Perfect 10, Inc. v. Visa International Service Association et al

Filing 40

AMENDED COMPLAINT against Cardservice International, Inc., First Data Corporation, Humboldt Bank, Mastercard International Incorporated, Visa International Service Association. Filed by Perfect 10, Inc.. (Attachments: # 1 Exhibit Exhibit 1# 2 Exhibit Exhibit 2# 3 Exhibit Exhibit 3# 4 Exhibit Exhibit 4# 5 Exhibit Exhibit 5# 6 Exhibit Exhibit 6# 7 Exhibit Exhibit 8# 8 Exhibit Exhibit 9# 9 Exhibit Exhibit 10# 10 Exhibit Exhibit 7-1# 11 Exhibit Exhibit 7-2)(Rothschild, Stephen) (Filed on 9/7/2004)

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Perfect 10, Inc. v. Visa International Service Association et al Doc. 40 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 1 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HOWARD E. KING (State Bar No. 077012) STEPHEN D. ROTHSCHILD (State Bar No. 132514) KING, HOLMES, PATERNO & BERLINER, LLP 1900 Avenue of the Stars, 25th Floor Los Angeles, CA 90067 Telephone: (310) 282-8989 Fax: (310) 282-8903 JEFFREY N. MAUSNER (State Bar No. 122385) JOHN R. YATES (State Bar No. 120344) BERMAN, MAUSNER & RESSER 11601 Wilshire Boulevard, Suite 600 Los Angeles, California 90025-1742 Telephone: (310) 473-3333 Facsimile: (310) 473-8303 E-mail: JeffMausner@bmrlaw.com DANIEL J. COOPER (State Bar No. 198460) General Counsel, Perfect 10, Inc. Attorneys for Plaintiff PERFECT 10, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA � SAN FRANCISCO DIVISION PERFECT 10, INC., a California corporation, ) ) ) Plaintiff, ) ) v. ) ) VISA INTERNATIONAL SERVICE ) ASSOCIATION; FIRST DATA ) CORP, a corporation; CARDSERVICE ) INTERNATIONAL, INC., a ) corporation; MASTERCARD ) INTERNATIONAL ) INCORPORATED, a corporation; ) HUMBOLDT BANK, a national ) banking association; and DOES 1 ) through 100, inclusive, ) ) Defendants. ) _______________________________ ) _ Case No. C04-00371 JW (PVT) [Assigned for all purposes to Judge James Ware] FIRST AMENDED COMPLAINT FOR: (1) COPYRIGHT INFRINGEMENT; (2) TRADEMARK INFRINGEMENT; (3) TRADEMARK DISPARAGEMENT; (4) WRONGFUL USE OF A REGISTERED MARK; (5) VIOLATION OF RIGHT OF PUBLICITY; (6) UNFAIR COMPETITION; (7) FALSE AND MISLEADING ADVERTISING DEMAND FOR JURY TRIAL FIRST AMENDED COMPLAINT Dockets.Justia.com Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 2 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Perfect 10, Inc. ("Perfect 10" or "plaintiff"), alleges as follows against defendants Visa International Service Association ("Visa"); First Data Corp ("FDC"); Cardservice International, Inc. ("CSI"); MasterCard International Incorporated ("MasterCard"); Humboldt Bank ("Humboldt"); and Does 1-100 (collectively, "Defendants"). JURISDICTION, VENUE, and INTRADISTRICT ASSIGNMENT 1. Jurisdiction. This action arises under the Copyright Act of the United States, 17 U.S.C. �� 501 et seq., and the Lanham Act, 15 U.S.C. �� 1051, et seq. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. �� 1331, 1338(a) and (b), and principles of pendent jurisdiction. 2. Venue. Venue is proper in this Court pursuant to 28 U.S.C. � 1391(b)(2), (c), and � 1400(a). 3. Personal jurisdiction. Personal jurisdiction is proper over the Defendants because they either reside in California or the wrongful activity at issue in this case concerns Defendants' operation of commercial businesses through which Defendants' knowingly transact business, share information and files, and enter into contracts with individuals in California, including within the County of San Francisco. Each of the Defendants, therefore, has purposefully availed itself of the privilege of doing business in California, and critical elements of Defendants' wrongdoing occurred in this State. 4. Intradistrict Assignment. A substantial part of the events which give rise to the claims occurred in San Francisco County, California, where defendant Visa is located. NATURE OF THE ACTION 5. The Defendants in this case, who are among America's most prominent financial institutions, are knowingly providing crucial transactional support services for the sale of millions of stolen photos and film clips worth billions of dollars that 2914.060\43841.FIRST AMENDED 1 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 3 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 belong to Perfect 10 and third-parties, as follows: A. The Stolen Content Websites 6. Hidden in undisclosed locations around the world, thieves from every country are operating websites ("Stolen Content Websites") that routinely offer for sale to the public stolen still and moving images consisting of (i) scans from Perfect 10 Magazine and images from its website perfect10.com, (ii) scans of supermodels from other magazines, and (iii) the most treasured film clips (usually nude scenes of top actresses) ever created by motion picture studios. Webmasters who run Stolen Content Websites also typically engage in consumer fraud or other illegal acts by doing one or more of the following: a) charging the consumer's credit card without authorization, b) falsely stating that memberships are free, c) promising nudes or sexually explicit videos of celebrities that don't exist, d) providing rape, incest, and/or bestiality images or falsely promising such images, e) spamming, and f) tricking the consumer into paying for other memberships without their knowledge. Stolen Content webmasters typically use sham Internet registrations with bogus addresses and contact information so that they are virtually impossible to track down and sue. 7. Stolen Content Websites cannot exist without the knowledge and direct participation of the financial institutions that process the credit card transactions for such unlawful material and that, as a result, effectively act as knowing fences for the sale of billions of dollars worth of stolen property. B. The Business of Defendants Herein 8. Visa and MasterCard are joint ventures, each owned by associations of thousands of banks, including Humboldt, which comprise a vast network which processes hundreds of millions of dollars in payment card transactions every day. The member banks issue MasterCard and Visa cards, and contract with merchants to accept their payment cards and sell sales drafts generated from use of those cards to the members, at a discount. 2914.060\43841.FIRST AMENDED 2 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 4 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9. Typically, when a merchant accepts a payment card from a customer, the merchant electronically and contemporaneously presents the transaction to an acquiring member bank, such as Humboldt, or to a third-party processor (known in the credit card industry as an "Independent Service Organization" ("ISO")) acting as agent for a member bank, for immediate purchase at a discount from the price being paid by the customer. FDC, including its wholly-owned subsidiary, CSI, is one of the largest, if not the largest, such ISO. 10. The merchant has a contract with the acquiring bank or ISO that obligates the bank or ISO to purchase the customer charges from the merchant immediately, provided the charges meet certain standards. Visa and MasterCard are virtually present at the time of each and every transaction on their branded cards. The acquirer (or the ISO through which the acquirer does business) presents the transaction to MasterCard or Visa for verification of a myriad of characteristics, including, but not limited to, that the credit card is not stolen, over its limit, expired, or otherwise incapable of incurring charges. MasterCard or Visa authorizes or rejects the transaction. However, Visa and MasterCard have chosen to ignore the obvious illegality of each and every Stolen Content Website transaction that they review. 11. If the transaction is authorized, the acquirer purchases it from the merchant, at a discount. The foregoing process occurs electronically, with the result that a merchant can make a sale using a payment card and simultaneously sell same to his acquiring bank, at a discount, receiving the net proceeds immediately. 