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IN THE UNITED STATES DISTRICT COURT
KAREN DUDNIKOV, v.
FLEURVILLE INCORPORATED, a California Corporation,
COMPLAINT OF TORTIOUS BUSINESS INTERFERENCE, |
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Plaintiffs Karen Dudnikov, and Michael Meadors, pro se, complains of Fleurville, Incorporated,
("Fleurville") and allege as follows:
I. NATURE OF THE ACTION 1. This is an action for Declaratory Judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201. The claims for relief are covered by the Lanham Act 15 U.S.C., and through the Copyright Act 17, U.S.C. § 101 et seq. Additionally, this court has jurisdiction under the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. §512 (g) (3) (D) wherein jurisdiction is established in this court as part of the counter notification procedure. Venue is also proper in this judicial district pursuant to 28 U.S.C. § 1391(b) in that a substantial part of the events or omissions giving rise to this law suit, as well as injury to the plaintiffs, have occurred or will occur in this district, as a result of the unlawful acts of the defendant as outlined below.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. Upon information and belief, Fleurville Incorporated, a California corporation with its headquarters located at 24A Tiburan St, San Rafael, CA 94901. 4. Upon information and belief, the defendant manufactures a variety of high-end baby products. II. JURISDICTION AND VENUE 5. 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. § 1367.6. 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. 7. This action arises out of defendant's improper use of the eBay VeRO Program to terminate three auctions listings 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. 8. By this complaint, plaintiffs seek a Declaratory Judgment affirming the right under law to sell lawfully acquired merchandise without further interference from the defendant. Plaintiffs seek a Declaratory Judgment affirming the right to refer to Fleurville 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 A. Plaintiffs' Business 9. 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. 10. The plaintiffs offer these items for sale using the eBay internet auction site using the seller identification of witnessprotectionprogram and Tabberone. They have been selling fabric items and collectibles on the internet auction site since 1998. 11. 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 12. The defendant is the holder of trademark rights and copyright rights to the name "Fleurville". 13. 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 products manufactured and distributed by Fleurville have been terminated at the request of the defendant. 14. Upon information and belief, Fleurville knows, and its counsel knows, or reasonably should know, that the resale of lawfully acquired product is permitted under copyright law, specifically The First Sale Doctrine. Fleurville 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 Fleurville are therefore illegal and immoral. They rely on the fact people can't fight back because of the potential enormous legal expense. 1. Perjury 15. Upon information and belief, on or about February 18, 2004, the defendant requested eBay terminate the auction listing by witnessprotectionprogram, falsely alleging to eBay in an affidavit that the article offered in this auctions was an infringing item. The false affidavit filed by the defendant constitutes perjury under 17 U.S.C Section 512. 2. Tortious Business Interference 16. 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. 17. 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 the plaintiffs. The action by the defendant constitutes tortious business interference under Colorado law. 3. Misrepresentation 18. Defendant made representations to eBay that plaintiff was engaged in an unlawful activity and violating federal laws. 19. The aforementioned representations to eBay were made in the course of business, profession and employment of the defendant by an employee of the defendant. 20. Such representations were false. 21. Fleurville's reason for terminating the auctions were not because of alleged copyright or trademark infringement but because Fleurville does not want its products sold on eBay. 22. Such reason constitutes misrepresentation under 17 U.S.C. §512(f). 23. These misrepresentations have cost the plaintiffs future sales and good will. IV. COMMUNICATIONS 24. Fleurville replied to the first inquiry as to why the auctions were terminated with: "The Fleurville brand and name is copyrighted and Protected by law and by ebay copyright standards. So the name Fleurville may not be used along with Any pictures or descriptions that identify it as such" (sic) (see Attachment #1) 25. Fleurville replied to the second inquiry as to why the auctions were terminated with: "We have spent a great deal of money to trademark our brand and product names, and currently we do not authorize any of our wholesale accounts to sell our products on ebay. That has not prevented a number of individuals from using devious means to obtain our products and sell them by auction, thereby undercutting our legitimate retailers. We are a new small business and need to protect our interests and the interests of our retailers. If you have inventory that you would like to return to us, we would be happy to take it back and give you a full refund. If you feel you have special circumstances and should be allowed to sell our bags on ebay, please let me know what those circumstances are. I will be happy to consider your request." (see Attachment #2) 26. Fleurville replied to the third inquiry as to why the auctions were terminated with: "Legally, you cannot advertise and sell our trademarked products without our permission. We have not given anyone permission to sell our products on ebay so you are selling them without our permission. Like I said before, we would be happy to give you a refund on any inventory you have remaining." (see Attachment #3) 27. The responses from Fleurville indicate they will not stop and infers they will use all available means to stop persons from selling the items on eBay. 28. Based upon the tone and implied threat, the plaintiffs felt further communication would be fruitless. It was apparent these actions would continue. On February 27, 2004, plaintiffs filed a counter notice with eBay pursuant to 17 U.S.C. §512. V. ARGUMENTS A. Copyrights 1. First Sale Doctrine 29. 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. 30. The defendant has offered no proof the items offered for sale were obtained illegally. 31. The plaintiffs lawfully acquired the three Fleurville diaper bags. The subsequent re-sale of the diaper bags falls wholly under the First Sale Doctrine. B. Trademarks 1. Fair Use 32. 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 diaper bags is a violation because they say so. 33. 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). 34. 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 diaper bags and the name "Fleurville" does not violate fair use. 35. 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. 36. 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." 2. Unauthorized Use 37. 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 diaper bags 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. 3. VeRO Program 38. eBay has a Verified Rights Owners program called the VeRO ProgramŽ 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. 39. 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. 40. 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. VI. 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. Selling lawfully acquired Fleurville products 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. Selling lawfully acquired Fleurville products are protected by the "First Sale Doctrine". 3. Selling lawfully acquired Fleurville products do not need "authorization" to be offered for sale. 4. Auctions terminated for reasons stated in 1, 2 and 3 constitute tortious interference with business. 5. Auctions terminated for reasons stated in 1, 2 and 3 constitute perjury under 17 U.S.C Section 512. 6. Auctions terminated for reasons stated in 1, 2 and 3 constitute misrepresentation under 17 U.S.C Section 512(f). 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 27th day of February, 2004
Karen Dudnikov
303-913-4702 Certificate of Service I HEREBY CERTIFY that on this 27th day of February, 2004, a true and correct copy of the Complaint was mailed, with all attachments, with a Notice of Lawsuit and Request for Waiver of Service of Summons, postage prepaid, Priority Mail with delivery confirmation to counsel of record at:
David Reiss
Registered Agent |