IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA Case No: 12-cv-21686

TRACFONE WIRELESS, INC., a Delaware Corporation, Plaintiff, v. RATES TECHNOLOGY, INC., a Delaware corporation, Defendant. _________________________________________/ COMPLAINT FOR DECLARATORY JUDGMENT Plaintiff, TracFone Wireless, Inc. (TracFone), a Delaware corporation, sues Defendant Rates Technology, Inc. (RTI), and states as follows: NATURE OF THE CASE 1. This is an action for, inter alia, declaratory relief, arising under the Patent Act of

the United States, 35 U.S.C. 1, et seq., and the Declaratory Judgment Act, 28 U.S.C. 2201 and 2202. 2. As set forth herein, RTI has created an actual controversy between the parties by

falsely accusing TracFone of patent infringement. PARTIES 3. Plaintiff, TracFone is a Delaware corporation with its principal place of business

located in Miami-Dade County, Florida. 4. Defendant RTI is a Delaware corporation with its principal place of business

located at 50 Route 111 # 210, Smithtown, New York 11787.

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TracFone has retained the undersigned attorneys to represent it in this action and

has agreed to pay its attorneys a reasonable fee for their services. JURISDICTION AND VENUE 6. Jurisdiction in this Court is proper pursuant to 28 U.S.C. 1331, 1338(a), 2201

and 2202 because this action for declaratory relief arises from allegations of patent infringement under Title 35 of the United States Code (35 U.S.C. 1 et seq.) and under the Declaratory Judgment Act (28 U.S.C. 2201 and 2202). 7. An actual, justiciable controversy exists between the parties with respect to

alleged infringement of U.S. Patent Nos. 5,425,085 (the 085 Patent) and 5,519,769 (the 769 Patent) (collectively the Patents). Copies of the Patents (with reexamination certificates) are attached as Exhibit A and Exhibit B, respectively. RTI sent a patent infringement notice to TracFone on March 23, 2012 contending that TracFones products, services and functionalities clearly infringe the Patents. TracFone contends that it has the right to use, sell and/or offer to sell products, services and functionalities in the United States without a license from RTI for any of the Patents. RTIs actions against TracFone demonstrate its intent to enforce the Patents against TracFone and have created a reasonable apprehension in TracFone that it will face a patent infringement suit by RTI. RTIs actions threaten to cause substantial damage to TracFone within this District. 8. RTIs prior litigation of the Patents against many other entities supports

TracFones reasonable apprehension that RTI will file a lawsuit against TracFone alleging infringement of the Patents. 9. RTI has sued many other companies for infringement of the Patents. Since 2006

alone, such lawsuits include, without limitation, the following:

a. Rates Technology Inc. v. Level 3 Communications, Inc., 1:2011-cv03254, in the U.S. District Court for the Southern District of New York; b. Rates Technology Inc. v. METROPCS Communications, Inc., 1:2011-cv03255, in the U.S. District Court for the Southern District of New York; c. Rates Technology Inc. v. Cox Communications, Inc., 1:2011-cv-01324, in the U.S. District Court for the Southern District of New York; d. Rates Technology Inc. v. Mediacom Communications Corp., 1:2010-cv09449, in the U.S. District Court for the Southern District of New York; e. Rates Technology Inc. v. Megapath Inc., 1:2010-cv-06396, in the U.S. District Court for the Southern District of New York; f. Rates Technology Inc. v. j2 Global Communications, 1:2010-cv-04527, in the U.S. District Court for the Southern District of New York; g. Rates Technology Inc. v. HTC Corp. et al., 1:2009-cv-10385, in the U.S. District Court for the Southern District of New York; h. Rates Technology Inc. v. Hawk Communications LLC, 1:2009-cv-10386, in the U.S. District Court for the Southern District of New York; i. Rates Technology Inc. v. RCN Corp., 1:2009-cv-04445, in the U.S. District Court for the Southern District of New York; j. Rates Technology Inc. v. Viper Intl LLC, 1:2009-cv-04068, in the U.S. District Court for the Southern District of New York; k. Rates Technology Inc. v. Paetec Holding Corp., 1:2009-cv-01594, in the U.S. District Court for the Southern District of New York; l. Rates Technology Inc. v. Callcentric, Inc. et al., 1:2008-cv-10731, in the U.S. District Court for the Southern District of New York; m. Rates Technology Inc. v. Arbinet-Thexchange, Inc., 1:2008-cv-08213, in the U.S. District Court for the Southern District of New York; n. Rates Technology Inc. v. Sipmedia Enterprises LLC, 1:2008-cv-08050, in the U.S. District Court for the Southern District of New York; o. Rates Technology Inc. v. Cordia Corp. et al., 1:2008-cv-05782, in the U.S. District Court for the Southern District of New York; p. Rates Technology Inc. v. Netgear, Inc., 1:2008-cv-05783, in the U.S. District Court for the Southern District of New York;