12. Member banks, including Humboldt, often delegate responsibility for processing payment card transactions to third party processors such as FDC and CSI. That delegation of responsibility includes responsibility for supervising merchants to make certain that merchants comply with Visa and MasterCard rules, and terminating illegal businesses from the Visa and MasterCard systems. Unless otherwise apparent from the context, references in this complaint to "FDC" include Humboldt and FDC's wholly owned subsidiary CSI. 2914.060\43841.FIRST AMENDED 3 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 5 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13. Visa and MasterCard receive a fee for every single transaction on their branded cards. 2914.060\43841.FIRST AMENDED 4 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 6 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. Defendants' Right and Ability to Control the Stolen Content Websites 14. Visa and MasterCard are also responsible for administering the Visa and MasterCard credit card networks, and they impose many requirements as a condition to ISOs and acquiring banks participating in the system. In addition to prohibiting member banks and third-party processors from providing services to merchants engaged in illegal activity, the associations' rules require member banks and thirdparty processors, including FDC, to investigate merchants suspected of engaging in illegal activity and to terminate those merchants that are engaged in illegal activity. The associations dictate "interchange rates," or the fees that acquirer banks must pay issuing banks for each transaction. Visa and MasterCard require member banks to terminate the accounts of merchants whose "chargeback" ratios exceed allowable limits. A "chargeback" occurs when a customer requests reversal of a charge that is fraudulent, unauthorized, or otherwise improper. 15. Visa and MasterCard rules and regulations require each and every merchant that wishes to secure the benefits of participation in the Visa and MasterCard systems to enter into a formal Merchant Agreement with an acquirer, pursuant to which Merchants are licensed to accept MasterCard and Visa charges and participate in the systems. Visa and MasterCard rules dictate many of the significant terms and conditions of such agreements. 16. Plaintiff is informed and believes and based thereon alleges that Humboldt, FDC and CSI have entered into Merchant Agreements with many owner/operators of Stolen Content Websites. Attached hereto as Exhibit "1" and incorporated herein by reference is a copy of a standard CSI Merchant Agreement. Perfect 10 is informed and believes and based thereon alleges that the provisions of the CSI Merchant Agreement are typical of merchant agreements throughout the Visa and MasterCard systems. 17. Paragraph 1.01 of the CSI Merchant Agreement requires Stolen Content 2914.060\43841.FIRST AMENDED 5 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 7 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Websites to accept all MasterCard and Visa charge cards presented to them. 18. Paragraph 1.02 of the CSI Merchant Agreement requires Stolen Content Websites to display defendants' promotional materials with defendants' proprietary names and symbols, unless they are "expressly exempted" by Visa or MasterCard. (Ex. "1," � 1.02.) 19. Paragraph 3.01, entitled "Compliance with Law," imposes the following restrictions on Stolen Content Websites: Merchant shall comply with all laws, ordinances and regulations applicable to Merchant, Merchant's business and any Card transaction, including without limitation all state and federal consumer credit and consumer protection statutes and regulations. Neither Bank [Humboldt] nor Cardservice International shall have any obligation to notify or advise Merchant of the existence of such laws or changes in such laws. Merchant warrants that it has the right to sell the products it sells and to use the names it uses. (Emphasis added.) 20. Pursuant to Visa and MasterCard rules and regulations, and to the contractual rights they insist upon, defendants direct merchants who accept their credit cards and who operate Internet websites to alter or delete contents of such websites in order to comply with laws and/or Visa and MasterCard rules, regulations and policies. When MasterCard or Visa learns of a merchant engaged in illegal, fraudulent, or otherwise improper business practices, their own regulations require them to cause member banks to investigate and, depending on the nature of the misconduct, terminate the merchants from the Visa and MasterCard systems. The rules of both associations strictly prohibit members from servicing illegal businesses. 21. Defendants assert the right, which they frequently exercise, to suspend merchants from the Visa and MasterCard systems, or to exclude them altogether. For example, pursuant to paragraph 3.04(b) of the CSI Merchant Agreement, Defendants have the right to terminate Stolen Content Websites "immediately" if the 2914.060\43841.FIRST AMENDED 6 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 8 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 merchant "violates any term, condition, covenant or warranty of this Agreement." 22. Plaintiff is informed and believes and based thereon alleges that the grounds for suspending and/or entirely excluding merchants from the system often are that Defendants believe that the merchants have engaged in illegal transactions and/or sell illegal products or services. If Defendants exclude a merchant from the system, all members of the Visa and MasterCard systems, and all ISOs, are prohibited from providing charge card processing services to that merchant, directly or indirectly through third party aggregators. 23. Paragraph 7.01 of the CSI Merchant Agreement requires merchants to use defendants' preapproved forms when accepting payment by credit card. 24. Defendants dictate what products and services a merchant sells. Merchants cannot sell different products without submitting a formal request to defendants and receiving Defendants' express pre-approval. 25. In addition to the foregoing, Defendants dictate the amount of credit card sales Stolen Content Websites may make each month. Since Defendants know that virtually all of the Stolen Content Websites' business is done through charge card payments, Defendants know that each time they increase the volume limits of a Stolen Content Website, they are also increasing the number of illegal transactions on such sites. 26. Plaintiff is informed and believes and based thereon alleges that, before defendants will allow a merchant to participate in the Visa and MasterCard systems, the Visa and MasterCard rules require the merchant to establish that it is financially responsible and that the owner/operators have acceptable backgrounds and business practices. Among other things, defendants inspect websites and business premises, and obtain and review merchants' bank statements, tax returns, credit reports, and a merchant's other financial information before allowing the merchant into the system. Plaintiff is informed and believes and based thereon alleges that, based on their reviews of Stolen Content Websites applying for merchant accounts, Defendants 2914.060\43841.FIRST AMENDED 7 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 9 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 know when Stolen Content Websites maintain no physical presence in the United States in order to evade criminal and civil liability for their illegal conduct. 27. When Defendants receive what they deem to be an excessive number of chargebacks on the accounts of Stolen Content Websites, Defendants place even more limitations on the account holders and require even more detailed information about their businesses. 28. Plaintiff is informed and believes and based thereon alleges that Defendants also require Stolen Content Websites to give Defendants permission to use their names in their advertising and promotional activities. 