Facebook, Inc. v. MaxBounty, Inc

Filing 41

Answer to Amended Complaint 36 Amended Complaint Affirmative Defenses and Jury Demand byMaxBounty, Inc. (Lewry, Thomas) (Filed on 5/13/2011)

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Mark B. Mizrahi, State Bar No. 179384
[e-mail]
BROOKS KUSHMAN P.C.
6701 Center Drive, Suite 610
Los Angeles, CA 90045
Tel. [phone]; Fax [phone]
Thomas A. Lewry (Admitted Pro Hac Vice)
[e-mail]
John S. LeRoy (Admitted Pro Hac Vice)
[e-mail]
BROOKS KUSHMAN P.C.
1000 Town Center, Twenty-Second Floor
Southfield, MI 48075
Tel. [phone]; Fax [phone]
Attorneys for Defendant MaxBounty, Inc.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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FACEBOOK, INC., a Delaware
corporation,

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v.

Plaintiff,

MAXBOUNTY, INC., a Canadian
corporation,
Defendant.

Case No. 5:10-cv-4712-JF
ANSWER TO FIRST AMENDED
COMPLAINT, AFFIRMATIVE DEFENSES
AND DEMAND FOR JURY TRIAL

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I. INTRODUCTION
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Defendant MaxBounty, Inc. ("Defendant"), an advertising company that uses its

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proprietary network of affiliates to drive traffic to its customers‟ websites, is the mastermind and

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beneficiary of a scheme that targeted Facebook‟s networking platform with unauthorized, fraudulent

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and deceptive Facebook Pages and other communications in order to lure unsuspecting Facebook

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users away from Facebook and to Defendant‟s customers‟ commercial websites. Defendant‟s

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advertising schemes also involved inducing or tricking Facebook users into allowing spam to be

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sent to all of their Facebook friends. Defendant conspired with, instructed, and encouraged its

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affiliates to carry out these schemes by providing them with assurances that their advertising

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methods were legitimate, by encouraging and coaching affiliates on ways to increase the

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effectiveness of their Facebook activities, and by providing technical support and substantial

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financial gain to the affiliates who agreed to participate in the scheme. Defendant, as the

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mastermind, was a knowing and active participant in these schemes which also infringed

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Facebook‟s trademarks and tarnished Facebook‟s brand. The direct result of Defendant‟s actions, for

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which it handsomely profited, was an almost immediate and viral spreading of these schemes that

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wreaked havoc throughout a significant portion of Facebook‟s user base, tarnished Facebook‟s

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brand, damaged its goodwill and required it to expend significant efforts to educate its users,

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respond to their concerns and identify and weed out Defendant‟s affiliates‟ deceptive Pages and

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schemes. Facebook brings this lawsuit to stop Defendant‟s fraudulent and abusive use of its services

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and to recover compensatory, statutory, aggravated and punitive damages, disgorgement of the

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proceeds of Defendant‟s scheme and Facebook‟s reasonable costs and attorneys‟ fees associated

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with this lawsuit.

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ANSWER:

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concerning allegations of fraud for failure to state a claim on which relief can be granted

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pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

Denied.

MaxBounty has moved to dismiss Facebook‟s causes of action

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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II. PARTIES
2.

Plaintiff Facebook is a Delaware corporation with its principal place of business in

Pale Alto, California.
ANSWER:

Admitted.

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3.

Defendant MaxBounty, Inc. is a Canadian corporation with its principal place of

business in Ottawa, Canada.

ANSWER:

Admitted.

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III. JURISDICTION AND VENUE
4.

Court has federal question jurisdiction of this action under 28 U.S.C. § 1331 because

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the action alleges violations of the Lanham Act (15 U.S.C. §§ 1125(a) and (c)), the CAN-SPAM Act

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of 2003 (15 U.S.C. § 7701 et seq.) and the Computer Fraud and Abuse Act (18 U.S.C. § 1030). This

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Court has supplemental jurisdiction over the remaining claims under 28 U.S.C. § 1367.

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ANSWER:

Admitted.

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5.

