IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

        1. KAREN DUDNIKOV, a/k/a TABBERONE
        2. MICHAEL MEADORS,
        3. TABBERS TEMPTATIONS, an unincorporated Colorado business

        Plaintiffs,

v.

        1. MARS, INCORPORATED, a Virginia Corporation
        2. MICHAEL MURPHY, in his capacity as President and CEO of MARS, INC

Defendants.

MEMORANDUM IN SUPPORT OF
MOTION FOR TEMPORARY RESTRAINING ORDER

COME NOW the Plaintiffs pro se, Michael Meadors and Karen Dudnikov, and for their Memorandum in Support of their Motion for Temporary Restraining Order state and aver as follows:

A. CLAIMS AND ISSUES

        1. EBay is easily the world's largest on-line auction. On any given day there are some nine million items for sale and millions of potential bidders worldwide. Tabberone sells an assortment of items on eBay every week, including collectibles and hand-crafted fabric items. These eBay sales also give Tabberone the opportunity to direct prospective buyers to her web site, www.tabberone.com, where she has a wide variety of items for sale.
        2. EBay has a program called the VeRO Program that allows the owners of certain trademarks and copyrights to cancel auctions of illegal and infringing items. (see attachment #1) Using the VeRO Program, rights owners can cancel eBay auctions by swearing the auction has infringing items.
        3. Mars, Incorporated, decided to avail itself of the VeRO program supplied by eBay as a means to circumvent the federal court system. On January 11, 2001, Mars, Incorporated ordered 3 auctions by Tabberone cancelled. To cancel these auctions, Mars, Incorporated filed a Notice of Infringement (see attachment #2) and an Addendum (see attachment #3).
        4. The Plaintiffs challenged the cancellations by filing a Counter Notice with eBay. A Counter Notice give the rights owner 14 days in which to either settle the dispute or take the dispute to court. (see attachments #4 &5) Mars, Incorporated was notified by eBay of the Counter Notice.
        5. On February 25, 2002, a representative of Mars, Incorporated, Inely Cessna, called the Plaintiffs and requested both sides try a negotiated settlement. The Plaintiffs agreed to meet with the representative. Attempts to settle included negotiations for Mars, Incorporated to purchase all of the M&MsŪ fabric in the possession of the Plaintiffs (see attachment #6) as well as subsequent negotiations for a licensing agreement where the Plaintiffs would become Mars licensees for 3 years concerning the use of the licensed M&MsŪ fabrics (see attachment #7). All attempts failed.
        6. In June, 2002, The Plaintiffs informed Mars, Incorporated of their intent to begin re-listing M&MsŪ fabric items on eBay (see attachment #8). Representatives of Mars, Incorporated have refused to give assurances the auctions would not be cancelled as before.
        7. The VeRO Program provides Mars, Incorporated with the means to continuously interfere and delay auctions by Tabberone. Continued cancellations of auctions could result in the permanent suspension of Tabberone as an eBay seller. (see attachment #9) The VeRO Program is heavily weighted in favor of the rights owner. (see attachment #10) The VeRO Program takes its lead from the rights owner. (see attachment #11) Mars, Incorporated could continue to close down the auctions forcing Tabberone to file a Counter Notice for each closure, causing a delay of about a month each time.
        8. During telephone negotiations on June 19, 2002, the Plaintiffs offered binding arbitration as a means to resolve the issues more quickly and with less expense to the parties. The offer was flatly refused on July 23, 2002.
        9. On August 1, 2002, Mars. Incorporated ordered eBay to terminate seven auctions of Tabberone, including those of collectibles that were purchased at M&Ms World, in Las Vegas. (see attachments #12, #13).
       