29. Defendants also regularly assert their right to require questionable merchants, such as the Stolen Content Websites, to maintain substantial reserve accounts with Humboldt in order to secure potential losses as a result of the misconduct of such merchants. D. Defendants' Knowing Participation in the Stolen Content Websites' Illegal Conduct 30. Defendants, jointly with the Stolen Content Websites, are engaged in (i) the willful and systematic infringement of the intellectual property rights of Perfect 10 and third-party publishers, film owners, and celebrities, and (ii) ongoing deception of consumers. 31. The explosion of pornography on the Internet has been a windfall to Defendants. Websites that provide pornographic images generate hundreds of millions of transactions, each one resulting in a separate fee to Defendants. Since 2002, Perfect 10 repeatedly has identified specific Stolen Content Websites to each defendant herein and asked each of the defendants to investigate and cease and desist servicing those illegal businesses. Perfect 10 has given Defendants such notice orally, in writing, and by e-mail. The notices have included screen shots and other evidence of the websites' illegal conduct. Defendants, and each of them, have failed and refused to investigate the Stolen Content Websites and to discontinue facilitating 2914.060\43841.FIRST AMENDED 8 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 10 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and participating in the business of the websites. Copies of many such notices are attached hereto as Exhibit "2" and incorporated herein by reference. 32. Defendants knowingly continue to supervise and materially contribute to the Stolen Content Websites' illegal conduct by authorizing their member banks to acquire customers' payment card charges for access to those websites, in violation of MasterCard and Visa Rules; providing confirmations for charges for the Stolen Content Websites; accepting fees for each charge card transaction on the Stolen Content Websites; and failing and refusing to enforce their rules prohibiting member banks and ISOs from servicing businesses engaged in illegal activities, directly or indirectly, and enforcing other rules to assure that they profit from the Stolen Content Websites. 33. Defendants aid and abet the Stolen Content Websites' illegal transactions by allowing them to process charges anonymously through off-shore locations that have no existence except as conduits for processing charge card transactions. 34. While most member banks and third-party processors refuse to acquire for pornographic websites, Humboldt, FDC and CSI have at all times material herein specialized in servicing pornographic websites. By charging them significantly more than conventional merchants pay for the same services, including by levying fees of as much as $100 per chargeback, Humboldt, FDC and CSI significantly increase their profit margins. 35. Defendants' branded payment cards are overwhelmingly the primary way by which customers pay to view Stolen Content Websites. Acceptance of MasterCard and Visa is so expected by consumers as a form of online payment that permission from MasterCard and Visa to accept their cards is tantamount to a precondition for running a successful online business, and gives such websites a significant competitive advantage. Inability to accept Visa and MasterCard would make it impossible for an online website selling adult images to compete and operate 2914.060\43841.FIRST AMENDED 9 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 11 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 at a profit. If Defendants enforced their own rules when they received notice of a Stolen Content Website, instead of turning a blind eye to the illegality, the Stolen Content Websites would be eradicated. Perfect 10 is informed and believes, and based thereon alleges, that Defendants do not enforce their own rules against websites that they know are Stolen Content Websites because Defendants do not want to lose the substantial revenues and profits they receive from the websites. 36. More specifically, Defendants are engaged in the following unlawful practices: � Defendants are knowingly and intentionally profiting from and providing critical support for the infringement of Perfect 10's copyrights and rights of publicity (by assignment) by reason of the distribution of photographs owned by Perfect 10 on Stolen Content Websites. � Defendants are knowingly and intentionally profiting from and providing critical support to sell millions of stolen images and film clips worth billions of dollars which rightfully belong to third-party publishers and film owners. � Defendants are knowingly and intentionally profiting from and providing critical support for the infringement of the copyrights of Perfect 10 and publicity rights of Perfect 10 and others by the unauthorized reproduction, creation of derivative works from, display, advertisement and sale of illegally altered photographs of celebrities and models, which falsely purport to show such celebrities performing sexual acts and in various nude poses. � Defendants are knowingly and intentionally profiting from and providing critical support for Stolen Content Websites which also compete unfairly by engaging in the following acts: a) making false claims about their content, such as offering images of "Christina 2914.060\43841.FIRST AMENDED 10 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 12 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Aguilera Masturbating!" b) falsely claiming that they are "free," c) grossly misstating the number of images on their sites, claiming for example in one case that they have 90,000 images when they have less than 3,000, d) using multiple "fronts" leading to the same content, e) requiring consumers to affirmatively uncheck a small box, lest they are unwittingly billed for memberships they did not want in the first place, and f) "spamming" consumers. 37. With Defendants' support, the Stolen Content Websites have become so brazen that they actually flaunt their illegality. One such website, touting an illicit video of Paris Hilton, proclaims, "Load it now before the lawyers take it down!" E. The Harm that Defendants' Participation in the Businesses of the Stolen Content Websites Has Caused to Perfect 10 38. Based on the foregoing, Defendants are aiding and abetting unfair competition against Perfect 10 and materially contributing to the infringement of Perfect 10's intellectual property rights by providing critical support for and participating in the sale of vast quantities of content misappropriated from Perfect 10 and third parties, thereby diverting consumers from Perfect 10's products and services to Stolen Content Websites. Despite notice from Perfect 10 of the ongoing violation of its rights on Stolen Content Websites, including infringements specifically alleged in this Complaint, and other fraudulent acts perpetrated by such websites, Defendants have continued wrongfully to purchase the specific credit card sales drafts generated by the illegal sales, at a discount, thereby providing the only profitable means by which a Stolen Content Website can consummate a sale. Nearly all Stolen Content Website sales are credit card transactions. 39. Perfect 10 has been forced to spend over $8 million in attorneys fees over the last two and a half years attempting to stop the widespread theft on the Internet of both Perfect 10 images and third-party intellectual property. That theft has made it impossible for Perfect 10 to operate at a profit. 