** Complaint - Part 1 of 2
1 STEINHART & FALCONER LLP
ROGER R. MYERS (State Bar No. 146164)
2 LISA M. SITKIN State (Bar No. 194127)
333 Market Street, Suite 3200
3 San Francisco, California 94105
Telephone: (415) 777-3999
4 Facsimile: (415) 442-0856
5 Attorneys for Plaintiff
BUSINESS WIRE
6
7
UNITED STATES DISTRICT COURT
8
FOR THE NORTHERN DISTRICT OF CALIFORNIA
9 SAN FRANCISCO DIVISION
10
11
BUSINESS WIRE, a California corporation, ) Case No. C 99-1987 EDL
12 )
Plaintiff )
13 ) COMPLAINT FOR FALSE OR
v. ) MISLEADING DESCRIPTION OR
14 ) REPRESENTATION (15 U.S.C.
JEFFREY S. MITCHELL, an individual; ) 1125(a)); TRADEMARK
15 WILLIAM ULRICH, an individual; JANICE ) DILUTION (15 U.S.C. 1125(c));
SHELL, an individual, ) TRADEMARK INFRINGEMENT
16 ) (15 U.S.C. 1114); TRADEMARK
Defendants. ) DILUTION (CAL. BUS. & PROF.
17 ) CODE 14330); BREACH OF
) CONTRACT; FRAUD;
18 ) DEFAMATION; UNFAIR
) COMPETITION; CIVIL
19 ) CONSPIRACY
)
20
21
22 Plaintiff Business Wire complains of defendants Jeffrey S. Mitchell
23 ("Mitchell"), William Ulrich ("Ulrich") and Janice Shell ("Shell") (collectively "defendants")
24 and alleges as follows:
25 THE PARTIES
26 1. Plaintiff Business Wire is a corporation existing under the laws of the
27 State of California and having its principal place of business in San Francisco, California.
28 Among other services, Business Wire distributes press releases for companies to news
1
COMPLAINT
1 organizations, informational databases, investors and others over a wire service and at a
2 website on the Internet.
3 2. Business Wire is informed and believes, and on that basis alleges that
4 defendant Mitchell is an individual residing in Westport, Connecticut.
5 3. Business Wire is informed and believes, and on that basis alleges that
6 defendant Ulrich is an individual residing in San Rafael, California.
7 4. Business Wire is informed and believes, and on that basis alleges that
8 defendant Shell is an individual residing in Milan, Italy.
9 5. Business Wire is informed and believes, and on that basis alleges that the
10 above-named defendants have acted in concert with one another and with other individuals in
11 doing the acts alleged in this Complaint.
12 JURISDICTION AND VENUE
13 6. This is an action for false and misleading description or representation
14 and trademark dilution in violation of the Lanham Act (15 U.S.C. 8 1125), trademark
15 infringement in violation of 15 U.S.C. 8 1114, trademark dilution in violation of California
16 Business and Professions Code 8 14330, breach of contract, fraud, unfair competition in
17 violation of California Business and Professions Code 8 17200 et seq. defamation and civil
18 conspiracy.
19 7. This Court has subject matter jurisdiction over this action pursuant to 28
20 U.S.C. 88 1331, 1338 and 1367, and 15 U.S.C. 1121. This Court has supplemental
21 jurisdiction over the claims in this Complaint that arise under state statutory and common law
22 pursuant to 28 U.S.C. 8 1367(a), because the state law claims are so related to the federal
23 claims that they form part of the same case or controversy and derive from a common nucleus
24 of operative facts.
25 8. Venue is proper under 28 U.S.C. 8 1391(b), because a substantial part of
26 the events giving rise to plaintiWs claims occurred within the Northern District of California
27 and because at least one of the defendants resides in the Northern District of California.
28
2
COMPLAINT
1 INTRADISTRICT ASSIGNMENT
2 9. This action should be assigned to the Oakland or San Francisco Division
3 of the United States District Court for the Northern District of California pursuant to Civil
4 Local rule 3-2 (c) and (d). This matter arises in the Oakland or San Francisco Division
5 because a substantial part of the events giving rise to plaintiff's claims occurred within the
6 County of San Francisco.
7 GENERAL ALLEGATIONS
8 Business Wire's Operations
9 10. Business Wire has been operating a press release service since 1961.
10 Business Wire currently distributes press releases through its wire service and over the Internet
11 to several thousand news organizations, informational databases and businesses throughout the
12 United States and abroad. Press releases distributed by Business Wire reach several million
13 individuals each day. Since at least 1961, Business Wire has continuously used BUSINESS
14 WIRE as a trade name for its press release distribution business and as a trademark for its
15 press releases, website and other products and services.
16 11. Business Wire is the owner of, among other federal trademarks and
17 service marks, Trademark Registration Nos. 1,131,770 (BUSINESS WIRE, registered March
18 11, 1980), 2,106,223 (BIZWIRE, registered on October 21, 1997) and 2,113,343 (BUSWIRE,
19 registered on November 18, 1997) (collectively "the BUSINESS WIRE Marks" or "the
20 Marks"). True and correct copies of those Registrations are attached as Exhibit A.
21 12. The BUSINESS WIRE Marks are inherently distinctive and appear on all
22 press releases distributed by Business Wire and on Business Wire's website. The Marks have
23 also been prominently featured in Business Wire's advertisements and promotional materials.
