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Lawyers, other representatives, expert(s), tribunal’s secretary

Preliminary Arbitration Award


These arbitration proceedings have been instituted by Lund Trading, LCC (in the following referred to as Lund Trading) against Zen Capital and Lise Aagaard Copenhagen A/S (in the following collectively referred to as Aagaard) by submitting statement of complaint of 4 March 2011 to the Danish Institute of Arbitration, and received by the institute on 7 March 2011.
The matter pertains to a dispute between the parties concerning their contractual relationship under a "Sole distribution agreement" of 17 February 2004 (Exhibit 1) (in the following referred to as the Agreement), according to which Lund Trading obtained the exclusive right to sell Aagaard's jewelry line "Troldekugler" ("Trollbeads") throughout the North American market. Clause 9.0 of the Agreement contains the following provisions:

"9.0 Governing Law and Venue

9.1This Agreement is governed by Danish law.

9.2 Any dispute arising out of or in connection with the Agreement or regarding deliveries made under the Agreement must be settled with final and binding effect in accordance with the "Rules of Procedure of the Danish Institute of Arbitration".

The dispute concerns whether Aagaard was entitled to terminate the Agreement on 25 January 2011.
The arbitration tribunal is composed of former Supreme Court judge Per Sorensen (nominated by the claimant), Mads Bryde Andersen, Professor, Doctor of Laws (nominated by the respondents) and Torsten Iversen, Professor, Doctor of Laws (appointed by the Danish Institute of Arbitration subject to nomination by the arbitrators appointed by the parties), the latter to serve as umpire.
Arbitration proceedings (preliminary proceedings) in the matter were held on 5, 6, 7, 9 and 13 December 2011 at the Copenhagen premises of the Danish Institute of Arbitration. On 30 November 2011, evidence was taken out of court in the form of examination of expert witness Karsten Ravn, as he would be away from 1 to 16 December 2011 without the possibility of making a statement via video link, Skype or similar.
Separate court records have been prepared for the preliminary proceedings to which reference is made.
Lund Trading has submitted Summary Pleading of 30 November 2011. At the beginning of proceedings, Lund Trading submitted a revised Case Summary dated 5 December 2011.
Aagaard has submitted Summary Pleading of 30 November 2011.
Bundle consisting of binders I-IV (comprising pleadings pages 1-124, award of the arbitration tribunal of 24 November 2011 (pages 124A-124F) and exhibits pages 125-1307 (more precisely page 1407 as the page numbers are repeated) has been submitted. Moreover, Exhibit 57 (394 pages, practically all with four scaled-down A4 pages on each page) has been submitted. In continuation of the bundle, pages 121A-121E have been submitted, as Lund Trading's Pleading 2 was not included in the bundle. During proceedings, the arbitration tribunal allowed Aagaard to submit Exhibits BA and CC (affidavits regarding American law). In addition to the procedure, both Lund Trading and Aagaard have submitted bundle of documents (146 and 242 pages, respectively). Aagaard also submitted Danish judgment U 2011.1895 Ø.
This preliminary award has, subject to the parties' agreement, been prepared without reproducing all details of the statement of claim. In general, the tribunal has been asked to reproduce evidence and the procedures of the parties in full to the extent possible. Subject to agreement between the parties, the parts of the statement of claim available in English, and any evidence given in English during the case, have been included in their original language in the award.


1. Lund Trading

During the proceedings, Lund Trading has made the following final claims; see case summary of 5 December 2011:
The Respondents must acknowledge that:

1. the Respondents' termination on 25 January 2011 (Exhibit 2) of the sole distribution agreement of 17 February 2004 (Exhibit 1) was unjustified

2a. the Respondents are obligated to pay compensation to the Claimant for the loss the Claimant has suffered as a consequence of the Respondent's unjustified termination of the agreement of 17 February 2004 (Exhibit 1)

2b. Primary claim : the Claimant has made a claim for compensation against the Respondents because the Respondents took over the distribution network, the goodwill, the market and the sales and marketing activities which the Claimant had established in Northern America from 2004 until the time of termination (Exhibit 1) in connection with the termination of the agreement of 17 February 2004 and because of the Claimant's loss in its existing stock of Trollbead products as at 25 January 2011 to the extent that such compensation is not awarded under claim 2a

Alternative claim : the Claimant has made a claim for compensation against the Respondents as a result of the Respondents having terminated the agreement of 17 February 2004 (Exhibit 1)

3. the Claimant is entitled to sell the existing stock of Trollbead products as at 25 January 2011, also in the North American Market, where such sale is accompanied by a statement that no commercial relationship exists between the Claimant and the Respondents.

4. the Respondents have acted in contravention of sections 1 and/or 19 of the Danish Marketing Practices Act by having collected and used confidential information about the Claimant's business and partners and/or forwarded Exhibit 3 to the Claimant's partners.

2. Aagaard

During the case, Aagaard has made the following final claims in response to Lund Trading's claims ; see Case Summary of 30 November 2011 :

In respect of Lund Trading's claim 1:

Award in favour of the Respondents.

In respect of Lund Trading's claim 2a:

Award in favour of the Respondents.

In respect of Lund Trading's claim 2b:

Primary claim: Dismissal.

Alternative claim: Award in favour of the Respondents.

Further alternative claim in respect of claims 2a and 2b: It should be established that any compensation and/or claim for compensation and/or compensation of goodwill and/or remuneration and/or the Claimant's loss of stock must be reduced or eliminated as a consequence of Lund Trading's involvement in the development and marketing of Novo products in the US.

In respect of Lund Trading's claim 3:

Award in favour of the Respondents.

Moreover, Aagaard has submitted an independent claim to the effect that Lund Trading must transfer the saleable stock of Trollbeads to Aagaard at cost price.

In respect of Lund Trading's claim 4:

Award in favour of the Respondents.

In addition, Aagaard has submitted the following independent claims :

A Primary claim:

Lund Trading be ordered to pay USD 2,185,906.80 to accumulate the following interest:

USD 3,149.92 plus default interest; see section 3(1), see section 5(1) of the Danish Interest Act, from 2 March 2011 until payment is made.

USD 1,672,756.88 from 15 April 2011 at 1% for every month or part of a month from 15 April 2011; see Exhibit 1, page 129 of the bundle, clause 4.7 and

USD 510,000 plus statutory interest from 6 May 2011.

Alternative claim:

Lund Trading be ordered to pay a smaller amount to Aagaard subject to the arbitration tribunal's discretion.

B Lund Trading be ordered to acknowledge being obligated to pay outstanding royalty to Aagaard for the period 1 October 2010 to 25 January 2011 plus contract interest of 1% for every month or part of a month from the due date of 15 April 2011.

C Lund Trading be ordered to acknowledge being obligated to pay the full profit to Aagaard from the unauthorised sale of Aagaard's products which has taken place after the termination of the sole distribution agreement on 25 January 2001 plus the statutory interest applicable from time to time from 6 May 2011 until payment is made.

Alternatively in respect of claim C:

Lund Trading be ordered to acknowledge being obligated to pay royalty of the unauthorised sale of Aagaard's Products which has taken place after the termination of the sole distribution agreement on 25 January 2011 plus contract interest of 1 % for every month or part of a month from the due date of 15 April 2011.

D Lund Trading be ordered to acknowledge having acted in contravention of the sole distribution agreement (Exhibit 1, page 129 of bundle).

E Lund Trading be ordered to acknowledge having acted in contravention of sections 1 and 19 of the Danish Marketing Practices Act.


After the parties had a chance to relate to the issue, the arbitration tribunal decided to postpone the consideration of Lund Trading’s claim 2b until the main proceedings. Following negotiation, Aagaard's alternative claim in respect of Lund Trading's claims 2a and 2b was also postponed to the main proceedings. Finally, Aagaard's enforcement claim - claim A - was postponed until the main proceedings.
The arbitration tribunal will subsequently consider all other claims in connection with these preliminary proceedings, including Aagaard's claims B and C concerning the principles for settlement following Aagaard's termination of the Agreement of 25 January 2011.
The following will refer to the exhibits of the case stating their number, and to pages in the bundle stating "X" followed by a page number. However, page designation in volume IV of the bundle has been changed so that e.g. "X 1 [1]61" will be used to designate the page numbered "1061" in volume IV.
Typing errors and clerical errors in quotes have not been corrected except for obvious cases where the correction is indicated with [].


Lund Trading, LLC, is a company registered in the US in 2004 with Morten Lund Petersen as sole owner.
Lise and Peter Aagaard each own half the capital in Zen Capital A/S. Ownership is specified on last page of the 2004 annual report for Zen Capital A/S, produced as Exhibit 5 (X 780). Zen Capital A/S owns the entire capital of Lise Aagaard Copenhagen A/S.
The jewelry line Trollbeads was originally created by Lise Aagaard's brother, Saren Nielsen, in cooperation with their father, Svend Nielsen. The product is described on Wikipedia; see the text produced as Exhibit A (X 1024). This is a beads-on-bracelet product where the beads, which all have a hole in the centre, are attached directly on the bracelet or chain.
The history of the Trollbeads is outlined in Exhibit 29 (X 953). It appears that they were created in 1976 and that they have undergone massive change, also commercially. They were originally only sold in Denmark, but after year 2000, they have been sold throughout most of the world.
Page 8 of Zen Capital A/S' 2004 annual report (Exhibit 5, X 774) specifies that the company's 2003 gross profit reached DKK 2.4 million, increasing to DKK 5.4 million in 2004. In 2003, a loss of DKK 348,000 was recorded and in 2004, a profit of approx. DKK 1 million was recorded.
Lise Aagaard Copenhagen A/S was established on 1 January 2005. Page 8 of this company's annual report for 2005 (Exhibit 5, X 790) specifies that the company's 2005 gross profit reached DKK 19 million and that the pre-tax profit totalled just over DKK 12.5 million. Page 10 of the annual report (Exhibit 5, X 792) specifies that the company's equity totalled DKK 14.4 million.
Before 2004, production of Trollbeads took place at the company's own workshops in Denmark, and Trollbeads was not established in the US market, where likely only a handful of jewelry stores sold the product.
Around 2000, the jewelry line Lovelinks was about to be launched in the US, and was followed by Pandora around 2003-04, which was established by Per and Winnie Enevoldsen together with René Sindlev and Morten Lund Petersen's brother, Michael Lund Petersen. Pandora's 2010 annual report with a description of Pandora's development has been submitted as Exhibit V (X 805).
Based on Aagaard's wish to expand in the US, contact was established between Aagaard and René Sindlev. The related circumstances have been outlined under the evidence provided.


As specified, Lund Trading and Aagaard concluded the Agreement on 17 February 2004. Prior to the conclusion of the Agreement, René Sindlev, representing Lund Trading, and Lise Aagaard, representing Aagaard, corresponded with each other by e-mail in December 2003 and January 2004. Rene Sindlev also corresponded by e-mail with Morten Lund Petersen. Part of this correspondence has been produced as Exhibit 42 (X 125) and comprises e-mail of 18 December 2003, 10:09 AM from Morten Lund Petersen to René Sindlev, which specifies:

"Lund Trading, LLC is selling other product lines...".

E-mail of 16 January 2004 from Morten Petersen to René Sindlev specifies:

"Lund Trading, 11 c may be selling other products and it is obvious that we will only agree to pay 12 % royalty on products that are the property of LA and manufactured under our licence agreement, Any other products whether jewelry, or gift boxes, displays or other items we offer to our customers are not going to be included in the 12 % royalty calculation. I also think we should exclude items we purchase from LA for sale in North America and items such as bracelets or necklesses that are not the property and copy protected by LA".

Moreover, e-mail of 21 January 2004 from René Sindlev to Morten Petersen specifies:

"A short outline of yesterday's meeting....

We reviewed all of your and L.A.'s items. We agree. I will write them in the following....

10.We must commit to enforcing the Trollbeads copyright, and we will naturally also receive any profit on the infringement...."

The Agreement is termed "SOLE DISTRIBUTION AGREEMENT", and the introductory clauses specify that it relates to the "Sole Distributor's sale of the Trollbeads jewelry line in the North American market".
Clauses 1-3 of the Agreement read as follows:

"1.0 Purpose of the Agreement

1.1 The Rights Holder holds all worldwide property rights in the jewelry line 'Trollbeads', including all intellectual property rights, and any and all tools, moulds, drawings, sketches, designs, trademarks and copyrights related thereto (hereinafter referred to as the 'Product').

1.2 The Sole Distributor is an American company established for the purpose of selling, distributing and marketing various products in the North American market.

2.0 The Product

2.1 The Rights Holder has exclusive right to the Product, to develop the Product and approve the manufacturer - respecting the Rights Holder’s property rights cf. clause 1.1 above -from whom the Sole Distributor will purchase the Product, however provided that the terms and conditions, except for commercial, agreed between the Sole Distributor and the above manufacturer are approved by the Rights Holder.

2.2 The Sole Distributor is only entitled to purchase the Product from manufacturers approved by the Rights Holder. The Rights Holder is entitled to carry out ongoing quality control of the manufacturer or manufacturers as well as of the final Product. The Product quality must equal the European quality level, and the manufacturers must observe all local and international rules, legislation and human rights.

3.0 Sole distribution

3.1 The Sole Distributor has the sole right of distribution in the entire North American market (hereinafter referred to as the 'Market'). The sole distribution right includes all links in the sales chain, with the exception of sale from the websitewww.trollbeads.com. The Sole Distributor is not entitled to establish an internet business trading in the Products, with the exception of a B2B website - Business to Business - solely targeting businesses. However, the Sole Distributor is entitled to allow its customers to establish their own e-commerce sites.

3.2 The sole distribution right comprises the Product and product range related thereto at the date of entering into this Agreement, as listed in the forwarded product portfolio [...].

3.3 The Sole Distributor is not entitled to trade with any third party' in the name of the Rights Holder and must not purport to be the Rights Holder’s agent.

3.4 The Sole Distributor is only entitled to sell the Product to customers residing in the Market, cf. clause 1.2 above. The Sole Distributor undertakes to forward any and all orders and inquiries regarding the Product from customers residing outside the Market to the Rights Holder. The Rights Holder must also refer present dealerships in and inquiries about the Market to the Sole Distributor.

3.5 To the extent possible and for its own account, the Sole Distributor undertakes to strive to enforce the property rights of the Rights Holder, including intellectual property rights, cf. clause 1.1 above, in the Product in North America if the Product is copied or in any other way infringed[…] The Sole Distributor is entitled to all income generated by such infringement.

Clause 4 of the Agreement includes provisions on calculation of royalty payment, including a guarantee for minimum royalty from Lund Trading during the first three years calculated from the first delivery to Lund Trading. Pursuant to clause 4.4, royalty payment is calculated for each calendar quarter, and royalties accrued fall due for payment on the 15th of the month following the end of the calendar quarter in which the royalties were accrued. In the event that payment is not made on time, clause 4.7 establishes that the outstanding royalty payment must carry "interest at 1 % for every' month or part of a month from the due date".
Clause 5 reads as follows:

"5.0 Marketing Material

5.1 The Sole Distributor must make an active and dedicated effort to promote the sale and expeditious distribution of the Product in the Market".

5.2 To promote sale of the Product in the Market, the Sole Distributor must arrange for necessary and professional marketing, advertising and other forms of promotion of the Product".

After clause 6, which concerns purchase prices and resale prices, clauses 7 and 8 read as follows:

"7.0 Intellectual Property Rights.

7.1 The Product must be marketed and sold as "Trollbeads" under the trademarks, logos, designs, copyrights, etc. applied by the Rights Holder from time to time in an ethically and morally proper manner.

7.2 The Sole Distributor may not market nor sell the Product in violation of the Rights Holder’s property rights; cf. clause 1.1 above.

8.0 Term of Agreement and Termination.

8.1 This Agreement enters into force on the signing hereof. However, the royalty period as well as the term of Agreement will not commence before the date on which the first actual delivery from the manufacturer/manufacturers approved by the Rights Holder has been received by the Sole Distributor.

8.2 The Agreement is non-terminable by the Rights Holder as long as the Sole Distributor maintains a sales organisation and meets the agreed minimum requirements.

8.3 The Agreement may, however, be terminated by either party after a period of ten years by giving 24 months’ notice.

8.4 The Rights Holder may terminate the Agreement without notice (i) after the expiry of one year if, following demand for payment, the guaranteed annual minimum royalty of USD 100,000 remains outstanding; (ii) after the expiry of two years if, following demand for payment, the guaranteed minimum royalty of USD 200,000 remains outstanding and; (iii) after the expiry of three years if, following demand for payment, the guaranteed minimum royalty of USD 300,000 remains outstanding. The Rights Holder is further entitled to terminate the Agreement without notice after three years if the total royalties paid during the three years do not exceed USD 1,200,000. The Rights Holder may also terminate the Agreement without notice after the fourth year if the royalties paid in the fourth year do not exceed USD 800,000. The Rights Holder will further be entitled to terminate the Agreement without notice after the fifth year if the royalties paid in the preceding year do not exceed USD 1,000,000.

8.5 The Agreement only applies to the parties. Transfer or sale of the Agreement to another company requires the consent of the other party.

8.6 The Rights Holder may terminate the Agreement without notice if outstanding royalties are not paid on or before 60 days after the due date.

8.7 Either party is entitled to terminate the Agreement without notice if the other party is declared bankrupt, suspends its payments, enters into liquidation or in any other way ceases its business activities.

8.8 At expiry of the Agreement - for whatever reason - the Sole Distributor is not entitled to any form of compensation, including but not limited to goodwill or loss of market, rioting further that the Sole Distributor is not entitled to market and sell the Product or use any intellectual property' rights, trademarks, logos, designs, copyrights, etc. related thereto either directly or indirectly. The Sole Distributor must —as soon as possible and free of any cost — deliver and/or cause to be delivered from the manufacturers moulds, design, including master moulds, etc. provided by the Rights Holder in connection with the signing of the Agreement or at a later date for use in the manufacturing process, tire sale or marketing of the Product in the Market".

Clause 9 of the Agreement has been reproduced under part I above.
The Agreement concludes in clause 10 with provisions under the heading "Miscellaneous". The provisions establishes the recipient of notifications and when such notifications must reach their destination as well as the sole distributor's duty' to take out products liability insurance.


1. Course of cooperation

Cooperation was then established. Production was launched in China, and the practical general rule was that Lund Trading made purchases directly from the Chinese factory, which was operated by a person referred to as "Winnie" in the case. However, Lund Trading was obligated to buy a specific number (stated at 72 during the case) of beads from Aagaard in Copenhagen. Lund Trading established distribution in North America. Distribution in Canada was handled by an independent distributor, while Lund Trading acted as distributor and via sales reps was in charge of sales to retailers the US, Mexico and the Caribbean.
In an e-mail dated 25 July 2005 (Exhibit 49, X 136) to Lise Aagaard, Morten Lund Petersen presented the idea of a safety chain.
In spring 2006, the parties met in Copenhagen, and in May 2006, they engaged in mutual e-mail correspondence (Exhibit B, X 138 ff.) concerning future marketing activities. In this connection, the parties also discussed Lund Trading's sale of another product line called Spinning. E-mail dated 24 May 2006, 11:05 AM from Lise Aagaard to Lund Trading reads as follows:

"I have now also had time to visit your website and must confess that I was a bit surprised to see that you have started distributing Spinning. I find this to be incompatible with to the distribution of Trollbeads. Obviously, I would have expected you to engage in discussions with us before you took on a product that is so similar. Furthermore, it is quite the wrong signal to send out. We are trying to profile Trollbeads as high end - so it does not help distributing a product like Spinning which profiles below Pandora".

The same day at 19:01, Lund Trading sends an e-mail with the following response:


The Spinning product is about half the price of Pandora and is in no way competing with Trollbeads. You see after we left the giftware market we saw Spinning as a perfect match for this market and the old sales reps, which are no longer selling Trollbeads, were excited about selling Spinning. Spinning contacted us and initially I turned them down because I didn't want any' other product to take our focus away from or competing with Trollbeads. If it is competing with another product it is definitely Pandora.

But more importantly that main product for Spinning is NOT the charms which is not very popular and may even disappear from the collection. The main product is the Spinning rings which are very popular with a limited interest for the earrings. We have different people dealing with this and in no way is this product taking the focus away from Trollbeads which we by the way look upon as our baby".

Two days later, in e-mail dated 26 May 2006, 9:27 AM, Peter Aagaard replied:

"We still believe that it is wrong to profile Spinning along with Trollbeads. Obviously we would like you to focus 100 % on Trollbeads - but as a minimum ask you to separate Trollbeads from Spinning (and other products)) in the marketing and sales including having different websites. [...]".

In a reply the same day at 19:01, Lund Trading made the following comments:

"The Spinning jewelry line is really only a ring concept line and I cannot see why this in any way would influence our commitment to Trollbeads - which I can assure you it doesn't. We have an opportunity to market others products which your other distributor also do (according to the web links you send me yesterday). Operating in the USA is nothing like the condition in Europe [...] Our sales reps, have several product lines because they need to be able to make a sales when they travel all day visiting another potential customer in far away towns".

To this Peter Aagaard made the following reply in e-mail dated 28 May 2005 (Exhibit 22, X145):

"3. WEBSITE/SPINNING. Most of our distributors deal only with Trollbeads. Some of them have other products - which we have approved. We have looked at the image/profile of the product and made sure it had the right image next to Trollbeads before giving our consent. Spinning does not in our opinion have the image/profile to be distributes next to Trollbeads. As said, we prefer you not distribute a product like Spinning - but as a minimum it should not be on the same web site".

Trollbeads celebrated their 30th anniversary in 2006 on which occasion an anniversary publication was prepared. In a draft for this publication (Exhibit 30, X 958), "cooperation with an American" was mentioned as crucial to development. In the final version (Exhibit 29, X 956), this passage had been deleted.
On 23 January 2007, Lund Trading signed an "ADDENDUM TO SOLE DISTRIBUTION AGREEMENT [...]" (Exhibit AR, X 147), which specifies "TROLLBEADS PHILOSOPHY AND VALUES". The addendum includes the following passage:


Branding of the product in the Market must be based on the general "Trollbeads Philosophy and Values" prepared by the Rights Holder. The Rights Holder must be included in the branding process and preparation of standard marketing material, just as the final design is subject to approval by the Rights Holder."

The addendum further specifies that emphasis is placed on product originality, history, design, unique beads, broad range of glass, material quality and details and that Trollbeads are something special and "not just standard".
In 2006-07, Morten Lund Petersen started considering the possibilities for a new product line. In September 2007, the development of new bead designs was initiated. E-mail dated 6 September 2007 (Exhibit 76, X 149) from Sarah Johnston, who was then employed by Lund Trading, to an American designer, Marcella Bijen Rose, includes the following passage:

"Morten and I just had a bead pow wow. We would love for you to use your imagination and come up with some designs based on the following.

We want this beads line to be different from any other. One way, obviously, is to come up with unique ideas. Please spend some time and think about ways to symbolize things such as ecology, animal extinction, history, and anything American. American history, the Army or Navy (not literally), our land (ocean symbols) or anything else that screams AMERICA (again not literally).

By taking a concept and symbolizing it in a bead we can set ourselves a part. We do not want to take a stance on any one subject but something such as animal extinction could be a topic to address through a bead.

I will be away on business for the next few days so please copy Morten your response. Thank you and happy designing".

In February-March 2008, Peter Aagaard and Morten Lund Petersen corresponded by e-mail (Exhibit C, X 150) about Morten Lund Petersen's proposal to improve the Trollbeads line. Morten Petersen had suggested that the line be supplemented with a safely chain and a bead (blocker bead) that prevented the Trollbeads from gathering in one place on the chain due to gravity. The latter was developed by Morten Lund Petersen and sold by Lund Trading, a sale which Aagaard demanded be stopped. The sale of blocker beads then stopped, and Aagaard developed their own stopper bead for the Trollbeads line.
An e-mail dated 14 May 2008 (Exhibit 41, X 158) from Peter Aagaard to Morten Lund Petersen mentions a decision from the Danish Jewellers Association [Guldsmedefagets Fællesråds Mønsterværn] establishing that Aagaard could not prevent the competing Danish jewelry company Pandora from manufacturing its products "as long as it was not an exact copy". To comply with Lund Trading's request for further information, Aagaard stated that no written decision was made but rather an oral advisory opinion.
In July and December 2008, Morten Lund Petersen and Peter Aagaard corresponded by e-mail (Exhibit 75, X 170) concerning the possibility' of allowing Lund Trading to have production take place somewhere else than at the Chinese supplier. The reason for this discussion was e.g. the delivery problems in connection with an amethyst Trollbead.
The e-mail correspondence from December 2008 between Morten Lund Petersen and Peter Aagaard concerned infringement cases produced as Exhibit D (X 315).
On 17 January 2009, Lise Aagaard received an e-mail from Sarah Johnston, who was no longer employed by Lund Trading, which read as follows:

"For the past 2 years Morten has been secretly designing a line of bracelets and "beads" that are in direct competition with Trollbeads. He has hired a few artists to design sterling silver and gold beads that will fit on Trollbeads, Pandora and Chamilia. He has also chosen specific glass beads from the assorteds sent by Winnie to replicate for his new line. I was in charge of this project for a while and is why I know these details. Morten has not played by the rules for many years and I thought it was time you find out and keep the integrity of Trollbeads. He is obtaining a bad reputation among retailers and reps in the U.S.".