2914.060\43841.FIRST AMENDED 11 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 13 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 40. Defendants have failed and refused to apply other rules and regulations to Stolen Content Websites, thereby continuing to profit from each illegal transaction in which they participate. For example, Defendants have allowed certain Stolen Content Websites to incur extraordinarily high chargeback rates because of the high volume from their illegal conduct and the resulting high fees accruing to Defendants. At the same time, Defendants have imposed arbitrarily low chargeback limits on legitimate web content providers, including Perfect 10, because such providers, lacking the increased revenues that result from the Stolen Content Websites' unfair and illegal conduct, are far less profitable to Defendants than the Stolen Content Websites. THE PARTIES Plaintiff Perfect 10 41. Plaintiff is, and at all times mentioned herein was, a California corporation having its principal place of business in Beverly Hills, California. Plaintiff owns and operates the website located at perfect10.com and publishes Perfect 10 Magazine. The Defendants 42. Perfect 10 is informed and believes, and on that basis alleges, that defendant Visa is and at all times material herein has been a joint venture association with offices at 123 Mission Street, 20th Floor, San Francisco, CA 94105 and conducts substantial business in California, including within the County of San Francisco. Plaintiff alleges that Visa is also an association of members, primarily banks, that issue payment cards, acquire merchants who accept payment cards, or both. 43. Perfect 10 is informed and believes, and on that basis alleges, that defendant MasterCard is and at all times material herein has been a joint venture association with offices at 2000 Purchase Street, Purchase, NY 10577, and conducts substantial business in California, including within the County of San Francisco. 2914.060\43841.FIRST AMENDED 12 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 14 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff alleges that MasterCard is an association of members, primarily banks, that issue payment cards, acquire merchants who accepts payment cards, or both. 44. Perfect 10 is informed and believes, and on that basis alleges, that defendant FDC is a corporation with offices at 6200 South Quebec Street, Greenwood Village, Colorado 80111, and conducts substantial business in California, including within the County of San Francisco. Plaintiff alleges on information and belief that FDC is an Independent Service Organization authorized to act by and subject to MasterCard and Visa Rules, engaged in the business of processing payment card transactions and data for Stolen Content Websites. Plaintiff is further informed and believes that FDC is the managing agent of MasterCard, Visa, and a number of their members banks. 45. Perfect 10 is informed and believes, and on that basis alleges, that defendant CSI is and at all times material herein has been a wholly owned subsidiary of FDC, located in Moorpark, California, and CSI conducts business within the County of San Francisco. 46. Perfect 10 is informed and believes and based thereon alleges that Humboldt is and at all times material herein has been a national banking association organized and existing under the laws of the United States with its principal place of business in Eureka, California. 47. Perfect 10 is informed and believes, and based thereon alleges that, at all times material herein, CSI was the alter ego of FDC, and that there exists and has existed at all times material herein a unity of interest and ownership between them, such that any separateness between them has ceased to exist, and that CSI is a mere shell, instrumentality and conduit through which FDC has at all times material herein carried out its business, exercising complete control and dominance over CSI such that any individuality or separateness of CSI from FDC has ceased to exist. 48. Adherence to the fiction of the separate existence of CSI as an entity distinct from FDC would permit an abuse of the corporate privilege and would 2914.060\43841.FIRST AMENDED 13 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 15 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 sanction fraud and promote injustice. 49. Does 1 through 100, inclusive, are sued herein under fictitious names. Their true names and capacities are unknown to plaintiff. When plaintiff ascertains the Doe defendants' true names and capacities, plaintiff will amend this complaint by inserting their true names and capacities herein. Plaintiff is informed and believes and based thereon alleges that each defendant named herein as a Doe acted with defendants and is responsible for the damages to plaintiff herein alleged. Each reference in this complaint to defendants, or to any of them, also refers to all defendants sued under fictitious names. 50. Plaintiff is informed and believes and based thereon alleges that at all times material herein each of the defendants was the agent and employee of the other defendants, and in doing the things hereinafter alleged, was acting within the course and scope of such agency and employment. ALLEGATIONS COMMON TO ALL CLAIMS A. Perfect 10's Business 51. Perfect 10 is the publisher of the well-known adult entertainment magazine PERFECT 10. PERFECT 10 Magazine has a circulation of over 65,000 copies per issue. Perfect 10 also owns the Internet website of the same name. The Perfect 10 website receives approximately 100,000 unique visitors per month. 52. Perfect 10's business consists of the design, layout, filming, production, marketing, and promotion of adult entertainment products, including photographs, magazines, video productions, and other arts. Some of these copyrighted works appear within PERFECT 10 magazine and Perfect 10's website. 53. Perfect 10 has invested, and continues to invest, substantial sums of money, as well as time, effort, and creative talent, to produce its copyrighted works. In order to produce such works, Perfect 10 must make numerous payments including model fees, photographer fees, location costs, styling costs, make up costs, printing costs, film and processing costs, travel costs, as well as public relations, legal, and 2914.060\43841.FIRST AMENDED 14 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 16 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 advertising costs. Perfect 10 is compensated for its creative efforts and monetary investments largely from subscription fees to its website, sales of and subscriptions to its magazine, and advertising revenue. 54. Perfect 10 is the owner of the valuable and well-known Perfect 10 family of trademarks. These marks are used by Perfect 10 in connection with the sale of its products, including PERFECT 10 magazine. Perfect 10 has spent millions of dollars advertising and promoting the PERFECT 10 mark and Perfect 10 products and services and has sold millions of dollars of products and services under the PERFECT 10 mark. Perfect 10 has built up and now owns valuable goodwill symbolized by the PERFECT 10 trademark. 55. Goods and services bearing the Perfect 10 trademarks have been featured on many television and radio shows (including the Tonight Show, Howard Stern Show, The Sopranos, Dawson's Creek, Battledome, Fox News, Hard Copy, Entertainment Tonight, Extra, The Dating Game, Temptation Island, Monday Night Football, Hanity and Combs, The O'Reilly Factor, The View, and Jenny Jones), in movies (American Pie, Hollow Man, and The Way of the Gun), as well as in many newspapers. 56. Perfect 10 regularly employs models and hires photographers in connection with the creation of its photographic works. As a regular part of Perfect 10's business, it secures assignments from its models of their rights of publicity in connection with these photographic works. Moreover, as a regular part of its business, Perfect 10 hires photographers who perform work for hire. 57. The Perfect 10 website is a subscription site. Consumers are given access to content on the website in exchange for the payment of a membership fee. B. Defendants' Business 58. Upon information and belief, Perfect 10 alleges that Defendants operate their businesses in the following manner: MasterCard and Visa are structured as open, joint venture associations with members (primarily banks) that issue payment 2914.060\43841.FIRST AMENDED 15 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 17 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 cards, acquire merchants who accept payments, or both. Visa members have the right to issue Visa cards and to acquire Visa transactions from merchants that accept Visa cards. In exchange, they must follow Visa's by-laws and operation regulations. The same is true of MasterCard. 