TABLE OF CONTENTS

TABLE OF AUTHORITIES

Statutes

Other Authorities

I. NATURE OF THE ACTION

        2. Plaintiffs Karen Dudnikov, and husband Michael Meadors, are Colorado residents who run a unincorporated home-based business that primarily does business on the eBay internet auction site as well as through a web site, www.tabberone.com.

        3. Using the eBay seller name of blueis2cool and tabberone, the plaintiffs hand manufacture fabric items from lawfully acquired copyrighted fabrics and then sell these fabric items on the web site as well as through eBay. The Plaintiffs also buy and resell a variety of collectibles and other items in the same manner.

        4. Upon information and belief, MGA Entertainment, Inc., is a California corporation with it's US headquarters located at 16730 Schoenburn St, North Hills CA 91343 and its legal representative Carol A. Witschel of the law firm White & Case LLP located at 1155 Avenue of the Americas New York, NY 10036.

        5. Upon information and belief, the defendant makes and distributes toys, books, clothing, and a wide array of other items designed to promote "Bratz" ("Bratz"), a juvenile orientated entertainment.

        6. Upon information and belief, the defendant has actively engaged in threatening and intimidating persons who have attempted to sell the aforementioned items on eBay. These actions include threats of litigation through cease and desist letters as well as terminating eBay auctions selling the items manufactured by the defendant.

II. Jurisdiction and Venue

        7. This Court has jurisdiction over the federal claims in this action under the Trademark Laws of the United States, Lanham Act Sections 32, 39, 43(a), and 43 (c)(1), 15 U.S.C. §§ 1114, 1121 and 1125(a)(c)(1), the Copyright Act 17, U.S.C. § 101 et seq. and the Judicial Code of the United States, 28 U.S.C. §§ 1331, 1338(a) and (b). This Court has supplemental jurisdiction over any common law and state statutory claims under 28 U.S.C. § 1367.

        8. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b)(2), in that a substantial part of the events giving rise to the claims occurred in this judicial district and plaintiffs are doing business within this judicial district.

        9. This action arises out of defendant's improper use of the eBay VeRO Program to terminate an auction listing by the plaintiffs. The defendant alleged in an affidavit to eBay, under penalty of perjury, that the auction by the plaintiffs was infringing because the plaintiffs were infringing upon their trademarks and/or copyrights.

        10. By this complaint, plaintiffs seek a Declaratory Judgment affirming the right under law to sell lawfully acquired Bratz items without further interference from the defendant. Plaintiffs seek a Declaratory Judgment affirming the right to refer to Bratz with these sales and any other similar sales as well as their right to use detailed pictures of the products offered for sale.

III. BACKGROUND FACTS

        11. The plaintiffs manufacture a wide variety of fabric items from a selection of fabrics lawfully purchased through a variety of national outlets. In the course of business, the plaintiffs also buy and resell various collectibles and other items.

        12. The plaintiffs offer these items for sale using the eBay internet auction site using the seller identification of blueis2cool and Tabberone. They have been selling fabric items and collectibles on the internet auction site since 1998.

        13. The plaintiffs also maintain a web site, www.tabberone.com, through which fabric items and collectibles are also sold. This web site has been in continuous operation since 1999.

B. The Defendant and The Defendant's Unlawful Acts

        14. The defendant is the holder of trademark rights and copyright rights to the name Bratz and variations of the name.

        15. Upon information and belief, the defendant aggressively protects the trademarked names. These actions include policing of internet auctions sites. On the auction sites, auctions selling items manufactured by the defendant have been terminated at the request of the defendant.

        16. Upon information and belief, the defendant knows, and its counsel knows, or reasonably should know, that the resale of lawfully acquired product is permitted under copyright law, specifically The First Doctrine. The defendant knows, and their counsel knows, or reasonably should know, that under the Lanham Act, the term "authorized" refers to the counterfeiting of a mark or trademarked product and does not apply to lawfully acquired trademarked material. The intimidation tactics used by the defendant are therefore illegal and immoral. They rely on the fact people can't fight back because of the potential enormous legal expense.