24 Business Wire has invested substantial resources to promote and protect the Marks in
25 connection with the interstate sale of its products and services. Business Wire's continuous use
26 of, and substantial investment in, the Marks have led the public to closely associate and
27 identify the Marks with Business Wire and its products and services. By virtue of the
28 foregoing widespread use, promotion and recognition of the Marks, the Marks have acquired a
3
COMPLAINT
1 distinctiveness and secondary meaning signifying Business Wire and its products and services.
2 13. Given the nature of its business, which is to distribute other entities'
3 press releases to the news media and others, Business Wire does not independently verify the
4 facts set forth in every press release it distributes. However, Business Wire does act to ensure
5 that the information it provides is accurate bY requiring, as a condition of distributing any
6 press release over its wire service and on its website, that the person or entity submitting the
7 press release warrant that the factual content in the materials submitted for distribution by
8 Business Wire is true and accurate.
9 Defendants' Misconduct
10 14. On or about March 29, 1999, defendants, by and through defendant
11 submitted a press release to Business Wire for distribution in the San Francisco Bay
12 Area. True and correct copies of defendants' press release and defendants' agreement with
13 Business Wire regarding distribution of their press release are attached as EXhibits B and C.
14 15. The press release submitted by defendants falsely stated that a company
15 called "Webnode" had been granted a government contract to raise money for the Next
16 Generation Internet ("NGI") by selling "nodes" on the NGI, and solicited investment in the
17 project. The press release referred readers to the Webnode.com website for details on how to
18 invest in nodes on the NGI. It also referred them to the website of a governmental agency,
19 Internet2, for more information on projects similar to NGI. The press release stated further
20 that a number of publicly traded companies, including A.T. & T. and Microsoft Corp., were
21 "early adoptees" of the NGI. It is not presently known how the information in the press
22 release influenced trading on those companies.
23 16. Webnode is a fake company. Neither this non-existent entity nor any of
24 the defendants has a government contract relating to the NGI or the rights to sell "nodes" or
25 any other vehicle or commodity relating to the NGI.
26 17. Defendants included information in their fraudulent press release
27 intended to induce readers to believe that the announcement about Webnode's government
28 contract was true, including information about the NGI, which is a real project managed by
4
COMPLAINT
1 Internet2, and the names of actual publicly traded companies.
2 18. At the Webnode.com website referenced in the false press release,
3 defendants solicited investment in nodes on the NGI under false pretenses. Defendants, by and
4 through defendant Ulrich, designed the website to induce visitors to believe that Webnode was
5 a real company and that the offer to invest in nodes was a genuine business opportunity. On
6 information and belief, defendants fraudulently obtained personal information from
7 approximately 2,000 people who inquired about investing in Webnode and/or registered to
8 purchase nodes from defendants at the Webnode.com website because they believed the false
9 press release distributed unwittingly by Business Wire and bearing the BUSINESS WIRE
10 trademark.
11 19. Defendants submitted their fraudulent investment solicitation to Business
12 Wire under false pretenses, including, but not limited to, misrepresentations regarding the
13 accuracy of the factual content of the press release.
14 20. During the first week of April 1999, Business Wire distributed
15 defendant's fraudulent press release throughout the San Francisco Bay Area and posted it on its
16 website on the Internet in reasonable reliance on defendants' representations in and about the
17 press release. As a result, innumerable of Business Wire's regular clients, including news
18 organizations, informational databases and investors, as well as other members of the public,
19 received the fraudulent press release with Business Wire's mark prominently displayed.
20 21. In addition to fraudulently inducing Business Wire to distribute their
21 false press release, defendants posted the fraudulent release with the BUSINESS WIRE mark
22 prominently displayed on Internet sites, including an Internet chat room for investors in
23 technology companies and on the Webnode.com website.
24 22. Defendant's false press release with the BUSINESS WIRE mark
25 prominently displayed also appeared on other Internet websites and was the subject of widely
26 disseminated news articles, including articles distributed by the Dow Jones News Service.
27 23. When Business Wire learned of defendant's fraudulent activities, it
28 removed the press release from its website and immediately contacted defendants and
5
COMPLAINT
1 demanded that defendants remove the BUSINESS WIRE mark from all postings of their
2 fraudulent press release.
3 24. Although defendants asserted that the fraudulent press release and
4 Webnode.com website were intended as an April Fool's Day hoax, nothing in the press release
5 itself -- nor, at the time the release was first distributed and posted by defendants on the
6 Internet, on the Webnode.com website -- indicated that the information in the press release or
7 on the website was not true. Indeed, defendants composed the fraudulent press release and
8 designed the Webnode.com website with the clear intent of fraudulently inducing readers to
9 believe that the information they conveyed was genuine and truthful. Information regarding
10 the purported hoax that was later added to the Webnode.com website is not immediately
11 apparent to visitors to that site and can easily be missed.