B. Supportive Agruments

        1. Plaintiffs are using the licensed fabric of Mars, Incorporated to hand-craft and sell articles on eBay and through the web site, www.tabberone.com. This fabric was purchased at retail and none the sixty different fabrics or the cardboard bolts upon which they were marketed contained any disclaimers of any type concerning the subsequent use of the fabrics. These fabrics were released through some 10,000 reatil outlets throughout the United States, such as Wal-Mart. In conjunction with the release of the fabrics, Simplicity released at least five different sets of sewing patterns, authorized and licensed by Mars, Incorporated, for the purpose of promoting the use of these fabrics (see attachment #14). None of these Simplicity sewing patterns contained disclaimers.
        2. On August 1, 2001, Warner Brothers, a member of VeRO, cancelled three auctions on eBay that belonged to Tabberone. Subsequent conversations (see attachment #15) between Warner Brothers and Tabberone resulted in the cancelled auctions being restored and the "black mark" being removed from the record of Tabberone (see attachment #16). These auctions were for fabric items made from licensed Warner Brothers fabric depicting Harry Potter. Warner Brothers acknowledged the auctions were cancelled because their office was confused about the origin of the fabric, not it's use. Once it was determined the fabric was genuine, they withdrew the complaint lodged with eBay.
        3. On September 17, 2001, lawyers representing Mars, Incorporated contacted the Plaintiffs. These lawyers alleged the Plaintiffs were guilty of "trademark infringement and unfair competition" because of their use of the M&M'sŪ name as well as the "unauthorized" fabric items.
        4. On January 11, 2002, the lawyers for Mars, Incorporated sent another letter to the plaintiffs. In this letter they stated:
        "Turning to the products sold on your website and on eBay, while Mars does not object to third parties (like yourself) re-selling authorized, licensed goods, it cannot permit the sale of unauthorized, unlicensed goods bearing its trademarks".
        5. In February, 2002, meetings and negotiations were begun at the request of Mars, Incorporated. Tabberone cooperated in every way including making an offer to resolve the disputes using binding arbitration.

C. Conclusion

        1. When Tabberone purchased the licensed fabric authorized by Mars, Incorporated, a royalty fee was paid to Mars, Incorporated through, due to, or before that purchase. Mars, Incorporated was compensated for the use of the fabric.
        2. The fabric did not have use disclaimers on the selvedge as does fabric licensed by such companies as Warner Brothers and Disney.
        3. The licensed fabric was released is such quantity and a vast method of distribution that Mars, Incorporated effectively relinquished control over it's use.
        4. The compensation to Mars, Incorporated, the lack of use disclaimers, and the sheer quantity and scope of distribution supports the Plaintiffs claim that the fabric was purchased with an implied use license that allowed the Plaintiffs to use the fabric in hand-crafted fabric items and resell them.
        5. The incident with Warner Brothers concerning the use of licensed fabric which did contain a use disclaimer, only increased the belief of the Plaintiffs that they were legally within their rights.
        6. When Mars, Incorporated entered into negotiations with Tabberone, that was an indication that the claims of trademark infringement were lacking.
        7. The representative from Mars, Incorporated prompted the conversations in such a way as to elicit a buyout figure for the fabric in possession of Tabberone. Mars, Incorporated rejected the figures offered.
        8. The subsequent licensing offer also failed because of contract wording and indifference from the Hacketstown office.
        9. Through their actions, Mars, Incorporated has indicated their case lacks full merit.
        10. The lawyers for Mars, Incorporated plainly stated that Mars (sic) does not have a problem with parties reselling "collectibles" (see B-4 above), yet on August 1, 2002, these same lawyers ordered the cancellation of Tabberone auctions of items that plainly were listed as "collectibles" and purchased from M&Ms World in Las Vegas (see attachment #17). The listings were not inconsistent with others that were selling the same items yet were not shut down or threatened (see attachments 18 & 19).
        11. At no time have the Plaintiffs ever worded an auction listing in a way that might confuse a prospective bidder as to the source of the fabric item or any affiliation with Mars, Incorporated (see attachemnt #20). The auctions plainly stated: "This (item) was made from licensed M&M fabric. It is hand-crafted. Tabberone is not affiliated with or sponsored by M&M/Mars."
        12. The plaintiffs contend that their purchase and subsequent use of licensed fabric authorized by Mars, Incorporated was legal, was proper use, and is not a trademark infringement. It is a matter for final adjudication before a court should Mars, Incorporated insist on pursuing the conflict.
        13. Mars, Incorporated is using the eBay VeRO Program to interfere with the legitimate business of Tabberone, as well as restraint of trade, and violations of RICO.
        14. Tabberone is a "Power Seller" on eBay. This status requires the selling of a certain dollar amount every month on average. The inability to continue selling the M&MsŪ collectibles and M&MsŪ fabric items, will seriously jeopardize this status. Ebay is planning to offer health insurance as a benefit to "Power Sellers" beginning sometime this fall.

D. Relief Sought

        1. The termination of these eBay auctions, is, and has, caused irreparable harm and financial loss to the Plaintiffs and their business.
        2. There is no plain, speedy, and adequate remedy at law. Injunctive relief will not disserve the public interest and the balance of equities favors relief. Injunctive relief will preserve the status quo pending a trial, or other disposition, of the merits of the dispute.
        3. The Plaintiffs request the Court prevent Mars, Incorporated, from using the eBay VeRO program to terminate eBay auctions by Tabberone of custom made M&MsŪ fabric items, and, prevent defendants from interfering with the web site, www.tabberone.com, until such time as the conflict has been adjudicated.

Respectfully submitted this 5th day of August, 2002.

Karen Dudnikov

Michael Meadors