IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION PETRA MICHAEL, an individual,

Plaintiff, v. JAMES A. BELL, an individual, and JAB DISTRIBUTORS LLC, an Illinois Limited Liability Company, Defendants. ) ) ) ) ) ) ) ) ) ) )

Case No. 1:11-cv-04484 Jury Trial Demanded

COMPLAINT Now comes the Plaintiff, PETRA MICHAEL, by her attorneys Carmen D. Caruso and Gary D. Abrams, and for her complaint against Defendants James A. Bell and JAB Distributors, LLC, alleges and states as follows: Nature Of The Case 1. This is an action for fraud and theft of intellectual property that a

company known to the public as Protect-A-Bed (Defendant JAB Distributors LLC d/b/a Protect-A-Bed) perpetrated against one of its former sales agents, Petra Michael (formerly Petra Minoff), who developed a valuable commercial product that was introduced to the public as the Protect-A-Bed Bug Off and later rebranded as the Protect-A-Bed AllerZip mattress and box spring encasements (and referred to herein as the Bed Bug Encasement), as described on the Defendants web page as follows:

Mattress Encasements for Bed Bug Protection

Protect-A-Bed mattress encasements feature our Patented BugLock three-sided zipper system with SecureSeal. Our allergy control bedding is bed bug entry, escape and bite proof for your mattress. Protect-A-Bed AllerZip mattress and box spring encasements are one surefire measure to prevent bed bugs from affecting your life by putting an impenetrable barrier between you and the parasites. In fact, Protect-A-Bed encasements are the only product scientifically proven and independently tested to eliminate bed bugs from bedding. (www.protectabed.com/Mattress_Encasements/subgrouping.htm?cat=30612)

2.

The Bed Bug Encasement was conceived and initially developed by

Petra Michael in 2005 and 2006 while she was an independent contractor doing sales work for the Defendant. Indisputably, Petra Michael alone conceived the idea that was developed into the subsequently patented Bed Bug Encasement product. 3. For example, in a press release issued by Protect-A-Bed on November

8, 2009, the Defendant stated that: Petra Minoff has been instrumental in designing Protect-A-Beds line of bed bug proof encasements, which won the Editors Choice Award in 2007 at the International Hotel/Motel and Restaurant Show (IH/MRS) (See Exhibit A hereto). 4. However, as the result of the Defendants fraudulent scheme that is

alleged herein, Protect-A-Bed became the owner of a U.S. patent (US 7,552,489 B2 hereinafter the 489 Patent) for the Bed Bug Encasement without naming Petra Michael as the inventor, without obtaining the requisite assignment of patent rights, and without compensating her for her valuable idea and her other contributions to the development of this commercially successful product. ProtectA-Bed then harassed and constructively terminated Petra Michael, forcing her out

of the company, leaving Petra Michael with nothing as being the true inventor of the Bed Bug Encasement. 5. Petra Michael seeks to right the wrongs perpetrated by James Bell and

Protect-A-Bed. She seeks a correction of the record at the U.S. Patent & Trademark Office that she is the Inventor (or at a minimum a co-Inventor) of this product. Further, she seeks compensatory damages for economic and other injuries, and punitive damages arising from the Defendants common law fraud, conversion, tortious interference with prospective economic advantage, the intentional infliction of emotional distress, breach of fiduciary duties, and breach of contract. Parties 6. Plaintiff Petra Michael (formerly Petra Minoff) is an individual who

resides in Carlsbad, California. Previously she resided in the State of Illinois. 7. Defendant JAB Distributors LLC (JAB) is a limited liability company

organized under the laws of Illinois and having its principal place of business at 3600 Woodhead Drive, Northbrook, Illinois 60062. JAB does business and is known to the public (inter alia) as Protect-A-Bed. It sells a range of bedding products to the hotel, retail and pest control industries. It recently alleged in this District that it is the owner of all right, title and interest to the 489 Patent (see 1:09 cv-07492, in which JAB brought suit for patent infringement against an entity known as Bedbug.com). 8. Defendant James A. Bell is an individual residing in the State of

Illinois and is the CEO of JAB.

