Chen became a director, shareholder,
and Vice President whose primary responsibility was sales and distribution of the company's organic reagent product used by purchasers to help develop or design candidates for new drugs. A biologic reagent known as M9 is one of the principal products marketed, sold, and distributed by Medicilon.

Medicilon owns a 30% interest in a Chinese corporation, Shanghai Medicilon, which develops and manufactures in bulk the biologic reagents marketed, sold, and distributed by the Chicago outfit. Once Shanghai Medicilon has completed the development and manufacture of the biologic reagent, it ships the finished product to Chicago.

Marketing primarily consisted of appearing at trade shows, visiting clients in the United States, and making calls and sending emails to U.S. clients. However, Medicilon also operates websites at mediciloninc.com, medicilon-mpi.com, and at its China-based site, medicilon.com.cn. These websites all prominently feature the MEDICILON trademark. While Mr. Chen was an employee of Medicilon, he was instructed to register the domain name www.medicilon.com and publish a web site at the address for the benefit of the company.

While an employee, Mr. Chen was also instructed to open a bank account with JPMorgan Chase Bank to serve as the depository for all sales income.

In the compliant, Mr. Chen is accused of starting his own competing business in or around May, 2008 by causing a recruitment letter to be sent to employees of Shanghai Medicilon and successfully securing 14 of them. Mr. Chen then allegedly directed the employees he recruited to
procure property belonging to Shanghai Medicilon when they left employment with that company. As a result, those employees removed from Shanghai Medicilon, and Mr. Chen
acquired, test tubes containing biologic reagents, cell lines, and other products developed or being developed by Shanghai Medicilon, including the biologic reagent M9.

In June 2008, Mr. Chen resigned as director and Vice President of Medicilon and formally began his new company in Hong Kong under the name Viva Biotech, which was officially created by Mr. Chen's sibling, and operates his primary office in the Chicago area which sell organic reagents including M9..

Mr. Chen did register the domain name www.medicilon.com and publish a web site at that address, but the site promotes his new business and can not be accessed by Medicilon.

According to the complaint, Mr. Chen also retained a list of Medicilon customers before his departure. An investigation also revealed that the bank account JPMorgan Chase was created in his own name, using his own home address and, therefore, giving Mr. Chen sole access to this account. Before his resignation, Mr. Chen also allegedly used $75,000 belonging to Medicilon to purchase an x-ray diffractmeter which was delivered in pieces at Mr. Chen's direction, with the most expensive components being in the possession of Mr. Chen.

Currently, Mr. Chen is still a shareholder of Medicilon, Inc.

The pleading filed by Medicilon contains causes of action based on unfair competition under the Lanham Act, cybersquatting, unfair business practices under Illinois law, unfair business practices under the Uniform Deceptive Trade Practices Act, conversion, tortious interference with prospective economic advantage, breach of duty of loyalty, breach of duty of care, trade secret misappropriation.

The pleading contains no assertion that MEDICILON is a registered trademark, but it does contain a claimed date of first use. While the complaint does not contain a count for trademark infringement, it does request an injunction prohibiting Mr. Chen from using MEDICILON because it is likely to cause confusion, mistake, or to deceive as to the affiliation, connection, or association between the parties which regard to the source of organic reagents.

The primary purpose of trademark infringement laws is to prevent consumer confusion regarding the source of goods and services. The first party to use a trademark has the superior claim of ownership. as such, they may prohibit other parties from using a mark subsequently on connection with similar goods or services. The marks do no have to be identical, but merely similar enough that they are likely to cause confusion.

Benefits of registered a trademark include, but are not limited to, the ability to recovery attorneys fees, statutory damages for willful infringement, constructive notice of use, and prima facie evidence of ownership.