1. Perjury

        17. Upon information and belief, on or about December 2, 2003, the defendant requested eBay terminate the auction listing by Blueiscool, falsely alleging to eBay in an affidavit that the article offered in this auction, a fleece hat with a Bratz applique on it, was an infringing item. The false affidavit filed by the defendant constitutes perjury under 17 U.S.C Section 512.

2. Tortious Business Interference

        18. By listing the item on eBay, a contract existed between the plaintiffs and eBay whereby eBay agreed to host the listing for a period of time. During that time it was reasonable to expect another party to place a bid on the item. Receiving a bid constitutes a binding contract to sell and to buy. The defendant reasonably knew contracts were in effect because the defendant had to look at the listings to affirm information used to terminate the auctions. The defendant improperly instructed eBay to terminate the auction listing effectively and unilaterally canceling the contracts that existed. This action resulted in loss of future revenue and good will to the plaintiffs. The action by the defendant constitutes tortious business interference under Colorado law.

        19. Offering an item on eBay and receiving a bid constitutes a binding contract to sell and to buy. The defendant reasonably knew a contract was in effect because the defendant reasonably had to look at the listing to affirm information used to terminate the auction. The defendant instructed eBay to terminate the auction listings effectively and unilaterally canceling the contract that existed. This action resulted in loss of future revenue to plaintiffs. The action by the defendant constitutes tortious business interference under Colorado law.

3. Negligent Representation

        20. Defendant made representations to eBay that plaintiff was engaged in an unlawful activity and violating federal laws.

        21. The aforementioned representations to eBay were made in the course of business, profession and employment of the defendant as representative of the defendant.

        22. Such representations were false.

        23. Defendant failed to exercise reasonable care and competence in communicating said information to eBay.

        24. Defendant should reasonably have expected that eBay would rely on said representations.

        25. These representations have cost the plaintiff future sales and good will.

4. Fraudulent Representation

        26. The aforesaid representations by the defendant, described in Paragraph 17, were false.

        27. At the time said representations were made, the defendant knew that they were false or was indifferent as to their truth or falsity.

        28. Said representations were material to eBay in deciding whether or not to terminate the auctions. Part of the auction terminations was that eBay sent all bidders an email that stated the plaintiffs had violated the law and infringed upon rights held by the defendant. These emails also strongly urged the bidder not to complete the auction by purchasing the items.

        29. The defendant made said representations with the intent of inducing eBay to rely on them to terminate the auctions and send libelous emails to the bidders.

        30. eBay did in fact, rely on the representations, and acted in accordance therewith in terminating the auctions, and such reliance was justifiable.

5. Outrageous Conduct

        31. Upon information and belief, defendant's representative who terminated the auctions was not properly trained to judge whether there was a trademark infringement but merely "following orders" and lacked the training to handle subsequent inquiries. Form letters were sent in response to inquiries.

        32. Defendant's conduct towards plaintiffs, as described in paragraphs above, is so extreme in degree as to go beyond the bounds of decency and is regarded as atrocious and intolerable in a civilized community.

        33. Defendant's acts were extreme and outrageous and were done with the intent to cause Plaintiff severe emotional distress and to defame to plaintiffs.

IV. Communications

        MGA Entertainment, Inc. owns and controls all copyright, trademark, manufacturing, distribution, licensing and merchandising rights in and to the property "BRATZ", its related characters (i.e., "Chloe", "Sasha", "Jade", "Dana", "Yasmin", etc.) and ancillary properties, (i.e. "LIL' BRATZ", "BRATZ BOYZ", etc.).

        MGA takes its responsibility for the protection of "BRATZ" and the rights it has granted to its authorized licensees very seriously. Due to contractual obligations to its licensees, MGA cannot permit the unauthorized use, sale and distribution of any unlicensed items using the "BRATZ" characters for commercial purposes.

        The second email said:

        To use your own logic, you could not take an emblem from a Mercedes, put it on a Pinto and try to sell it as a Mercedes. You are using a small element from a toy to sell your hats as a "BRATZ" product. MGA cannot permit you to use "BRATZ" to enhance the potential sales value of the products you make.