This Court also has federal jurisdiction of this action under 28 U.S.C. § 1332,

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because the action is between corporations of different countries and the amount in controversy

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exceeds $75,000, excluding costs and interest.

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ANSWER:

Admitted that the action is between corporations of different countries.

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MaxBounty lacks knowledge or information sufficient to form a belief about the truth of the

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remaining allegations.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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6.

Venue is proper in this district under 28 U.S.C, § 1391(b)(2) because a substantial

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part of the events giving rise to the claims raised in this lawsuit occurred in this district and because

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Defendant agreed to comply with Facebook‟s Statement of Rights and Responsibilities

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("Statement"), which provides that any dispute arising. out of or related to the Statement shall be

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resolved by a state or federal court located in Santa Clara County.

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ANSWER:

Denied.

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7.

This Court has personal jurisdiction over Defendant because during all relevant times,

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Defendant repeatedly, knowingly and intentionally accessed and induced its affiliates to access

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Facebook servers located in California in furtherance of its deceptive and fraudulent marketing

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scheme. In the course of its conduct, Defendant had systematic and continuous contacts with

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California and targeted its wrongful acts at Facebook, which it knew was headquartered in

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California.

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ANSWER:

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concerning allegations of fraud for failure to state a claim on which relief can be granted

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pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

Denied. MaxBounty has moved to dismiss Facebook‟s causes of action

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The Court also has personal jurisdiction over Defendant, because Defendant agreed to

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comply with the Statement and thereby agreed to submit to the personal jurisdiction of the courts

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located in Santa Clara County, California for the purpose of litigating these claims.

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ANSWER:

Denied.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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IV. INTRADISTRICT ASSIGNMENT

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Assignment to the San Jose Division of this Court is appropriate under Civil L.R. 3-2

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because the claims asserted herein arose in the county of Santa Clara. Facebook is headquartered in

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the county of Santa Clara and has servers located at several locations in this county. Assignment to

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the San Jose Division of this Court is also appropriate because the parties have agreed that all claims

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between them would be resolved in Santa Clara County.

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ANSWER:

Denied.

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V. FACTS AND BACKGROUND
A.

Facebook Background and Services
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Founded in February 2004, Facebook is a "social utility" – a network that helps

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people communicate more efficiently and effectively with their friends, family and co-workers. The

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company develops and provides online networking services that facilitate the sharing of information

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through the "social graph" –the digital mapping of people‟s real world social connection. Through

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Facebook‟s website, the Facebook Platform, Social Plugins and other tools, hundreds of millions of

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Facebook users enjoy personalized and relevant Internet experiences. As of the filing of this

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Complaint, more than 500 million active Facebook users spend more than 700 billion minutes per

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month on http://www.facebook.com, making the website the second most trafficked website in the

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United States. More than 150 million Facebook users also engage with Facebook through external,

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third-party websites every month. And more than one million websites have implemented tools

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made available by Facebook that engage users and make their websites more social and relevant.

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Through Facebook, users can interact with over 900 million objects (individual and community

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pages, groups and events) and 30 billion pieces of content (web links, news stories, blog posts,

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notes, photo albums, etc.).

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ANSWER:

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truth of the allegations.

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MaxBounty lacks knowledge or information sufficient to form a belief about the

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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One of the defining features of Facebook is that users are required to use their real

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identities. Facebook users rely on the fact that users are required to use their actual identifies such

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that they trust the authenticity of the communications coming from their Facebook friends.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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In order to access Facebook information and features available to Facebook users, a

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person must sign up for Facebook using his or her real name, select a unique password and agree to

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the terms and conditions contained in Facebook‟s Statement before being granted authorization to

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access the protected information areas of Facebook.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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13.

Once a user obtains a Facebook account, the user obtains a "profile" that may be

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populated with information about the user such as where he or she lives, his or her interests,

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biography, current and past education and work history. Facebook users may connect their profiles

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to the profiles of other persons that they "friend" on Facebook. A Facebook friendship is mutual.