q. Rates Technology Inc. v. Voip Your Life, LLC, 1:2008-cv-05510, in the U.S. District Court for the Southern District of New York; r. Rates Technology Inc. v. VOIP.com, 1:2008-cv-05477, in the U.S. District Court for the Southern District of New York; s. Rates Technology Inc. v. Fonality, Inc., 2:2008-cv-00853, in the U.S. District Court for the Eastern District of New York; t. Rates Technology Inc. v. HostRocket.com, Inc., 2:2008-cv-00644, in the U.S. District Court for the Eastern District of New York; u. Rates Technology Inc. v. Qwest Communications Co. et al., 1:2007-cv00442, in the U.S. District Court for the District of Delaware; v. Rates Technology Inc. v. Primus Telecommunications Inc. et al., 1:2007cv-00441, in the U.S. District Court for the District of Delaware; w. Rates Technology Inc. v. Time Warner Telecom Inc., 2:2006-cv-05243, in the U.S. District Court for the Eastern District of New York; x. Rates Technology Inc. v. Net2phone, Inc. et al., 2:2006-cv-03604, in the U.S. District Court for the Eastern District of New York; and y. Rates Technology Inc. v. VTech Communications, Inc., 2:2006-cv03116, in the U.S. District Court for the Eastern District of New York. 10. RTI has also previously filed patent infringement lawsuits in this District

concerning patents in the same field of use, e.g. Rates Technology, Inc v. Florida First Phones, et al, 95-06069, in the U.S. District Court for the Southern District of Florida, thereby subjecting itself to jurisdiction in the Southern District of Florida. 11. RTI conducts continuous and substantial business in this District, and has

intentionally engaged in contacts with Florida involving the Patents. These Florida contacts include negotiating and entering into and receiving compensation for license agreements, settlement agreements, and agreements involving a license or covenant not to sue under the Patents. TracFone expects to uncover evidence of additional transactions by RTI through the discovery process in this lawsuit. Further, RTI has initiated at least one patent infringement action in this District, therefore voluntarily availing itself to jurisdiction in this District. 4

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RTI is subject to the personal jurisdiction of this Court pursuant to the following

Florida Statutes: (i) section 48.193(1)(f)(1) because RTI has threatened actions which will cause injury to persons within this State arising out of an act or omission by RTI outside of this State while RTI was engaged in solicitation of service activities within this State; (ii) section 48.193(1)(f)(2) because RTI has threatened actions which will cause injury to persons within this State arising out of an act or omission by RTI outside of this State while products, materials, or things processed, or serviced, by RTI were used or consumed within this State in the ordinary course of commerce, trade, or use; and (iii) section 48.193(2) because RTI has engaged in substantial and not isolated activity within this State. 13. Venue is proper in this Court pursuant to 28 U.S.C. 1391(b) because a

substantial part of the events or omissions giving rise to the claim occurred in this District, the impact of RTIs threats occurred in this District, and RTI is subject to personal jurisdiction in this District. FACTUAL BACKGROUND 14. RTI alleges that it is the owner of the Patents and that it has the right to sue

TracFone for any infringements of the Patents. 15. The 085 Patent issued on June 13, 1995 and is entitled Least Cost Routing

Device for Separate Connection into Phone Line. 16. The 769 Patent issued on May 28, 2002 and is entitled Method and System for

Updating a Call Rating Database. Subsequently, a reexamination certificate issued on May 28, 2002.