        The third email said:

        Thank you for your legal analysis, but MGA stands by its decision that you are using BRATZ to sell your products, and therefore infringes MGA's rights.

        35. What is evident from defendant's emails is that defendant is terminating any auctions they want to without regard to the rights of the seller and that the primary purpose for terminating the auctions has nothing to do with trademark infringement but rather their desire to control the secondary market.

        36. The defendant does not maintain an eBay VeRO "About Me" page as do many other corporations.

        37. The response from defendant admits they will not stop and infers they will use all available means to stop persons from selling Bratz items on eBay to protect "its licensees".

        38. Based upon the previously response by the defendant, the plaintiffs felt further communication would be fruitless. It was apparent these actions would continue. On December 9, 2003, plaintiffs filed a counter notice with eBay pursuant to 17 U.S.C. §512, faxing and sending copies to the defendant and counsel of record as could best be determined.

V. ARGUMENTS

A. COPYRIGHTS

1. First Sale Doctrine

        39. The common-law roots of the first sale doctrine allows the owner of a particular copy of a work to dispose of that copy. This judicial doctrine was grounded in the common-law principle that restraints on the alienation of tangible property are to be avoided in the absence of clear congressional intent to abrogate this principle. This doctrine appears in section 109 of the Copyright Act of 1976. Section 109(a) specifies that this notwithstanding a copyright owner's exclusive distribution right under section 106 the owner of a particular copy or phonorecord that was lawfully made under title 17 is entitled to sell or further dispose of the possession of that copy or phonorecord.

        40. The defendant has offered no proof, nor has the defendant alleged, that the applique offered for sale was obtained illegally.

        41. The plaintiffs lawfully acquired the applique already attached to the fleece hat as a gift. The subsequent re-sale of the item falls wholly under the First Sale Doctrine.

        42. The only way for this action not to fall under the First Sale Doctrine would be for the Court to consider the fabric item a "derivative work". But the fabric item fails to meet the required definition for a derivative work.

2. DERIVATIVE WORKS

        43. The primary standard for a work to qualify as a derivative work is that it be copyrightable in it's own right. No one would suggest that an apron or a pillow made from the copyrighted fabric would qualify as copyrightable. Ironing an applique onto a fleece hat, lacks any "originality" which is a requirement of the statute for a work to qualify as a derivative.

        44. Section 101 of the Copyright Act defines a derivative work as:

        a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

        45. A derivative work is copyrightable if it is sufficiently original. 1 Nimmer on Copyright § 3.03. The law requires more than a modicum of originality. This has been interpreted to require a distinguishable variation that is more than merely trivial. L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir.) (en banc) (requiring some substantial, not just a trivial, variation), cert. denied, 429 U.S. 857, 490-92 (1976). As the Court of Appeals for the Second Circuit said in Batlin:

        "Originality is . . . distinguished from novelty; there must be independent creation, but it need not be invention in the sense of striking uniqueness, ingeniousness, or novelty, since the Constitution differentiates "authors" and their "writings" from "inventors" and their "discoveries." Originality means that the work owes its creation to the author and this in turn means that the work must not consist of actual copying."

        Id. at 490 (citations omitted).

        46. In Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), the Supreme Court stated that copyright protection "subsists . . . in original works of authorship fixed in any tangible medium of expression." 17 U. S. C. § 102(a) (1982 ed.). This protection has never accorded the copyright owner complete control over all possible uses of his work. (White-Smith Music Publishing Co. v. Apollo Co., 209 U.S., at 19)

        47. In Quality King Distributors, Inc. v. L'Anzaresearch Int'l, Inc (98 F.3d 1109, reversed), Justice Stevens noted for a unanimous Supreme Court:

        "The whole point of the first sale doctrine is that once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution."

        48. Under the First Sale Doctrine, the plaintiffs do not need, nor require, permission from the defendant to make or to sell the fleece hat. Since no authorization is required, the claims of the plaintiffs selling "unauthorized" goods is baseless. When M&M/Mars sells a candy dish, they do not require the purchaser only fill the dish with "M&M's"®. They cannot legally or legitimately place a restriction upon the use of the item placed into general commerce.