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Both users must agree to be friends before a friend connection is established.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Business or other commercial, political or charitable organizations can create "Pages"

that allow them to establish a presence on Facebook. Facebook users can also connect their profiles

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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to Pages. The administrator of the Page must be an authorized representative of the subject of the

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Page.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Facebook users may connect their profiles to Facebook Pages by clicking on the

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"Like" button that is located at the top of each Page. By clicking on the Like button, a link to the

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Page is displayed on the user‟s profile in a list under the category "Likes," and the user‟s name and

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profile picture appear on the Page‟s list of "Friends" or "People" that Like the Page.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Prior to implementing the "Like!‟ button, Facebook allowed users to connect their

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profiles to Facebook Pages by clicking on a similar button labeled "Become a Fan." The "Become a

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Fan" button operated the same way as the "Like" button: By clicking on the "Become a Fan" button,

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a link to the Page was displayed on the user‟s profile under the category "Pages" and the user‟s

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name and profile picture appeared on the Page‟s list of "Fans." The "Become a Fan" feature was

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discontinued when the "Like" button was implemented for Pages.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Once a Facebook user connects his or her profile to his or her friends‟ profiles and

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desired commercial Pages, Facebook facilitates and enables connected profiles and Pages to

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communicate with each other. Secure communication among Facebook users is vital to the integrity

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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of Facebook‟s computer network as well as to the level of confidence that Facebook users have in

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using Facebook.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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18.

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Facebook itself.

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ANSWER:

Facebook users may only be contacted by other registered Facebook users or by

MaxBounty lacks knowledge or information sufficient to form a belief about the

truth of the allegations.

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Each user profile and each Facebook Page has a "Wall," which is an area where

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registered users with access to the profile or Page may post content, including messages, links,

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pictures and videos. Each profile and Facebook Page prominently displays the "Facebook"

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trademark referenced in paragraph 25 of this complaint in the upper left-hand comer of the

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webpage. The Wall functions as a virtual bulletin board where recent posts arc arranged

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chronologically, with the most recent post appearing on the top.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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In addition to the user‟s profile, which contains the Wall, Facebook provides each

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Facebook user with a "News Feed" or "home" page; this is the first page shown to Facebook users

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when they log into their Facebook accounts. As with profiles and Pages, the News Feed prominently

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displays the "Facebook" trademark referenced in paragraph 25 of this complaint in the upper left-

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hand comer of the webpage. The News Feed displays, among other things, communications from a

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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user‟s friends and, activities performed by each of the user‟s friends and Facebook Pages to which

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the user has connected his or her profile. For example, a user‟s News Feed on a given day could

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include updates posted by the user‟s friends or Pages to which the user has connected, notices that

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friends became friends with other Facebook users, notices that a particular friend connected a

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Facebook Page to his or her profile, notices that new content was added to a Facebook Page‟s Wall,

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or notices that a link, photo or video was posted on a profile or Page Wall. The activities that appear

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on the News Feed are arranged chronologically with the most recent events posted at the top of the

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feed. This feature enables users to instantly view the activities occurring on the various profiles and

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Pages to which they are connected without visiting each and every profile or Page.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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A registered user may share a Facebook Page by clicking on the "Share" button on

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the Page. Clicking on this button brings up a window where the user can type a short note and then

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publish the note, a link to the Page and the picture icon of the Page to his or her Wall, which will

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then appear automatically in the News Feeds of all of that user‟s friends. The user can also opt to

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send this note as a direct electronic mail message to targeted friends, or can post it directly on

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another user‟s wall. This function enables users to share a link to the Page with a large number of

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users with minimal effort. Using the "Share" button often causes the user‟s friends to view the

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shared Facebook Page.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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For a period of time, registered users could also target a Facebook Page to only

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particular friends by clicking on the "Suggest to Friends" button. When a user clicks on the "Suggest

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to Friends" button, a message containing a link, icon, short description and an optional message is

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sent to selected friends inviting them to connect to the Page. A Page suggestion often causes the

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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recipients of the message to view the suggested Facebook Page to determine whether the user would

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like to connect to the Page. Provided the sending user‟s privacy settings are not adjusted to prohibit

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it, the fact that a user suggested a Page is published to the user‟s Wall and also to the News Feeds of

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that person‟s friends.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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23.