The e-mail then stated the names of two designers, Marcella Bjien Rose and Sondra Sherman, and their e-mail addresses. This e-mail and the subsequent correspondence have been produced as Exhibit BT (X 179 ff.). It appears from this that Sarah Johnston had started her own jewelry line, SaSa, and that she felt harassed by Morten Lund Petersen. She stated in an e-mail dated 21 January 2009 that she did not have "any pictures or physical proof".
Internal e-mail correspondence in Lund Trading from March 2009 with proposals for names and accompanying texts for the competing product, later marketed under the name "Novo beads", has been produced as Exhibit BV (X 182). These documents have been marked "CONFIENDTIAL - Attorneys' Eyes Only" in the arbitration proceedings since they have been furnished via the discovery conducted during the trademark dispute pending in the US between Aagaard and Novo Beads.
Exhibits BQ (X 186) and BL (X189) include e-mail correspondence from March to November 2009 between Anya Pinchuk, employee of Lund Trading, and various potential manufacturers of the Novo products. Some of these e-mails have an attachment with a picture of a Trollbead. Exhibits BM and BO (X 231 and X 233) show pictures of two original Trollbeads. These pictures were sent as attachments.
In an e-mail dated 15 April 2009 (Exhibit 13, X 188), Lise Aagaard congratulated Morten Lund Petersen because Lund Trading and its advertising agency had received an award for their Trollbeads campaign.
In an e-mail dated 16 October 2009 (Exhibit 46, X 235) Lise Aagaard commented on Morten Lund Petersen's royalty report for the third quarter of 2009 with the words: "This is nothing less than fantastic".

2. Establishment of Novo, LLC

The company Novo, LLC was established in September 2009. The company records (Exhibit G, X 159) show that the company was founded by Jeremy Wilson, Morten Lund Petersen's American attorney, and that the company was dissolved on 23 November 2008, after which, on the same date, a new company was registered by Timothy Young under the same name.
Novo completed its first sale in June 2010. The company launched its website in June 2010. An overview of Novo's sales from July 2010 up to and including 24 January 2011 shows total sales of just over USD 325,000 (Exhibit 53, X 877).
Sarah Johnston sent an e-mail again to Lise Aagaard on 24 June 2010 (Exhibit BU, X 239), informing about Novo's website. Lise Aagaard responded by e-mail of 2 July 2010 and asked for further details. The further details from Sarah Johnston were provided during telephone conversations and in e-mails. For instance, in an e-mail dated 21 July 2010, 00:31, to Lise Aagaard (Exhibit 59, X 261) Sarah Johnston wrote:

"Tim Young is the owner/operator of Novo Beads. He is the owner on paper as you saw but under Morten's direction, however I do not have any proof of that".

The e-mail correspondence between Sarah Johnston and Lise Aagaard took place from June 2010 to January 2011. They had some telephone conversations, and Lise and Peter Aagaard met with Sarah Johnston in Annapolis, Maryland, in September 2010.
In July-August 2010, Aagaard hired an American attorney, Stephen Murphy, who then worked for ReedSmith. Based on his advice, Aagaard hired a private detective, David S. Brown, who during autumn 2010 performed a surveillance of Lund Trading and a surveillance of their trash. David Brown's affidavit is appended as Exhibit AU (X 903), containing attorney Stephen Murphy's report on the legality of trash surveillance in the US. As Exhibit 57, Lund Trading has - in a separate binder - produced a comprehensive collection of the exhibits that allegedly were collected during the said trash surveillance. This concerns 393 pages, practically all containing four scaled down A4 pages, i.e. at least 1,500 pages. Lund Trading claims that the papers are confidential and contains business secrets.
In respect of Lund Trading's marketing of Trollbeads in 2010 and plans for 2011, comprehensive written documentation has been produced, including Exhibit 17 (X 982) relating to the Lund Concept Stores launched by Lund Trading in 2010 - the so-called FRUs (Floating Retail Units) - intended to be set up in malls and Lund Trading Strategic Marketing Plan 2011 (Exhibit 16, X 974). A set up for Lund Concepts, LLC (Exhibit 18, X 874) shows total investments in this of USD 1,079,600 and a net loss of USD 729,000. Lund Trading has stated its cost for "marketing and advertising" in Exhibit 10 (X 836).
The overview "Lund Trading's Marketing Efforts for Trollbeads" prepared for these proceedings has been produced as Exhibit 11 (X 963).
Between 14 and 18 January 2011, Lund Trading participated in a major exhibition in Atlanta and won the award as "Best of Floor" (Exhibit 14, X 972). A DVD with a video recording of the exhibition stand is produced as Exhibit 15 (X 973).
Lund Trading's 2004-2010 sales appear from the overview produced as Exhibit 56 (X 875). The quarterly figures are illustrated in the graphs in Exhibit 62 (X 837).
On 14 September 2010, Joel Bardach forwarded an e-mail (Exhibit E, X 313) from Tim Young concerning Novo to Kimberly Wahlberg, Lund Trading's biggest sales rep. Joel Bardach had previously helped Kimberly Wahlberg find Novo on the Internet; see Exhibit I (X 282). The e-mail from Tim Young is from the day before, 13 September 2010, and was a response to an inquiry from a retailer, David Kodner, who had contacted Tim Young.
On 17 December 2010, Kimberly Wahlberg contacted Tim Young by phone. The phone call was followed up by e-mail correspondence produced as Exhibit 72 (X 319). This correspondence shows that Kimberly Wahlberg was also interested in selling the Novo line, but that she was worried about the relation to Lund Trading and therefore wanted express and written confirmation from Morten Lund Petersen that she could also represent Novo. The background to this was that Kimberly Wahlberg under her contract with Lund Trading - as other Trollbeads Sales Reps. of Lund Trading - was bound by a provision that she was only allowed to sell Trollbeads.
On 23 December 2010, 8:49 AM, Kimberly Wahlberg sent an e-mail (X 329) to Morten Lund Petersen which included the following:


I would like to move forward with Novo Beads.

As I told you before, I want to make sure that any new corporation that is set up is done so correctly and with your permission. A few questions for you...

1. Is it ok that Steve owns the new corporation?

2. Do you want a separate rep force? Or can the new agency hire any of my existing reps [...?]

3. Are there any limitations to the new corporation that are important to you?"

In an email of the same date, 10:25 AM, (X 329), Morten Lund Petersen replied:

"I[t] must be completely separate (reps, ownership etc.) otherwise everybody is going to know and you know we don not allows retailers reps or anyone else to push a competing line".

The same day, 23 December 2010, 2:45 PM, Tim Young sent an e-mail (X 332) to Kimberly Wahlberg, stating:

"3) I will reiterate that it would be easier to convince the public that Boy George was straight, than Morten isn't involved in Novo. Mary Jo's daughter made a major announcement to all my reps, (long story). The entire state of MI knows it. Anyone at Pandora who cares, knows it. Trollbeads accidently sent an e-mail to my customers because Morten's IT guy used old files. The stories go on and on. So, what I am saying is, I'll reiterate but I have been pounding this drum for a year.

4) I don't know how expensive it would be and I don't know your personal situation but one way to bury your involvement is have a Trust own it. or cheaper and easier - Limited Partnership. The General partner would be a Corporation and you and Steve the limiteds. Limited Partners do not have to be divulged in public records. The General Partner (the Corp) could have an attorney as the President (or anyone for that matter). I have done this before and it works very well".

An e-mail dated 27 December 2010 (X 333) from Tim Young to Morten Lund states:

"I received a call from Kimberly Wahlberg last week. She indicated that she had a brief conversation with you regarding her husband forming a new Rep Agency specifically for Novo. She indicated that her call was exploratory and before proceeding with time and money, did I have an interest? She was clear and direct about two things: 1) that the new company stand alone and not be confused with KW Co. 2) that she would only proceed with your blessing, she was quite clear she would not proceed if it would adversely affect her LT relationship

She is waiting to hear if I have an interest? Of course I do, but I do not want to adversely affect anyone's relationships.

What do you think [thumbs up/thumbs down-sign]?"

The e-mail correspondence between Tim Young and Kimberly Wahlberg continued throughout January 2011. The correspondence shows that Tim Young had received Kimberly Wahlberg's "Sales Representation Agreement" (X 326-327) and her draft agenda for "our group's Trollbeads sales meeting in January" (X 338).

3. Establishment of Trollbeads United States

On 14 September 2010, Aagaard established a company in Princeton, New Jersey, under the name Anglo-American Jewelry Corporation, Inc. This company was renamed to Trollbeads United States, Inc. on 4 February 2011. The company records have been produced as Exhibit 67 (X 284).
In September 2010, Aagaard requested an update of the list of retailers in the US (Exhibit AA, X 286), and received an updated list from Morten Lund Petersen.


On 25 January 2011, the parties had arranged a meeting at Lund Trading between Morten Lund Petersen and Peter Aagaard. At the meeting, Peter Aagaard, who was accompanied by attorney Stephen Murphy, handed over a letter of termination dated 25 January 2011 (Exhibit 2, X 362). The letter of termination was accompanied by three appendices (Exhibits 1-3): 1. Termination and Release Agreement, 2. Purchase, Assignment and Assumption Agreement and 3. Notice of Assignment. The letter of termination reads as follows:

"Re: Sole Distribution Agreement

Dear Mr. Petersen:

This letter concerns the sole distribution agreement entered into on February 17, 2004, between Lise Aagaard Copenhagen ("Aagaard") and Lund Trading, LLC ("Lund"), including the addendum thereto entered into on January 23, 2007 (together the "Distribution Agreement") regarding Lund's sale of the jewelry line "Trollbeads", all rights to which are exclusively owned by Aagaard, in the North American market.

Aagaard has learned that you have engaged in competing business activities through your involvement with the company Novo, LLC ("Novo"). These activities are in material breach of your duties of care and loyalty under the Distribution Agreement, which require you, as the owner of Lund, to "make an active and committed effort to promote the sale and expeditious distribution of the Product in the Market." Distribution Agreement, Sec. 5.1. Your activities are also in material breach of the Distribution Agreement for failure to comply with the Danish Marketing Practices Act, which, in relevant part, prohibits disloyal conduct and the abuse of business secrets.

In addition to violating your duties of loyalty and care, Aagaard also believes that you have failed to protect the intellectual property rights of Aagaard in 'Trollbeads', as required under the Distribution Agreement, and in fact have encouraged and/or facilitated the infringement of Aagaard's copyrights by Novo. Such conduct is also an abuse of business secrets in violation of the Danish Marketing Practices Act. These activities also violate the Responsible Jewelry Council Principles of Business Ethics, adopted by Aagaard in March 2010 as to which Aagaard informed all of its business partners and distributors to abide by, particularly the ethical principle requiring signatories to conduct business 'to a high ethical standard' and 'to ensur[e] integrity, transparency, and conformance with applicable law.'

Such conduct constitutes a material breach of the terms of the Distribution Agreement. As a result, Aagard hereby notifies Lund that the sole distribution rights granted to Lund under the Distribution Agreement hereby are immediately terminated. In return for a mutual re-lease of any rights (a form of which is contained in the Termination and Release Agreement attached hereto as Exhibit 1), obligations, and remedies under the Distribution Agreement, Aagaard is prepared to acquire the domain name www.trollbeadsus.com; the Facebook group "TrollbeadsUS Original"; the trademark "every story has a bead"; all new or relatively new store displays and store furniture, FRUs and sales islands in working order bearing the Trollbeads name or logo on it; any existing inventory and viable marketing materials of Lund related to Trollbeads; any outstanding accounts receivable existing on the date the release is entered into related to Trollbeads; and to assume any booking obligations, advertising commitments, and retail contracts. Attached are proposed Purchase, Assignment and Assumption Agreement (Exhibit 2), and Notice of Assignment to Retailers

(Exhibit 3).

In making this offer, Aagaard does not waiver any rights or remedies it may have under the Agreement, or otherwise. This offer will remain open until midnight on January 28, 2011".

The same day and immediately after the termination, Aagaard issued an information letter (Exhibit 3, X 380) to all US dealers.
Similarly, on 25 January 2011, attorney Stephen Murphy forwarded a cease-and-desist-letter headed "Notice of Copyright Infringement and Unfair Competition" on behalf of Aagaard (Exhibit Æ, X 382) to Novo, LCC. This letter was accompanied by a photo display comparing 42 beads, in which Novo was alleged to infringe the rights to Trollbeads.
In e-mail dated 26 January 2011 (Exhibit X, X 421), Morten Lund Petersen wrote to Kimberly Wahlberg, among others

"So while you remain under the contract with Lund Trading and will continue to receive commission on every order, we are releasing you from the non-compete provision of your contracts (Paragraph 9j)".

On 28 January 2011, Lund Trading obtained a so-called TRO (Temporary Restraining Order) against Aagaard's American activities at the Circuit Court of Ann Arundel County. However, this TRO was annulled by the higher court, the United States District Court for the District of Maryland, from which a transcript has been produced as Exhibit Z (X 1119). Aagaard has highlighted the judge's statement on page 67, lines 9-13 of the transcript:

"[…]I think that Aagaard would be irreparably harmed by being forced to deal with a distributor whom it thinks is cheating it dealing with a competitor. I think that is poisonous, and I think that is equally, equally clear".

During proceedings, letter of 10 February 2011 (Exhibit AV, X 433) from attorney Ronald W. Craig from the law firm Ober Kaier was produced concerning a patent application submitted by Lund Trading for an invention made by Anya Pinchuk for the Novo line. It has been stated that a dispute exists between Lund Trading and Anya Pinchuk as to whom holds the patent rights; see the exhibits to Anya Pinchuks deposition (Exhibit 18 and Exhibit 19, X 1298). In a letter dated 30 August 2011 (Exhibit AV, X 433) from Rodney C. Davis to Peter Aagaard, Mr Davis stated that he represented Anya Pinchuk and offered Aagaard a licence to the patent.
Two e-mails dated 14 February 2011 (Exhibit T, X 424) from Louise Rogers, a retailer of Trollbeads, have been produced stating that a customer visiting Novo's website had her password automatically entered, and that a customer was greeted "Welcome Ginger Hatten", although she had only stated her e-mail address as "neonfilter@yahoo.com".
In February 2011, Lund Trading - after having secured Aagaard's acceptance - sold various fixtures and P.O.S. (Point of Sale) materials to Peter Schauben and various sales documents and equipment relating to Lund Concept to Patrick Kehres; see letters of 17 and 18 February 2011 produced as Exhibits 14 and 20 (X 427 and X 429). However, Lund Trading's surplus stock of Trollbeads was not sold back to Aagaard, and it is disputed whether Aagaard's buy back offer was conditional on Lund Trading accepting release. The parties agree that one consignment has been returned by and credited to Lund Trading.
In Exhibit A (X 393), Aagaard has produced a number of e-mails from January-February 2011 from retailers expressing their appreciation that Aagaard takes over distribution in the US and their negative attitude towards Lund Trading.
Extremely comprehensive documentation has been produced about the products, not just Trollbeads and Novo Beads, but also about Pandora, Chamilia and other products on the beads-on-bracelet market. As part of Exhibit 63, volume II of the bundle, page 697, a scaled down, foldable overview of various beads has been produced. After the preliminary proceedings, this overview has been sent to the arbitration tribunal in A l format.
Moreover, numerous exhibits have been produced in the case of which just two overviews of product names (Exhibit AZ and Exhibit 34, X 737 and X 738) will be highlighted here, an analysis of the technical differences between Trollbeads and Novo Beads (Exhibit 65, X 739), marketing material regarding Novo (Exhibit 66, X 1001), a table of "Market penetration for Trollbeads" (Exhibit AS, X 1023), affidavits from persons related to Lund trading (Exhibit 51, X 1075) - former employees Joan Allen, Kristina Gurvich, Gregory Laszczynski, Donald Frank Clark, Alan Donald Strott and Maria Habecker and from an independent sales rep, Jeffrey Liebich, two Danish judgments concerning Aagaard (Exhibits 8 and 23, X 1088 and X 1124) and an elaborate transcript from Anya Pinchuk's deposition in the US (Exhibit BR, X 1176) and other material furnished in connection with the US case, including the use of discovery.


The parties have produced expert opinions concerning the products; Aagaard in the form an opinion from Karsten Ravn (Exhibit AÆ, X 896) and Lund Trading in the form an opinion from Martina Windels (Exhibit 54,X911).
Karsten Ravn concludes that it must be assumed that Novo's products have been designed with the Trollbead products as model, and that Novo's products, in respect of appearance, lie closer to the Trollbeads than other competing products in the market, including Pandora and Chamilia.
Martina Windels disagrees with Karsten Ravn's conclusions. In her opinion, Novo and Trollbeads are "similar" because the both use "materials and techniques commonly used in jewelry design".
Further expert opinions have been given about US law from professor Christine Haight Farley (Exhibit 55, X 920) and professor David V. Snyder (Exhibit 73, X 936) - both working at the American University Washington College of Law - and from attorney Barry Kramer and attorney Glenn G. Pudelka - both from law firm Edwards Wildman (Exhibit BÂ) - and attorney Stephen Murphy (now Edwards Wildman) (Exhibit CC).
Aagaard has requested the arbitration tribunal to pay special attention to the passages from the produced transcripts from Anya Pinchuk's deposition, as specified in the table in Aagaard's Summary Pleading, pages 10-11. The arbitration tribunal will not reproduce the relevant passages here, as it has been stated that under US law, the passages will not be made available to the parties to the case.


1. Morten Lund Petersen

Morten Lund Petersen has testified that he left Denmark 30 years ago. He moved to the US in April 1981. Back then he worked at Niro Atomizers which had an operation in Columbia, Maryland. He is a trained engineer. He had some experience with the jewelry business prior to his meeting the Aagaards, as his brother Michael was co-owner of the distribution company formed by Pandora in the US. Michael owned 25 %, and so did René Sindlev and Per Enevoldsen, the founder of Pandora. The remaining 25 % was owned by the sales manager, he thinks. He helped his brother in forming a company, an LLC, and for VA years his brother lived at his place whenever he was in the US. For a year, or a year and a half, his home was used as the meeting facility for Pandora in the US.
He got in contact with Lise and Peter Aagaard through René Sindlev. The Aagaards were interested in René Sindlev or Pandora, and first they had a telephone conference with René Sindlev. During the converstation he said that he did not think Per Enevoldsen would allow a competing line being
carried by René, but that he might be interested himself. He had experience with selling things and setting up an operation. The Aagaards sent a draft to René Sindlev, anticipating that they would work with him, as indicated in this first draft. Therefore, it must have been clear to the Aagaards that René Sindlev would work both for Pandora and Trollbeads, because he would clearly not leave Pandora of which he owned 25 %.
The mail correspondence was between René Sindlev and Lise Aagaard. He was not copied on it. The fact that the contract was to be made with him, Morten Lund Petersen, and not René Sindlev did not mean that René was out of the project. He needed René's experience.
It was crucial for him that Lund Trading could do more than Trollbeads. "You do not place all your eggs in one basket". A network was planned, and other items that were compatible with Trollbeads had to be added. Sales reps have to be able to carry other products, of any kind, including jewelry. There was even talk of having them carrying Pandora. Jewelry was certainly on their minds.
He does not know whether René Sindlev discussed the summary he gave with Lise Aagaard. He assumes René did so, Two things were brought up at all the meetings: the need for a double clasp and the right to cany multiple products. He was not going to take a chance on just one product. For that reason the contract did not include a non competition clause. René was already dealing with a competitive line, and the Aagaards knew that.
He had not seen Trollbeads before, and the first thing he asked himself when he did, was: "How do you put the beads on?" The Aagaard's answer to that question was that the customer would have to go to a goldsmith who would put on and take off the beads. This would never work, he knew'. The whole idea must be that you can switch the beads on your own. He knew that this was absolute necessary, also because no tools were needed to manage Pandora's beads. This was the background for the double clasp.
He does not remember the exact date of his first meeting with the Aagaards. It was sometime in late 2003 when he visited Copenhagen. All the major points had to be agreed in advance, and this had taken several months. Already at the outset it was clear that Aagaard had no production capacity. They had been struggling just to supply the Danish market. Therefore, Lund Trading would be in charge of the production and be in control of the operational plan.
To his recollection they met in Lise Aagaard’s office. He stayed in Denmark for a week or maybe 10 days. He signed the contract before leaving. He does not recall whether he received legal advice. Maybe his brother, Michael's tennis partner looked at the contract, but he did not talk to a lawyer himself.
It was extremely important to him that the contract stated that Lund Trading could carry "... other products.". Otherwise he would not have signed the contract. The basis for the contract was Pandora's contract for the starting of their US operation. It was used as a template, but this was different since Per Enevoldsen had "hands on" in Pandora. This is why the contract was called "Eneforhandlingsaftale". It should have been called a licence agreement. The contract was signed by Lund Trading. It was not an issue whether he should also sign as an individual.
He understood clause 8.8 in the way that it was put in because Lund Trading was in charge of production. A termination would mean that he would have to stop production, but not that he had to hand over his inventory. He did not have any designs, masters etc., as they were in the possession of the manufacturing facilities. He has never received any confidential information relating to the production itself.
The Trollbeads name was an obstacle in itself, in fact, a horrible problem in the beginning. He suggested that the name was changed, but Lise Aagaard refused this categorically. He wanted specific American products, and mentioned pets. She said she would think about it.
The glass pearls were what interested him from the start. They were very pretty, really fantastic, and nobody else had them. When you do business, you need a message or a niche, an edge that sets you apart. Pandora had been copied by Chamilia, but nobody could copy the glass pearls, and the customers were very impressed with them.
After the signing of the contract, he had René Sindlev working for him as his consultant for three years. René had the same role in relation to Michael from Pandora. He and René discussed strategies, what to do, etc. Initially, he tried to copy what Pandora had done, but that did not always work for Trollbeads.
As regards the manufacturing process, they looked for production facilities. He got some names in Thailand from Per Enevoldsen, and contacted them. Meanwhile, René Sindlev contacted one of his friends from the watch industry in Hong Kong, Peter Lee, who came back and gave the name of his cousin in China, Winnie, who could do the manufacturing. The Aagaards, René Sindlev, and he flew to Hong Kong and went by boat to China to see and try out the facilities. They brought some masters. In China, they could easily manufacture the silver, but the glass was another matter. Lise Aagaard had brought gas burners along, and she taught them how to make the glass beads, of which there were no masters. The silver was easy, and he got his first delivery from China in May 2004. He received his first glass delivery in July 2004. Lise Aagaard would perform the quality control, meaning that the pearls had to go to Denmark before they were shipped to Lund Trading.
The production facility in China was his exclusive factory', but Peter Aagaard made the same agreement with the factory as he had. It was understood, however, that Lund Trading's orders would go through first. The products to be made in China were ordered directly from Lund Trading, shipped directly to Lund Trading, and paid directly by Lund Trading. However, some products were not dealt with in this way. To begin with, it was only one product: a pearl. Nobody else could drill a hole in a natural fresh water pearl, so it was done in Denmark, and he had to buy them from there. Over the years, more and more had to be bought in this way. He thinks the Aagaards liked it be-cause it gave them a "double dip": first a profit on the selling, then a royalty from the end sale. It ended with over 70 beads - or item numbers - as they also included leather necklaces. He considered this to be against the contract. From China they got some 400 beads, according to Peter Aagaard. The chain was bought from a German supplier. Lund Trading cut and oxidized the chains. It is a standard issue, a so-called foxtail chain (3 mm).
At first, when he built up the network for Lund Trading, he had no sales reps. The first sales rep he hired was Steve Gluck who came from Pandora. Steve Gluck was only with him for a short time. Per Enevoldsen liked to keep the two lines a little apart, and Steve Gluck could not carry both lines. In other respects, Pandora was a real resource for Lund Trading. Sales reps would tell stores to take Trollbeads in as well. Having choices was important to the customers.
In establishing the sales reps network, he had to win them over one at a time. There were jewelry shows once a month, and he got one sales rep at such a show. The jewelry shows are put up by the jewelry organizations. You rent a booth and show your line. There are 60 different shows each year. It was very' difficult to find sales reps - much harder than he had thought. They carry a bunch of products, such as candles, scarves, accessories, and jewelry. To find something that fits and some-one who is dedicated is very difficult. In their contracts, the sales reps were not allowed to carry other lines. This was to ensure that they were focused. They could have no competing lines, no beaded jewelry things. The majority of the retailers were signed up by the sales reps. A few were signed up at the shows. At the end, Lund Trading had about 1,000 retailers, but the number went up and down constantly. One year they had to let 200 retailers go because of poor performance. In the end, they' had more closed accounts than open accounts in their computer.
Lund Trading had education in their program. It was an idea from Denmark, where they called it the "Trollbeads Academy". In the US, they called it the "Trollbeads University". It was for retailers. They got breakfast and lunch and were taught best practices. Retailers having 12,000 $ a year wholesale purchase ended up having a yearly 15,000 $ purchase, on average. All things were made better. There was no exclusivity clause for retailers, but a dealer program based on a reward system. If a dealer was made a premier dealer, he could only sell Trollbeads, but would get benefits in return.
Canada worked differently. Lund found a distributor located in Toronto. The distributor had his inventory there and shipped goods from there.
As far as the cooperation with the Aagaards is concerned, Lise Aagaard's attitude at the beginning was something like: "You can do anything you want to". He could advertize and promote very in-dependently. If Lise retired a bead, he did not have to do so. But he decided to adapt to their line, regardless of his own freedom. It made business sense. Among other things, he could also deal with a rubber necklace, if he wanted to. Lise sent him information about where to get it. In the first and second year he did not carry any other products. Later he did. At one point he had Veledoro, which is jewelry from Italy (only necklaces, no beads) a finished product consisting of precious stones. He also had Hultquist from Denmark. Per Enevoldsen of Pandora suggested that Spinning products used Lund Trading. He thought they were compatible. The Spinning line carries in essence stackable rings. The whole line also includes charmed bracelets. They looked very different from Troll-beads and were not as high taste as Trollbeads. He thinks he started with Spinning in 2006. There was a dialogue with Aagaard about it in 2006. The conclusion was that he could carry it, provided it was on a different website. Until then, Veledoro, Hultquist, Spinning, and Trollbeads had all been on the same website.
He created Trollbeads US.com as a separate website. It ran alongside with LundTrading.com. Spinning continued at Lund Trading until late 2007 when he terminated the agreement, but he continued selling Spinning way into 2009. It was just displayed on the website, but no direct sales were made.
Sales reps made the sales, in the way that they continued sales to existing customers. There was no more discussion with the Aagaards upon the subject.
Christa Brook is a fairly new line. It was developed as a high-end, luxury silver line by Anya who worked for Claudia. It started sometime in 2009. They developed one piece at a time. This line was announced or launched in the summer of 2011. It had taken longer than they wanted it to. They had to develop prototypes and machines, etc. for the factory in China. Because of the termination by Aagaard they suffered a 6-month delay. They moved production to another factory, because Peter Aagaard had a big say in the factory in China, and they did not want that. He did not inform the Aagaards of this new line at Lund Trading. They had a licence agreement on Trollbeads, but no other agreement.
The background for the blocker bead was that Pandora used a very smart campaign where they showed that you can place your beads in one of three sections of the chain. The beads do not all fall down to the bottom, but stay in place. This way, if you only buy one bead, or a few beads, to begin with, it does not look terrible.
He mentioned it to Lise Aagaard. She dismissed his idea. Her attitude was something like: "I have done this for 30 years. I know how to do it". In 2005, there was no positive response to his idea. In 2008, he discussed it with Peter Aagaard. Actually, he thinks it was earlier than 2008. Lund Trading had developed a blocker device. They did not market it as a bead, and certainly not as a Trollbead, but they have sold more Trollbeads because of it. The Aagaards probably saw it at the factory. The Aagaards introduced their own stopper bead in 2006-07. They would not turn over the masters to Lund Trading, and he was forced to buy the bead from Denmark at higher prices. It took a while before the Aagaards allowed it to be transferred to the factory. His words "your copy" were based on the fact that their "stopper bead" pretty much copied his: There was rubber inside, and silver outside.