59. As an ISO, FDC materially contributes to transactions involving hundreds if not thousands of websites, including Stolen Content Websites, by processing individual MasterCard and Visa charges on behalf of MasterCard, Visa, and a number of their member banks. When a merchant accepts a credit card from a customer for the provision of goods or services, including stolen content, the customer executes a sales draft which the merchant electronically presents to an acquirer such as FDC. FDC submits the transaction to Visa or MasterCard, and Visa or MasterCard verify the validity of the customer's card and available credit. Visa or MasterCard then authorizes or denies the transaction, on a transaction by transaction basis. 60. If Visa or MasterCard authorize a transaction, the merchant immediately transmits the sales draft to FDC, which immediately purchases the draft at a discount. 61. The websites for which FDC and other acquirer banks process transactions are required by MasterCard and Visa to adhere to certain "Terms and Conditions" established by MasterCard and Visa which ostensibly prohibit illegal content or illegal conduct. 62. FDC exercises substantial supervision and control over the Stolen Content Websites for which it processes transactions. In fact, MasterCard and Visa require such supervision and control. MasterCard and Visa rules prohibit the processing of transactions that violate federal, state, and local laws. Examples of such rules are attached hereto as Exhibit "3" and incorporated herein by reference. On information and belief, FDC regularly reviews websites for which it processes, ostensibly to assure that they comply with Visa and MasterCard regulations. 2914.060\43841.FIRST AMENDED 16 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 18 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff is informed and believes and based thereon alleges that Visa and MasterCard have rules requiring members and processors to exercise similar close supervision of all merchants. 63. Despite supposedly conducting such reviews, Defendants continue to support and profit from websites which show obviously infringing content and/or openly disclaim the rights to their content. As more fully set forth in paragraph 29, above, Perfect 10 has provided Defendants with notice of unlawful activity many Stolen Content Websites.. C. Defendants' Wrongful Conduct 64. Perfect 10 alleges upon information and belief that each of the Defendants, individually and in concert with others, is providing critical support to Stolen Content Websites engaged in the infringement of the copyrights, trademarks, and publicity rights of Perfect 10 as well as the publicity rights of numerous thirdparty film owners, publishers, models, and celebrities, as follows:. 1. Specific Wrongful Conduct By Defendant FDC 65. Stolen Content Websites for which FDC processes transactions display images that violate Perfect 10's copyrights, trademarks, and assigned rights of publicity, and similar intellectual property rights of third parties. Exhibit "4," hereto is a list of some of the Stolen Content Websites. When a credit card holder uses his or her card to buy a membership to a Stolen Content Website, which purchase is facilitated by FDC, the credit card holder can view, download, and copy these infringing images. 66. Plaintiff alleges upon information and belief that virtually all celebrity content invoking the names and/or images of bona fide celebrities on the Stolen Content Websites which Defendants support is misappropriated, including, more specifically, as follows: 67. All or virtually all use of the names and images of bona fide celebrities on the Stolen Content Websites is unauthorized, infringing the rights of publicity of 2914.060\43841.FIRST AMENDED 17 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 19 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the celebrities, whose names and images are invoked. 68. Most of the infringements of Perfect 10 copyrights and rights of publicity occur on the celebrity websites. 69. Each of the Defendants is liable for conduct of the other Defendants and the Stolen Content Websites as follows: 70. Plaintiff alleges upon information and belief that, in addition to the websites identified in Exhibit "4", many other websites for which FDC processes transactions infringe Plaintiff's copyrights, trademarks, and rights of publicity, with Defendants' knowing participation. 71. Stolen Content Websites for which FDC processes transactions contain content that infringes in other ways the rights of Perfect 10 and third parties to this action, including by the unauthorized display of images of celebrities. Such conduct constitutes unfair competition against Perfect 10. 72. Plaintiff alleges upon information and belief that, in addition to the websites identified on Exhibit "4," other websites for which FDC processes transactions violate third party rights of publicity, and thereby compete unfairly with Perfect 10. 73. Defendants are profiting from and providing critical support for Stolen Content Websites which, aside from stealing massive quantities of celebrity images, commit various forms of unfair competition. Defendants are providing critical support to websites which: a. b. Deceive consumers by making false claims about their content such as "Christina Aguilera Masturbating." Grossly misstate the number of images they contain. For example, in one case, a website claimed that it had 90,000 images when it had less than 3,000. c. d. Have multiple "fronts" leading to the same content. Provide memberships to consumers who don't want them, for 18 2914.060\43841.FIRST AMENDED Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 20 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e. example, by requiring consumers to affirmatively uncheck a small box, lest they are unwittingly billed for memberships they did not want in the first place. Send large amounts of spam. 74. Plaintiff alleges upon information and belief that FDC has knowledge of the Stolen Websites' illegal transactions before, when and after they occur. Among other things, Plaintiff and others have notified Defendants of this wrongful conduct, but Defendants have continued to provide critical support for, and benefit from, such conduct. 75. Starting in January of 2003, Perfect 10 wrote to Martin Elliot of Visa, Noah Hanft of MasterCard, Adam Herbert of FDC, and a variety of attorneys for those organizations putting them on notice of more than 240 specifically identified Celebrity Porn Websites with obvious stolen content that they were supporting. 76. Perfect 10 also noted in its January 8, 2003 letter that many of the celebrity porn sites with obviously stolen content had obviously phony Internet registrations and in many cases defrauded consumers by having different homepages and titles leading to the same content. Exhibit "4" includes a copy of that letter. 77. Declarations from celebrities, stating that they have not authorized the use of their name, likeness, or identity on pornographic websites and that they do not want their images and names so used, have also been sent to Defendants. Such declarations, from celebrities such as Britney Spears, Christina Aguilera, Anna Kournikova, Yasmine Bleeth, and others, many of which have been sent to Defendants, are attached hereto as Exhibit "5". 78. MasterCard and Visa also received a letter from attorneys representing Britney Spears, on March 5, 2003, notifying them of Stolen Content Websites which defame their client and are supported by MasterCard and Visa. A copy of that letter is attached hereto as Exhibit "6" and incorporated herein by reference. 