Jurisdiction And Venue 9. This Court has exclusive jurisdiction over the subject matter of this

action under 28 U.S.C. 1331 and 1338(a), as Plaintiff seeks pursuant 35 U.S.C. 256 a correction of the records in the U.S. Patent & Trademark Office. 10. Supplemental jurisdiction exists over Plaintiffs state law claims,

which all arise from the same transactions and occurrences as those claims are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. 11. In addition, on information and belief, the Court also has jurisdiction

over the subject matter of this action under 28 U.S.C. 1332 as the Plaintiff is now a resident of California; and the named Defendants are citizens of Illinois; and on information and belief none of the members of Defendant JAB Distributors LLC are citizens of California. The amount in controversy exceeds $75,000 exclusive of interest or costs. 12. Venue is proper in this District pursuant to 28 U.S.C. 1391 as all

Defendants reside here and the acts and omissions giving rise to these claims alleged occurred primarily within this District. FACTS COMMON TO ALL COUNTS 13. allegations. 14. In 2004, James Bell on behalf of JAB engaged Petra Michael as an Paragraphs 1 through 4 hereinabove are incorporated herein as fact

independent contractor. Her duties and responsibilities were concentrated in the

area of sales. She sold the companys products to hotel industry clients. She was very good at sales and was quite successful. 15. Petra Michaels relationship with James Bell as of 2005, and onwards,

was one of close personal friendship, trust, confidence, and reliance. James Bell was fully aware that Petra Michael had reposed in him her trust and confidence, and that she was relying on him in ways that went beyond any mere business relationship. 16. As an independent contractor, Petra Michael was not subject to any

restrictions that would have precluded her, for her own benefit, from developing new products that could be developed commercially for potential sale to hotel industry or other potential clients. 17. In or about September 2005, while working on her own time, Petra

Michael conceived and developed a new idea for a bed bug encasement for mattresses and box spring covers. The Bed Bug Encasement would soon prove to have substantial appeal in commercial markets such as the hotel industry, and other residential environments such as college dormitories, hospitals, nursing homes, condominium buildings, and private residences. 18. The idea that Petra Michael developed in 2005 was novel, useful, and

not obvious within the meaning of the United States Patent Code. 19. In or about November 2005, after she conceived the idea for the Bed

Bug Encasement, and while she was still an independent contractor, Petra Michael presented her idea for that product to James Bell of JAB. She was interested in

Bells opinion as to whether her potential encasement product would have commercial appeal and whether it would have value to JAB. 20. Petra Michael believed and trusted James Bell in every way. However,

and unknown to Petra Michael at the time, James Bell and JAB would shamelessly exploit Petra Michaels trust and confidence. 21. Beginning in the fall of 2005 James Bell was very enthusiastic about

Petra Michaels idea and expressed interest in having JAB develop the Bed Bug Encasement. Petra Michael was receptive to the idea of having JAB develop this product. 22. At all times in 2005 and 2006, whenever the idea for the Bed Bug

Encasement was discussed, it was understood and agreed by James Bell and Petra Michael, both expressly and impliedly, that Petra Michael originated this idea and that she would be financially rewarded if the product became successful. Further, both James Bell and Petra Michael were very confident and optimistic that the Bed Bug Encasement would become successful. James Bell repeatedly told Petra Michael that the Bed Bug Encasement was going to make her a very wealthy woman. 23. As alleged, the relationship between James Bell and Petra Michael as

of 2005, and onwards, was one of trust, confidence, and friendship. Petra Michael had no reason at the time to suspect that James Bell would soon defraud her.

24.

After learning of Petra Michaels idea for the Bed Bug Encasement,

James Bell raised the subject of having JAB employ Petra Michael instead of remaining as an independent contractor. Petra Michael was receptive to this idea. 25. In late 2005 and early 2006, while still an independent contractor,

Petra Michael continued to work to work on the refinement of her idea for the Bed Bug Encasement. She sought the opinions of researchers and others in the industry. She devoted substantial time and energy to this project, on her own time. 26. By early 2006, it was time to develop a prototype and to test the Bed

Bug Encasement. 27. By April or May of 2006, Petra Michael and JAB developed a first

version of the Bed Bug Encasement and brought a first version of the Bed Bug Encasement to market. The first customer was EZ Hotel Group in San Diego. This sale was for $100,000 (or approximately that amount). Petra Michael received a commission on the sale. The balance of the $100,000 was re-invested in the Bed Bug Encasement. 28. The $100,000 sale to EZ Hotel Group generated great excitement.