Facebook also provides a messaging service that allows users to send personal

electronic mail messages directly to other Facebook users. Such messages are not posted to the
user‟s Wall or News Feed but instead are private between the sender and recipient(s).

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Facebook provides its users with tools that allow the customization of the ability to

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share or restrict certain information based on specific friends or friend lists on Facebook‟s network

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as well as the ability to have certain Facebook communications delivered to them by other

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messaging options, such as to have electronic mail messages sent to a user‟s Facebook account sent

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to a separate email account.

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

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truth of the allegations.

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Facebook devotes significant resources to combat unauthorized use of its website and

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service. In addition to Facebook employees that continuously work to monitor and improve

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Facebook security, Facebook also provides users with tools that help them ensure that their accounts

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are not used by others.

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ANSWER:

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truth of the allegations.

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MaxBounty lacks knowledge or information sufficient to form a belief about the

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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B.

Facebook’s Trademarks Are Famous
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Facebook is the owner of the entire right, title and interest in and to a number of

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trademarks and service marks, including the following, for which Facebook owns federal

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applications or registrations covering a Wide variety of goods and services:
FACEBOOK Registration: Reg. No. 3801147 (first use for Classes 38, 41, and 42
February 28, 2004, first use for Class 9 August 31, 2006)

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Pending Applications: Serial Numbers 77896325 and 77896323

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Pending Application: Serial Number, 77273570

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ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

truth of the allegations.

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27.

Attached to this Complaint as Exhibit A, and incorporated here by reference, are true

and correct copies of the United States Patent and Trademark Office printouts of the online status
pages for these trademarks. All of the registrations noted in Exhibit A are valid, subsisting,
unrevoked and uncancelled. These registered trademarks are referred to collectively as the
"Facebook Trademarks."

ANSWER:

Admitted that Exhibit A includes printouts from the United States Patent and

Trademark Office records corresponding to the registration and applications identified in
paragraph 25. MaxBounty lacks knowledge or information sufficient to form a belief about the
truth of the remaining allegations.

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28.

Facebook has continuously used the Facebook Trademarks in interstate commerce in

the United States since the date listed in paragraph 25, above, in connection with its goods and
services.

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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ANSWER:

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truth of the allegations.

MaxBounty lacks knowledge or information sufficient to form a belief about the

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The Facebook Trademarks are highly distinctive with regard to Facebook‟s online

networking services.

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ANSWER:

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truth of the allegations.

MaxBounty lacks knowledge or information sufficient to form a belief about the

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30.

As a result of Facebook‟s widespread use of the Facebook Trademarks worldwide, its

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prolific presence on third party websites, the continuous and unsolicited media coverage of

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Facebook, the high degree of consumer recognition of the Facebook Trademarks and the strong and

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loyal base of customers that regularly use and enjoy Facebook‟s services, the Facebook Trademarks

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are famous within the meaning of Section 43(c) of the United States Trademark Act, 15 U.S.C.

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§1125(c).

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ANSWER:

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truth of the allegations.

MaxBounty lacks knowledge or information sufficient to form a belief about the

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C.

Facebook’s Statement of Rights and Responsibilities
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In order to obtain authorization to access user information maintained by Facebook,

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users must agree to comply with the requirements set forth in the Statement and incorporated

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documents. Facebook has established the Statement and associated guidelines in order to limit

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access and use of its network to permissible uses. Facebook has determined that this is necessary to

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protect Facebook users from abuse, protect the privacy of their personal information, protect the

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Security of the content they have entrusted Facebook with and protect the Facebook brand.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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ANSWER:

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truth of the allegations.

MaxBounty lacks knowledge or information sufficient to form a belief about the

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32.

Facebook‟s Statement includes, among other things, specific terms for Facebook

profiles, Pages ("Pages Terms") and for advertising ("Advertising Guidelines").

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ANSWER:

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Statement.