The background for the Novo line was this:

From the outset, Lise Aagaard had said that she would make some American beads. At that time, Trollbeads released 3-4-5 new beads every year, but very few were designed for the US, if any. He received ideas for American beads from customers, retailers, sales reps, and his own staff. He sent these ideas on to Lise Aagaard, but received no feedback, and after a while he stopped sending them on. This was around 2005 or early 2006. Lund Trading had other problems in the American market. Pandora, Chamilia, and Lovelinks fit on each other's bracelets, but Trollbeads only fit on to Trollbeads' bracelets. He often brought up the diameter of the hole as a problem, but Lise Aagaard saw no problem in that. She was proud of her product, and rightly so. Still, it was a problem on the US market. The beads were called "European beads" in the US. As with the blocker bead, he tried to prompt Lise Aagaard's "thinking out of the box", but as the story about the "American beads" shows, their communication was strained, and the Aagaards wanted to control him in every way. They wanted him to be 100 percent Trollbeads.
What really made an impression on him was what happened in relation to the Trollbeads Magazine from 2006 in which they presented a chronological history of Trollbeads. He was shown a draft of this by Lise Aagaard, and in this it was mentioned that René Sindlev and he had had something to do with developing the production to get big enough to go worldwide. In the end, both of them were erased from the text. When he met with distributors from other countries, they were surprised that Lund Trading had the production facilities in China. They did not know.
Sarah Johnston was hired by him. She had a moderate background in jewelry. She had not done anything really great herself, but had a good understanding of jewelry. The new line should be made by US designers, have US themes, and should be produced in the US. Sarah Johnston contacted her teacher in art school, Sandra Sherman. Lund Trading did not tell them what to make, they would rather see what they came up with, and then say yes or no. Marcella Rose was also asked to do design work. She was an artist, but not a jewelry designer. She had never done any carving in wax previously, but taught herself how to do it. The first designs were too big, and were simply rejected. Marcella Rose is one of the premier bead designers of today, and she has done about 70 to 80 percent of Novo's designs. She did not work at Lund Trading. She worked from her home. Sandra both worked from home and at her art school. They sent ideas, sketches and concepts to him. From the wax bead, carved out by hand, a silver bead master was created.
Sarah usually talked to the designers. He would often have some input. Sarah made it clear to the designers that they did not want Trollbeads (Exhibit 76, X 149). The designers were told that it had to be unique, and that they would reject anything close to anybody else, not just Trollbeads, but also Pandora - and especially different from Trollbeads, as stated by Anya in her deposition. They wanted something that filled the need of the American market. It should be compatible with other products, i.e. fit on to their bracelets. The chain is a standard chain. You pick it from a catalogue, order a sample, receive a chain. The bangle, the hard bracelet ring, you cannot order like that. Novo made those.
The interesting thing about the lighthouse (Exhibit J, X 652) is that it was released by Trollbeads at the end of 2009, and that the Novo lighthouse was designed in 2006. Sarah had told this to Lise Aagaard. For the clasp creation Sarah turned to Sandra who is a very technical person. She could actually machine a bead on a lathe. He thought she would be great at making the clasp, but her samples turned out to be horrendously bad. The project was put on a shelf until Claudia got involved. He had seen a magnetic clasp somewhere. It was very smart. He wanted something like that. Eventually, it was Anya who came up with the clasp, based on his idea, that one end fits only to the beads so they can be put on, and the other only fits with the closing mechanism so the brace-let can be opened and closed. They send it to be patented, but it has been perfected since then. It is a single structured carabiner locking mechanism, whereas the Trollbeads product consists of two separate carabiners. His is smaller, cheaper to produce, and it looks like a decorative bead.
Claudia started in 2008 when they should push the new Novo line. At that time they only had metal charms. They needed something more colourful. As for glass, he did not want it. Glass was the hallmark of Trollbeads. He never even thought about it, contrary to Sarah's statement. Cubic Zirco-nia - the CZ's -became Novo's "glass beads" so to speak. They are made from a completely different material, the colours are much brighter. The bangle was also important. It was different from the chain used by Trollbeads. The bangle was the hallmark of the Novo line, and all their advertising featured this bangle - not a chain.
Confronted with Claudia's request to manufacture faceted samples (Exhibit BL, X 192, X 193, and X 198), and the pictures used in this connection, he concedes that it seems like Trollbeads pictures were used. The communication with manufacturers is sometimes very difficult. Instead of describing a faceted bead, you could give them an item number, showing all these angles that a faceted bead has. They were not trying to copy it, just to describe what they wanted. This way to do it is not in good taste. The employees should not have asked in this way, and it would have been easy to find a different way to do it. He cannot say whether any production ever came about with these manufacturers. They have changed manufacturers so many times so he cannot say.
Anya at one time asked for a bead with a 4 mm hole. The reason for this was a request he made by e-mail. He wanted to find an amethyst exactly like the Trollbeads amethyst. The reason was that they were having delivery problems. Peter Aagaard would not allow Lund Trading to source directly, and therefore Lund Trading wanted to find one by itself. The idea was to send it on to Peter Aagaard so that they could talk about it again. They had had the same conversation about pearls, and

he ended up sending samples to Peter Aagaard. The Novo line did not end up with a faceted amethyst. It has a pumpkin bead, but that is not faceted.

For a long time, the design process of Novo was dormant. Sarah was not very skillful in managing the development, so nothing much happened until 2008 when Claudia came along. The Novo project had absolutely no influence on Trollbeads. He had learned to live with the shortcomings of Trollbeads, and in 2010 he was every bit as committed as in 2004. The rest of the organization was also busy with Trollbeads. Everybody was 100 percent dedicated to Trollbeads.
He did not talk to the Aagaards about the Novo development. After what had happened in relation to the Trollbeads Magazine, and since Lise Aagaard was not interested, he saw no point in it. Novo did not go for a market segment covered by Trollbeads. Novo was the opposite of Trollbeads. He pointed out from the beginning that he did not want anything like Trollbeads and Scandinavian mythology. He wanted something that fitted on to Pandora because everybody had Pandora. The glass beads were what gave Trollbeads an edge. People really liked them. At a jewelry show in 2005, he heard from Pandora that they were going to have glass beads as well. He joked and said that the cheap ones he had seen did not scare him, but then he was told that Pandora would get their glass beads from Trollbeads. That was really a blow. He felt "kicked in the butt". If really hurt Lund Trading's sale and promotion. They did not have an edge any longer. He confronted Lise Aagaard about it, but she did not care. He thinks that Pandora could probably have done it by itself, but not as fast.
The Novo project was no secret at Lund Trading. Internally, it was open. Everybody knew about the prototyping. But it was secret to the outside world. Even when sales reps came, they hid everything about Novo. At one point, 4 beads disappeared in connection with a sales rep's visit. You do not want to have things like that happen. He did not want the Aagaards to know. He did not want any-body to know. He had a much better clasp design than Trollbeads had. He wanted to patent it. He had been in the process of patenting the blocker bead in 2006, but had given it up. An application was made, but they never went through with it. He knew Greg Laszczynski back then.
The original intention was to launch Novo in 2007-08 by Lund Trading. They could have a complementary line. The lesson from Spinning was that it takes a lot of effort to launch a product, and Lund Trading's staff was very busy. From 2004 to 2010 they had a growth, year by year, of 80 percent on average. He did not want to mess that up. He decided he would not carry the Novo line himself. It was not a legal decision, but a business decision. He could not carry it. It may hurt Troll-beads by pulling resources away. He did not want that. Novo was never a big part of his life. He never managed that line. His focus was to market and brand Trollbeads. Novo was his idea, but he engaged external designers. He remained dedicated to Trollbeads. Except from the jewelry development department, everybody was dedicated to Trollbeads.
At some point, Claudia Arbalaez (also known as Claudia Bridge) contacted him. She is from Columbia, South America. She asked him if he needed a jewelry designer. It was a very casual interview, and he was fascinated by her and came to think about Novo. Claudia could get a two year work permit while her husband was studying in Washington, D.C.
Around 2008 they started looking for somebody to take over Novo, to carry the brand. You really needed a message to make it on the beads market, as 80-100 other lines were out there. The message of Novo line was that it should have US themes, be US-designed, be US-made, and be marketed as US beads. He talked to his wife Marilyn who knew Jan, the wife of Tim Young. According to Jan, Tim was a bit bored with his existing businesses. Tim was not a friend of his, but he had seen him at social events, and their wives knew each other. Tim was away in San Francisco when Tim called him and told him he was interested in running Novo. He considered Tim a very smart person, financially stable and with business experience. Tim had no experience in dealing with beads, of course, but he had not had any himself when he started, and neither did his brother Michael who was at Pandora.
Initially, he just bought the company, Novo, LLC, to have the name registered. He did not want to own Novo. He would retire in 2016, and by then he would have earned enough. Therefore, a trust was set up. Tim Young would report to the trust. His wife was on the board of the trust. The beneficiaries were his four children, of whom the eldest is 33 and the youngest 23. They probably do not know they are the beneficiaries of the trust.
The Novo project was funded with 1 mil. $. It was agreed that he would provide 80 percent, and Tim 20 percent. It was not his idea. He let it be up to Tim. It might have been the other way round: 80 percent for Tim, and 20 for the trust, or it might have been Tim 100 percent. That would have been okay with him. Tim had to hire some staff and lease some premises, and he did so on his own. Tim had his own furniture businesses, and knew how to do things. Of course Tim asked him about

some things, e.g. if he knew an architect. The build-out, the computer system and software, the web design, everything was handled by Tim who hired independent contractors.