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In view of the allegations in RTIs March 23, 2012 letter, RTI contends that

certain (but as yet unspecified) products, services and functionalities relating to TracFones business model infringe the Patents within the United States. TRACFONES BUSINESS MODEL 18. TracFone is the largest provider of prepaid wireless telephone service in the

United States, and markets its service under the TracFone, NET10, SafeLink Wireless, and Straight Talk brands. 19. TracFones business model enables its customers to prepay for TracFones

Prepaid Wireless Service by purchasing TracFone prepaid airtime and specially manufactured wireless phones. Customers load airtime minutes into their TracFone prepaid phones using codes generated from PIN numbers associated with the TracFone prepaid airtime, or via TracFones website or toll-free customer service phone number. 20. TracFone prepaid phones and airtime are sold online and also through major

national retailers such as Wal-Mart, Target, and Best Buy. 21. TracFone is considered a Mobile Virtual Network Operator or MVNO in the

wireless industry. TracFone is not a facilities-based wireless provider like AT&T, Verizon, TMobile or Sprint/Nextel. Rather, TracFone contracts with facilities-based wireless providers to purchase airtime on their networks for use by TracFones customers. 22. TracFone does not manufacture mobile phones. Instead, TracFone purchases

mobile phones from third party manufacturers and resells them for use on TracFones prepaid wireless service. 23. A list of the mobile phones that TracFone has sold is attached as Exhibit C

(collectively, TracFone Phones).

RTIS PATENTS 24. The Patents disclose a device designed to connect between a traditional wired

telephone and a wall jack. Upon placing a call, the device consults an internal database to determine which carrier has the least expensive rates for the call. The device then places the call, inserting tones to select the least expensive carrier. Methods and systems of periodically

updating the internal database on the device are also disclosed. 25. TracFone sells only cellular telephones and does not sell landline phones that plug

into wall jacks. 26. TracFones products and services do not include devices intended to enable

telephones to select the least expensive carrier for a given call. 27. Each of the cellular telephones sold by TracFone is activated on a single

underlying carriers network. The TracFone Phones do not select among carriers based on the cost as is discussed in the Patents. 28. The patent claims of the 085 Patent, as amended during reexamination, are

directed to devices for routing telephone calls and recite numerous limitations not included in any device manufactured, imported or sold by TracFone, including without limitation: a. housings forming an enclosure and comprising a first jack means for connection to a telephone and a second jack means for connection to a network; or b. databases for storing billing rate parameters for determining a least cost communication path for a given call based on the telephone number being called. 29. The patent claims of the 769 Patent, as originally issued and as amended during

reexamination, are directed to methods and systems for updating a database that stores billing rate parameters for a call rating device used for cost determination, including the device discussed in the 085 Patent. 7

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The method claims of the 769 Patent recite numerous limitations not practiced by

TracFone, including, without limitation: a. calling or connecting at a predetermined date and time a call rating device and a rate provider; or b. transmitting the date and time of the last update of the billing rate parameters stored on that device. 31. The system claims of the 769 Patent recite numerous limitations not practiced by

TracFone, including, without limitation: a. providing or using a call rating updating system as described in the 769 Patent; b. providing or using a system that comprises a call rating device including a database that stores current updated billing rate parameters used for cost determinations for a calling station; or c. providing or using a system that comprises a rate provider as described in the 769 Patent. 32. With the exception of the pre-paid billing features offered by TracFone, the

TracFone Phones operate in the same manner as other non-pre-paid cellular phones, including operating on the same cellular networks. 33. The TracFone Phones do not select among carriers based on price, on a call-by-

call basis, as is discussed and claimed in the Patents. RTIS THREATS 34. On or about March 12, 2012, Jerry Weinberger, RTIs president and the inventor

of the Patents, called Kenneth H. Oh, Esq., TracFones Intellectual Property Corporate Counsel

at TracFones headquarters office in Miami, Florida. During this call, Jerry Weinberger alleged that TracFone is infringing the Patents. 35. Following up on his telephone call to TracFone, RTI sent a letter to TracFone in

Miami, Florida, on March 23, 2012, and again alleged that TracFone is infringing the Patents. TracFone replied to RTI with a response letter sent from its Miami headquarters dated April 19, 2012. 36. On or about April 23, 2012, Kenneth H. Oh received a voice mail message in his

office at TracFones Miami, Florida headquarters from Gerald Weinberger regarding the April 19, 2012 response letter. The voice mail message expressed that the response letter was insulting and that TracFone can expect to be served with a lawsuit. RTI also threatened to sue TracFone suppliers, including WalMart, unless TracFone agreed to pay for a covenant not to be sued by RTI. 37. On or about April 24, 2012, Jerry Weinberger left another message for Kenneth