79. Even without notice from Perfect 10 and attorneys for Britney Spears 2914.060\43841.FIRST AMENDED 19 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 21 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and attorneys for other celebrities, Defendants knew or should have known about the unlawful activity on the Stolen Content Websites they supported for a number of reasons: (i) many of the websites contained the word "illegal," "celeb," "scan," or "fake" in their URL, suggesting that the website had unlawful material or had unlawfully scanned its images; (ii) many of the websites have disclaimers indicating that they did not own the rights to their content; (iii) most of the websites have obviously unauthorized material on their homepages, such as promises of "beaver shots" of various celebrities, "Britney and Christina � their first time oral sex;" and (iv) many of the websites had obviously phony domain name registrations such as BELIZE CITY, BZ BZ BZ; Box 821 The Valley AI; or BUDA, 1112-H HU. 80. Plaintiff alleges upon information and belief that the conduct on the Stolen Content Websites for which FDC sells access is calculated to mislead consumers in the following ways: a. Consumers are likely to be misled to believe that Perfect 10 and others, including celebrities, endorse or authorize the use of their names, likenesses or content on the Stolen Content Websites. b. Stolen Content Websites routinely falsely claim to have images of popular celebrities in nude poses or performing sexual acts when in fact the websites do not contain such content. c. celebrities. d. Many Stolen Content Websites are designed to appear as multiple websites with separate content, when in fact the webpages are all part of a single website, or contain the same content, fraudulently inducing consumers to purchase multiple memberships rather than a single membership. 81. Perfect 10 has never authorized Defendants or the Stolen Content Websites for which Defendants and other acquirer banks process transactions to use 2914.060\43841.FIRST AMENDED Some consumers are likely to believe that "fake" or counterfeit images of popular celebrities on Content Websites are true images of those 20 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 22 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Perfect 10's copyrighted photographs or trademarks, or to invoke its rights of publicity. Perfect 10 further alleges upon information and belief that no celebrity (known outside the "porn" industry has authorized Defendants or the Stolen Content Websites for which Defendants processes transactions to use his or her photograph or name or to invoke his or her right of publicity. Upon information and belief, Defendants know or should know that such use of celebrity images and identities is not authorized. 82. Plaintiff alleges upon information and belief that Defendants have contributory, vicarious and/or aider and abettor liability for the infringements of Perfect 10's copyrights and other wrongful conduct on the Stolen Content Websites for which Defendants processes transactions. 2. Specific Wrongful Conduct By Defendants MasterCard and Visa 83. Plaintiff is informed and believes and based thereon alleges that MasterCard and Visa regulations require the associations to review the content of websites that accept MasterCard and Visa credit cards as a form of payment. Despite such regulations, both MasterCard and Visa have, despite extensive notice from Perfect 10 regarding the unlawful activities in which the Stolen Content Websites have been engaged, repeatedly failed to enforce these regulations, and as a result, have permitted this unlawful activity to continue unabated. Upon information and belief, Perfect 10 further alleges that MasterCard and Visa have allowed some of the largest and most successful Stolen Content Webmasters to run chargeback rates far in excess of those allowed by their rules and regulations, such as, for example, 6% and higher, when the purported established Visa/MasterCard limit is not more than 1%. 84. Simultaneously, while turning a blind eye to what is occurring on Stolen Content Websites accepting MasterCard and Visa as forms of payments, Visa and FDC have ironically--and unfairly--made it impossible for Perfect 10 to accept 2914.060\43841.FIRST AMENDED 21 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 23 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Visa as a form of payment on a new website, by arbitrarily terminating Perfect 10's merchant account in 2001 and wrongfully placing Perfect 10 and its president on the black list. FIRST CLAIM FOR RELIEF (Copyright Infringement, Vicarious Liability, and Contributory Infringement Against All Defendants -- 17 U.S.C. �� 501 et seq.) 85. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 84 above as though fully set forth at length. 86. At all times relevant hereto, Perfect 10 has been the owner of all right, title, and interest to each of the copyrights in suit, or has been assigned the copyrights and all claims for infringement of those copyrights. Perfect 10 (or its predecessor in interest) has registered the copyrights for its magazines, calendars, website, and photographs, each of which contain individually copyrighted works that Defendants have unlawfully reproduced, copied, prepared derivative works from, distributed, and publicly displayed. 87. Attached hereto as Exhibit "7" are copies of Perfect 10's copyright registrations. 88. Perfect 10's copyrighted photographs are contained in PERFECT 10 magazine and Perfect 10 calendars, which will be made available to Defendants' attorneys at the offices of Perfect 10's attorneys, and in Perfect 10's website, which can be accessed at perfect10.com. 89. Each of Perfect 10's copyrighted works consists of material wholly original with Perfect 10, and each is copyrightable subject matter under the laws of the United States. 90. Plaintiff is informed and believes, and on that basis alleges, that Defendants have knowingly induced, caused, encouraged, and assisted others to infringe, and/or materially contributed to the infringement by others of Perfect 10's copyrights, including by the reproduction, alteration, public display and distribution 2914.060\43841.FIRST AMENDED 22 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 24 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the copyrighted works on the Stolen Content Websites, as set forth above. 91. Plaintiff alleges upon information and belief that Defendants knew, based on explicit notice and on the open and obvious infringing nature of the content, that photographs on the Stolen Content Websites were infringing and had reason to know that other photographs on the websites were infringing. Indeed, some of these photographs, as they appeared on these websites, contain a Perfect 10 copyright notice and/or a caption that states "Perfect 10" or a variation thereof. In addition, many of these websites specifically admit that the websites do not own their content. 92. Through the conduct averred herein, Defendants have engaged and continue to engage in the business of knowingly and systematically inducing, causing, and materially contributing to the above-described unauthorized reproduction, public display and distribution of, and creation of derivative works from, Perfect 10's copyrighted works, including by supporting the infringing activity on the Stolen Content Websites, as set forth above. Defendants have contributory liability for the infringement of Perfect 10's copyrights, as set forth above. 