Lund Trading had two local and two New York marketing contacts. Tim interviewed the two local ones. Novo hired LMD which was the same that Lund Trading had. In New York Novo took Ciphers. He went along with Tim for the first meeting with both LMD and Ciphers, to introduce Tim, and to the first meeting on marketing to make sure it did not look like or compete with Trollbeads. Tim and the marketing people presented something completely different.
Novo and Lund Trading were run completely separately. The day-to-day' cash needed at Novo was there, and he did not pay for or guarantee anything. Shannon's credit card charged for Larry Park Casting (Exhibit BG, X 1 [1]78) is for the Novo line. When a new bead was designed, a wax model was made at Lund Trading, and Anya would send it on for casting so that a silver master could be made from the wax bead.
Novo, LLC had a licence to sell the product, the Novo line. Lund Trading did not pay Novo, LLC or do accounting for Novo, LLC. The design work was finished at Lund Trading, and there was an internal classification of expense. Until Novo, LLC was thoroughly established, the development took place at Lund Trading. That changed when Tim Young hired Jimin Park. Then it was all moved to Novo, LLC, also the development. Today, Jimin Park is managing that 100 percent.
The travel expense report about "Garry" driving to Novo (Exhibit BH, X l[2]00) had to do with internal transportation. It is the same with another report (Exhibit BH, X 1[1]98). It might be product pick up or delivery. The employees use their own vehicles and get travel expenses. Novo, LLC had a much bigger building, a warehouse, and had nothing in it. Lund Trading needed the space so they agreed that Lund Trading could use the warehouse and one office at Tim's place. Lund Trading could use the warehouse for their huge boxes, and they also used an office. They made bracelets there, but their people only' spoke Spanish, and they were completely separated from the Novo operation. Nove employees were paid by Novo. Lund Trading paid the employees they had. Shannon often went back and forth to get office supplies. Lund Trading did not pay any' rent to Novo. The idea was to pay rent, but it never came to that.
The wood pallets mentioned in the 24 September 2010 order (Exhibit BH, X 1 [1]01) were shipped directly' to Novo’s building. Again, because Lund Trading had rented the space. In fact it was not rented, but Lund Trading had been allowed to use it. The pallets are probably in Princeton now, at
Aagaard's US operation set up for Trollbeads. Peter Schauben was involved in this. The Aagaards had no displays themselves and seemed unprepared when it came to selling the products, so they' set up a "straw man" to buy Lund Trading's, but he heard that the driver collecting the pallets took them to Princeton.
Upon examination about the payments for Novo (Exhibit BG, X 1 [1]65), made by PayPal or by his credit card, he does not recall the particulars of this, but he did not pay' Novo with his credit card. Novo had its own bookkeeping, its own IT, its own financial system, and its own wholesale distribution system.
The legal set up was that a company called Tang Trading, a limited company, owns the copyright to the Novo line. He is the sole owner of Tang Trading Ltd. There are no royalty payments from Novo to Tang.
Novo should get its own sales reps and retailers. He was part of the beginning of the story with Kimberly Wahlberg. When she was at his office, he confirmed that Tim was in charge of Novo, and that she should talk to Tim about representation and about the relationship she had to Lund Trading. He referred her to Tim. It was Kimberly who approached him when she learned that he was behind the design. He told her that she could not do it under the current agreement. She needed somebody who was not involved, it could be her husband, and she needed a separate sales representation entity. Being secret was not what he meant. He was talking about making an exception for her, knowing that if he gave Kimberly permission to do it, everybody would want it. At the end, he did not give her an exception. He did not allow his sales reps to carry Novo prior to the termination on 25 January' 2011. He immediately removed a retailer's status as premier dealer when he learned that she, contrary to the conditions for premier dealership which only allows one line, carried Novo as well. They were strict about it. It was a firm policy, irrespective of the fact whether the other line was Novo, Chamilia, or Pandora.
The Novo business did not affect the Trollbeads business - on the contrary, Tim took over Novo. The Trollbeads line was his focus. He was carrying out a completely new branding process, as he had found out how successful Pandora’s retail outlets were. In 2010 he came up with the Lund Concept, where they wanted 100 percent-focused stores. Lund Trading had merchandise displays for hire, and they always kept 10 in stock. The FRUs (Floating Retail Units) could be placed in the middle of a mail. Lund Trading had spent way over 1 mil. $ on this. The marketing budget was way higher than any other year. The commitment was higher than any other year.
As regards the advertising activities, he was furious when Aagaard's lawyers succeeded in persuading a federal court in Baltimore that in December 2010 Novo had a full page ad in InStyle, where-as Trollbeads had none. He had had 5 ads for Trollbeads in December 2010, though not in InStyle. The bottom line was that even after 25 January 2011, Lund Trading continued to pay for advertisements until the end of April or beginning of May 2011 (Exhibit BJ, X 1[2] 15). This is the explanation. WMI is a broker that Lund Trading used. These ads were ordered on 11 January 2011, and they could not get out of these ad deals.
At the time of termination, Lund Trading had quite a large inventory, a big stock, of Trollbeads products. Measured at raw cost, and excluding duty and transport, his guess is that it was in excess of 4.5 mil. $. With costs, it would be in excess of 5 mil. $. In wholesale prices it would be about 12-14 mil. $.
After 25 January 2011 Lund Trading succeeded with their restraining order against Aagaard in the first round, and they were still in business. Aagaard started their Trollbeads operation on 31 January 2011, but customers continued to place orders with Lund Trading, and they continued to sell, certainly into February 2011. It dwindled out after that. The Aagaards put pressure on the customers. Lund Trading still has a stock stored in boxes. It is true that Aagaard made an offer on the day of termination to take over his stock. He was not really happy that day, and the offer was conditioned upon his relinquishing all his rights. He would not agree to that.
After the termination, he offered the emergency relief to the sales reps, Kimberly Wahlberg and others, that they could carry other lines as well. He revoked the non-compete clause. This meant that they could also carry Novo, but he had nothing to do with Novo. His sales reps' businesses were at stake - Kimberly Wahlberg's, Peter Schauben's. He could not live up to his agreement so he felt he had to release them.
The 14 February 2011 mail from Louise Rogers (Exhibit T, X 424), he first saw 5 December 2011. Lund Trading used independent web designers. Novo used the same web designer as Lund Trading. This was unknown to him. The web designers were decent, and he does not think they would do something like that on purpose. They may have used the template for Lund's existing web design for their subsequent design.
As far as the trash surveillance is concerned, he was not aware of that, of course. The outcome of this is all inside information. He wonders why the information on Shannon's use of credit cards is not here. The hash surveillance was even carried out at his personal home, on his property. They went through his personal notes, and among other things there were papers relating to a funeral.
Examined by Aagaard's attorney Morten Lund Petersen has explained that they do have faceted beads in their collection ("our collection"), but that they are different from Trollbeads. He did not say that they could just have bought a faceted bead from Pandora. Pandora did not have them. But you could have found them on the internet. They did not send on Trollbeads silver beads to get a price.
He wanted to move production to Mexico and contacted three factories. He sent samples from Peter Aagaard to Mexico. He did not send out Trollbeads to develop the Novo line. Absolutely not.
Examined about the e-mail from Jaci Factor (Exhibit BV, X 182) he states that Jaci Factor did the marketing coordination in Lund Trading. Jaci got in touch with one of her friends, Maureen Walsh, who was a writer for National Geographic, and introduced her to the job of writing a message, which she did as evidenced in the sentences presented in the attachment (Exhibit BV, X 185). He does not consider these texts to be a story for every bead as in the Trollbeads concept. He does not know whether, in the end, the texts were used or not.
The explanation for question submitted in the e-mail of 17 June 2012 to Anya (Exhibit B0, X 1 [3]87) is that they were still waiting for an exact amethyst bead. They had severe delivery problems with the amethyst, and it would be very convenient if this production could be transferred. But Peter Aagaard was unwilling to discuss it. Therefore, before taking it up with Peter Aagaard again, he would try to obtain a sample. The specifications are clearly for Trollbeads (including the 4 mm hole). It was about the time he had the discussion with Peter Aagaard.
Presented with the e-mail dated 6 December 2008 from Peter Aagaard (Exhibit 75, X 170), he states that this must have been the first time they discussed delivery problems. They continued to discuss it. It was still the same problem in 2010. They got a little better, but it was still a problem. The core of it had nothing to do with delivery problems, but with him being the manufacturer according to the agreement. He was entitled to source the products.
His children do not have anything to do with Novo. The trust is managed by a trustees' or executor's board, and this consists of his accountant and his wife. He injected capital into the trust, and then the trust injected the capital into Novo, LLC. The trust is run by his accountant. Tim Young is totally running the business. The trust could have a say, but it does not. Tim Young is the business man. The intellectual property rights are owned by Tang Trading Ltd. It receives no license fees, but is entitled to withdraw the rights. There is a formal agreement. There are documents about the stucture of the operation. He could purchase back the rights from Tang, and he could stop Tim's right to produce and sell Novo.
The question whether Novo, LLC is "well capitalized" - as stated in Tim Young's e-mail of 13 September 2010 (Exhibit E, X 313) - should really be put to Tim Young and not to him. Prior to 25 January 2011, he did not have anything to do with Novo's business operation. Since 1 February 2011 he has. Before that, Tim called him from time to time, of course. He did not share customer lists, etc. with Tim. Pandora shared their customer list with Tim, and he consulted with Tim. He visited Tim in Tim's building.
He would have a budgeting or target meeting with Kimberly Wahlberg every year, in late November or early December. They also had one in 2010. She always flew in for the meeting. She is a large sales rep. Some came close, but she was the biggest, with more than 20 percent of the total sales of Trollbeads in the US. She has a sales reps company and has several sales reps under her control. She covers all of New England as well as New Jersey and New York. She said that she was interested in Novo, and he referred her to Tim Young, He does not know whether anybody else at Lund knew about this. She sent Tim an e-mail, and he explained that she could not be a sales rep for both Lund Trading and Novo. It had to be a completely different set up (Exhibit S. X 358). He was not active behind the scenes. He did not see the e-mails exchanged between Tim and Kimberly Wahl-berg. He had no face to face meetings with Kimberly Wahlberg after that, except that they met at the Atlanta show in January 2011.
He does not specifically remember staff meetings where he took up the topic of Novo. But as e-mails circulated, there were rumours, and there was some distraction in the company. Therefore, he called his staff to a meeting. It may have been late August or September 2010. He wanted to clear up things. He said something like: "We all know that Novo was developed here, but you work for Trollbeads". He did not want his employees to lose focus. None of Lund Trading's employees were
transferred to Novo. One left and was later hired by Novo. She called Tim, and he hired her. It was in customer service. Otherwise, she would have had to leave Lund Trading anyway.
He knows of the account called "other assets Novo". It was not an asset, but an accounting procedure regarding things concerning the Novo development. It continued after June 2010 (Exhibit BG. X 1 [1]90). After Tim Young had hired Jimin Park, everything was transferred to Novo, LLC.
If, after June 2010, the Aagaards had asked him to start an infringement case or a lawsuit against Novo, LLC, he would have said no. They can only go after copyright infringers. There was not a case to be made against Novo.
As for Lund Trading's turnover on Trollbeads after 25 January 2011, he can only guess. His guess is a couple of mil. $, but it is a complete guess. This is in wholesale prices. They had a lot of re-turned Trollbeads as well as outstanding invoices. Therefore, it was easier to return some stock to Aagaard, and he did because he knew they would be willing to accept it. He thinks that all the products that were returned to Aagaard came from Denmark, not from China, but he has no idea. He did not go through the papers on the return shipment. It was not intentional if it contained goods from China.
The main reason for 4th quarter 2010 lagging a little bit behind the figure for 4th quarter 2009 was the empowerment bead program. Through the distributing chain everybody donated half of their profit to fight women's breast cancer. Lund Trading alone donated V2 mil. $. There was also another reason, namely the 90 days credit program they had to introduce. Asked how much turnover was then transferred from 2010 to 2011 because of the 90 days credit, he explains that the new retailers deal (Exhibit 48, X 839) Lund Trading offered, not only included 90 days of credit, but also the right to return stock after 90 days. Actually, it was only a consignment deal. It all backfired, especially when the Aagaards started up in Princeton, New Jersey at the end of January 2011. The majority was then returned, and he was driven out of business. He has 250,000 $ in outstandings, and has had to press charges. The new retailer deal meant that the retailers did not have to pay anything but for what they had sold. Maybe 20 new retailers took advantage of this program, so maybe V2 mil. $ of the outstanding accounts of 8-9 mil. $ at the end of 2010 was under this program. He is shooting from the hip with this figure, but he thinks that is the number.
The patent application had nothing to do with Lund Trading. The invention was developed for Novo (Exhibit AV, X 434). It was filed on 21 January 2011, but a preliminary patent application was filed a year earlier. This is the permanent approval. According to US patent law, the inventor's (or designer's) name has to be stated in the application.
Examined about the Lund Trading Strategic Marketing Plan 2011 (Exhibit 16, X 974), he testifies that the description herein of Lund Trading's competitors does not include Novo because Novo had no financial impact - "period".He did not expect Novo to have an impact on beads. The 2011 plan was prepared in late 2010. He does not think that it would have been reasonable to take the Novo line into account. There are 120 competitors out there. It is the fiercest competition in the world. They only included the major players in the plan.
At the time he entered into the contract with the Aagaards, he had a business relationship with René Sindlev. They did not have a license agreement, but René Sindlev got money out of him, in the form of a salary as director. Peter Aagaard asked him whether he had a draft contract. René Sindlev had a Pandora draft, and he himself then came forward with this. The template was for Pandora. The first proposal had come from Lise Aagaard.
At the time, it was his understanding that after the agreement was terminated, he would be entitled to sell his stock. He should stop manufacturing immediately, but it was okay to sell out the product. This is the only way to do it. "Imagine a car dealership where the car dealer is terminated, and not allowed to sell out his stock!" Asked whether this is what clause 8.8 says when it calls for a stop for marketing ("markedsføre"), he answers that this is how he understood it.
Before signing, he read clause 8.8 about no compensation or damages for loss of goodwill. He understood this condition, "absolutely". When the agreement says "uanset grund", it is still all related to the earlier points on how the agreement can be terminated. It cannot be terminated except for these reasons. He relied on the 24 months' warning. This would give him enough time to sell out his stock and wind up his business after 2014. Asked what would be the situation in case of a fundamental breach of contract, he answers that he had no intention of breaching the contract. He tried to keep things straight. He discussed this with Peter Aagaard in relation to the Spinning product line. He accepted this because of the termination period. Spinning were rings. Christa Brooks are not beads, not bracelets.
His statement to René Sindlev in his e-mail of 16 January 2004 (Exhibit 42, X 126) that they needed "the active participation of Lise Aagaard" referred to the fact that she should train the employees in the fabrication process. She should provide the manufacturers with knowhow on the manufacturing process, e.g. about glass beads. This was the whole purpose of the agreement.
According to Jeremy Wilson's affidavit (Exhibit 71, X 951) he never took any legal action against Pandora or Chamilia. This is correct. Jeremy Wilson was never asked to do so. They only took infringement actions against exact copies. It was never an issue. He would not do it against Novo, either. Jeremy Wilson traced illegal Trollbeads, counterfeit products.
He does not agree that clause 3.5 of the contract (Exhibit 1, X 131) should oblige them to go after something like Novo. There is no copyright infringement. Copyright means that the production of exact copies is prohibited, as stated by Peter Aagaard in his e-mail of 14 May 2008 (Exhibit 41, X 158). Lund Trading would have gone after Novo if it had in fact infringed. Jeremy Wilson has carried out more than 60 cases.
After having heard the witnesses' statements below, Morten Lund Petersen was re-examined. In his re-examination he has stated in addition that Lund Trading's marketing efforts have always been "energisk og effektiv" as provided in the contract. Their marketing material was extensive. They made advertisement campaigns, sales binders (information for sales reps), furnitures and fixtures were offered to retailers, they had special material for shop-in-shops, they had lots of P.O.S. material, like boxes and bags, and these were of a very high quality making the presentation look good and signaling a high end and high quality product. This did not stop in 2009, Lund Trading continued like this all the time. Lund Trading was famous for its marketing efforts and even won an award, the Abby award, which is like an Oscar for marketing, for its campaign.
The marketing material was very professional, and it was also used by the Aagaards. The fixtures, the P.O.S material, and the ad campaign was all taken over by the Aagaards. Before the termination, Lund Trading had filled its stock with P.O.S. material, fixtures, and furniture. They were fully stocked. After the termination they were approached by Peter Schauben. The retailers asked if they could buy from them. Peter Schauben got full truck loads (and these were 18 wheelers trucks). They could see it was all going to Princeton because it was printed on the shipping papers.
There was no change in his mind or his focus on Trollbeads. The 2011 figures reflected their in-tended campaign, and they were in line with earlier years in which there had also been an increase from year to year. The year 2010 showed a larger commitment and push in Trollbeads than ever before. Lund Concept 2010 was a way into the future, and the FRU's had completely' new fixtures.
The retailers should own and run them. In two cases Lund Trading owned them because in two markets they were not functioning very well.
The 2010 investment was much bigger than in previous years (Exhibit 10, X 836). From 2009 to 2010 they almost doubled their marketing costs. The market was becoming more competitive, and they invested a lot. Lund Trading's marketing plan for 2011 (Exhibit 16, X 981) shows a 313,000 $ in-crease. There was much more advertising than this, e.g. in the malls, in the booths, and in the shows. This plan was the one presented by the marketing department to him, but it was not revised. The numbers are in line with what he had told the director of marketing, Don Clark.
He does not have the same recollection from their December meeting as the one Kimberly Wahl-berg has presented. He remembers that she had two wishes, one of them being a free gift on purchase. He tried to think about it, and in January 2011 he met Peter Schauben at a show and mentioned to him that he had had a meeting with Codax home accessories which is a high end product. Gift on purchase is a great idea, and the best way to circumvent fixed prices. The bar codes proposal brought up by Kimberly Wahlberg was also interesting. It is not that they did not have bar codes, they do, but they did not have the UBC/EN standard. You have to purchase them. This was also on the agenda with Peter Schauben. Obviously, Lund Trading was interested in this. The meeting with Kimberly Wahlberg was not a special meeting. There are few people so demanding as she. She wanted the world. She is very good at what she does. It is the same story every year, a negotiation between them.
At Lund Trading they did a lot of work for retailers, e.g. they had open forums and meetings. They would train the retailers at Lund Trading, and dine with them. You cannot just sit in your office. You have to talk to sales reps and retailers. This is the very idea behind the Trollbeads University. He always talked to retailers.
Setting the sales goals for sales reps is subject to a normal negotiation, trying to find a balance. Steve Gluck is an example. Basically, Steve Gluck wanted Lund Trading to spend all the money and then hand over the customers to him.
Aagaard supplied Lund Trading with existing photos and images. Lund Trading then put them together for marketing purposes. Lund Trading ran their own campaign, involving several ad agencies, and they provided the photographs for this. They paid for all the photo shoots, e.g. to LMD which received a retainer every month. Lund Trading also ran special campaigns. None of these numbers are stated in Lund Trading's 2011 Strategic Marketing Plan (Exhibit 16, X 981).
As for the gift boxes, the Novo gift box is not a copy of the Trollbeads gift box. It is the other way round: Mary Joe Coe saw a Novo package, which is grey, and said it was very nice and that she would want that for Trollbeads as well. The manufacturer was identified right out of a catalogue. For Trollbeads it was made in white, since all the P.O.S. material for Trollbeads is kept in white. It was Mary Joe Coe's suggestion that Trollbeads should have the same box, and it is a standard issue. For Trollbeads, Lund Trading had a lot of P.O.S. material designed, e.g. they had a travel box, consisting of three round boxes on top of each other, and an item going inside a jewelry box. Most distributors bought their material from Lund Trading, and they made it available to the rest of the Trollbeads group.
Through 2009-2010 and into 2011, he spent little time on Novo. His commitment was 120 percent Trollbeads. He had a lot of travel on weekends, attending shows, meeting retailers, running the Trollbeads University. He did a lot of work on the Lund Concept Stores, dealing with the mall managements in difficult locations. Malls were difficult to deal with, especially if you want a good space. He felt like it was an election year. He was on the road all of the time.
Lund Trading was expanding all the time. They purchased a new building. Greg Laszczynski had the smallest office you can imagine, and they had to use the hallway. Because of this, the chain production was moved. It was very simple to take out. Then they got more space for Claudia and Anya. Through 2009-2010 they were looking for a new building. They had 2-3 off site warehouses, and they wanted to get things together. It is easy to find a lease, but negotiations with the landlord proved difficult. In the end, they bought a new building, only to house Trollbeads, only to expand Trollbeads.
The growth indications can be seen from the sales figures (Exhibit 56, X 875). From 2004 to 2011, Lund Trading had grown constantly. The 2011 budget had figures in the mid 40's, and the 2012 budget in the late 50's. The 2011 budget figures are in the 60's if you count in all the fixtures and everything. The figure for 2010 is the total royalty related turnover. With fixtures, it is in the mid 40's. For 2011 it is 60 mil. $. The Lund Concept goals were 4 mil. in sales, rising to 14 mil. $ in sales. They were opening stores in a rapid click. "Royalty sales" means the sales that royalty is based on. Lund Trading's marketing was going to be a lot more aggressive. They had money set aside for it.
In the first years, you do not earn anything on a contract like this. You make the money in the rear. You really reinvest a lot of the profits to expand business. He expected to retire by 2014. He had no plans to take over Novo, no intention to do that. It may be seen as if he was trying to hide Novo, but everybody in the company knew. He was hoping Novo would do well because his kids would benefit.
When he gathered his employees it was to set the record straight. It was no secret to the employees that he was behind Novo, but he wanted to make it clear that he was not a part of Novo. Rumour had it that he was involved, and he wanted to make it clear that he had no ownership, no options of ownership, and that was the information.
The designers of Novo continued. The design process never really ends. It was done by Anya, but Jimin started becoming more involved, and there was a hand over process.
When Lund Trading and the Aagaards made the agreement in 2004, there was never any talk that René Sindlev might leave Pandora. He would never have done so. Pandora sales were exploding, no other increased as rapidly as Pandora. It was the fastest growing company in the US ever. René Sindlev would never let go of Pandora, he would never sell his shares in Pandora. Originally, he had been in the watch business, but he knew the jewelry business. His share was 25 percent of Pandora Jewelry, LLC.
The contract with the Aagaards was for sole distributorship. This meant that the Aagaards could sell into the US market from the trollbeads.dk website. This direct sale was annoying to his retailers who then faced competition in their own territory. The Danish website offered free shipping, and then his retailers had to do at least the same. He took it up with Peter Aagaard, but it was not changed.
He thinks there seems to be some amnesia in relation to Spinning. He had 115 accounts on Spinning. They were developed over several years. Using web services like archive.org, you can go back and see snapshots of what was on the internet. In 2009, he still had Spinning on a website.
The start of Novo has been accurately stated by Sarah Johnston. They received suggestions from retailers and kept them on a list for Novo. It was nothing but ideas. He brought the American theme
idea up in his first meeting with Lise Aagaard, and he communicated with her often. She was very polite, but she never came up with any American beads. In the end, he stopped sending his ideas on to her.
It was he who created the blocker bead, and he hoped that Lise would carry them. Their communication was challenged, at best, and that process never took place. He would always give her ideas, and he probably was annoying. At the end of 2005, he stopped sending on his ideas. The beads were known as "European beads" and were passed off as something exclusive. He knew there was a niche, because there was nothing American. Scandinavian mythology really does not sell in large parts of the US, e.g. in the Midwest, in the entire "Bible Belt". At one point, a retailer had opened a package and sent the whole thing back because of some scary faces on the beads. "The cell" was another bead that was disliked there. The beads were very artistic, but they had a terrible time to open Trollbeads accounts. He knew that the American theme would have been fantastic to do.
It was he who invented the slogan "Every story has a bead", which was registered as a trademark. Others have slogans like "Every charm tells a story" or "Every bead has a story" (Halia, Michael Hill, Biagi, Silverado). This was their way to do it. At Novo they call it messages.
The explanation to Louise Rogers' story of the databases is relatively simple: if you fill in your e-mail address, the entire form is filled out automatically by way of a "cookie". It is stored on the computer from which you send the request. After the termination, the Aagaards sent a threatening letter and he took his website down. It was the highest-rated Trollbeads site in the world. The server company now had lots of empty space, which i.a. had been taken up by the "vendor machine". They moved Novo on to the Trollbeads server using the same IP number that had previously been used by Trollbeads. This was after termination. They had built everything up, so it belonged to them. They had handed over the domain name, and also the trademark, in order to make sure there were no further issues.
In response to the allegation made by Kimberly Wahlberg that he brought up the Novo question at their December 2010 meeting, he wants to put it straight that he did not offer her the Novo line. There is no suggestion in the e-mail correspondence from that time that he did. He told her to discuss this issue with Tim Young and that she had a non-compete clause in her contract. It was she who brought up the possibility of keeping the distribution of the Novo line separate. He said it would probably be okay if it was totally separate, so that she was not involved, i.e. not her reps, not
her company. Her husband could be okay. That would be fair. The remark "or everybody is going to know" dit not imply that there was anything secret, but simply that he did not want to have Troll-beads reps carrying other lines. If others knew, they would all ask for the same. His principle is that you should always stick to your contract. You should not make exceptions.
Before he got involved in the project that later became known as Novo, he had read through the contract. He was keenly aware that he did not want to break it. Pandora was already in the market, and it could not be any more competitive than that. He was entitled to carry other products, and if so, how should it be decided if they were competing or not. He thought he was in his full right to do what he did. Asked about a possible duty of loyalty, he answers that from his earlier employment he learned to stick to the contract. The contract is the Bible, so to speak. He stuck to bis contract.
The background of Anya's sending out the amethyst and asking for a 4 mm hole was that he wanted to produce one exactly like Aagaard's. Then he would present it to Peter Aagaard and persuade him to let Lund Trading have it produced elsewhere. Peter Aagaard would not give Lund Trading information about the sourcing, and so Lund Trading would try to find its own source. It should be the exact same Trollbead. The accusation by Anya that he wanted to sell counterfeits is false. He never sold an item that was not an Aagaard piece.
When Claudia and Anya sent out pictures of Trollbeads when trying to find manufacturers for No-vo's 5 mm hole beads, it was simply a way of communicating. You have to be a GIA (Gemological Institute of America) educated person to understand facets. The Chinese did not even know what they were talking about when it came to facets. The amethyst never became a Novo bead. Novo has a pumpkin shaped bead, invented by Claudia.
After the termination on 25 January 2011, Novo and Trollbeads are in litigation, and it is correct, as stated by Anya, that 42 beads were taken out of the Novo line. This was done on the advice from the attorneys. The idea is to take it off until the issues are resolved.
Asked why he took on the Trollbeads if be did not like the name, the scary faces, etc., he testifies that it is a beautiful line, and that he likes it. This does not imply that it sells well. His comments on the scary faces related to the fact, as testified by Sarah Johnston, that customers would call up angry. He tried to persuade Lise to change the name, but she would not. After advertising for two years, it began selling better. It was a request by him, made before the contract, that Lise would make new beads. He wrote this in his e-mails to Rene Sindlev who passed his views on to Lise.
When you see the products from afar, they look exactly the same, especially if the beads are combined in the same way. But that goes for e.g. Pandora as well. This is evidenced by the picture displaying a Pandora bracelet alongside a Trollbeads bracelet (Exhibit 32, X 636). When the beads are combined individually, chances are only one in a thousand to end up with a similar bracelet from Pandora or Trollbeads.

2. Greg Lasznynski

Greg Laszynski has confirmed his written affidavit (Exhibit 51, X 1079). He has stated that he was employed by Lund Trading on 26 April 2010. He was responsible for sales, solely dedicated to Trollbeads. In his eyes, the development of the Novo line, of the Novo products, never had any influence upon the Trollbeads activity. He can agree to everything that Morten Lund Petersen has testified.
Lund Trading was out of space. His office was not much bigger that the desk he is sitting behind right now. His first job was to find more space and get everybody back under one roof. Novo and Lund Trading were kept completely separate. There were no payments either way.
He was in charge of the concept store activities. It was Morten Lund Petersen's idea. The FRU's (or "kiosks") were a new business venture to help market Trollbeads. They had great expectations for this project which was run by Karla Kehres as a separate managing director. She focused solely on this new concept.
As far as he remembers Tim Young only visited Lund Trading a few times. From his start on 26 April 2010 and in the time up to 25 January 2011 Tim Young has probably made two or three visits. It was not very often at all. He knew Tim socially. They were acquaintances rather than friends. Tim Young never called him for any advice or things of that nature.
Technically speaking he is still president of Lund Trading, but from 24 March 2011 onwards he has taken over some responsibility at Novo. Now he is only involved with Novo, responsible for sales, etc.
At Lund Trading he ran four special departments. He knew of the development department but they did not report to him. He refers to the organizational diagram from the "dumpster diving", There were people working with Novo at Lund Trading.
At the time of termination, the remaining stock of Trollbeads, on a cost basis, amounted to 3.5-3.8 mil. $. This is purely cost, it does not include duties, receiving, packaging, costs of moving. You can roughly add 15-20 percent to cover those costs. Off the top of his head, he would say that the value is probably 4.5-5 mil. $.
After 25 January 2011, Lund Trading offered to sell Trollbeads to sales reps with a discount of about 20 percent. They also returned some shipments to Winnie in China, possibly to cover some invoices. He believes that they have paid all invoices to Winnie, either through direct payment or through the returning of goods. He cannot say whether all invoices were paid as they fell due. He does not remember.