James Bell repeatedly told Petra Michael on this and other occasions that she was going to become a very wealthy woman as the Bed Bug Encasement took off. 29. After the sale to EZ Hotel Group, Petra Michael and JAB discussed

making further improvements to the Bed Bug Encasement, including how to improve the zipper end stop. Additional testing was planned.

30.

In May or June of 2006, Bell stated that JAB would need for Petra

Michael to sign a written employment agreement with JAB. Petra Michael agreed that an employment contract would make sense so long as it was fair. She fully expected at this time that she would be compensated as the originator of the Bed Bug Encasement in addition to being compensated for her work in sales. 31. In the same discussion(s) about the creation of a written employment

agreement, Petra Michael offered to invest some of her own money into the development of the Bed Bug Encasement, but Bell said that would not be necessary. 32. In June 2006, Petra Michael on behalf of JAB made arrangements for

a public relations firm to announce our newest product Protect-A-Bed Bed Bug Encasement fully encased mattress and box spring covers which are certified to be bed bug proof. This is the Bed Bug Encasement that Petra Michael had developed while she was still an independent contractor. 33. Petra Michael not only conceived the idea for the Bed Bug

Encasement, she sewed many of the prototypes herself. 34. On or about June 14, 2006, James Bell called Petra Michael to his

office in Northbrook and showed her an employment agreement that he had prepared. This draft contained certain language pertaining to the work for hire doctrine, whereby products or ideas developed by an employee become the property of the employer. She discussed this language with Bell, who reassured her that she would be compensated and treated fairly and compensated if her product was a

commercial success. Bell repeated that Petra Michael was going to become a very wealthy woman. 35. On July 5, 2006, in reliance on Bells assurances, Petra Michael signed

a slightly revised version of the employment agreement that JAB had tendered. To induce her signature, Bell reiterated that the Bed Bug Encasement was Petra Michaels baby and that she would reap the rewards as the Bed Bug Encasement became a huge success. 36. In signing the July 5, 2006 agreement, Petra Michael believed and

trusted Bell and JAB when they repeatedly credited her as the originator of the Bed Bug Encasement, and repeatedly promised her that she would be greatly rewarded as the Bed Bug Encasement became successful, as they both expected. Exactly as Bell and JAB intended, Petra Michael viewed the July 5, 2006 employment agreement as solidifying her relationship to JAB and as the first step to the lucrative rewards that Bell was promising to her. 37. The July 5, 2006 employment agreement, a copy of which is attached

hereto as Exhibit B, had a two-year term, expiring in July 2008. 38. Unknown to Petra Michael when she signed the July 5, 2006

employment agreement, Bell and JAB had no intention of crediting Petra Michael financially as the originator or inventor of the Bed Bug Encasement. Bell, speaking for himself and for JAB, made all of those promises and representations for the purpose of convincing Petra Michael to sign the employment agreement, which included a work for hire clause that Bell and JAB intended to rely upon to claim

ownership of Petra Michaels idea for themselves, even though the origination of this idea pre-dated the employment contract. Bell and JAB had formed a specific intent to defraud Petra Michael and they viewed this employment agreement as a critical step in the commission of their fraud. 39. After July 5, 2006, Petra Michael fully performed all of her obligations

to JAB. The Bed Bug Encasement was further refined and Petra Michael earned substantial commissions in selling that product to hotel industry customers. 40. In February 2007, at the companys annual convention, James Bell

announced the Bed Bug Encasement at a meeting of about 90 persons, including the companys staff, independent representatives, manufacturers, and foreign distributors. This announcement was covered in the trade press as follows: The company also introduced its BugOff line of mattress protection products aimed at protecting consumers from bed bugs. The products, which come with "bug-proof zippers," fully encase the mattress and boxspring and keep bed bugs from biting. The products also have a high level of protection against allergens, the company said. (www.furnituretoday.com/article/40006-Protect_A_Bed_beefs_up_team.php) 41. In introducing the Bed Bug Encasement at the February 2007

convention, James Bell told everyone that the Bed Bug Encasement was Petra Michaels idea. The overwhelming consensus at the meeting was that the Bed Bug Encasement was destined for success. Everyone at the meeting to whom she spoke congratulated Petra Michael on her accomplishment.