H. Oh at his office in Miami, Florida stating that Weinberger is meeting with his board of directors. 38. Despite requests from TracFone for an explanation as to which TracFone

products, services or practices infringe individual claims of the Patents, and an explanation as to where the various claim elements can be found in TracFone products and services, RTI has failed and refused to provide to TracFone the basis for its allegation that TracFone is liable for infringing one or more claims of the Patents. 39. TracFone denies RTIs contentions. An actual controversy exists as to whether

TracFone infringes either of the Patents. Absent a declaration of non-infringement, RTI will

continue to wrongfully assert the Patents against TracFone and its suppliers, causing TracFone irreparable harm. RTI has also threatened to assert claims against TracFones major national retailers, in order to jeopardize TracFones relationships with its retailers and to force TracFone to capitulate to RTIs demands. COUNT I DECLARATION OF NON-INFRINGEMENT OF U.S. PATENT NO. 5,425,085 40. reference. 41. 42. RTI has asserted that TracFone has infringed the 085 Patent. TracFone has not infringed, is not now infringing, and will not infringe, either The allegations of the preceding paragraphs 1-39 are repeated and incorporated by

directly, contributorily, or by inducement, any claim of the 085 Patent. 43. TracFone does not directly infringe the 085 Patent because TracFone does not

manufacture, import, sell or use devices, including without limitation the TracFone Phones, that include all of the elements required by any of the claims of the 085 Patent. 44. Further, TracFone has not contributed to the alleged infringement of the 085

Patent by others, and has not actively induced the alleged infringement of the 085 Patent by others. 45. An actual and justiciable controversy exists between TracFone and RTI with

respect to the alleged infringement of the 085 Patent. 46. TracFone is entitled to a declaratory judgment: (i) that TracFone does not infringe

the 085 Patent; (ii) that TracFone has not contributed to infringement of the 085 Patent; and (iii) that TracFone has not actively induced the alleged infringement of the 085 Patent.

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COUNT II DECLARATION OF NON-INFRINGEMENT OF U.S. PATENT NO. 5,519,769 47. reference. 48. 49. RTI has asserted that TracFone has infringed the 769 Patent. TracFone has not infringed, is not now infringing, will not infringe, either The allegations of the preceding paragraphs 1-39 are repeated and incorporated by

directly, contributorily, or by inducement, any claim of the 769 Patent. 50. TracFone does not directly infringe the method claims 769 Patent because

TracFone does not perform the steps required by those claims. 51. TracFone does not directly infringe the system claims of the 769 Patent because

TracFone does not manufacture, use, sell or import systems that include all of the elements required by those claims. 52. Further, TracFone has not contributed to the alleged infringement of the 769

Patent by others, and has not actively induced the alleged infringement of the 769 Patent by others. 53. An actual and justiciable controversy exists between TracFone and RTI with

respect to the alleged infringement of the 769 Patent. 54. TracFone is entitled to a declaratory judgment: (i) that TracFone does not infringe

the 769 Patent; (ii) that TracFone has not contributed to infringement of the 769 Patent; and (iii) that TracFone has not actively induced the alleged infringement of the 769 Patent. Wherefore, TracFone respectfully requests this Court for a final judgment: A. Declaring that U.S. Patent No. 5,425,085 is not infringed, contributorily infringed,

or infringed through inducement by TracFone; B. Declaring that U.S. Patent No. 5,519,769 is not infringed, contributorily infringed,

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or infringed through inducement by TracFone; C. Awarding to TracFone such further and additional relief, as this Court may deem

just and proper, including but not limited to an award of reasonable attorneys fees, costs and expenses incurred by TracFone as recoverable under applicable law, including without limitation 35 U.S.C. 284 and 285. DEMAND FOR JURY TRIAL Plaintiff TracFone hereby demands a trial by jury on all triable issues.

Dated: May 3, 2012

By: ________________________ Steven J. Brodie (FL Bar # 333069) Email: sbrodie@carltonfields.com Aaron S. Weiss (FL Bar # 48813) Carlton Fields, P.A. 100 Southeast Second Street, Suite 4200 Miami, Florida 33131 Telephone No. (305) 530-0050 Facsimile No. (305) 530-0055 James B. Baldinger (FL Bar # 869899) Email: jbaldinger@carltonfields.com Carlton Fields, P.A. 525 Okeechobee Boulevard, Suite 1200 West Palm Beach, Florida 33401 Telephone No. (561) 659-7070 Facsimile No. (561) 659-7368 Attorneys for Plaintiff

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