3. Peter Aagaard

Peter Aagaard has explained that he and Lise Aagaard own 100% of the capital in Zen Capital A/S which owns 100% of the capital in Lise Aagaard Copenhagen A/S which again owns 100% of the capital in the North American subsidiary Trollbeads US.
It was René Sindlev who originally contacted Lise Aagaard because he was interested in the Trollbeads. He was already then involved in Pandora. René Sindlev contacted Lise Aagaard as a private individual, and they were under the impression that he wanted to leave Pandora. Later, when it became clear that it was not going to be René Sindlev, he suggested Morten Lund Petersen, the brother of Michael. There were no discussions at all about distributing Trollbeads along with Pandora. It was not even up for discussion.
He only just saw the e-mail correspondence between René Sindlev and Morten Lund Petersen in connection with this case. Originally, he was not informed about the content of the e-mail correspondence.
The first draft contract was sent by Morten Lund Petersen on 29 January 2004. On his PC, he can see the e-mail sent by Morten Lund Petersen: "I attach the first draft.... template from Pandora". In her reply to the e-mail of 3 February, Lise stated that the agreement would be forwarded to the attorney. Clause 8.8 was added at the request of their attorney, Karsten Kielland. As far as he recalls, the clause was Lise's wish. No issues should come up on termination of the agreement. The clause covered both termination and cancellation. It could be both situations.
Both he and Lise had attached importance to Clause 3.5.1 (Exhibit 1, X 131) specifying that Lund Trading was to "enforce the Right Holder's [...] intellectual property' rights". Many copy products enter the US market. However, the clause does not only cover 1:1 copying. Only very few cases concern 1:1 copying. It is much more common for trademarks to be infringed or for something to be too close to a brand or concept.
Clause 5 specifying that Lund Trading must make a dedicated marketing effort reflects the fact that he and Lise did not in principle have a problem with Lund Trading distributing other jewelry lines - as long as they were not in competition with Trollbeads. Lund Trading was not allowed to distribute beads-on-bracelets.
That was completely clear. Clause 1.2 stating that Lund Trading distributes "various products" covers only non-competing products which are clearly not beads-on-bracelet products.
The agreement with Pandora (mentioned in Exhibit 23, X 1125), according to which Lise was designing certain glass beads for them, was not kept secret to Lund Trading. It was René Sindlev who facilitated contact to Lise Aagaard, who was of the opinion that then "Pandora should also pay royalty this time". A dispute had previously arisen in relation to Pandora on some products that were very similar to Aagaard's products. Pandora's glass beads differ from Trollbeads. Trollbeads have a silver core "rimming" the hole of the bead and very small flanges. Pandora beads have two pieces glued around the hole and very large flanges.
Spinning also had a beads-on-bracelet concept, and he and Lise found that this was inconsistent with the agreement (Exhibit B, X 142). The e-mail (Exhibit B, X 140) stating that Lund Trading should as a minimum sell Spinning products from a separate website must be considered based on the fact that Morten reassured them that he was only interested in selling the rings. If he only were to sell the rings, then they could not and should not object to that. Later they were told that Morten would stop selling Spinning products.
They had also had some discussions with Morten concerning marketing, and his statement (Exhibit B, X 139) that he would spend 15% on marketing was therefore very important. For the major success brands, it is quite common for an amount corresponding to 10-20% of the turnover to be spent on marketing. 15% was fine, it was satisfactory.
The reason for the addendum (Exhibit AR, X 147) which was drawn up prior to a meeting in Washington D.C. was two key issues: 1. The extent of Lund Trading's marketing activities 2. The content of Lund Trading's marketing activities. This was a requirement set by Aagaard before they would discuss it. Lund Trading's marketing activities were too far from the global line.
Clause 6.2 of the agreement (Exhibit 1, X 133) sets out that sales prices will be set jointly, but Lund Trading ended up setting the prices themselves. In their opinion, this was contrary to the agreement.
With respect to Lund Trading's blocker beads and safety chain, the fact was that he and Lise saw them at SLF (Winnie) in China. There he saw blocker beads and he confronted Morten with that. It was totally unacceptable. Admittedly, they were not referred to as Trollbeads products on Lund Trading's website, but they were often confused by distributors. The result was that Morten stopped production and Lise developed her own production. Lund Trading produced chains in their own workshop and sold a safety chain which he discovered was not Aagaard's safety chain (Exhibit C, X 154). An agreement was then made to the effect that Lund Trading was to buy it from Aagaard which improved it. It had to be strengthened and soldered. Later, when the quality issues had been solved, Morten was supposedly allowed to produce and sell it directly.
Obviously, accessories may not be sold without approval from Trollbeads. He has no immediate recollection of other cases than the two mentioned above.
The reason for the E-mail discussion (Exhibit 75, X 170) about the amethyst being produced elsewhere was that Lund Trading is entitled to produce elsewhere but that this requires Aagaard's approval. Since Lund Trading did not want to disclose where they intended for the jewelry to be produced, it proved impossible to approve alternative production sites. An amethyst is difficult to cut and it is difficult make the type of bole used in Trollbeads. Aagaard was the first to launch such amethyst bead. According to the production agreement with SLF (Winnie) in China, Aagaard may terminate the agreement if amethysts are sent directly. The amethyst was important. It was one of the most popular beads.
Morten Lund did not inform Aagaard that in 2010, he tried to buy the amethyst directly through Anya Pinchuk (Exhibit B0, X 1 [3]87). This is contrary to the correspondence from 2008 and to the agreement, according to which he must discuss supplier/manufacturer. Aagaard had not been informed. Delivering the amethyst was not a problem in 2010 as it had been in the introduction phase where it was more popular than expected. Later, this returned to normal.
The e-mail from Sarah Johnston from the summer of 2010 (Exhibit BU, X 238) was forwarded to him by Lise, and they discussed their suspicion. They were deeply concerned and had to find out how much truth was in the information. They could see the Novo Beads website and had received the information from Sarah Johnston. That was it. He had some knowledge of US attorneys and Reed Smith back from the 1990s when he worked in the US, and Stephen Murphy was assigned the case. He thinks that their first meeting was in September 2010. Stephen Murphy told them that it was a serious accusation and that they had to find out what was the actual truth in that. Stephen Murphy suggested hiring a private detective. This is how it is done in the US. They had tried to see what they could find themselves on the Internet. So had Sarah Johnston.
As a result of the E-mail from Sarah Johnston (Exhibit 59, X 273) stating that Novo and Lund Trading were using the same building, the private detective initially started to monitor traffic to and from Lund Trading's building and Novo's building. The two buildings were located on the same road but far apart. He and Lise had a meeting with Sarah Johnston in connection with their meeting with the attorney. Sarah had no e-mails or any other documentation.
The e-mail stating that Blaire Richardson was "on board" (Exhibit 59, X 279) resulted in an interview with her on 24 January 2011. The attorney had said that they needed third party verification before they could take any further steps against Lund Trading. Until the meeting with Blaire Richardson, they had Sarah Johnston's e-mails, the meetings with the attorney, the meeting with Sarah and the results from the trash surveillance. They had not talked to any other former Lund Trading employees.
The documents produced as Exhibit BH (X 1[1]97) were what they received from the trash surveillance. That is all they have got. That is what they gathered in the period until 25 January 2011. Stephen Murphy recommended that the information be verified by at least one other person. This other person was Blaire Richardson. Not until the conversation with her, did they have enough documentation to move on.
Presented with the amount of the gathered material (Exhibit BF, X 1 [1]96] and when asked why they did not react until 25 January 2011, he stated that the reason was that, until then, they had only received information showing a certain degree of confusion between Lund Trading and Novo, LLC, but no documentat ion of Morten Lund Petersen's direct involvement in Novo. It was only pieces in a puzzle. The US subsidiary was established in September which held the key to some of the pieces. They had to bear in mind that they needed to be able to supply goods if it proved necessary to terminate the agreement. 1,000 retailers depend on supplies from Aagaard. Establishing the company served as insurance. A tenancy agreement was concluded on 1 December 2010, and in December 2010, two employees were hired. Many pieces fell into place in January. However, the decision to terminate the Agreement was not taken until immediately after the conversation with Blaire Richardson on 24 January 2011.
The table of "Market penetration for Trollbeads" (Exhibit AS, X 1023) includes all countries that started at the same time as or later than the US.
The breast cancer awareness campaign - the so-called empowerment beads - was a charity project to which all links in the chains had to donate half of their profit. This therefore applied to Aagaard and Lund Trading and - in some cases - to the retailers.
He had not seen Lund Trading's strategic marketing plan for 2011 (Exhibit 16, X 974) prior to the termination. Neither had he seen similar plans earlier in the cooperation with Lund Trading. Marketing costs of USD 1,180,000 out of USD 35 million are very far from 15%. It would have been USD 5 million. Other retailers of Trollbeads vary between 10% and 20%. In Germany, they operate with 20%. The average is about 15%.
As for concept stores, Morten had shown them a picture of the actual "island" at a distribution conference in 2010. In Europe, they are used by the Baltic distributors. Concept store comprises both FRUs - Floating Retail Units - and in line shops. Added to these are the shop-in-shops. The above-mentioned FRUs - or "kiosks" - were to be set up in shopping malls. They were not successful in the US. Some are running okay and one or two are running well, but the rest are running at a loss. For now, they have stopped setting up more FRUs. Several of the existing FRUs will be closed down. They do well in Spain and the Baltic countries, and the distributors decide whether they are a good idea. In the US, Aagaard is now a distributor, and as mentioned, they have stopped expanding for now. They own three FRUs themselves. All three are running at a loss, one close to break even, the other two run poorly, Christmas sales are to be included, and results are awaited. The rest - about 15 - are owned by the retailers. They are in dialogue with them, but the retailers decide whether to close them down.
The meeting at Lund Trading on 25 January 2011 was scheduled in advance. They were to have a dialogue about production in Mexico. It was the first time they had received a specific outsourcing opportunity from Lund Trading. The meeting then took a different turn. Stephen Murphy, Attorney at Law, participated in the meeting and he went through the gathered material. They then notified Morten of the termination of 25 January 2011, cf. "By Hand Delivery". Morten Lund Petersen was confronted with his involvement in Novo Beads. Stephen Murphy had brought evidence. Morten Lund Petersen responded by saying that they had entirely misunderstood it. He had nothing to do with Novo. The discussion did not get any further. It was Stephen Murphy who wrote the letter of termination (Exhibit 2, X 362).
They had the list of retailers, to which this letter (Exhibit 3, X 380) was sent, from their Trollbeads site. The list originally came from Lund Trading which had a store finder on its website.
The list (Exhibit A A, X 286) was forwarded by Lund Trading upon request in September 2010. It was an update of the store finder on the website. They did not know Lund Trading's sales reps in the US and did not send any notification to these sales reps. Within five days of the termination, all sales reps had contacted Aagaard.
Asked about private detective Brown's trash surveillance and presented with Exhibit 57 (compiled in a separate portfolio), Peter Aagaard stated that he had never before seen this material. It must be material from the discovery carried out in the US. From Brown, they only received material concerning Novo. They have not used any of it in their work with the Trollbeads.
He believes that Mary Joe Coe contacted him on 25 January 2011 in the evening. He talked to her a few times. She is now employed with Aagaard where she works with marketing and market development. She has not provided them with any information they can use in future. He contacted Stephen Murphy to find out what Mary Joe Coe wanted to talk to him about. The attorney said that first she had to hand in her notice of resignation at Lund Trading. He could not discuss any future employment with her while she was still there.
The e-mails presented as Exhibit A (X 393) are only examples of the e-mails and calls they received from retailers with negative publicity of Lund Trading. They received close to 200 e-mails and calls during the first days.
Lund Trading has a total of about 50 sales reps covered by 14-15 sales reps agreements. The majority of the former Lund Trading sales reps are now sales reps for Aagaard. This happened after they had been "released".
The letter of 27 January 2011 presented as Exhibit A (X 394) from F. Joseph Gormley, attorney-at-law, included what is called a release letter from Lund Trading. In reality, it contained a threat of lawsuit which made the sales reps very nervous. So while the immediate response had been very positive, it was now replaced by nervousness. Generally, however, Aagaard received very positive response in the market.
He made contact with Kimberly Wahlberg on 26 or 27 January 2011. It was the first time he met her. They had had no previous contact. Of the former Lund Trading employees, they took over Mary Joe Coe as sales manager, Sarah Johnston as event coordinator and Jody Green as sales reps manager.
Trollbeads US has been running at a loss (Exhibit AA, X 796) due to many extraordinary expenses. Great uncertainty prevailed as to the transition due to the temporary restraining order Aagaard was faced with. They spent a lot of money on making themselves visible, and sales were a huge challenge not only in the US but globally. They established that Novo had been sold to up to 18-20 Trollbeads retailers which now also sold Novo in their shops. They spent much more money on advertisements than previously.
They had no desire to take over the US market themselves. Receiving royalty' from the US sales was actually a good idea, because then they could focus on Europe and Asia. But they could not have a major disloyal distributor in their network. They had no "plug and play plan". They spent many calories trying to find out whether the accusations raised were true. After 25 January 2011, they really were to build the organisation. This process is not yet completely finished. A manager started in September 2011. He had to run it himself from February to September 2011. Only the 2012 plan would be the real plan. Not until February 2011 did they start booking fair stands and media space. Their advertisements did not come out until May 2011. If a plug and play plan existed, it would definitely have been a very unprepared plan.
No other manufacturers of beads-on-bracelet lines have an individual story for each bead. This was one of the distinctive features of Trollbeads. True, other manufacturers also use storytelling, but they do not have one story for each bead/charm. This is unique. He does not know whether Silverado also has one story for each bead.
The reason why Aagaard terminated cooperation with Lund Trading was that it was completely unacceptable with a sole distributor which was financially and operationally involved in a competing product. In respect of the financial involvement, they knew of some intermingling of Finances. The interview with Blaire Richardson also confirmed that Morten Lund Petersen was behind Novo Beads. The exhibits were the credit cards. There were no specific evidence. They only had the evidence from the trash surveillance. They were pieces in a puzzle.
With the knowledge he now has, he can say for sure that Morten Lund Petersen is financially involved in Novo. The money for Novo comes from Morten Lund Petersen. He did not know that for sure back then, but since Lund Trading paid for the development, there was reason to believe that he was involved to some extent. It is true that you could not be 100% sure. This was the basis for the decision. There were no other papers. The decision was made on the basis of the interview with Blaire Richardson. It confirmed the information they already had. Not until then was Aagaard ready to terminate. He was in the US on 24 January. He did not attend the interview with Blaire Richardson which Stephen Murphy was in charge of. Stephen Murphy had also talked to Sarah Johnston on a separate occasion. It was Stephen Murphy's decision. During the interview with Blaire Richardson, Sarah Johnston was present, and possible also Luke McKay from Reed Smith as secretary of the meeting.
Aagaard had established the company Anglo-American Jewelry Corporation in September 2010. The company had two employees, one in customer service and one CFO. A recruitment company in Princeton had recruited them. It happened in November. They had a database of possible candidates and conducted interviews. Subsequently, he conducted interviews with selected candidates in November. He went to the US in November because of this. From 1 December 2010, they had a lease agreement. It was arranged through an estate agent in Princeton. This was taken care of on the same trip in November. He does not remember whether he went to see the lease, but he probably did. It was a small lease. Since then it has been extended twice.
They requested the updated information from Lund Trading about the retailers in connection with an update. Not only Lund Trading was asked.
He wrote the information letter of 25 January 2011 (Exhibit 3, X 380) together with Stephen Murphy during January. He does not recall whether it was at the beginning of January. The new contract with the retailers was made towards the end of January or at the beginning of February. He does not remember that. As far as he remembers, it was not sent out along with the information letter. The retailers were not allowed to contact the manufacturer.
After the termination, he was in contact with Patrick Kehres. This was perhaps one or two weeks later. Westfield Mall had an FRU and they contacted him to find out whether Karla Kehres had contacted him. She had not. That was about three weeks into February. Peter Schauben was among the sales reps who contacted him within five days. But he was also contacted by one photographer used by Lund Trading. Personally, he did not talk to anybody.
In January 2009, he was notified of Sarah Johnston's e-mail (Exhibit BT, X 181). He discussed it with Lise, and they were disappointed about the accusation, if it was true. Perhaps it was simply kept in the basement and stayed there. On 24 June 2010, they received the e-mail (Exhibit 59, X 243) about the website novobeads.com. They checked it out. Then they contacted a US attorney with whom they probably had the first conversation in June or July 2010. Their first meeting was in September. The first contact to the then Danish attorney at Accura was also in July-August 2010.
In his opinion, hiring a private detective cannot be in violation of any duty of loyalty. The decision was made on the basis of advice from the US attorney. Getting to the bottom of such cases is difficult. Both ordinary surveillance and trash surveillance were conducted. Photographs were taken of meetings between Morten Lund Petersen and Tim Young. Confronted with what he had previously stated about Aagaard having the full decision basis, he stated that at least one report had been made of a meeting between Tim Young and Morten Lund Petersen at Morten Lund Petersen's office. He remembers the description of this. Reports had also been made that Tim Young was a frequent visitor at Lund Trading's office. This was also a piece of the puzzle. All pieces are about the same size and neither of them provides the entire picture. Trash surveillance started in August-September 2010.
Presented with the fact that in August-September 2010, Aagaard had the statements from Sarah Johnson - if any validity could be attached to these statement - the papers concerning Novo, LLC, the names of the designers and asked what was then missing, he replied that it is easy enough to get a perspective of the situation with the information available today. Former employees might have their own motives. Tim Young's visits could be attributable to a friendly relationship. Back then, Aagaard did not have any concrete documentation proving disloyalty of such serious nature. Documentation was provided through Blaire Richardson's confirmation to Stephen Murphy. This is third party verification which fits well into the other information. It is correct that Blaire Richardson had already been sued by Lund Trading when she made her statement to Stephen Murphy. She said that Kokopelli, a large retailer of Trollbeads, had received a visit from Novo and had accepted Novo Beads. Kokopelli was situated in Maryland, and an employee checked whether it was correct. It proved to be true. Stephen Murphy, attorney-at-law, prepared minutes of the conversation with Blaire Richardson. The information contained in the minutes confirmed the other information. Blaire Richardson said that there had been less focus on Trollbeads. He relies on minutes of 27 February 2011 of the meeting on 24 January 2011. She confirmed the information about Nifty Things in Michigan and that Morten Lund Petersen has kept his involvement secret.
Blaire Richardson also explained that a number of retailers were concerned about declining focus on Trollbeads, lack of focus on promoting and advertising. No specific examples were given. Aagaard buys the magazines and tries to stay up-to-date. As far as he knows, only one meeting was held with Blaire Richardson. When asked whether an employee would on the same day drive out to the shops and check up on any issues stated by Blaire Richardson, he explained that they would not drive out on the same day. They had previously visited those shops. It was validation of information. Her information was in accordance with their observations. Knowing that her information was correct was very important for credibility.
They did not ask Morten Lund Petersen because of the magnitude of the breach of loyalty. It could not be handled in any other way than by dismissal. They were unable to see any future cooperation.
Sarah Johnston received no payment or presents. Or yes, when they visited her, she did receive some presents and they also took her out for dinner (Exhibit 59, X 274). Sarah Johnston and her husband most likely received some Trollbeads bracelets. Lise can probably answer that question.
It was awfully serious. They saw no reason to give any notice. They had not received any information from Morten Lund Petersen in 2009 or 2010, and when they confronted him with it on 25 January 2011, he claimed that they had completely misunderstood it and that he had nothing to do with Novo Beads. He would not have admitted that earlier - the way he did in this case.
As a result of the termination, he had to spend all of his resources and calories on the US market. For the past year, he has not had anything to do with the international sales of Trollbeads. They would like to have done without it. It was not good for the business.
The attorney forwarded the material from the surveillance which was relevant for this case. The material submitted was the material which the attorney or private detective found relevant to the case. Much other information was revealed in connection with discovery in the case against Novo.
They have received a customer list, but it was Trollbeads relevant. They also received other material which did not necessarily state "Novo", but offhand, he cannot give examples of this.
When the agreement was originally concluded, he understood that René Sindlev was leaving Pandora. This was an important issue because a distributor needs to be dedicated. René Sindlev would not have been able to do both. The way they understood it, René Sindlev was willing to leave Pandora. René Sindlev did not say anything about a sale of shares and negotiations never got that far. Confronted with the fact that he had previously read from the e-mail correspondence from the time around conclusion of the agreement and asked about the number of e-mails, he replied that it was probably about 20 e-mails. The contract was sent back and forth. They were assisted by Karsten Kielland, attorney-at-law. He does not know whether Jan Borrit Hansen has been used as attorney by the other party. Perhaps René Sindlev has involved him.
Clause 8.8 (Exhibit 1, X 134) of the agreement sets out that, after expiry of the agreement, the sole distributor is not entitled to sell Trollbeads. The way he understands it, Trollbeads are "the Product", but he agrees that it means something different in clause 2.1. However, in his opinion, "the Product" referred to in clause 8.8 must be the physical product, the stocks. The definition in clause 1.1 means that it also includes stocks.
The case involving the Danish Jewellers Association (Exhibit 41, X 158) concerned the matter of copying of Trollbeads. He does not remember the details. It dates back to 2000 and discussions were oral. It concerned a chain from Pandora and a chain from Trollbeads. It was stated orally that there was nothing to come for. Pandora had its own locking system (thread and screws). Importance was probably attached to other matters, for instance that the companies were entirely separate and had not previously cooperated.
In relation to Spinning, he says that it was never the intention that their sole distributor should sell other beads-on-bracelets. Common practice is for their distributors to come and ask whether they have any problems with him selling this and that product. Most recently, their UK distributor asked them whether they would any problems with some Buddha statuettes which they did not. It was no problem. Earlier, their Swiss distributor wanted to sell the Danish produced Les charms which is a beads-on-bracelet product but they said no to that. And then the Swiss distributor did not start selling them. It has not been generally communicated that they consider beads-on-bracelets clearly competing. They have answered when asked. Lund Trading also knows what competing products are.
They have not included non-competition clauses in all of their agreements. They operate with different agreements. Such provisions are not necessarily included in their agreements, but it is their general policy that whereas rings and earrings are okay, beads-on-bracelets are out of the question. They resigned themselves to Lund Trading selling Spinning as it was the rings, not the charms, that were being sold. Subsequently, they learned that Lund Trading had stopped. It was no longer to be seen on Lund Trading's website. He does not think that it was just on a separate website, but he thinks that it disappeared completely. Morten Lund Petersen had assured them that is was only Spinning rings. No acceptance was given to sell beads-on-bracelets from other companies. After the discussion with Lund Trading, he could not find Spinning on the website.
The fact that Winnie held back some moulds to e.g. Christa Brooks following the termination, this was attributable to bills not being paid on time.
After having listened to the evidence in the case, Peter Aagaard further explained during a re-examination that a total of about 400 Trollbeads exist and about three or four of them are "scary faces" or trolls. Morten Lund did not have to sell those. They received no complaints about "scary faces" or beads with trolls.
In such case, René Sindlev would sell either Trollbeads or Pandora. Joint representation was never considered.
The sentence in the story of Trollbeads (Exhibit 30, X 961) was incorrect with respect to production in the US. It was a matter of correcting a mistake, and not wanting to state that they were "made in China". It was a correction of a factual mistake — the beads were not made in the US - and then the text had to be changed. There had never been any plans of production in the US.
In relation to the rumour from September 2010 (Nifty Things/Dough Hickman), he states that he has called Doug Hickman, who confirmed that he had met with Tim Young in December 2010, but had not said anything about termination. He only head about that from some competing companies towards the end of December 2010. Doug Hickman also said that during the summer of 2010, sales reps and retailers had a discussion because of Lund Trading's treatment of retailers. If this continued, Trollbeads in Denmark ought to give notice of termination to Lund Trading. It had nothing to do with Novo. It was about the requirements Lund Trading placed on its retailers.
The first meeting with Reed Smith was in September 2010. A decision was made not to give notice of termination. That decision was made much later. Back then, there was not sufficient evidence. They had Sarah's explanation and strong circumstantial evidence on the Internet but no concrete evidence. Brown's trash surveillance was expensive. It continued until the autumn because it was part of solving the puzzle. It lasted until mid-January. He would have been stopped, if it were believed that sufficient material had been provided.
Aagaard was ready with the first national advertisements in the US in May 2011. Upon termination, a team of 8-10 Danes had travelled to the US at the end of December to handle the retailers if notice of termination was given. But there was no marketing or sales department. As Morten also stated, they were unprepared. A single person was brought along from the marketing department in Copenhagen. Bookkeeping was done from Copenhagen. The first two DTP employees were hired for the marketing department in February-March and a marketing manager was not appointed until the summer of 2011.
He has checked whether Silverado has stories related to their beads. This is not the case.
No notice was given because it was so obvious that Morten had done everything he could to cover up his involvement. That was what made the entire case so difficult. When Morten was confronted on 25 January 2011, he completely denied having anything to do with Novo. The notification to all retailers had to be distributed, or otherwise they would all be taken hostage, which they also were for the period of the temporary restraining order. On their part, they wanted a prompt transition so they would not lose ground in the US.
Lund Trading and Aagaard did not communicate very well by e-mail. A notice would not have changed the fact that future cooperation was impossible. Such a major breach of loyalty was impossible to overcome.
Novo has no amethyst, but they have a CZ bead in about the same colour. The Trollbeads amethyst will be completed in Copenhagen, i.e. finished off with a silver core.
In connection with campaigns, the addresses of end customers were gathered, e.g, in connection with campaigns which gave out a bead or two for free. The US campaigns were different from those in Europe. In Europe, you had to buy a chain with two beads and a lock to get a free bead. In the US you either got a bracelet or a lock for free.
For empowerment beads in the US, special beads were made with a larger hole to allow them to be used on Pandora bracelets. There were ten of them in a bunch. The other distributors did the same thing. The size was a bit of a gimmick. It was Lise's idea: "If you have to give away money, you might as well take up space on other companies' bracelets". Referring to the summary of Lund Trading's sales (Exhibit 62, X 837), the witness states that there has been different campaigns every year. It is a natural part of sales, and campaigns should either be included or excluded for all years. In 2010, there was a "Start a Bracelet" campaign. If campaign sales are excluded for 2009 alone, 2010 would still not show any improvement in this respect but simply a zero-result.
He is not very familiar with Novo's product range. He does not know every single bead. He has not been in a Novo shop to look around. He does not remember exactly how many products are subject to the US lawsuit, but it is probably around 40. The US copyright infringement case is not about whether each individual bead infringes any copyright but about the look and feel of the line. This also includes the chain, photos, presentation, etc.
His comments in relation to René Sindlev were not about a discussion they had with him but about a feeling they had. There appeared to be one conflict with Per Enevoldsen which made René Sindlev consider selling his shares.
The reason why René brought up Morten was that he could not or would not himself. Their impression that René would leave Pandora was not discussed directly. The first meeting was with René alone. The run-up to the meeting with Morten went through René. After the meeting with Morten, all contact was with him. As mentioned, it was not a topic of discussion. It would have been inappropriate to include René if he still had Pandora interests. When this was not clarified already as the very first thing, it was because they thought that René was considering leaving Pandora.
At the meeting on 25 January 2011, they hoped to agree on an assignment. But since Morten denied any relationship with Novo, he contacted one of his employees in Princeton and had him send out the information letter. It had been written the week before.
The meeting on 25 January was scheduled at the beginning of December. But quite a few pieces of the puzzle were still missing. Many pieces fell into place in the first half of January. "Point of no return" was on 25 January. The last statement was the one from Blaire Richardson which had been received the day before.
Everything had been prepared. He had a meeting with the attorney in the morning. They had hoped for a dialogue with Morten. Once the newsletter had been distributed to the retailers on 25 January, it was the point of no return.
Had the presumption proved incorrect - if documentation had been available proving that Morten was not involved in Novo — the agreement would not have been terminated. If Blaire Richardson had said that Morten had nothing to do with Novo, the situation would have been different. Morten had been an active part of the entire process. He had been in charge of development. He was the one who launched the ship.
At point of no return, they thought that Morten was less involved than he actually was. He had taken development further. He had participated in the marketing activities. That they did not know. Neither did they know that LMD had used the same photographer. They actually thought that the separation was clearer. They knew nothing of his financial involvement — nor the fact that he was therefore interested in how well Novo's business was doing - and in any circumstances it would have been a breach of loyalty. They had presumptions but no evidence.
At the time of the termination, they had no concrete evidence proving that Morten was behind Novo. On 25 January, he said that he had nothing to do with it and that it was all a "misunderstanding". They had heard that he had sold to Tim Young and that a trust was involved, and at the time of the termination they thought that those parties had the financial interest.