12 25. Instead of removing the BUSINESS WIRE mark from the copy of their
13 fraudulent press release posted on the Webnode.com website, defendants changed the byline on
14 the fraudulent press release to BIDNESS WIRE, a name nearly identical and confusingly
15 similar to Business Wire's Marks.
16 26. On or about April 15, 1999, Business Wire sent a cease and desist letter
17 to defendant Mitchell requesting that he and his associates delete any and all references to
18 BUSINESS WIRE or to confusingly similar names such as BIDNESS WIRE from all copies of
19 the fraudulent press release, whether posted on the Webnode.com website or elsewhere.
20 27. On or about April 16, 1999, Business Wire sent an identical cease and
21 desist letter to defendant Ulrich.
22 28. On or about April 18, 1999, defendants replaced the reference to
23 BIDNESS WIRE in the copy of the fraudulent press release posted at the Webnode.com
24 website with "[reference deleted]" and posted a report on their dispute with Business Wire at
25 the beginning of their home page.
26 29. In their messages and reports about their dispute with Business Wire,
27 defendants also published, at the Webnode.com website and, on information and belief,
28 elsewhere on the Internet, statements asserting that Business Wire condones and/or knowingly
6
COMPLAINT
1 participates in fraudulent activities.
2 30. Defendants have engaged in similar fraudulent activities involving fake
3 investment schemes in the past and have indicated that they plan to disseminate information
4 intended to defraud the press and the public regarding investment opportunities again in the
5 near future.
6 FIRST CAUSE OF ACTION
(Violation of Section 43(a) of the Lanham Act
7 -- False or Misleading Description or Representation )
8 31. Business Wire realleges and incorporates herein by this reference
9 Paragraphs 1 through 30, above, as if set forth here in full.
10 32. Business Wire is informed and believes and on that basis alleges that
11 defendants' use of the BUSINESS WIRE Marks and confusingly similar marks, including
12 fraudulently inducing Business Wire to distribute their false press release and posting the false
13 release on the Internet under the BUSINESS WIRE Marks or confusingly similar marks, was
14 misleading and likely to cause confusion and mistake among the public as to whether
15 defendants and their fraudulent press release are affiliated with, licensed, sponsored, endorsed
16 by or otherwise sanctioned by Business Wire.
17 33. Defendants' wrongful actions described above, including defendants' use
18 of the BUSINESS WIRE Marks and confusingly similar marks to promote their fraudulent
19 investment solicitation scheme, constitute false and misleading descriptions and representations
20 in violation of 15 U.S.C. 1125(a).
21 34. Defendants' wrongful actions, including their false and misleading
22 descriptions and representations, have caused and continue to cause irreparable injury to the
23 value and goodwill associated with the BUSINESS WIRE Marks, as well as to Business Wire's
24 business, goodwill and reputation. Defendants' actions, if not enjoined, will continue.
25 Business Wire has no adequate remedy at law in that defendants' conduct is irreparably
26 harming Business Wire, and the amount of its damages is difficult to ascertain.
27 35. As a result of defendants' wrongful actions, including their false and
28 misleading descriptions and representations, Business Wire has incurred damages in an amount
7
COMPLAINT
1 to be proved at trial consisting of, among other things, lost revenues, injury to its business
2 relationships, and diminution in the value of and goodwill associated with the BUSINESS
3 WIRE Marks.
4 36. Defendants' wrongful actions, including without limitation their false and
5 misleading descriptions and representations, are deliberate, willful, and fraudulent, and
6 constitute a knowing use of Business Wire's marks. Business Wire is therefore entitled to
7 recover treble the amount of its actual damages as well as its attorneys' fees incurred in this
8 action.
9 SECOND CAUSE OF ACTION
(Violation of Section 43(c)(1) of the Lanham Act -- Dilution)
10 37. Business Wire realleges and incorporates herein by this reference
11 Paragraphs 1 through 35, above, as if set forth here in full.
12 38. The BUSINESS WIRE Marks are famous marks and are entitled to
13 protection from dilution of their distinctive quality.
14 39. Business Wire is informed and believes, and on that basis alleges, that
15 defendants commenced use in commerce of the BUSINESS WIRE Marks well' after the
16 BUSINESS WIRE Marks became famous.
17 40. Business Wire is informed and believes and on that basis alleges that
18 defendants have diluted, blurred, or tarnished the BUSINESS WIRE Marks, in that defendants'
19 fraudulent conduct tends to give the impression that Business Wire knowingly distributes false
20 information in press releases and/or condones or participates in fraudulent solicitations for
21 investments, when in fact Business Wire requires as a condition of distribution that the
22 information contained in press releases be true and accurate.
23 41. Upon information and belief, defendants, in the conduct of the wrongful
24 acts alleged above, willfully intended to trade on Business Wire's reputation, and/or to dilute
25 the BUSINESS WIRE Marks.
26 42. Defendants' wrongful acts, as alleged above, have diluted the distinctive
27 quality of the BUSINESS WIRE Marks, in violation of 15 U.S.C. 1125(c).
28
8 |