3. Disclaimers

        49. The plaintiffs liberally use disclaimers in their eBay auction listings. Such use is prima facie evidence of lack of intent. The lack of positive statements indicating an affiliation affirms there is none in the mind of the buyer. The presence of a statement saying there is no affiliation solidly reinforces that fact to the buyer. The auction listing terminated by the defendant stated"

        "This is not a licensed Bratz Product. It is however hand-crafted with care using a licensed Bratz applique. I am not affiliated with Bratz or MGA Entertainment."

        This disclaimer was immediately below the listing, in the same size font, in bold font, and highlighted by being backlit in yellow to attract attention.

        50. Every time, the browsing shopper must go through several disclaimers in the eBay auction listings. No one is being misled. No reasonable person would believe that the items being offered for sale were anything other than hand-crafted from licensed appliques. No reasonable person would conclude that the plaintiff was connected with Bratz in a business relationship. No reasonable person would be confused.

B. TRADEMARKS

1. Trademark Infringing Activities

a. FAIR USE

        51. Fair use of trademarks in conjunction with selling or promoting the sale of goods made by the mark holder is acceptable. The defendant appears to contend that selling the item is a violation because they say so.

        52. It is a fundamental principle marking an outer boundary of the trademark monopoly that, although trademark rights may be acquired in a word or image with descriptive qualities, the acquisition of such rights will not prevent others from using the word or image in good faith in its descriptive sense, and not as a trademark. See Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 12-13 (2d Cir. 1976); Sunmark, Inc. v. Ocean Spray Cranberries, Inc., 64 F.3d 1055, 1058 (7th Cir. 1995); United States Shoe Corp. v. Brown Group, Inc., 740 F. Supp. 196, 198-99 (S.D.N.Y. 1990); Holzwarth v. Hulse, 14 N.Y.S.2d 181, 181 (Sup. Ct. 1939); Johnson & Johnson v. Seabury & Johnson, 67 A. 36, 38 (N.J. 1907); Restatement (Third) of Unfair Competition § 28 (1995); 3A Louis Altman, Callmann on Unfair Competition, Trademarks and Monopolies § 21.24 (4th ed. 1983); Margreth Barrett, Intellectual Property 760-61 (1995). The principle is of great importance because it protects the right of society at large to use words or images in their primary descriptive sense, as against the claims of a trademark owner to exclusivity. See U.S. Shoe, 740 F. Supp. at 198-199. This common-law principle is codified in the Lanham Act, which provides that fair use is established where "the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, . . . which is descriptive of and used fairly and in good faith only to describe the goods or services of . . . [a] party, or their geographic origin." 15 U.S.C. § 1115(b)(4).

        53. One could hardly sell a used automobile in the classified ads or other mediums without telling prospective buyers the make and model of the vehicle. The use of pictures of the applique and the name "Bratz" does not violate fair use.

        54. Regardless whether the protected mark is descriptive, suggestive, arbitrary, or fanciful as used in connection with the product or service covered by the mark, the public's right to use descriptive words or images in good faith in their ordinary descriptive sense must prevail over the exclusivity claims of the trademark owner. See Dowbrands, L.P. v. Helene Curtis, Inc., 863 F. Supp. 963, 966-69 (D. Minn. 1994)

        55. In short, fair use permits others to use a protected mark to describe aspects of their own goods, provided the use is in good faith and not as a mark. See 15 U.S.C. § 1115(b)(4). That is precisely the case here.

        56. The fair use doctrine permits use of a protected mark by others to describe certain aspects of the user's own goods. See Car­Freshner Corp. v. S.C. Johnson & Son, Inc., 70 F.3d 267, 270 (2d Cir. 1995).

        57. The Restatement (Third) of Unfair Competition adopts as a relevant factor the "physical nature of the use in terms of size, location, and other characteristics in comparison with the appearance of other descriptive matter or other trademarks." Restatement (Third) of Unfair Competition §28 cmt. c. (1995).