4. Lise Aagaard

Lise Aagaard can confirm that Peter Aagaard's statement corresponds to her recollection. She thought that the first e-mail about Lund Trading's development project was the reaction of a disgruntled employee. The person in question had been aspiring to be a goldsmith, and Morten Lund Petersen refused to give her access to any contacts. When she read the e-mail that that Morten had been running a secret development project she thought: "Why on earth would he do that? He had a good agreement". She and Morten were not on the best speaking terms. It would be a little embarrassing if she were to confront him with something she did not really believe herself.
The development of the Trollbeads was started in 1976 by her father, Svend Nielsen, and her brother, Søren Nielsen. Søren made six beads. They were to be worn in a leather necklace. One of the beads had a face and it looked like a troll. Hence the name. Her father is a goldsmith and two of her brothers are goldsmiths as well. In the 1980s, she also became a goldsmith after having done something else. She worked alone. Already one year after, she set up on her own.
At some point, six beads were put on a silver bracelet and displayed in the shop window. Just a single bead was displayed in the other window. One day a customer wanted to see the bead on the bracelet. Another day, a customer wanted two beads on the same bracelet, and she thought that it was a strange idea. Soon after, a friend of that customer came in and wanted the same. So basically, the customers' wishes developed the product. It did not happen overnight. Some customers asked for figurative things or beads which would symbolise e.g. faith, hope and charity. Others asked for beads with animals. The line was developed. Beads of silver, gold, mixed silver-gold, gemstones, faceted stones and cabochons were added to the line. The glass beads came later. They only got them after 2000. They were they only company with glass beads. They were not really introduced until 2004. It was a difficult product to develop. Glass is hard, silver is soft. A glass bead would slowly wear out the silver bracelet. A silver core needed to be inserted in the form of a silver grommet which so to speak "everts out" of the hole. Technically speaking, the silver core is a cut tube.
They used sub-suppliers right from the start. The chain was made by a German supplier. First they bought it through a Danish retailer, later they bought it directly. The actual beads were also produced by sub-suppliers. In the beginning, Danish goldsmiths with idle capacity produced the beads, and her father Svend, and older brother, Jens, probably also accounted for some production. In 2003, they engaged a German casting firm to produce the silver and gold beads. The Chinese factory arrived on the scene in 2004. They have a general agreement with this factory which also produces for other markets. It was René Sindlev who found this Chinese factory. The employees in China were trained by her. Silver and gold are very easy to learn. They can do it themselves. Glass beads are much more difficult, and they require special instructions. She made them all herself until 2002.
They were four people travelling to China together for the first time: Morten, René Sindlev, Peter and herself. She brought along 12 gas burners with tubes and everything. 12 Chinese girls were to be trained in making glass beads. Much to her surprise, they learned really fast. They were able to make silver cores right from the start. Outsourcing is the basis of the entire production. Winnie has their stamp and she therefore stamps the products on their behalf. They are very careful when deciding who gets to use the stamp. The other glass workshops have to deliver their beads to Denmark where the silver core is then inserted.
The background of the amethyst was that she would like to have stones. They found five business partners, met with three and went on with one. It can hardly be explained in words by e-mail, and samples were sent back and forth. She likes to use elements from the culture in which the product is manufactures so that the design reflects the culture. This is the reason for the great diversity of her products. Amethyst is not a standard bead. It was very difficult in the beginning. Making a four mm hole trough a natural stone is very difficult and the breakage percentage was high. There was a substantial loss. Facets give a pretty gleam and ten facets on a bead are beautiful. No one else had faceted gemstones.
The lighthouse bead was sent to her as a completely finished sample from a German goldsmith, Gabrielle, about six months before the collection. They had 15 designers in Copenhagen. She though about Morten when she saw it. She had not seen that Morten had himself made one for Novo. They never saw anything from Novo until they saw it on the website.
She developed a double lock. The possibility of changing beads at home was next in line. At the meeting with Morten, it was a clear agreement that they needed to have one. She then developed the small carabiner for the small eye and the large carabiner for the large eye. The intention was for it to be replaced by other designs at a later time. However, it sells so well that it never happened. The small one has never been given up, and today, its the best selling one.
Her father, Svend Nielsen, thought that there should be a stopper on the chain and he made experiments with skipping rope and washing line which could be attached as stopper. Generally, she does not really think that gravity should be fought. However, her father made a stopper, but it did not always work. That was in the mid-1990s, perhaps later. They only sold them for a short period of time. The blocker bead which Lund Trading introduced was far from elegant. It was a cast elements with an O-ring. It had hearts on in it. She did not like it. She went back to her father and they developed a thin stopper where the silver was bent around the silicone ring. It was stamped. Winnie did not want to make it. Only after severe pressure from Morten did Winnie accept and production moved to China.
Morten would very much like a safety chain. She herself thought it was for old ladies or to make the bracelet look expensive. Morten wanted it, and she could do better than the sample he had. Morten wanted to produce it himself and he was allowed to, but it had to be stronger and be soldered. The best locks are cast not pressed, and they had a bit of a discussion or conflict about the design. Morten would have preferred a cheaper product. Quality assurance was made when it was delivered to them by from the factory.
Her comment (Exhibit 46, X 235) to the royalty reports from the third quarter of 2009 - "nothing less than fantastic" - expresses her view that it is important to praise whenever praise is called for. She willingly does that. And this was definitely worth the praise.
She did not really want to be in charge of the US market. She is happy with other self-employed persons who reap a benefit from their work, both distributors and manufacturers. The thought of taking over the US market was nowhere near. This was not Aagaard's key competence.
Sarah Johnston wrote a new e-mail on 24 June 2010 (Exhibit 59, X 243). It was about the marketing of Novo. It was the first time they heard about that. Her first thought was that she had never before been copied so closely by anyone. She also said that to Peter. It was the ring at the end, the eyes, the small and the large lock in each end, the colours, the stories, the credits given to the designers, the fact that the bracelets could be opened and that beads could be removed and added.
The stories related to the individual Trollbeads was a result of the way in which customers spoke about "Lucky knots" ("Lykkeknuder") and "Knots of life" ("Livsknuder"). At first, the beads only had names, but people also wanted a story about the beads. A little story is related to each bead, but the story is an option -you can also make your own story.
Asked about the e-mail of 26 August 2010 (Exhibit 59, X 268) from Celia Chin, she replies that she does not know who Celia Cihn is. The e-mail has been sent to the e-mail address at Trollbeads.com called "info". Aagaard received many such e-mails, and they forwarded them to Morten. They also sent a reply to the senders asking them to contact Morten.
Morten had a program through which he kind of punished his retailers. A silver dealer, i.e. a dealer at silver level would not be able to get a limited edition, which was only given to special shops by Morten.
Pandora is simpler than Trollbeads, more commercial. Pandora's beads have far fewer details and therefore fewer steps in the production process. Pandora wants an "insanely cheap" product. As an example, Pandora's flower beads only have 13 steps. Later, they also went up to 20 steps but not more than that. Her beads have up to 100 steps. They might also have as little as 20 steps, but typically, they have more. It was fantastic for her to make Pandora's glass beads (mentioned in Exhibit 23, X 1125). It showed that there was great interest in her work. It was a good idea, because it was quite a unique opportunity to divide the waters. The message she received from René Sindlev was that Pandora had made a decision of principle to sell glass beads, and she could have done nothing to prevent this decision anyway. Pandora was entitled to use the same solution. Instead Pandora used a cast insert with a screw thread inside. It was a complicated material, which was glued into the glass bead. It consisted of two cast elements and ended in a large rim on each bead.
Morten wanted special beads for the US market. Trollbeads had 20 distributors in 45 countries, and at some point there was a "World Tour" where each country had four beads. Those beads could only be bought in that particular country. This way, tourists could buy a bead which they could not get at home when they were travelling or as a present for someone at home. She delivered the four beads, and the distributors were to make a fun little movie about the four beads. By watching the movie from e.g. Germany, it should be possible to learn a little bit about the country. The product range included 6-8 US beads. She recalls having to remind Morten that he had not responded whether he wanted to be part of the "World Tour". She thought that was strange.
When she looked at Novo beads for the first time, she saw silver, silver/gold and pearl beads. She is not sure whether there was also cubic zirconium (CZ). The gemstones came later. When stating that she had never before been copied so closely, she referred to the entire concept. It was difficult for her to see that some of the beads were typically American. She thought that they looked very similar to her beads and thought "Maybe Sarah is right", and then she also shivered a bit. Perhaps the amber beads came at a later point in time, but there were definitely pearl beads. No one else has such a flexible chain as Trollbeads. It is not possible to make such a flexible S-shape with the Pandora and Chamilia bracelets.
At some point, Morten had presented her with the idea that she ought to design a bead with something characteristic of each of the 50 US states, but she did not think that she could burden e.g. a retailer in Kalundborg with 50 US beads. People are to take ownership of the bead themselves. At some point, she launched a new line named "Walk" with two children's feet, two high heels and two men's shoes which was especially used in New York as "their" beads.
It is not a requirement that her texts are being used. People can make their own stories. Novo's beads included far more beads with hearts, flowers and lucky knots than beads with specific US themes. The vast majority was not particularly American, but it is possible that certain things are more sacred in the US. As an example, an Adirondeck chair was definitely American.
It made her shiver, because she did not want to find out that Morten was behind it. If it were him, he would cannibalize on her brand. They discussed Sarah's e-mail. Even though she did not want to find out that Morten was behind it, they had to act. It was a choice between the plague or cholera.
Trollbeads are characterized by a wealth of details, the stories, the promotion of designers, the element of play and the freedom to make your own chain. The design is very well thought out. Customers who prefer Trollbeads to e.g. Chamilia and Pandora attach importance to the wealth of details, the stories and the Trollbeads glass used. Many people also prefer Trollbeads because it is the original product. She does not think herself that the latter is important, but many people do.
As regards empowerment beads, Morten requested that those beads had larger holes to make them fit every chain. The black/white beads are the best selling beads. Pink/white were the colours for Breast Cancer Awareness. There were several special beads. As an example, Morten purchased a huge quantity to support the earthquake victims in Haiti. The manufacturer, the distributor and the retailer each donated half of their profit. These beads are still part of the product range.
After having seen Novo beads on the Internet, they suspected that Morten was behind. However, they could not see exactly where Novo was domiciled - an address had suddenly seemed to be removed. She remembers that Novo was located in the same town as Lund Trading, but she does not remember whether they were on the same road.
The Trollbeads line has silver charms which suit the US market, but they were not made specifically for this market. As an example, there is a desert theme. She also suggested an Indian theme, but Morten was not at all interested in that. He was interested in a coke can, a football and a cocktail glass as charms. The Trollbeads line once had 5 balls symbolizing the various team sports and later also some beads symbolising individual sports.
The names of some of the Novo beads were very similar to hers.
When they received additional e-mails from Sarah Johnston, she would probably send flowers as she wrote. At the visit, they brought along presents - a bracelet for Sarah and a bracelet for Jeb, her husband.
In August 2010, there is an e-mail (Exhibit 59, X 252) stating that they should have a talk "on the phone". They have probably had that talk. She does not recall what specific information she received. She does not have any specific recollection about the e-mail (Exhibit 59, X 262) concerning "another update" and "our own discoveries". It was very split between her and Peter. There is an e-mail (Exhibit 59, X 265) from Sarah to Peter containing a tag with pictures. She does not remember what pictures. This also goes for the e-mail of 25 August 2010 (Exhibit 59, X 266).
She had a meeting at Sarah's place and in this connection, she also had a meeting with Reed Smith. Afterwards, she met with Sarah again. Sarah has an amazing memory. She does not remember much from the meeting herself. Not much new came up. The meeting probably lasted half an hour or an hour. Afterwards, they went out to get something to eat. She remembers it as sort of a repetition. Sarah had been deeply involved in production development and talked about that and said that one of the designers had previously been her teacher. Morten spent a lot of money on development work.
When she saw Novo beads on the website, she was personally very sad. The circumstantial evidence that Morten was behind it was substantial, but there was no specific evidence. They felt that they would be in a bad position if they were to give an account of Morten's involvement on this basis.
They arranged for an employee to visit some shops. She has not herself visited a shop that sold Novo. The employee purchased three beads: a zirconia bead, an amber bead and a silver bead. It was one of the Danish employees who bought the three beads, and the first time she saw the three beads was in November 2010. It took a while before she saw the bracelet.
They have always had the Trollbeads.com website, and in fact they have had some sales to the US. The website was fantastic for gathering information. They never advertised this website and did not feel inclined to enter the US market. It is likely that they will try to get a distributor in the US again, but it is a very difficult business to leave to others.

5. Marcella Rose

Marcella Rose has testified that from the outset she was a designer, but that now she works in the advertising business. At some point she started doing jewelry. She got in touch with Lund Trading via a trade magazine where she found an ad from Lund Trading which was searching for outside designers. This was in the fall of 2006, she believes. She talked to Sarah Johnston via mail and the phone, and she forwarded some of her designs to Sarah. Sarah responded that they were interested and that they should move forward. They signed an agreement, and the designing of beads could begin. She started on the designing process in December 2006.
She was encouraged to come up with her own ideas for beads. It should be new and fresh. She is a very spiritual person, and she came up with things like "Two souls one spirit", "Unity" and different goddesses. She knew that the designs were to be used for beads on bracelets. This was in December 2006.
The phrase "bead pow wow" in the e-mail from Sarah Johnston from 6 September 2007 (Exhibit 76, X 149) referred to a list of ideas that she had been asked to make ("a huge list"). The e-mail is sent in September 2007, that is some months after December 2006-January 2007 when she had started out working for Lund. This letter is a response to Lund's reaction. Maybe a few of her beads were too big, but other than that, they loved them. They narrowed it down, and then they moved forward. They loved what she came up with after that.
She knew that Lund Trading had Trollbeads. To begin with, all she had was an ad from a trade magazine, She did not see real Trollbeads, but she looked them up online. The e-mails said that she should make beads different from any others, so she should definitely do them in her own particular style.
She did not know of a separate line called Novo. It was a long time before she heard of it. She asked Lund Trading how long it would be before her designs would hit the stores, and she was told that they would submit her beads to Trollbeads. At some point, she was told that Trollbeads did not like them. Originally, she thought they were going to be part of the Trollbeads line. She would not say that her beads are similar to Trollbeads, except for the size. She was told to make beads that were "uniquely Marcella Rose". She has her own style. It is very organic, feminine, and truthful. Trollbeads are very precise. She herself cannot draw a straight line.
In 2007-2008 she was told it was for a separate line. This was right after Sarah had left Lund Trading. Suddenly, they wanted a new logo. Basically, it is all her design. She thinks the logo for the new Novo line is beautiful. It is hand-drawn!
She designed probably some 200 beads for the Novo line. Silver, gold, silver and gold, gemstone, and pearl beads, She did not make any glass or cubic zirconia. She made some beads where a tiny zirconia part was added to them, e.g. a tiny flower.
She has never visited Lund Trading. She is still waiting for an invitation. Over the years, she talked with Morten Lund Petersen a couple of times. They talked in the beginning when they discussed the wording of her contract. She e-mailed Sarah, and Sarah informed her of Morten Lund Petersen's views. It drifted away. Maybe a year later or so, she talked to Morten Lund Petersen again when she was following up on something or wanted to discuss payment.
Originally, Sarah had told her that this should be something totally different. She was always under the impression that it should look like things she did. Lund Trading rejected some items. A little mermaid was returned immediately, and she was told to stay away from fantasy topics. She thinks that her beads reflect the American theme. It belongs here. She made a wolf, an American chief, jazz, whales, which she considers to be American. She was invited to give the beads names, and the names just came to her immediately, some before she makes the bead, others after. She did not look at Trollbeads or Pandora names. She gets her inspiration from within.
She knows that Novo, LLC is a separate legal entity, and she is designing for them today. She be-came aware of it sometime in the summer of 2009. She talked to Anya on a monthly basis. She also talked to Tim Young. After Morten Lund Petersen changed to Novo, she also talked to him. It was her impression that Tim Young had purchased the company. She talked to him and to Anya. She talked to Morten Lund Petersen about other things, about jewelry. They always talked about things other than Novo.
She admits that her Linkedin profile from 2 July 2010 does not mention her doing work for Novo, although, as stated, from the summer of 2009 she understood that she was designing for Novo. She probably just did not update her profile. Anya was employed to do Novo beads, and they talked together at that time. Anya told her about the Novo beads line.
She receives her pay checks from Tim Young. Years ago it was from Lund Trading. It stopped last summer, no, the summer of 2009. Yes, from the place where she was living at that time, she would say it was 2009.
She gave the beads a name, and she also gave them a story. That was at the beginning. She has not done so recently.
She gets royalties from the Novo beads. She has a living interest in the Novo beads in the sense that she will get a larger royalty if it is a success.

6. Martina Windels

Martina Windels has confirmed the contents of her Expert Report (Exhibit 54, X 911) and her resume (Exhibit 54, X 919). She has explained that she has a background in jewelry. Starting out as a goldsmith in Germany, she became a master of jewelry in the U.S. and has worked in the jewelry industry ever since. She has taught jewelry design for seven years, and she has exhibited at a jewelry gallery. She writes about design etc. All her working life has revolved around this.
To make her expert report she received nine cardboards with samples of Novo beads and Trollbeads, covering some 40 products. She received Karsten Ravn's report and Exhibits M, K, and L. She disagrees with Karsten Ravn (Exhibit 54, X 914). She thinks the design features are "commonly used". The four elements -the chain, the bead, the lock (clasp), and the stopper bead - are common for jewelry design. They are all commercial, and it is difficult to claim that any of them is unique. The symbols are common symbols, like the heart, a star, a Christmas sleigh. They are all part of the common design vocabulary. It is hard to make a distinct product when you rely so much on common elements. There are not really any distinctive designs in the four elements. The chain is veiy commercial. The clasp is somewhat more distinct, but very common. Beads have existed for over 100,000 years. Perhaps the stopper bead is a little more distinctive. The beads are the most expressive parts.
Having received the nine cardboards, she compared the lines. She looked for similarities and differences. From an overall perspective, Trollbeads are more geometric, more abstract. They are more sophisticated and aimed at the European market. The Novo symbols are well-grounded in the

American market. Both lines rely on symbols. The idea of a chain bracelet is that the beads can symbolize different events. An Eiffel tower can symbolize a visit to Paris, France, and a baby carriage that you had a baby. The baby carriages of Novo and Trollbeads are very different.

The Novo line has a cowboy hat and a log cabin. These are specifically aimed at the American market, and they are not in the Trollbeads line.
The average consumer will probably not be able to distinguish the different products. The consumer would not only have a problem distinguishing Novo and Trollbeads, but also e.g. Pandora and Chamilia. It goes for the entire market. The market is very crowded, and there are probably over 100 companies trying to sell beads.
The product names are similar for several products, e.g. snowman, flowers/pansies, chicken/duck, wine harvest/grapes. The background is that the names are very descriptive and tell what the bead symbolizes. It is just describing the product, really, and there is no proprietary element in that. Novo is just another product in a crowded market, not a similar product.
The witness has confirmed that she has been paid for making the report.

7. Tim Young

Tim Young has testified that he holds a Bachelor of Science in Business Administration from the University of South Dakota. While in college he wrote a paper on mortgage banking. This was in his senior year. Afterwards, his professor told him that these papers are usually a joke, but that there actually could be something about what he had written. He worked at a mortgage bank for 12 months, and then established his own business, ran it for 3 years and sold it at a profit. He re-invested in a car wash chain that was doing badly, turned it around, sold it, and made a profit. He then bought 16 hair studios in 4 states, managed them, and later sold them at a profit. Currently, he is the owner of a chain of furniture stores in the Baltimore-Washington D.C. area. He still runs them.
He met Morten Lund Petersen at a dinner or Christmas party held by some mutual friends around 1995. Their wives got to know each other pretty well, and he would see Morten Lund Petersen occasionally. They did not lunch or dine together, they did not have each other's cell phone numbers or e-mail addresses, and they probably just saw each other annually, and only on occasions. At some point, he hired Morten Lund Petersen's stepson to work for him. Morten and he started to talk a bit more with each other occasionally. In the fall of 2009, their wives had them out for dinner. His wife had told Morten's wife that he was a bit bored with his other businesses, the furniture stores and his real estate investments. Morten's wife suggested that the witness should call Morten about a new concept that somebody should launch. He was in Sacramento, California when he called Morten. They agreed to meet for lunch as soon as he got back. This was in October 2009.
He was a little familiar with beads beforehand because his next door neighbour was a retailer for Pandora. He had read her business plan, and had thought that it was not a very good buy, but it turned out that it was. He knew from his wife that Morten Lund Petersen's business was doing extremely well, and he wondered a bit about it. They were in the worst recession since the 1930s, and still these bead dealers did so well. You need to buy bread, but you don't need to buy beads.
Morten Lund Petersen showed him the Novo plan. The American theme makes it special. The Trollbeads were pretty, but they did not make sense to him. They seemed foreign. The American themes, on the other hand, really got him. They made sense. There was a conestoga bead, a cowboy hat bead, a cowboy boot bead. This appealed to him because when he was fifteen, he dressed up as a cowboy as did his friends, and they went to see rodeo shows. He has been to Oregon where even today - 150 years after the big push to the west - you can still see the tracks from the conestoga wagons. He has backpacked into the heartland of the US and seen bisons, so the bison bead made total sense, too. This was different. These beads were for the American public who did not get the European beads. It made total sense.
The lunch with Morten Lund Petersen lasted maybe 90 minutes. He was very, very interested. He was pretty clear that he did not just want a job, he wanted an equity position, to own part of the business. He suggested that he would make a resume and a business plan. Morten left it to him to suggest a fair equity amount. The business plan dealt with the question why the bead business was doing well in a time of crisis. It included a SWOT plan, but not a lot of numbers. The equity split was not his idea, but 20 percent was fair for him. They needed 1 mil. $ to get started, 200,000 $ came from him, 800,000 $ from a trust, Morten Lund Petersen just said "a trust" - or maybe "a family trust". They were not friends so they needed an operating agreement that stated who was in charge, etc. He was in charge. He had full control over all decisions. He was the manager and the decision maker. It made him furious when on occasion he heard Lund employees whisper that he was not smart enough, or did not have enough knowledge of the bead business. He has been working 7 days a week, through holidays and Christmas since he became involved in Novo. He has not had three days off. His other businesses have suffered, and his wife is not very happy by his 100 percent involvement in Novo. He ran it 100 percent.
Morten Lund Petersen did not have many comments on his business plan proposal, and at the time he was surprised about that. Now that he has reread the business plan two years later, he can say that 90 percent of his assumptions were correct. Of course he received pieces of advice from Morten, and they discussed things. He would ultimately need a sales manager and asked Morten for ideas. He also asked to learn what shows had been successful, and what shows had not.
He had a good deal of experience in advertising himself. In the haircut franchise he was involved in, he had been on the advisory board consisting of 6 franchisees, and they helped manage an advertising budget of 2 billion $. He had been in on deals for 10s and 10s of millions of $ in advertising campaigns. His experience was especially good when it came to TV and radio campaigns. He had a little less experience with the printed media. He had been in on sponsorships and advertisement deals with NASCAR (race cars), and a women's basketball team. He would call Morten Lund Petersen occasionally and ask about this and that. He got no customer lists. He got no sales forms. He never got any development strategies from Trollbeads.
The trustee - or executor of the trust - was Morten Lund Petersen's accountant. The accountant signed the operating agreement on behalf of the trust, but did not play an active part in the business. The trustee was probably a little bit deficient or rather not as active as he should have been. He does not know whether Morten's wife is a beneficiary of the trust, or if it is only the children. He does not even know if the children know of the existence of the trust.
The operating agreement included setting up the company, articles of organization and the like. Prior to his involvement, a company by the name of Novo, LLC had been set up (Exhibit G, X 165), and he had had nothing to do with this prior entity. He wanted a new company to be set up, and suggested a "clean" LLC, with no prior record. He gave the papers to Morten Lund Petersen's attorney who would then erase the old company. November 2009 was the legal start of Novo, LLC (Exhibits G, X 166 and X 169). This was the birth, as far as the formal papers were concerned.
Because of the recession, there was no shortage of empty buildings, and the rates were low. He knew a real estate agent whom he had used for 20 years. Morten Lund Petersen had also used him. He discussed the physical location with Morten. He signed the lease on behalf of Novo, LLC. With a company only 1-2 weeks old, now signing a lease for 5 years with an option, the landlord naturally wanted some security. He had to show him the tax returns on his other businesses, and probably also his personal tax return, and he had to put up a personal guarantee, also to get power and lights turned on, etc. The building was an empty shell, basically some empty warehouse space. Half of it was to be converted into offices. There were 8,000 square feet in total, and half of it would be left as a warehouse area.
The design or intellectual property rights of the Novo line was owned by Tang Trading Ltd. He does not have an interest in that, and he does not know much about it. He has made no payment to Tang, but to the designers, e.g. Marcella Rose.
He started hiring staff in February 2010. He did not hire a permanent employee to begin with, but just one temporary employee to do letters, etc. The clerical workload was not that difficult to manage. He was preparing ad catalogues and expansion of the line. They only had 100-120 designs at the time. He could be off a little bit on the figure, but it must be around that number, and it was not enough to take to market. In June 2010 he hired his first full-time employee, Jimin Park. She was the perfect person. She holds a master's degree from Rhode Island's School of Design, RISDE, an Ivy League institution. She had obtained a master's degree in jewelry and received a Fulbright scholarship. She was also good with IT issues. She was very "all purpose", and just perfect for Novo, LLC. She also took care of the remaining designing projects with the existing designers.
To assist Jimin they later hired Claudia Bridge (or Arbalaez) who came from South America. Claudia was instrumental in developing the design, and she brought in Anya Pinchuk. Jimin became the project manager, both designing and marketing beads. Initially, Jimin handled the quality control of Marcella Rose's designs, maybe suggesting them to be made smaller or adding a pair of wings or the like. Later, Jimin started designing beads on her own.
The manufacturing process took place at different locations, depending on whether it was silver, gold, gold and silver, pearls, or CZs. They did not use Lund Trading's network for sourcing. A lot of the manufacturing takes place in Novo's building: clipping off of silver, polishing, inserting cores in CZs, stamping logos on inserts, etc. Jimin would source the raw material on her computer. For the CZs they had six different sources. She would find them in e.g. Asia or the Pacific. She would decide herself, and she did not contact anybody at Lund Trading. He does not think that Lund Trading even uses CZs. It is far superior to glass and used as a sales argument for Novo.
Novo started taking on sales reps and getting retailers from June 2010 until 25 January 2011. It happened gradually. In the fall of 2010 they had approximately six sales reps. Two had worked for him in other businesses. They did not have any prior experience with jewelry, but they knew retail, and had worked with Walmart and Target earlier. Two more had contacted him through common friends. One was a former Trollbeads sales rep who had been fired. He knew her in advance be-cause she had cut his hair before. Five were found by him. This was up until January 2011.
Novo's first account was kind of iconic. It was opened with two borderline famous stores, which were very, very small, and achieved the best sales per square foot. These two stores are situated in Ohio, just opposite each other. One is a Trollbead store, the other carries Pandora. As Pandora does not allow other lines, he intentionally went after the Pandora store... and he got it! He could have gone after the Trollbeads store, but he did not. American beads hold a powerful brand position in Ohio. As of 25 January 2011, Novo had some 40-50 retailers. These retailers also sold Chamilia, Pandora, or Trollbeads. Roughly 6-7 of them also sold Trollbeads. 6-7 sold Trollbeads, Novo, and another, usually Chamilia. Sometimes, Novo would be the fourth bead line in the store. The major players were Pandora, Chamilia, and Trollbeads.
The main competitor for Novo beads is without doubt Pandora. Pandora dominates the business, 10-1 to the next player. Pandora's numbers are tire only ones that are relatively accurate because it is a listed company. Everybody else can pretty much throw out any numbers. Chamilia is number 2. They are certainly much bigger than Trollbeads, which is 3rd. He is not sure if the status was the same on 25 January 2011.
By 25 January 2011, Novo had made some 300,000-350,000 $ in sales. Trollbeads had two more zeros behind their number. Novo was certainly no threat to them. In his opinion, their products are not quite similar. In his business plan, he made a point of illustrating the difference between on the one hand markets in which the business is only one pie, and the only thing you can do is divide it differently, and on the other hand markets in which the business is a pie you can make bigger. The selling proposition for Novo was the American theme. There were some 125 bead lines out there. To make it as a newcomer, you need an edge. This was the new pie: an "American Pie".
The Novo marketing material (Exhibit 66, X 1001) shows the bangle which is different from the chain. Prior to launching the product he hired an ad company from Annapolis to explore the likes and dislikes of the public. He was especially interested to know whether inroads could be made into Pandora's market. Would a customer put one of his beads onto a Pandora bracelet? How much brand loyalty exists for the Pandora brand? The ad agency did 400 interviews online. The questions were phrased something along these lines: "Would you buy a bead of equal value at a similar cost, but one you liked better, even if it was not a Pandora bead?" Over 90 percent answered "Yes". He was happy. This meant he could sell beads that people would put on bracelets from other brands. He also did research into the question of whom to target, both geographically and with regard to age groups. He wanted to bring the average age down, to appeal to the younger generation. He took the decision right there, a heroic decision, it is fair to say. He decided to go for the bangle.
95-99 percent of all their ad shots feature the bangle. 9 out of 10 of what they sell are bangles. Orders come in, the retailers report back. Chains just remain in their inventory. Novo's chain sale is only at 10 percent, bangles make out for more than 90 percent. The bangle has been out there for around 100 years. There are 125 bead lines out there. Others are certainly selling, but Novo was probably the only one to use bangles at the primary issue. The bangle is on the full page web, and it was so, too, half a year ago.
Cipher from Annapolis, Maryland, did this initial market research, and he was very satisfied with them. Then came suggestions for mock ads, He was less impressed with those. He considered them "cheasy". They had jeans as the background and looked a bit like a Ralph Lauren copy. He did not like it. Cipher had no background in jewelry, but had dealt with auto dealers and the like. The Trollbeads ads really, really looked good. He called Morten Lund Petersen and asked if he could use LMD which was the agency that Lund Trading used. Morten Lund Petersen said okay, and they used a different team to make sure it would come out differently. Morten Lund Petersen participated in an early meeting, the first or the second. This was not a creative meeting, but the budget meeting. The budget was at 100,000 $ and included wet shots design, ad photographs, and writing style. He thought it was too expensive, but Morten told him that it was not unusual with the things Novo was looking for. Altogether he had 20 meetings with LMD, maybe more, and Morten participated in two: the budget meeting and the one in which the bangle picture was presented. He asked Morten Lund Petersen: "This is what I am going to do. What do you think?" Morten was excited about the lower age group, the college age, and the demographics behind it. Morten did not take part in the decisions on strategy and advertising process, except as to whether or not an ad was good looking.
Novo had full page printed ads in some women's magazines like "Elle", "Martha Stewart Living", and "Southern Living", which is great for the southern beads market. Novo did not run in every issue the way that Trollbeads did. Novo ran in some magazines that Trollbeads also ran in, and some that Trollbeads did not use, and Trollbeads used some that Novo did not use. The same applies to Pandora and Chamilia. There are multiple bead ads in the same magazines. Novo and Troll-beads did not coordinate this. They never had a single discussion on this. Based on his budgets, he could not let Novo run ads every month, but he tried to do so every other month. The magazines often stay 60 days on the shelf, and that was okay for his budget. Before Valentine's day, Mother's day and the holidays are important. You need to time it. The magazines often hit the shelves some time before official publication. A March issue is probably on the shelf on 10 February. Morten Lund Petersen never told him he wanted an ad for Novo in a magazine on a certain date.
In the genesis of Novo, i.e. in the first three months at the end of 2009, he met frequently with Morten Lund Petersen, maybe once or twice a week. This lasted until Christmas. He did not have an office at Lund Trading, and even if he had wanted one there, he could not have had it, as they had absolutely no space. He did not use Lund Trading's computer. They discussed the start up, the operating agreement, the Tang royalty agreement, budgeting, and start-up things. They did not discuss the products or designs much. The 100-110 beads were not on the radar at that time.
For three months Novo used office space at Lund Trading, but after that Novo had its own offices. The building inspector approved the new building on 2 March 2010, but he worked there prior to that, probably from the first week of January 2010, supervising the construction work. In January-March of 2010, he was probably at Lund Trading once every two weeks. In April he may have been there once, but also possibly not at all. He was rarely there. It may only have been to give Jimin a ride there, as she had her lunch at Lund Trading. He was not at Lund Trading on a regular basis. He is reluctant to say "not at all" because he might have been there.
Morten Lund Petersen did not visit him often. During January-March of 2010, Morten was there to give some technical help as he himself is the average tech- savvy person. Morten helped with servers and routers, things he cannot do himself. Morten set up the IT room on Saturdays. He considered it a favour from Morten, and Morten did not charge for his help.
Lund Trading used space at Novo's building. He had 8,000 square feet, and Lund Trading was extremely crowded. He had a big kitchen at Novo, some 600 square feet. Early 2010, perhaps February or March, Morten called him and asked if he would have a problem with Morten moving some of his staff there. It lasted until 25 January 2011, for almost a year. There was a supervisor called