93. At all times relevant herein, the Defendants had the right and ability to supervise and/or to control the infringing content that exists on the Stolen Content Websites by refusing to process credit cards for such websites and/or simply enforcing their own rules and regulations. Defendants derived substantial financial benefit from infringement of Perfect 10's copyrights, in that, among other things, the availability of approximately 20,000 Perfect 10 images on the Stolen Content Websites acted as a draw for members who pay subscription fees, a portion of which fees are ultimately earned by Defendants. The Defendants have vicarious liability for the infringement of Perfect 10's copyrights, as set forth above. 94. Defendants' acts alleged herein were performed without authorization by Perfect 10. 95. The infringement of each of Perfect 10's rights in and to each Perfect 10 2914.060\43841.FIRST AMENDED 23 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 25 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 copyrighted photograph constitutes a separate and distinct act of infringement of a separate and distinct copyrighted work. 96. The foregoing acts of infringement by Defendants have been willful, intentional and purposeful, in disregard of and with indifference to the rights of Perfect 10. 97. Defendants' conduct constitutes contributory and/or vicarious infringement of Perfect 10's copyrights, and Perfect 10's exclusive rights under copyright, in violation of Sections 106 and 501 of the Copyright Act, 17 U.S.C. �� 106, 501. 98. As a direct and proximate result of the foregoing, Perfect 10 has suffered substantial damages to its business in the form of diversion of trade, loss of profits, injury to goodwill and reputation, and a dilution of the value of its exclusive rights in an amount to be established at trial. Perfect 10 is entitled to its actual damages and Defendants' profits attributable to the infringement pursuant to 17 U.S.C. � 504(b). 99. Alternatively, Perfect 10 is entitled to the maximum statutory damages, pursuant to 17 U.S.C. � 504(c), in the amount of $150,000 for each work infringed by each website or such other amounts as may be proper under 17 U.S.C. � 504(c). 100. Perfect 10 is entitled to its attorneys' fees and full costs pursuant to 17 U.S.C. � 505. 101. Defendants' conduct is causing and, unless enjoined and restrained by this Court, will continue to cause Perfect 10 great and irreparable injury that cannot fully be compensated or measured in money. Perfect 10 has no adequate remedy at law. Pursuant to 17 U.S.C. � 502, Perfect 10 is entitled to preliminary and permanent injunctive relief prohibiting further infringement of Perfect 10's copyrights. SECOND CLAIM FOR RELIEF (Trademark Infringement, Vicarious Liability, and Contributory Infringement Against All Defendants) 2914.060\43841.FIRST AMENDED 24 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 26 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 102. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 102 above as though fully set forth at length. 103. Perfect 10 is the owner of the registered trademark/service mark PERFECT 10 and PERFECT10.COM. The United States trademark/service mark registrations for PERFECT 10 and PERFECT10.COM, Registration Nos. 2,202,643; 2,235,145; 2,709,583; and 2,573,998, are for entertainment services in the nature of adult entertainment and beauty contests provided via a global computer network; entertainment services in the nature of beauty contests; magazines featuring adult entertainment, beauty contests, pictures of female models, interviews, fiction, and articles on human relations, sports, entertainment, lifestyles, and fitness; calendars; and unmounted photographs. Perfect 10 is also the owner of trademark and service mark registrations for the mark PERFECT 10 in various foreign countries. Attached hereto as Exhibit "8" are trademark registrations for Perfect 10 trademarks. 104. The PERFECT 10 trademark has been continually used by Perfect 10 and its predecessors in commerce since 1991 and is widely known throughout the United States and other parts of the world. 105. Perfect 10 has also applied for registration of the PERFECT 10 trademark for other products, and such applications have been allowed. 106. Perfect 10 has spent millions of dollars advertising and promoting the PERFECT 10 mark and Perfect 10 products and services, and has sold millions of dollars of products and services under the PERFECT 10 mark. 107. As a result of the aforementioned use, promotion, and advertisement of the PERFECT 10 trademark, Perfect 10 has built up and now owns valuable goodwill symbolized by the PERFECT 10 trademark. 108. As a result of the care and skill exercised by Perfect 10 over the nature and quality of goods and services sold under the registered PERFECT 10 mark and the extensive promotion, advertising, sale, and public acceptance thereof, these 2914.060\43841.FIRST AMENDED 25 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 27 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 goods and services have acquired a fine reputation, and this trademark has become renowned as a symbol of the goodwill that Plaintiff has created throughout the United States and elsewhere by selling products and services of high quality and by fairly and honorably dealing with the trade and public in the sale of these products and services. 109. Photographs containing a Perfect 10 copyright notice and/or a caption "Perfect 10," "P-10," or similar designation have been posted on the Stolen Content Websites. 110. Defendants are knowingly inducing, causing, and materially contributing to the conduct of the Stolen Content Websites, as alleged above. Defendants had the right and ability to supervise and/or to control the infringing content that exists on the Stolen Content Websites, and receive a direct financial benefit from the infringing activity, as alleged above. 111. Defendants are providing critical support to Stolen Content Webmasters that are using the PERFECT 10 mark in a manner that is likely to cause the public to believe that Stolen Content Websites emanate from and/or are endorsed by, affiliated with, sponsored by, and/or otherwise authorized by Perfect 10. 112. Defendants are liable for inducing infringement or contributory infringement of Perfect 10's trademarks, and/or are vicariously liable, by reason of the uses alleged herein. Defendants also are liable as co-conspirators for the acts of the Stolen Content Websites, as alleged above. 113. Defendants' actions have at all times been without Perfect 10's consent. Defendants' acts constitute willful and deliberate infringement of Perfect 10's registered trademarks/service marks in violation of trademark and unfair competition laws, including, but not limited to, Sections 32 and 43 of the Lanham Act, 15 U.S.C. �� 1114 and 1125. 114. Defendants' acts complained of herein have damaged, and will damage, Perfect 10 irreparably. Perfect 10 has no adequate remedy at law for these wrongs 2914.060\43841.FIRST AMENDED 26 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 28 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and injuries. The damage to Perfect 10 includes harm to its goodwill and reputation in the marketplace that money cannot fully compensate. Perfect 10 is, therefore, entitled to a preliminary and permanent injunction restraining and enjoining Defendants and their agents, servants, and employees, and all persons acting thereunder, in concert therewith or on their behalf, from providing critical support to any Stolen Content Website using Perfect 10's PERFECT 10 mark, or any colorable imitations thereof, in connection with their websites or in the sale, offering for sale, and advertising of their goods and services, or in any manner likely to cause mistake or to deceive the public as to the source, origin, or affiliation of Defendants' goods and services. 115. Because Defendants have willfully supported Stolen Content Websites who have used the PERFECT 10 mark in a manner calculated to cause confusion in the sale, offering for sale, and advertising of services, Perfect 10 is entitled to recover all damages sustained as a result of Defendants' unlawful conduct, including (1) Defendants' profits, (2) Perfect 10's damages, (3) treble those amounts, (4) the costs of the suit, and (5) reasonable attorneys' fees, pursuant to 15 U.S.C. � 1117. THIRD CLAIM FOR RELIEF (Trademark Disparagement Against All Defendants -- 15 U.S.C. � 1125(a)) 116. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 115 above as though fully set forth at length. 117. The acts of Defendants alleged herein create an undesirable, unwholesome, or unsavory mental association with Perfect 10 and its PERFECT 10 mark. 118. As a result of Defendants' wrongful acts, the public is likely to be confused or deceived into believing that the Stolen Content Websites' goods and services are affiliated with, connected with, or sponsored by Perfect 10 or with the genuine PERFECT 10 trademark. 2914.060\43841.FIRST AMENDED 27 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 29 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 119. This deception, likely confusion, and association damages Perfect 10's valuable goodwill and disparages Perfect 10's rights in the PERFECT 10 mark. 120. Defendants are liable for inducing or materially contributing to the conduct causing a disparagement of Perfect 10's trademarks, and/or are vicariously liable, by reason of the uses alleged above. Defendants also are liable as coconspirators for the acts of the Stolen Content Websites, as alleged above. 121. As a direct and proximate result of Defendants' actions as alleged herein, Perfect 10 has been damaged in an amount presently unknown, but to be proven at time of trial. Perfect 10 is also entitled to recover Defendants' profits. 122. Perfect 10 has incurred costs and attorneys' fees in bringing this action. 123. Defendants' actions as alleged above are greatly and irreparably damaging Perfect 10 and will continue to do so unless Defendants are restrained by this Court. Plaintiff is entitled to injunctive relief. FOURTH CLAIM FOR RELIEF (Wrongful Use of a Registered Mark Against All Defendants -Cal. Bus. & Prof. Code � 14335) 124. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 124 above as though fully set forth at length. 125. Defendants' actions in providing critical support to Stolen Content Websites who are using and reproducing the PERFECT 10 mark in connection with the sale, offering for sale, and advertising of their goods and services are likely to cause mistake and to deceive the public as to the source or origin of Stolen Content Website's services. Defendants' actions have at all times been, and continue to be, without Perfect 10's consent. Defendants' support of Stolen Content Websites constitutes unlawful infringement in violation of California Business and Professions Code � 14335. 126. Defendants' acts complained of herein have damaged, and will damage, Perfect 10 irreparably. Plaintiff is entitled to injunctive relief. 2914.060\43841.FIRST AMENDED 28 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 30 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FIFTH CLAIM FOR RELIEF (Violation of Right of Publicity Against All Defendants -Cal. Civil Code � 3344 and common-law right of publicity) 127. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 126 above as though fully set forth at length. 128. Perfect 10 is the assignee of publicity rights in the likenesses of models and actresses appearing in PERFECT 10 magazine, on its website, in calendars, in photographs, and otherwise, which models and actresses were the subject of photographs appearing on the Stolen Content Websites. Attached hereto as Exhibit "9" is a list of the identities of the models and actresses who have assigned their rights of publicity to Perfect 10, which rights have been misappropriated by Stolen Content Websites with the critical support of Defendants. 129. Defendants knowingly support Stolen Content Websites which violate Plaintiff's rights of publicity by appropriating likenesses belonging to Perfect 10 and by publishing the same on the Internet. 130. The appropriation was unauthorized and without the prior consent of Perfect 10 or any authorized party. 131. The Stolen Content Website's conduct involved the appropriation of the names and photographic images of Plaintiff's assignors. These assignors are readily identifiable in such photographs, and the names of certain of these assignors have been wrongfully used on the Stolen Content Websites. 132. The misappropriation by Stolen Content Websites was on or in products, merchandise or goods, or in advertising for them. 133. Defendants are liable for aiding and abetting the infringement, and/or have vicarious liability, as alleged above. 134. By reason of Defendants' acts, Perfect 10 has suffered substantial damage to its business in the form of diversion of trade, loss of profits, injury to goodwill and reputation, and a dilution of the value of its exclusive rights, all of 2914.060\43841.FIRST AMENDED 29 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 31 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 which are not yet fully ascertainable. Defendants have profited from these acts. 135. Defendants' critical support of Stolen Content Websites that infringe Perfect 10's rights of publicity has damaged, and will damage, Perfect 10 irreparably. Perfect 10 has no adequate remedy at law for these wrongs and injuries. The damage to Perfect 10 includes harm to the goodwill, value, and reputation of the persons who have assigned their rights of publicity to Perfect 10 in a manner that money cannot compensate. Perfect 10 is, therefore, entitled to a preliminary and permanent injunction restraining and enjoining Defendants and their agents, servants, and employees, and all persons acting thereunder, in concert therewith or on their behalf, from infringing the rights of publicity that have been assigned to Perfect 10. 136. Plaintiff is informed and believes, and on that basis alleges, that the aforementioned acts of Defendants were willful, oppressive, fraudulent, and malicious, and Plaintiff is therefore entitled to punitive damages. SIXTH CLAIM FOR RELIEF (Unfair Competition Against All Defendants -- common law, California Business & Professions Code ��17200 et seq., and Lanham Act �43(a)) 137. Perfect 10 realleges and incorporates herein by reference each and every allegation of paragraphs 1 through 136 above as though fully set forth at length. 138. Defendants are providing critical support for and profiting from the unfair competition perpetrated by Stolen Content Websites against Perfect 10 by reason of the conduct alleged herein, including the following: 139. Defendants have provided critical support to Stolen Content Websites that offer a vast library of misappropriated content that is used to compete directly and unfairly against Plaintiff, including, without limitation by (i) selling the misappropriated content at substantially less than the cost of selling such content legitimately and (ii) selling misappropriated content that is not lawfully available to 2914.060\43841.FIRST AMENDED 30 Case 5:04-cv-00371-JW Document 40 Filed 09/07/2004 Page 32 of 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Perfect 10 or other competitors acting lawfully. This misappropriated content includes (but is not limited to) material that infringes upon the rights of Perfect 10 and third-party publishers, film owners, celebrities and models, including their rights of publicity and privacy and their rights not to be placed in a false light. Attached hereto as Exhibit "10" is a list of some of the third-party celebrities and models whose rights of publicity and/or rights of privacy (false light) have been infringed by Stolen Content Websites which receive critical support by Defendants. Given the sheer volume and changing character of the misappropriations taking place, this list is not exhaustive, but is rather an exemplar of the misappropriation that has taken place. Defendants are providing critical support to Stolen Content Websites which deceive consumers by misrepresenting the source or sponsorship of material on their websites, by palming off the property of Perf

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