Notables.
News. Biomed's Product, Assets & Trademark Shanghaied by Former Member of Board. CHICAGO, June 29, 2009 -- Chicago-based Medicilon Inc. filed suit today in the U.S. District Court for the Northern District of Illinois when a former member of its board of directors established a competing business selling the same organic reagent under a similar name. Medicilon was founded in 2003 by Dr. Chun-Lin Chen, Dr. Jintao Zhang, and the defendant Mao Chen. At the time of incorporation, Mr. Chen became a director, shareholder, and Vice President whose primary responsibility was sales and distribution of the company's organic reagent product used by purchasers to help develop or design candidates for new drugs. A biologic reagent known as M9 is one of the principal products marketed, sold, and distributed by Medicilon. Medicilon owns a 30% interest in a Chinese corporation, Shanghai Medicilon, which develops and manufactures in bulk the biologic reagents marketed, sold, and distributed by the Chicago outfit. Once Shanghai Medicilon has completed the development and manufacture of the biologic reagent, it ships the finished product to Chicago. Marketing primarily consisted of appearing at trade shows, visiting clients in the United States, and making calls and sending emails to U.S. clients. However, Medicilon also operates websites at mediciloninc.com, medicilon-mpi.com, and at its China-based site, medicilon.com.cn. These websites all prominently feature the MEDICILON trademark. While Mr. Chen was an employee of Medicilon, he was instructed to register the domain name www.medicilon.com and publish a web site at the address for the benefit of the company. While an employee, Mr. Chen was also instructed to open a bank account with JPMorgan Chase Bank to serve as the depository for all sales income. In the compliant, Mr. Chen is accused of starting his own competing business in or around May, 2008 by causing a recruitment letter to be sent to employees of Shanghai Medicilon and successfully securing 14 of them. Mr. Chen then allegedly directed the employees he recruited to procure property belonging to Shanghai Medicilon when they left employment with that company. As a result, those employees removed from Shanghai Medicilon, and Mr. Chen acquired, test tubes containing biologic reagents, cell lines, and other products developed or being developed by Shanghai Medicilon, including the biologic reagent M9. In June 2008, Mr. Chen resigned as director and Vice President of Medicilon and formally began his new company in Hong Kong under the name Viva Biotech, which was officially created by Mr. Chen's sibling, and operates his primary office in the Chicago area which sell organic reagents including M9.. Mr. Chen did register the domain name www.medicilon.com and publish a web site at that address, but the site promotes his new business and can not be accessed by Medicilon. According to the complaint, Mr. Chen also retained a list of Medicilon customers before his departure. An investigation also revealed that the bank account JPMorgan Chase was created in his own name, using his own home address and, therefore, giving Mr. Chen sole access to this account. Before his resignation, Mr. Chen also allegedly used $75,000 belonging to Medicilon to purchase an x-ray diffractmeter which was delivered in pieces at Mr. Chen's direction, with the most expensive components being in the possession of Mr. Chen. Currently, Mr. Chen is still a shareholder of Medicilon, Inc. The pleading filed by Medicilon contains causes of action based on unfair competition under the Lanham Act, cybersquatting, unfair business practices under Illinois law, unfair business practices under the Uniform Deceptive Trade Practices Act, conversion, tortious interference with prospective economic advantage, breach of duty of loyalty, breach of duty of care, trade secret misappropriation. The pleading contains no assertion that MEDICILON is a registered trademark, but it does contain a claimed date of first use. While the complaint does not contain a count for trademark infringement, it does request an injunction prohibiting Mr. Chen from using MEDICILON because it is likely to cause confusion, mistake, or to deceive as to the affiliation, connection, or association between the parties which regard to the source of organic reagents. The primary purpose of trademark infringement laws is to prevent consumer confusion regarding the source of goods and services. The first party to use a trademark has the superior claim of ownership. as such, they may prohibit other parties from using a mark subsequently on connection with similar goods or services. The marks do no have to be identical, but merely similar enough that they are likely to cause confusion. Benefits of registered a trademark include, but are not limited to, the ability to recovery attorneys fees, statutory damages for willful infringement, constructive notice of use, and prima facie evidence of ownership.
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