Linda from Lund Trading and 7-8 other Lund Trading people, fluctuating members of the staff. Novo did not make use of Lund Trading employees. These employees made long rolls of chains, cut them up, saddled, oxidized, and tumbled them. They did not do this work for Novo. First, Novo did not pay them. Second, Novo primarily do bangles. When Novo went to market, Jimin would make the chains. She was way overqualified to make chains, but she could do this for a couple of hours -and then Novo was fine for 30 days. Lund Trading paid its own employees, he did not. Novo had its own finance system. He opened a Novo bank account on 2 January 2010. The bank needed two signatures, so he and his wife signed. This was in case something should happen to him. There was not any co-mingling of the funds of Lund Trading and Novo.

He did not like to visit Lund Trading because usually a lot of people wanted to talk to him. Anya and Claudia were doing Novo's designs there.
Mary Joe Coe was sales manager. She now works for the Aagaards. She always asked him a lot of questions: "What trade shows are you going to?", etc. He then had two choices: A) to answer truth-fully that it was not any of her business and appear rude, or B) not look very bright by giving vague answers, like "Well, I really have not decided yet". He went for the latter option. Mary Joe was un-commonly interested. The trade shows were not coordinated between Lund Trading and Novo. Novo only went to one show. That was in mid-January 2011, approximately a week before the termination. Lund Trading showed Trollbeads at Atlanta. This was on the 18th floor of the building, the finest spot. Novo was in building 3, which is for the ones who are there for the first time and might not be coming back. Novo had been placed against the wall, underneath a fan, not easy to find. If Novo had been helped, it would surely have been better. It was a horrible place.
As regards advertising, the rates offered to Lund Trading were great. They used an ad broker in New York, My People, who would buy e.g. 20 pages in a magazine and sell them off. Novo used the same agency as he wanted an ad in the InStyle magazine. However, he was presented with an extremely high rate. He called Morten up and asked if this was what such ads go for, and Morten told him that the rate was a lot higher than what he was paying. He then called the ad agency and told them that there were lower rates out there, but he was just told to take it or leave it. Lund Trading also got credit, 60 or 30 days, which he did not get. He had to make payment in advance, and he had to pay for the first ad with his own credit card. Novo did not get any benefits from Lund Trading's business.
The ad sales order of 11 January 2011 that was collected during trash surveillance (Exhibit BJ, X 1[2]15) does not have anything to do with Novo. Novo never ran an ad for a second time. It is not a contact name he knows. This is not a Novo bill. There cannot be any Novo ads paid for by Lund Trading because he paid them with his credit card, filling in his number and faxing it back.
The trade show booth he talked about earlier is the Atlanta Jewelry Show. It is held twice a year, in the beginning of the year, and in the middle of the year. It was important for him to attend it in January 2010. The Atlanta show is by far the most important in the business. Novo had four major rep agencies, among them Appleman and Schauben. He walked the temporaries' area at the show, which was not in the main building where he wanted to end up someday. He walked around and ended at the Lund Trading space on the 18th floor. There were free margaritas and food. It is very cumbersome to do the entire US and very difficult to handle 125 individual reps. It is better to hire an agency that covers a region. His main purpose for being at the show was to see what the temporaries' space looked like because he knew he would be there soon. He also wanted to see who the big players were and to see if he could get himself some reps or a rep agency. Apart from this one incident he did not follow Lund Trading around on its shows. He was not a "groupie". He was not a regular visitor, and he was never behind the counter at a Lund Trading show. He never talked to a customer in Lund Trading's space.
In September 2010, he made contact with a potential retailer, Nifty Things from Michigan. They had contacted him based on an ad. Nifty Things sold Chamilia and Trollbeads, but this retailer really liked the American beads. Michigan is hard hit by imports. He thought this retailer deserved a personal visit and as Michigan is way up north, he flew to southern Michigan and met with the retailer, Doug Hickman. Mr. Hickman loved the product and said he would like to have it. He was a pretty direct individual who tells you exactly what he is thinking. He asked whether Morten Lund Petersen was involved in this. He answered Mr. Hickman that Morten Lund Petersen created 100-120 beads, and that a royalty was paid back, but that Hickman was never going to meet with Morten Lund Petersen who was no longer involved. He, Tim Young, would be his contact, and he asked Hickman why he had asked. Hickman answered that he had heard a rumour that Peter Aagaard was coming to Maryland on 23 January to close Morten Lund Petersen down. He was shocked at this, but now he can see that Hickman was only wrong by 48 hours. This was back in September 2010.
When he was back in Maryland, he contacted Morten Lund Petersen at once. Morten was not in town, but he got hold of him and told him. Morten's reaction was not angry, but he was irritated with him, which he did not understand. But then Morten said: "Tim, rumours go around all the time. There is no worse rumour business than this one. There have been rumours that my brother, Michael, and I work together, or even that we are, in fact, one and the same person". Morten told him about chat rooms and blogs, and the constant flow of rumours. Without actually saying: "Mind your own business", this is what he said.
Asked if he is sure that this incident happened back in September 2010 - four months prior to the termination - the witness has confirmed his answer with a "Yes". He is normally not good on dates, but on this particular day a football game was on, the Minnesota Vikings against the New Orleans Saints, and he was trying to find it on the radio. It might have been the 10th of September 2010, but if you Google 'Vikings v. Saints' you are sure to find the exact date.
The story about his contact with Kimberly Wahlberg (Exhibit 72, X 319) is this: Kimberly Wahlberg called him. He is absolutely sure. It was in December 2010, he would say early December. She introduced herself. He did not know her name, but he knew there was a very successful sales reps agency up in New England. He does not remember how he knew that. New England is Trollbeads territory, so if you Google' Trollbeads' or search for blogs on Trollbeads, you will find a lot up there. She introduced herself as "the Trollbeads rep for New England" and asked if they could talk. He said he would love to. Some people you warm up to immediately, and he did to her. Still today, he has no ill will whatsoever against her. She would like to go beyond New England, and he had pretty green reps. Working with her could be really, really good. They agreed to talk soon again. She should probably come to Maryland to do some due diligence, they agreed, and he asked her how he would recognize her at the airport. She said: "That's easy because I'm really tall and have a big mouth". They met and talked.
Finally, at the end of the day, there was a problem. By contract she could not cany another bead line. He dropped her off at the airport, and they e-mailed back and forth about it. He had not discussed Kimberly Wahlberg with Morten Lund Petersen prior to this meeting. It was his idea, not Kimberly Wahlberg's idea, that they should not mention it to other people. Often nothing comes out of such meetings. Morten did not know that she was coming to Maryland (Exhibit 72, X 333). This e-mail dated 27 December 2011 from him to Morten is really him asking on Kimberly Wahlberg's behalf. The answer from Morten was the same as the one he had given her. Contracts do not allow multiple lines. At some point, she suggested that maybe Morten would feel warmer about it if he got a kickback from Novo beads. He considered that extraordinarily unethical, and could not believe it was suggested by a lawyer. He did not want to let that lie but wrote to her that there was no chance in hell that Morten would do that. A. He would never do it. B. He is far too intelligent to do it.
Asked about the 23 December 2010 e-mail from Morten Lund Petersen to Kimberly Wahlberg (Exhibit 72, X 329) on the need to separate ownership, reps etc, the witness states that he did not receive it. It can be read in two different ways. You can put a sinister spin on it if you want to. The essence is that Kimberly Wahlberg cannot do it, but her husband can do it. The meaning of "... otherwise everybody is going to know..." is just to point out that if it is just smoke and mirrors it will not work. In this almost incestuous little bead world, you have to keep things clearly apart.
In his 23 December 2010 e-mail to Kimberly Wahlberg (Exhibit 72, X 332) he tried to explain that Morten was involved in Novo. There was a lot of chatter out there. The entire state of Michigan knew, he wrote. Mary Joe had a long term relationship with the Aagaards, long before this. Mary Joe's daughter had screamed about it at some occasion, and he had called Morten who was angry. He had told Morten about the rumour he had heard from the retailer in Michigan. This is what he referred to in this e-mail. Michael, Morten's brother, probably knew about Morten. If his own brother had such a project, he certainly would. There had been a passway between servers with the result that some e-mails were mixed up. He does not know the technical details. The reason for saying that Morten was involved in Novo was that he desperately wanted to persuade Kimberly Wahlberg. What he meant is that Novo is Morten's brainchild. He did not mean that the day-to-day business was run by Morten.
Regarding Louise Rogers' e-mail (Exhibit T, X 424) to Peter Aagaard regarding the Novo website autofilling the names and addresses, he cannot explain in detail. He did not personally share any data with Lund Trading, nor did any Lund Trading employees share data with him. He thinks it must go back to the server having the same web designer. There was never any co-mingling of databases. The IT guy they used probably was not good enough and must have made a web design error. It has happened to him as well, e.g. once he wanted to buy a book from an online bookstore and was redirected to Amazon.
As for the cease and desist letter dated 25 January 2011, there is really no need to go further into that. It is a frivolous litigation on the side of the Aagaards. His attorney who has an extensive back-ground in copyright law has told him that in his 35 years of practice this is the weakest case he has ever seen. He himself has been around attorneys before and he has never heard as clear a statement as that. The lawsuit against Novo must have been made to get information for this case, to slow Novo down, or simply to be vindictive. He is really not happy about it.
He knew of Trollbeads' success before he talked to Morten about it. His next-door neighbour was a Pandora retailer, and he knew Trollbeads had also done well.
The 16 hair salons he had did not need advertising of 2 billion $, but he only had 16 out of 1,000 salons in a large franchise chain. He was one of 6 people on a board of franchisees who had control over the ad budget. He just said this to make the point that he has extensive experience in advertising.
He was more than interested in the American beads. The messages appeal to him. Trollbeads do not appeal to him. American beads symbolize where he grew up, his hobbies, etc.
Asked where the American beads are in the marketing material produced in the arbitration as Exhibit 66 (X 1001), he has stated that the engagement ring is, but that this picture was chosen by the photographer for aesthetic reasons. Confronted with the next page of the material (X 1002), he states that the ice cream cone and flip flops and margaritas are American themes - "pretty American vacation", he would say.
The chain production at Novo's leased premises took place in 2010. They put rings on the ends of the chains and oxidized them. Asked to compare the Novo and Trollbeads chains he states that they appear to be pretty much standard issue. They are similar. There is a small ring on one end, and a big ring on the other. Everybody doing such a chain would have to do it this way. Otherwise the beads would fall off everytime you took off the chain.
He does not know the supplier of the Novo chain. Jimin ordered them. They were not difficult to source. Chains and rings can be bought everywhere. There was no co-mingling. The chain work for Novo and for Trollbeads was not done in the same room.
Novo and Trollbeads did not use the same photographers. Novo used Nicole Fallek, who was also used by Trollbeads, but for internal shots only, not for ad shots. For the ad shots Novo used a photographer in Pennsylvania whose name he does not remember. Nicole Fallek took pictures of single beads. These pictures probably ended up in catalogues. Novo used her because she was very inexpensive. She was not qualified for making catalogue shots.
Novo has its own contracts regarding IT systems, i.e. for maintenance, for software, and for support. Lund Trading had nothing to do with that. You have to make a distinction between web design and IT. Web design is the skin so to speak, the basic navigation, and it is done by an ad agency, and then turned over to IT for the navigation. The web design at Novo was done by the same company that had done it for Lund Trading. He does not know Lund Trading's software system. He did ask Morten about software, and Morten recommended what he bought. He used the same software guy whom Morten used. Novo paid an annual fee and a maintenance fee. Again, you have to make a distinction between IT and web design. It would seem that the web guy was not bright enough and made a mistake.
The witness was confronted with the fact that at one point he mentioned royalty to Tang. By that he did not mean that Novo was paying royalty to Tang. It was the intention to do so some day, but no payment was ever made. No contract exists today for a royalty payment. It was discussed at the beginning, but was never done.
The background for the sentence "... probably violate his Trollbeads' contract..." in his 28 December 2010 e-mail to Kimberly Wahlberg (Exhibit 72, X 336), was that Kimberly Wahlberg had told him that she could not represent Novo. He wanted to point out that Morten would not accept a commission, a kickback. At least, he thinks Morten would never accept that. He cannot speak for Morten, of course. To this day, he has not read Morten's contract with Trollbeads. When writing to Kimberly Wahlberg, he just assumed that the contract would contain something to that effect. Now that he has read some passages of the contract, he can see that it is not that well-written. He just knew that he would not allow something like that if he had made the contract. It is not carrying a competing line that would be a problem, it is accepting a kickback. That is underhanded and devious. Asked why it is worse to accept a kickback than to carry a competing line, the witness answers that accepting kickbacks is a very devious way to do business. The contract clearly states that Morten can sell other products. He has read that part and even had it translated! When it came to sales, Novo would not be selling in competition with Trollbeads. He does not think that Morten did everything he could to hide his Novo involvement. He could have done a lot more if he had wanted to. The witness does not know what Morten told the Aagaards.
He received no salary from Novo in 2009, but a little in 2010. For the first six months, he did not get anything.
The capital injection of 1 mil. $ was enough for 2010 to cover expenses for stock and employees.