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42.

Then, on May 31, 2007, James Bell (along with two individuals from

China) applied for a patent for the Bed Bug Encasement, which was based on the idea that Petra Michael had conceived and brought to James Bell and JAB in 2005. That patent (US 7,552,489 B2) was eventually issued by the U.S.P.T.O. on June 30, 2009. A copy of that patent (hereinafter the 489 Patent) is submitted as Exhibit C. The 489 Patent recites that Bell and his co-applicants assigned it to JAB. 43. Neither Bell nor JAB ever sought or obtained from Petra Michael any

assignment of her rights to the 489 Patent. 44. In no uncertain terms, Petra Michael was the Inventor (or at a

minimum a co-Inventor) of this product and she should have been so designated as such to the USPTO. The failure of Bell and JAB to do so was part of their fraud. 45. On July 5, 2008, the July 5, 2006 employment agreement expired by its

terms. In anticipation of that expiration, Petra Michael and James Bell renegotiated some of her compensation terms. Petra Michael obtained an override commission on sales of the Bed Bug Encasement made by others in addition to the commissions that earned on her own sales. Thereafter she was paid both her commissions and her override consistent with this agreement. 46. When the 2006 employment agreement expired and was re-negotiated

in 2008, it was expressly understood and agreed between Petra Michael and James Bell that Petra Michael was to continue to be compensated in relation to the Bed Bug Encasement. Bell continued to assure Petra Michael that she would grow with the company and share in the success of the Bed Bug Encasement. Petra Michael

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wanted a new written agreement, but Bell and JAB declined. However, as Bell granted her the override, Petra Michael was pacified and continued her successful sales efforts for the company. 47. In the summer of 2009, at or about the time the USPTO issued to Bell

the 489 Patent for the Bed Bug Encasement that Petra Michael had originated, and as the full potential of that product became more clear, Bell and JAB initiated a campaign that was intended to drive Petra Michael out of the company. Elements of this campaign, which continued into 2010, included verbal and non-verbal harassment, demoting her, cutting her commissions, and eliminating her overrides on pest division sales. The Defendants intent in initiating this campaign was to deprive Petra Michael of any further financial rewards associated with the Bed Bug Encasement. 48. In July 2010, in response to the Defendants campaign of intentional

harassment, Petra Michael terminated her employment with JAB under duress, and she informed the Defendants at that time that they had committed constructive termination in addition to other wrongs. INJURIES AND DAMAGES 49. As the direct and intended consequence of the conduct of Defendants

James Bell and JAB as alleged herein, Petra Michael has suffered economic damages in an amount to be proven at trial, but not less than $1,000,000 and more likely in excess of $5,000,000 based on reasonable estimates of lost royalty income for the Bed Bug Encasement, and lost sales commissions.

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50.

In addition, and also as the direct and intended consequence of the

conduct of Defendants James Bell and JAB as alleged herein, Petra Michael has suffered professional embarrassment and humiliation, as the manner in which JAB and James Bell stole her idea and then cast her aside is now widely known in the hotel supply industry. The monetary damage to Petra Michaels career and her future earning potential will be proven at trial. 51. In addition, and also as the direct and intended consequence of the

conduct of Defendants James Bell and JAB as alleged herein, Petra Michael has suffered emotional distress for which she sought medical treatment and which has manifested itself in depression, anxiety, and related physical symptoms, and inability to do her best work. CLAIMS FOR PUNITIVE OR EXEMPLARY DAMAGES 52. The conduct of Defendants James Bell and JAB as alleged herein was

willful and the injury and damage that they have inflicted on Petra Michael has been intentional. 53. In addition to paying compensatory damages these Defendants should

be required to pay punitive damages, to the fullest extent of the law, for their intentional tortuous conduct as alleged below in Counts I, II, III, IV and V. 54. The amount of punitive damages should be sufficient to punish these

Defendants, taking into account their income and their assets, and should further be sufficient to deter others from like misconduct.