        The Restatement also observes that the scope of the fair use should be related to the degree to which the descriptive meaning is relevant to the goods with which it is associated in the alleged infringement, and whether there are other terms available to describe the pertinent characteristic. See id. Where a mark incorporates a term that is the only reasonably available means of describing a characteristic of another's goods, the other's use of that term in a descriptive sense is usually protected by the fair use doctrine. See New Kids on the Block v. News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992); 2 McCarthy, supra, §10:14 at 10-26 ("Since the use of a descriptive title cannot serve to prevent others from using the title in a descriptive, non­trademark sense, others may be able to use the title as the only term available.").

        58. As Justice Holmes clarified,

        "A trade mark[sic] only gives the right to prohibit the use of it so far as to protect the owner's good will against the sale of another's product as his. . . . When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth. It is not taboo."

b. Unauthorized Use

        59. Court after court refers to "counterfeiting" and "knockoffs" when applying the Lanham Act. The Lanham Act plainly refers to someone who, without authorization, uses or imitates another's mark in such a way as to possibly cause confusion. Confusion is the benchmark of Trademark Infringement. Without confusion there is no infringement. The plaintiffs have not counterfeited any products or marks. Sale of the applique is covered under the First Sale Doctrine. No further authorization is required and since there is no counterfeiting of product or of marks, there is no violation of the Lanham Act.

C. VeRO Program

        60. eBay has a Verified Rights Owners program called the VeRO Program® that allows verified rights owners to terminate auctions listings when the verified rights owner submits an affidavit, under penalty of perjury, stipulating the auction is "infringing" upon their copyright and/or trademark rights. The decision to terminate rests solely in the hands of the VeRO member. This gives the VeRO member the ability to cancel auctions even when the "offending" party, is in fact, within their legal rights to sell. Instead of being compelled to sue in federal court, the VeRO member can intimidate through auction cancellations and the threat of possible suspension from eBay should the offending activity continue.

        61. Parties seeking to use the VeRO Program become members of eBay and are therefore subject to the rules and regulations of eBay. As such, the defendant accepted and recognized that offering an item for auction is a pending contract to perform and to sell. When an item receives a bid, there is a binding contract to buy. Terminating an auction without cause, as alleged in this complaint, constitutes tortious interference with business on the part of the defendant. Terminating the auctions also creates the possibility of permanent suspension of the plaintiffs from eBay as habitual offenders.

        62. Additionally, the defendant's VeRO representative knew, or reasonably should have known in their capacities as legal or quasi-legal representatives for intellectual property, that the items on auction that were terminated was not infringing, and therefore they willfully and knowingly committed perjury as defined in the Digital Millennium Copyright Act, 17 U.S.C. Section 512 simply to intimidate and attempt to control the marketplace.

IV. CONCLUSION

        Based upon the above arguments, the plaintiffs firmly believe that the actions of the defendant are calculated, improper, unethical and illegal and will continue unless stopped. The defendant, like many other companies, is using the threat of federal court action to interfere with businesses conducting business legally and within the applications of federal law. The actions of the defendant has caused financial harm, present and future, to the plaintiffs, as well as defamed the conduct and character of their business.

        Therefore the plaintiffs request the court issue a declaratory judgment affirming:

        1. Persons selling lawfully acquired Bratz items are allowed reasonable "fair use" of images and descriptions that pertain to the items being offered without interference and threats from the copyright and trademark holder.

        2. Persons selling lawfully acquired Bratz items are protected by the "First Sale Doctrine".

        3. Persons selling lawfully acquired Bratz items do not need "authorization" to offer for sale these items.

        4. "Cease and Desist" letters (or emails) that reference the above items (1 & 2 & 3) are illegal and a violation of professional ethics.

        5. Auctions terminated for reasons stated in 1, 2 and 3 constitute tortious interference with business.

        6. Auctions terminated for reasons stated in 1, 2 and 3 constitute perjury under 17 U.S.C Section 512.

        7. Plaintiffs request the court grant legal costs and any other reimbursements deemed to be appropriate.

        8. Should the issues go to trial, the plaintiffs request a jury trial.

        Respectively submitted this 10th day of December, 2003

Karen Dudnikov
Michael Meadors
3463 Maskoke Trail
P.O. Box 87
Hartsel, Colorado 80449
PRO SE PLAINTIFFS

303-913-4702
303-913-6075

(end of complaint)