8. Kimberly Wahlberg

Kimberly Wahlberg has stated that she has been a sales rep since about 1985. She started in her husband's sales agency which he had purchased. They worked together for a number of years, but 9-10 years ago he left the business, and she has run it ever since. She is responsible for 8 states in the Northeast, all six New England states and New York and New Jersey. 99,999 percent of her business came to be Trollbeads, but she also represented a hand lotion line, Crabtree & Evelyn.
She was hired to sell Trollbeads in March 2005 and was one of their first sales reps, perhaps their second sales rep in the US. She is a large sales rep for Trollbeads, with around 25 percent of total Trollbeads sales. Her sales rep group is one of the largest, and she has the largest volume of sales reps dealing with Trollbeads. She got two minuscule accounts when she started, and in the five years up to 2010, she built it up to just over 10 mil. $ with 225 accounts.
Louise Rogers is her largest independent retailer. Louise Rogers also has the longest Trollbeads relation, and she runs a tremendous online business next to her permanent store. What the witness is most proud of is that Louise Rogers is self-taught, also when it comes to the web and the internet. Louise Rogers is an amazing business woman. She is a soft talker, and really developed her business. Louise Rogers is "the voice of Trollbeads", especially to the avid collectors. Louise really cares about the product, and she explains the meaning of the individual beads, etc. Louise also hosts big festivals under the name of "Trollbeads' fest". There were visitors from 17,1 8,19 states and 7 countries. Louise is quite committed to the line.
The situation in 2005 compared with the situation three years on was that in the beginning people did not know these European beads, or why they were fun. There was a lot of explaining to do. Trollbeads were placed side-by-side with Pandora in some stores, but in 2008 Pandora forced their retailers to choose between Trollbeads and Pandora. The majority went with Pandora, but a few stayed with Trollbeads, and their awareness was elevated. In 2009, Chamilia entered the market. It was compatible with Pandora. Some of the stores dealing with Trollbeads now also took in Chamilia. In 2009, Chamilia was an issue. In 2010, it was a big problem! By then, there were probably 65 other bead lines, and that is a lot. Department stores created their own lines, and jewelry multi-store chains did the same.
The slogan "Every story has a bead" was something they treated religiously. It had a big influence. The stories were used by the sales reps to sell to the retailers, and by the retailers to sell to collectors. The retailers are trained to know the meanings of the beads and the stories related to them. It is part of their sales training. There are given stories, but different ways to interpret them. The retailers were encouraged to develop stories of their own. The ultimate collector relates to the beads. It is like the old-fashioned charm bracelet from Grandmother, where there is a story for every charm.
She learned about the new line because people started talking about it. She does not remember the very first time she heard about it, but it may have been from Joe) Bardach who was a Trollbeads sales rep at the time. He was fairly dogged in talking about it, but she could not find it, and asked him to spell it, as the 19 August 2010 e-mail (Exhibit 59, X 283) shows. Then she found it. She first discussed it with Morten Lund Petersen at their 16 December 2010 sales conference in Columbia, Maryland. She flew down to set sales goals for the next year with Morten, and to go over what she needed. She always brought an agenda to these meetings. Mary Joe was there, as was Alan Strott. Sometimes Morten's wife Marilyn would be there, too. When marketing was discussed, Shannon would be there, and Greg Laszczynski also, when it came to sales figures.
The meeting started with Kimberly Wahlberg sitting with her agenda and Mary Joe sitting in the room with her. On her agenda she had the sales programs, the sales models, and the promotional plans. They would discuss Chamilia's and Pandora's plans, and she wanted to talk about the competition. Trollbeads were being clobbered in the market place, and they had to address this competition. She also wanted to discuss the concept stores. She had a potential viable buyer for a concept store. He needed backup from Lund Trading to go along, but he was not getting any.
It was a miserable meeting. She did not get anything. No, she wants to take that back: She got one thing, but not a 100 percent. It was the UBC code, a Universal Bar Code, which most independent retailers need. She asked if they could have it, but Morten Lund Petersen said it was too expensive. You cannot sell to multi-store chains without these codes. She had Paper Stores among her retailers, 17 out of the 26 stores sold Trollbeads. It caused great tunnoil that they did not have the UBC codes.
As regards other sales support, she wanted a free gift with purchase and a calender of promotional events. When she talked about the rise of Chamilia, Morten Lund Petersen did not listen. He just said that they were nothing, just copycats. He never acknowledged this problem. Paper Stores had told her that they had 100 mil. $ Chamilia sales, twice the Trollbeads size. She had a lot of suggestions for more support, but all Morten Lund Petersen's answers were "No, no, no". It is important to know that Chamilia is compatible with Pandora. Pandora is at least 10 times bigger than Trollbeads, and all the other lines made sure they fitted onto their chains. Trollbeads' core is smaller, and Trollbeads do not fit onto Pandora's chains. Maybe they have 50 percent silver and 50 percent glass in Trollbeads, and the glass do not fit onto Pandora, She asked Morten to talk to Denmark about it, but he turned her down. On an earlier occasion, he had called them all a "bunch of idiots".
At one point there was a break in the meeting on 16 December 2010. She does not remember whether it was the lunch break or a break in the middle of the afternoon. Morten came in and started talking about Novo. He was very boastful about it, and obviously very proud of this new line. "This is going to be such a great thing in the US", he said. She asked him if she was allowed to carry the Novo line as a sales rep, and he said that she could if she wanted to, but that it had to be in a separate business in her husband's name. Morten had met her husband and knew that he had been involved with her business earlier. Morten said that she could call Tim Young about it and gave her Tim Young's cell phone number. Then Morten left, and Mary Joe Coe walked into the room again. She must have had a look of total surprise on her face because Mary Joe asked what had happened. She then told that Morten Lund Petersen had said that she could carry the Novo line as well. Mary Joe said in disbelief: "He did?!". Then other people entered the room, and they talked no more about it.
The 17 December 2010 e-mail correspondence between her and Tim Young (Exhibit 72, X 319) started with her calling Tim Young on 17 December 2010. They agreed that she should fly in there so that they could meet. She began looking for flights, and sent him the flight schedule (Exhibit 72, X 321), as he was going to come and pick her up. So, she went back to Columbia the next week. Tim Young showed her the new line. They sat in a conference room. She met his wife. They talked a lot about the new line, about the bracelet, the packaging, and the fact that Morten Lund Petersen's blessing was needed. She was very aware of this problem, as Joel Bardach had been fired just for talking about the Novo line. The witness took out the packaging which she had brought along for the witness examination today. At the meeting with Tim Young, she just flipped open the lid and said: "They are just like our boxes!" To this Tim Young said: "Yeah, they knocked us off - meaning the boxes. At the time she thought it was a joke. She does not know who had the boxes first. She saw both a bracelet in the form of a chain, and one on a hard wire.
The 23 December 2010 e-mail from Morten Lund Petersen (Exhibit 72, X 329) was his first e-mail about the problem. He also wrote one on 18 December 2010 which also mentions that her husband should own the business. It was not Morten Lund Petersen's problem, but hers.
The background for the 23 December 2010 "Boy George" e-mail (Exhibit 72, X 332) was that since Morten's revelation on 16 December 2010 they had by now spent a lot of time to get his blessing. She wanted it iron clad, in writing. He had fired Joel. She has 11 sales reps in her business. By the time they got to this, Tim Young had been trying to say that Morten was behind it, and she knew that Tim Young was trying to get it in writing at her request (Exhibit 72, X 336). A lawyer friend of hers, Mark A. Rosenblum, brought forward the idea that Morten should receive a royalty from the Novo sales, as indicated in Mr. Rosenblum's 27 December 2010 e-mail (Exhibit 72, X 335). Rosenblum was not very keen on her doing this, and he was very clear that she should not do it unless Morten Lund Petersen gave his permission in writing. She wanted to go this way because she felt that Morten was throwing his weight behind the new line, and Trollbeads were getting clobbered in the market as it was.
When Morten mentioned Novo Beads to her at their meeting on 16 December 2010, her initial comment was: "You have done a great job on this, Morten", and she wanted to control Novo Beads in her territory. She knew Morten would have somebody carry the line, and she wanted to control her business. One of the ways her lawyer came up with was this, because a commission paid to Morten Lund Petersen would be proof that he was aware of what was going on, and then he would not be able to go against her. She sent a copy to Tim Young that she wanted Morten Lund Petersen to give his approval. There were two e-mails from 18 December 2010. Only one has been produced as an exhibit in the arbitration.
At the Atlanta show on 15 January 2011, she met with Morten Lund Petersen, and they talked again. Lund Trading had two booths, at two different places. She asked Morten for a walk and told him that she could not go forward unless she got something in writing. He said that he did not want everybody to know of his involvement in Novo. She told him that everybody knew already. He re-fused to believe this, and she then told him that the reps, the retailers, everybody knew. She insisted on something in writing, and finally he said he would do it once, but not anything else. She told him she needed the proof that it was okay with him, and would have her lawyer draw something up.
Then, Lund Trading was terminated towards the end of January. The witness had an indication before 25 January, because the week before Morten Lund Petersen had called her at her home in the evening, maybe at 20:45 or 21:00 hrs. Normally, he would never do that, and normally he would always use the cell phone. He referred back to their meeting in Atlanta and wanted her to explain a bit more why she thought that everybody knew. She told him about Joel Bardach, and the things Tim Young had mentioned in his e-mail about Mary Joe's daughter. She mentioned the accidental e-mail blast from Lund Trading about Novo which by mistake went out to sales reps and consumers. She does not remember when it went out, but she got copied on it. During their conversation, Morten told her that Peter Aagaard was coming in the next day, and she asked him if he was nervous. "No, no", he answered, and he said that their meeting was about setting up a production in Mexico.
The next day, 25 January 2011, there was the e-mail blast telling the sales reps and retailers that Lund Trading had been terminated. She did not know why, and was completely surprised. She sent Peter Aagaard an e-mail, and wanted to talk to him. One called the other, she does not remember who called whom. They met on Friday. She remembers because there was a horrific snow storm. She never had any contact with the Aagaards before that.
Returning to the sales and marketing meeting on 16 December 2010, she can make the general comment upon 2010 that whereas they had grown and grown up until then, now they had reached a point where they were struggling. She felt Lund Trading was forcing a difficult sales plan on her for 2011. There was to be a 25 percent increase, but no help to achieve it. Morten Lund Petersen felt that two magazine ads per month were very adequate, and he would do no more. Her candidate for the concept store had finances to open which costs a lot, but he wanted some kind of partnership deal, e.g. in the form of P.O.S. material or some advertising cooperation where he would get a percentage from Lund Trading, maybe 25,000 $. He himself would be making an investment of some 300,000 $. Morten Lund Petersen would only help if they lowered the commission to 3 percent, which she refused. At the meeting on 16 December 2010, she wanted 10 percent advertising support, and got only 71/2 percent and some extended credit. Out of the seven things she asked for, that was the only thing. He did not cut her commission at this meeting, it happened later, at the Atlanta show, on 17 January 2011.
Over the years, while their sales had increased, the marketing budget at Lund Trading stayed flat. The marketing basically consisted of 2 ads a month. It is night and day, when she compares it with what they have today. Morten Lund Petersen just refused to listen to their problems. That is why she was so afraid of the Novo line. She saw it that way, everybody saw it that way: That was where it was going.
She would not describe the concept stores as a success. It went nowhere with Lund Trading in charge. Morten Lund Petersen wanted concept stores with only Trollbeads, independently owned by retailers, and 30 of these "kiosks" or FRUs (Floating Retail Units) were manufactured. They cost 40,000 $ to buy, and the retailer had to order 100,000 $ worth of stock, and make 5 year leases with the malls. It is a big investment. She asked if they could get some extra support then, but Morten said no. One retailer opened two of them in October 2010, and it was a very difficult ordeal for him. The reps were not successful in persuading retailers to get FRUs, and Lund Trading started opening in malls itself. The retailer she just mentioned opened 5 FRUs with the Aagaards.
When she compares Novo, Trollbeads, Chamilia, and Pandora, she would say that Novo and Troll-beads are almost identical. The chain is very similar. Chamilia and Pandora are very similar, at least functionally speaking. They are both shiny, whereas Novo and Trollbeads are oxidized. The website of Novo and Trollbeads are exactly the same: the site map, the wish list (which Morten Lund Petersen came up with), the customer info, the log in, the subcategories, and the bracelet images looked the same. Novo's website had big blowups of a particular bead like Trollbeads' website has. On Facebook, a good many of Lund Trading's employees were friends of Novo. She does not think there were that many similarities when it came to Facebook, but especially the websites looked exactly the same. Both were situated on Guildford Road, but in opposite ends of the road.
The reason why she said that "everybody knows about it" was that Joel's e-mail led to sales reps calling each other. Sales reps also started seeing Novo in the marketplaces. Joel Bardach did some digging, e.g. he asked one of his retailers to ask for information from Novo. Joel kept her informed and sent her an e-mail with a packet of information attached, as can be seen from his e-mail (Exhibit E, X 313). The 19 August 2010 e-mail (Exhibit I, X 283) is probably sent the first time she heard about it. One reason why everybody talked about it was that there were so many similarities: the website, the friends on Facebook, the products. She works 24-7 and she is very interested in her own business. It was Joel who did the digging. He heard from relatives in Pennsylvania, from sales reps. There was a big store in Ohio that was selling Novo.
16 December 2010 was the first time she heard it from Morten Lund Petersen himself. On arriving, she asked Mary Joe what was going on, and Maty Joe answered that Morten said it was okay to discuss Novo. The witness was nervous because Joe was fired as a sales rep after he had called in at Lund Trading and started asking about Novo. The reason was that Morten Lund Petersen was trying to hide it. Mary Joe told her this.
Asked if she considers Morten Lund Petersen a good businessman, she answers that he is an engineer. In the beginning he did a good job. The last two years he did not, especially not the last. 2009 was rough, 2010 was miserable. There was no funding, no support. Morten Lund Petersen would not listen. Most of the time he would not even come to the phone when she called. One very popular thing was a sales associates' contest where the retailers could win free products. Morten Lund Petersen wanted to eliminate that. There were no new initiatives in 2010. Yes, there were the concept stores but they were carried on the backs of the retailers. Without any support, it is ridiculous to expect a retailer to invest 150,000 $.
Her own business grew because she herself paid for a lot of what she needed. She paid for sales guide training, for photographs, for teaching retailers best practices. She bought bracelets for her employees. She would buy banners, postcards, etc. It needed to get done, To begin with she had had 22 other lines which she pulled away from. Tn 2005 she had 4-5 reps and a business of 30,000 $ which grew to 185,000 $ at the end of the year. In 2006, she did less than 500,000 $, in 2007 it was 2.1 mil. $, but her territory had grown, as New York and New Jersey were added. New York had almost nothing, maybe 40,000 $, but New Jersey had 700,-800,000 $ already when she got it. In 2008, her sales were 5 mil. $, in 2009, 8 mil. $, and in 2010 10.2 mil. $. By then, she had 11 reps working for her.
In 2011, she left Lund Trading. She resigned on the Saturday after the Aagaards had terminated Lund Trading. In January and February 2011 she probably had sales for 20,000 $ for Lund Trading, and her total sales for 2011 will be at 7 or 7.5 mil. $, or maybe it could even end at 8 or 8.5 mil. $. December is a big month, and December 2010 she had sales of 1 rail. $.
2011 was worse than 2010 because of the disruption and the litigation. The reps were taken aback. Some retailers were buying an awful lot of products from Lund Trading and not telling them. She has no idea of the number Lund Trading shipped after it was terminated. She knows of some who bought Trollbeads from Lund Trading. She has more than 200 accounts and cannot remember exactly, probably a few dozen bought front Lund Trading which offered steep discounts. She thinks Preppy Barn (which has two stores), The Currents, Monica Sand, and Parkly bought something from Lund Trading. Probably Louise Rogers did as well, and Neck and the Heart, and some retailers in Maine. She does not have confirmations of this, as retailers were reluctant to tell. The situation was difficult, and she was not going to press her retailers on this issue. She did not really discuss the ongoing sales from Lund Trading with the Aagaards. They all knew merchandise had gone in, but it would only be a problem if the Aagaards had made it a problem. They did not.

9. Mary Joe Coe

Mary Joe Coe has stated that she worked for 25 years in corporate sales in the telecommunications industry, at Horizon. She worked as a sales manager and worked with the sales reps in the state of Maryland and the area around Maryland. One of her customers back then was Niro, and she got to know Morten Lund Petersen in 1994. They became very friendly over the years, and when they met he would always talk about Trollbeads. She had been at Horizon for 17 years when MCI bought them. Morten looked for a sales manager and asked her if she knew anybody who would be interested. After thinking about it, she called him back and said that she would. He told her that it would not be like corporate sales. In April 2007 she began working as a national sales director at Lund Trading. She left Lund Trading in early February 2011. She resigned. She now works for Trollbeads US.
Her job at Lund Trading was hiring and firing sales reps. Lund Trading had 50-60 sales reps on the Trollbeads line. They had a regional manager for the East Coast, and one for the West Coast. She arranged trade shows and until about 2009, she was also responsible for marketing. After that, she still worked closely together with marketing, as sales and marketing are connected, e.g. when it comes to creating programs to enhance sales, which was one of the things she worked on.
Initially, the new line was not called Novo. It started around the time when she started at Lund Trading. It was a second line of beads-on-bracelet, and she always kind of knew about it. She thinks it was underway already when she started. Morten Lund Petersen was involved. He directed Sarah to work faster. He became more and more involved, and shortly before Sarah left, in May 2008, Claudia Bridge started working, probably in April or early May. Sarah instructed Claudia. It was a transition. Being from Columbia, South America, Claudia wanted to know what would be representative for the US, and she and others tried to help her. Trollbeads were not necessarily what they aimed for, as the beads had to be different. Morten Lund Petersen did not want to hurt their sales of
Trollbeads. Anya was hired a little later. The witness did not talk as much with Anya as she did with Claudia. She does not recall when Anya came, and she does not remember when Claudia left, maybe early 2010.
The logo for Novo was developed, and LMD was engaged to do the advertising. They also worked on Trollbeads. There was a meeting in the conference room. Tim was there, so were Morten and his wife, and Claudia and Anya. Afterwards Claudia showed the witness the design of the logo and the smart little boxes in the office. Stephanie also saw them. Both Claudia and the witness thought they were very cool, and the witness asked if they could not do the same boxes for Trollbeads as well. The answer was that they could, and so they did. The boxes were used for Trollbeads around last Christmas.
At some point in time, the witness found a document in the printer, left there by the CFO, Jim Kerr. She kind of joked about it to him and said he should be more careful with what he left lying around. The document had something to do with a trust and Morten and Tim. She only saw the top of the document, she did not read through it. It was not supposed to be lying around.
Of the Lund Trading employees, one named Jessica left in June or July of 2010 to work for Novo. Lucy Austin, a sales rep, also went to work for Novo. She had been terminated because her sales were too low, and Lund Trading needed someone stronger than her.
Claudia and Anya were physically located in Lund Trading's offices. On the sketch displayed in the binder (Exhibit BO, X 1[3]64), their room was the one in the left bottom corner. Shane Powers, a graphic designer who eventually became marketing director, shared the room with them. Space was very limited, and they were practically all sitting on top of each other. In the back room they had some production. It was moved to the Novo building, she was told. She only knew what she was told about this. Most of the time, Claudia and Anya were alone in their room, Tumblers for cleaning jewelry were there, too. The vault which contained all the jewelry and gold was kept in the back of the Lund Trading building. They had access to all the Trollbeads. At one point, there was a theft in the office. Since then, the vault became off-limits for the witness and her people. She was annoyed at this because, to her surprise, Anya could go in and take gold out of the vault.
The witness discussed with Morten Lund Petersen what the Aagaards would say to Novo, the competing line. He said that they might be mad at him if they found out. At least on two occasions she confronted him with the fact that everybody knew. Then he said that the Aagaards could not touch him because it was not in his contract.
Inside Lund Trading, Novo was a known fact, but Morten Lund Petersen was trying to keep it secret to the outside world. When Diva Hansen, chief operating officer of the Aagaards, wanted to come to the office, Alan Strott and Morten Lund Petersen walked around to ensure that no Novo-related things were visible. The bulletin board was erased, and the jewelry was removed. In the summer of 2010, an intern from the UK distributor of Trollbeads wanted to come and visit. It was fine with Morten, but everything in the design room relating to Novo was removed, and they made sure that no Novo things were lying around. In principle, there could have been Novo stuff all over. Now there was none. She made sure.
She recalls that Novo started advertising in July 2010. She had met Tim Young at the January 2010 show in Atlanta and had asked him about the launch. She thinks he had said about July 2010, but he also said that by that time Morten Lund Petersen would have nothing to do with Novo. Tim Young asked her about the marketing of Trollbeads, things like how they had gone about setting things up, acquired sales people, and their strategy. She was a bit. reluctant to answer since Novo was a competing line. This could have been late 2009 or early 2010, or before or after that, she does not remember exactly. She was mostly focused on Trollbeads. She had two talks with Tim Young in the office, and she also met him at the JCK [Jewelers' Circular Keystone] Show in Las Vegas in the end of May or beginning of June 2010. As the time came nearer to the announced launching she avoided conversations with Tim Young.
Asked about the extent of Morten Lund Petersen's involvement in the marketing/sales of Novo, she testifies that he had a meeting with the ad agency, LMD, in the conference room at Lund Trading. She was aware of this fact. She also recommended Lucy Austin to be a Novo sales rep. The witness knew there were talks with Kimberly Wahlberg, and that a Steve Huntington was brought on. Twisted Sisters in Ohio were two stores, run by two sisters, Becky and Debbie. One had Pandora, the other had Trollbeads, but it was the witness' understanding that both sisters owned both stores. She does not know whether one of their stores took on Novo as well. She does not think so because they were premier partners. To her knowledge they never carried Novo. She never had a conversation with Tim Young about the question of a license fee. The witness made a joke about it to Morten Lund Petersen at some point, and he acknowledged it. It was her understanding that Novo was owned by Tim Young and Morten.
In December 2010, Kimberly Wahlberg visited Lund Trading to talk about sales strategy. Greg, Marla Habecker, Kimberly Wahlberg and the witness were in the room to discuss Kimberly Wahl-berg's sales planning. Kimberly Wahlberg came in with a whole list, containing plan and strategy. The list contained a lot of special requirements, e.g. about the FRUs, the "kiosks" to be placed in malls. Kimberly Wahlberg passed over the list to the witness at some point, and the witness remembers thinking: "None of this is ever going to be approved". The forecasting was more about a number that Morten Lund Petersen would want to reach, whether it was realistic or not. The sales reps were expected to reach it no matter what. There was no additional ad support, but without any changes, the new number was to be reached anyway. The support for retailers and the ad support were on the same level as earlier.
At the outset, when the witness came to work for Lund Trading, Morten was very involved in the development of the business. He introduced a benefit program with silver, gold and platinum dealerships, and sales were doubling, from 1 to 2 mil. $, and then to 4 mil. $. In that year, Morten Lund Petersen was happy to do 9-10 mil. $, but the witness said she thought he would reach a turnover of 12 mil, $. They actually had a bet about it. She won because they got more than 12 mil. $. It was very exciting at that time. There was a lot of growth. Marketing did not develop sufficiently after that. She wanted more scheduled ads, but they still just took the remnant ads which they could get veiy cheap provided they were capable of making a decision on the same day. They had ads for 500,000 $ the first year she was there, and for 1,000,000 $ the second year, but then it just stayed there. In the plan for 2011, it also stayed there. In her view, Morten Lund Petersen made a great growth effort in the first years, but not in the later years. He was against banner ads on Facebook.
At the meeting in December 2010, Kimberly Wahlberg did not get through with anything, and she said that then she could not achieve the numbers, but Greg and Morten told her that she had to find a way. There was no real support for Kimberly Wahlberg. The sales reps in Michigan had worked to get a retailer who had Pandora to take Trollbeads instead. They had offered him a deal he could not refuse, and it included 500,000 $ out of the sales reps' own pockets. Morten said no. He would not go along. The 2010 ad budget brought no increase from 2009, even thought the market was a lot more challenging. Earlier on, Morten had been a lot more open to new ideas. One program was to sell fixtures to retailers, but with free beads to offset the cost of the fixtures. A sales rep got a store to carry the line and got initial orders for 120,000 $, but when Morten found out how many fixtures they got, he did not like it.
At some time during the 16 December 2010 meeting with Kimberly Wahlberg, the witness walked into the room, and Kimberly Wahlberg just sat there with an open mouth. She told the witness that Morten had just told her that she could wrap Novo, and the witness said: "Oh, really?" Their conversation ended as the others came back into the room. Maybe she and Kimberly Wahlberg talked casually about it after that, but the witness did not pursue a conversation about it. She was very busy at the end of December.
In 2010, they had 42 mil. $ turnover of Trollbeads. 95 percent of their customers paid cash or by credit card. The retailers needed to be at Gold level at least to get 30 days of credit. The Caribbean dealers got 60 days. Towards the end of 2010, after Greg, CFO Jim Kerr and Joe Glee had taken it up with Morten, they finally succeeded in convincing Morten to open up for credit. One of the arguments was that they paid 1-2 mil. $ a year in service fees for the credit card payments. Now they were allowed to give 30 days of credit, subject to a strict credit approval. For the last three months, they could give 90 days of credit, and the retailers could return the goods freely, without being charged a restocking fee. This was not a success, because most retailers returned the goods. At the end of January 2011, Lund Trading refused to take back stock, and then the retailers asked the Aagaards to take it back. The 30 days of credit applied to most. The 90 days satisfaction guarantee only applied to customers buying a total of maybe 250,000-300,000 $ of goods. Only these customers had the right to return goods.
After the termination in January 2011, Lund Trading at first succeeded with a temporary restraining order, and Trollbeads US could not operate. Lund Trading shipped out as usual, and had trunk shows up to Valentine's Day. They had a lot of orders for special deals. Some asked them who they should buy from, and they answered that Lund Trading was the only one allowed to ship. They told the customers that they had their orders in their system, and that in New Jersey they were not organized. At Lund Trading, they had 6-8 weeks of stock at hand. They ususally stock more at the beginning of the year, because the Chinese New Year means that a few months later it is difficult to get new stock. Asked about the value of the stock, she states that she considered it to be normal. Shortly before she left, Jim Kerr had said that they had 5 mil. $ worth of stock. She estimates that a stock worth 5 mil. $ at cost price would amount to 12-15 mil. $ in wholesale prices, and would take 4-5 months to sell at normal circulation.
At Trollbeads US where she came to, she and others told the retailers that they would give points if the retailers told them what they had bought from Lund Trading. At the end of April 2011, they made a cut off.
Some retailers did not tell them what they had bought from Lund. At Trollbeads US, they did not have a full picture. They got some information, though, and according to this, Lund Trading had sold around 2.5-3 mil. $ at the end of January. This is the value at Lund Trading, i.e. retailers' purchase price, equivalent to 30 percent of the retail sales price, and approximately I mil. $ worth of stock. Lund Trading may have sold for this amount.
As far as the witness knows, no other line used the story lines that Trollbeads use - not until Novo.
The 23 December 2010 e-mail from Timothy Young to Kimberly Wahlberg (Exhibit 72, X 332) deals with the accidental e-mail. Late 2010, Lund Trading ran a bracelet program. The retailers could give some free bracelets, and would be reimbursed if they provided Lund Trading with the name, ad-dress, e-mail address, and phone number of the end customer. The retailers were only reimbursed if they provided this information. It was put into a database. An entire e-mail was sent out that it was Christmas, and it also went out to the Novo database, so there must be a connection somewhere. The software system used by Lund Trading was Vision Core which was adapted to suit Lund Trading's needs. Jasmin from Novo's customer service would call her how to do things, so this is how she knows Novo used the same system. Vision Core was used to run everything about the customers, and somehow things must have been combined.
Asked about Lund Trading's Strategic Marketing Plan for 2011 (Exhibit 16, X 974), the witness testifies that there were no such plans for the previous years. This one was never sent to the Aagaards. It was put together by the marketing team, led by Don Clark at the time. The witness never received it while she was employed at Lund Trading. It contains comments on the competition from Pandora and Chamilia. Novo was never discussed in this connection.
Retailers had to pay for the storybooks, or most of them at least. The gold or platinum retailers received some at no cost. Sometimes when there was a new bead release, they would otherwise give out earrings for free upon request.
The witness heard about the termination on 25 January 2011. She was honestly not surprised. She had heard a rumour from a terminated sales rep whom Morten Lund Petersen had threatened. That was sometime after the release of Novo. Morten Lund Petersen was very angry when the sales rep -Joel Bardach - had phoned in and asked "What has Lund Trading to do with Novo?" Joel was not the sharpest guy and not the best sales person, either. There had been some pressure to get rid of him, and now Morten Lund Petersen fired him. Morten said they should fire the next guy who called in and asked about Novo. Joel Bardach did not like Morten Lund Petersen anyhow, but now he started saying things like: "Morten Lund Petersen is going down!" He claimed he knew a lot of people, also in Denmark, and he said that the Aagaards were coming in and were going to take over the distributorship in January. She thought that he probably only believed half of it himself. The witness said something about this to Greg and to their legal counsel. She had been very concerned back then and wanted to know if something like that could really happen. Greg said that it could happen. Things like that are not unheard of. It was the same with Jeremy Wilson. Morten, on the other hand, said "The Aagaards cannot touch me. There is nothing in the contract". The witness then thought to herself that if he was not going to be worried, neither would she.
On 25 January 2011 the witness shook Peter Aagaard's hand as he came by her office on his way into Morten Lund Petersen's office. The meeting between Morten Lund Petersen and Peter Aagaard and his lawyer lasted for about 20 minutes. When the witness came into Morten Lund Petersen's office he avoided eye contact. He had his head down and was not saying anything. The witness could see what had happened. Ten minutes later the customer service people started coming in and said: "The Aagaards say that you are no longer their distributor". The witness got sick to her stomach. Her livelihood was threatened. She has two children in expensive colleges. It did not seem to be real. She left work and drove home. She was afraid to call New Jersey. She had Lise Aagaard's home number. In August 2010, they had discussed some beads. She called Lise Aagaard, and Lise was happy to talk. She then called Peter Aagaard at 7 or 8 o'clock that evening.
The witness did not provide the Aagaards with information in 2010. She only met with Peter in May 2010, and she did not mention anything about Novo. She had a number of conversations with Lise. There was never any talk about Novo.
Confronted with the note in the 23 December 2010 e-mail from Timothy Young to Kimberly Wahlberg (Exhibit 72, X 332) regarding her daughter's telling all the reps, she said that she really wanted to know three things: When was that? Where was it? Who were present? She does not know what it means - it does not make sense. Her daughter has never talked to "all the reps". She only worked at Lund Trading as temporary help in the summertime period, picking orders and packing shipments.
The concept stores started in early 2010. They were called "kiosks" and were to deal with Trollbeads only. The witness was in charge of sales and marketing until the end of 2009. Then marketing shifted to Shane Powers, and later to Don Clark. Even after that she was still very much involved in marketing. The concept stores were not her responsibility. She had the sales reps to take care of. The Lund concept stores were created by Lund Trading. She does not know the size of the investment made by Lund Trading to create the concept stores.
The 2011 Lund Trading Strategic Marketing Plan (Exhibit 16, X 974) was put together by Don Clark. In late 2010 it was put on her desk. As indicated on one of the pages (X 976) the marketing budget in 2009 was 966,000 $, around 1 mil. $. She does not know exactly but she does not think there was an increase in 2010. She does not recall the figures introduced in this arbitration as Exhibit 10 (X 836) which are 550,000 $ for 2009, and 966,400 $ for 2010. She remembers these numbers to be around one mil. for both years. She does not recall the 550,000 number. It must have been on her desk in October 2008, and she cannot remember these figures so far back.
The premium program with dealer levels was introduced in 2007. It was a success. It gave the dealers something to strive for. The program continued all the time she was with Lund Trading. So did the shows, the fairs, the markets. The January 2011 show in Atlanta was the last one she attended. It was not a discount show. Lund Trading was still in the show room, and they also had a temporary booth that Pandora had left over. That show was an increase in efforts when it came to the show-room. The temporary show did not give anything. They were approached by the Hallmark stores, but Morten Lund Petersen refused to take them on. Lund Trading won an award for the show in Atlanta.