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COUNT I COMMON LAW FRAUD 55. herein. 56. Defendants JAB and Bell made false statements of material fact to Plaintiff incorporate paragraphs 1 to 54 as though fully set forth

Petra Michael (including without limitation that it was supposedly necessary to structure the parties relationship as an employment relationship, of July 5, 2006, in order to develop the Bed Bug Encasement and bring that product to market) with the intent to deceive Petra Michael. 57. Defendants JAB and Bell made false omissions of material fact to

Petra Michael (including without limitation that they were intending to obtain the patent for the Bed Bug Encasement and reap the rewards of intellectual property ownership for themselves) with the intent to deceive Petra Michael. 58. Defendants JAB and Bell made false promises of future performance to

Petra Michael (that they intended for Petra Michael to be rewarded as the inventor of the Bed Bug Encasement) which they had no intention of performing, as part of their scheme to defraud Petra Michael. 59. The Defendants false representations, omissions and false promises of

future performance were calculated to deceive and were material. 60. Petra Michael reasonably relied on the Defendants false

representations, omissions and false promises of future performance to her detriment.

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61.

As the direct and intended consequence of the Defendants false

representations, omissions and false promises of future performance, Petra Michael has sustained economic and other injuries as alleged hereinabove. 62. The Defendants have exploited and profited from their fraud. They

must be held to account for all damages that they have obtained or will obtain through the entry of judgment in this case. 63. In addition, unless this fraud is undone, the Defendants will continue

to profit from their fraud, and Petra Michael will suffer additional damages in amounts to be proven at trial. COUNT II CONVERSION 64. herein. 65. Petra Michael had the sole right to her idea for the Bed Bug Plaintiff incorporates paragraphs 1 to 63 as though fully set forth

Encasement and all confidential and proprietary information related thereto. 66. Bell and JAB wrongfully gained access to, and control over, this

intellectual property that rightfully belongs to Petra Michael. 67. In applying for and obtaining the 489 Patent, the Defendants

wrongfully converted the intellectual property of Petra Michael to themselves. 68. As the direct and intended consequence of the Defendants conversion,

Petra Michael has sustained economic and other injuries as alleged hereinabove.

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69.

The Defendants have exploited and profited from their conversion of

intellectual property that belonged to Petra Michael. They must be held to account for all damages that they have obtained or will obtain through the entry of judgment in this case. 70. In addition, unless this conversion is undone, the Defendants will

continue to profit from their intentional tort, and Petra Michael will suffer additional damages in amounts to be proven at trial. COUNT III TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE 71. herein. 72. Petra Michaels exclusive rights to the Bed Bug Encasement, which Plaintiff incorporates paragraphs 1 to 70 as though fully set forth

she never assigned to anyone, had a high probability of economic benefit to Petra Michael. She was likely to enter into valid business relationships such as by licensing her invention to third parties. 73. Bell and JAB had knowledge of the existence of the likelihood that

Petra Michael stood likely to gain substantial economic advantage through her relationships to third parties with respect to the Bed Bug Encasement. 74. Armed with that knowledge, and through the conduct alleged herein,

Bell and JAB intentionally and unjustifiably interfered with Petra Michaels reasonable expectations of developing highly profitable licensing arrangements with third parties.

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75.

As the direct and intended consequence of the Defendants intentional

interference, Petra Michael has sustained economic and other injuries as alleged hereinabove. 76. The Defendants have exploited and profited from their intentional

interference with Petra Michaels prospective economic advantages. They must be held to account for all damages that they have obtained or will obtain through the entry of judgment in this case. 77. In addition, unless this intentional tort is undone, the Defendants will

continue to profit from their intentional tort, and Petra Michael will suffer additional damages in amounts to be proven at trial. COUNT IV BREACH OF FIDUCIARY DUTY 78. herein. 79. Because of this special trust and confidence that Petra Michael had Plaintiff incorporates paragraphs 1 to 77 as though fully set forth

reposed in him, as alleged herein, James Bell assumed the status of a fiduciary to Petra Michael. 80. In engaging in the conduct alleged herein, and while acting for himself

and for JAB, James Bell breached fiduciary duties to Petra Michael. 81. As the direct and intended consequence of Bells breach of fiduciary

duty, Petra Michael has sustained economic and other injuries as alleged hereinabove.

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82.

The Defendants have exploited and profited from Bells breach of

fiduciary duty. They must be held to account for all damages that they have obtained or will obtain through the entry of judgment in this case. 83. In addition, unless this breach is undone, the Defendants will continue

to profit from their intentional tort, and Petra Michael will suffer additional damages in amounts to be proven at trial. COUNT V INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS 84. herein. 85. The Defendants conduct was outrageous in the extreme, and in Plaintiff incorporates paragraphs 1 to 83 as though fully set forth

engaging in this conduct, the Defendants intentionally and recklessly inflicted severe emotional distress on Petra Michael. 86. Petra Michaels damages for the intentional infliction of emotional

distress will be proven at trial. COUNT VI BREACH OF CONTRACT 87. herein. 88. In July 2008 the parties reached a verbal agreement for the Plaintiff incorporates paragraphs 1 to 86 as though fully set forth

compensation of Petra Michael as the person who conceived, originated and contributed to the development of the Bed Bug Encasement. This agreement

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included an override commission by which Petra Michael would earn compensation based on the sales efforts of others. As such this provision was not dependent on her continued services to the company. This provision was part of the express and implied agreement between Petra Michael and JAB that her compensation for being the person who originated the Bed Bug Encasement would continue as long as JAB sold this product. There was never any contrary understanding or agreement that would have allowed JAB to terminate Petra Michael and keep all of the compensation derived from this product for itself. 89. JAB breached its express and implied agreement with Petra Michael

when it constructively terminated her employment and stopped paying her for her overrides and deprived her of the opportunity to earn commissions on the product she originated. 90. Petra Michaels damages for breach of contract will be proven at trial. COUNT VII CORRECTION OF INVENTORSHIP OF THE PATENT 91. herein. 92. Pursuant to 35 U.S.C. 256, the Court should enter an order issued to Plaintiff incorporates paragraphs 1 to 90 as though fully set forth

the Commissioner of Patents declaring that Petra Michael is the true inventor of the claims set forth in the 489 Patent.

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93.

In the alternative, the Court should enter an order issued to the

Commissioner of Patents declaring that Petra Michael is a co-inventor of the claims set forth in the 489 Patent. JURY DEMAND 94. Plaintiff Petra Michael demands trial by jury on Counts I through VI

of her Complaint. PRAYER FOR RELIEF WHEREFORE, Plaintiff Petra Michael demands that judgment be entered in her favor and against Defendants James A. Bell and JAB Distributors LLC: A. Awarding the Plaintiff such damages to fully compensate her for

the economic and non-economic injuries that she has sustained in such amounts as may be proven at trial. B. Awarding the Plaintiff punitive or exemplary damages to the

fullest extent permitted by law. C. Entering such declaratory and equitable relief that may be

available to right the wrongs that have been alleged herein and which may prevent the occurrence of additional damages. D. July 1, 2011 Award the Plaintiff her costs of suit and attorneys fees. Respectfully submitted, PLAINTIFF: Petra Michael, By: /s/ Carmen D. Caruso One of Her Attorneys

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Carmen D. Caruso #6189462 Caruso Kaplan LLC 77 West Wacker Drive, Suite 4800 Chicago, Illinois 60601 Direct: (312) 606-8640 cdc@carusokaplan.com

Gary D. Abrams Gary D. Abrams & Associates, Ltd. 55 W. Monroe Street, Suite 1200 Chicago, Illinois 60603 Direct: (312) 957-8072 gda44@comcast.net

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