Admitted that the document identified as the Statement records the terms of the

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All Facebook users, including Defendant, affirmatively agree to comply with the

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Statement before Facebook creates an account for thereof allows them access to certain features of

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the Facebook website. The Statement sets forth acceptable uses Of Facebook and prohibits users

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from conducting certain activities. A true and correct copy of Facebook‟s current Statement is

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incorporated here by reference and attached as Exhibit B.

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ANSWER:

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MaxBounty lacks knowledge or information sufficient to form a belief about the truth of the

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remaining allegations.

Admitted that Exhibit B includes what Facebook identifies as a Statement.

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34.

Facebook‟s Statement prohibits Facebook users from:

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a.

using Facebook to do anything unlawful, misleading or malicious;

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b.

using Facebook‟s trademarks without Facebook‟s written permission;

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c.

sending or otherwise posting unauthorized commercial communications (such

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as spare) on Facebook; .
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collecting users‟ content or information or otherwise accessing Facebook

using automated means without Facebook‟s permission;
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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e.

using Facebook in any unlawful manner or in any Other manner that could

damage, disable, overburden or impair the Facebook website;

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f.

facilitating and encouraging violations of the Statement by others; and

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g.

uploading malicious code.

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ANSWER:

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the extent the allegation is inconsistent with those terms, or incomplete, or if the Statement has

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changed over time, it is denied.

The document identified as the Statement records the terms of the Statement. To

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35.

The Statement also addresses the permissible use of Facebook Pages by expressly

referencing and incorporating Facebook‟s Pages Terms, which contain the following restrictions:

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a.

Pages may only be used to promote a business or other commercial, political

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or charitable organization or endeavor (including nonprofit organizations, political campaigns, bands

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and celebrities);

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b.

c.

Pages can only post content and information under the "everyone" setting;

d.

If the Page contains any form of advertising, then Section 11 of the

the Page;

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Only an authorized representative of the subject of the Page may administer

and

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Statement, and also the Advertising Guidelines apply to the Page and its administrator.

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ANSWER:

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the extent the allegation is inconsistent with those terms, or incomplete, or if the Statement has

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changed over time, it is denied.

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36.

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Exhibit C.

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ANSWER:

The document identified as the Statement records the terms of the Statement. To

Facebook‟s current Pages Terms are incorporated here by reference and attached as

Admitted.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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37.

The Statement also includes reference to Facebook‟s Advertising Guidelines, which

apply to all advertisements appearing on Facebook, including advertisements in Facebook Pages.

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ANSWER:

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Guidelines. MaxBounty lacks knowledge or information sufficient to form a belief as to the

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remaining allegations.

Admitted that the statement included reference to Facebook‟s Advertising

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38.

Facebook‟s Advertising Guidelines include the following restrictions:
a.

Advertisers cannot create or manage multiple Facebook accounts for

advertising purposes unless given permission by Facebook to do so;
b.

Advertisements that contain a URL or domain in the body must link to that

Same URL or domain;

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c.

Advertisements must not be false, misleading, fraudulent or deceptive;

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d.

Advertisements cannot be deceptive Or fraudulent about any offer made;

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e.

Advertisements must clearly represent the company, product or brand that is

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being advertised;

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f.

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Products or services promoted in the advertisement must be directly available

on the landing page;
g.

Advertisements must not include unsubstantiated claims, including but not

limited to prices, discounts or product availability;
h.

If an advertisement includes a price, discount or "free" offer, (1) the

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destination URL for the ad must link to a page that dearly and accurately offers the exact deal the

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advertisement has displayed, and (2) the advertisement must clearly state what action or set of

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actions is required to qualify for the offer;

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i.

Advertisements may not contain, promote or reference "get rich quick" and

other money making opportunities that offer compensation for little or no investment, including
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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“work from home” opportunities positioned as alternatives to part-time or full-time employment or

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promises of monetary gain with no strings attached;

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j.

Advertisements cannot contain, facilitate or promote "spam" or other

advertising or marketing content that violates applicable laws, regulations or industry standards;

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k.

If obtaining the benefit of the advertisement requires the user to subscribe to a

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service, the service and offer requirements must both be stated in the advertisement and on the

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Facebook Page;

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l.

If obtaining the benefit of the advertisement requires a recurring subscription,

the benefit to be obtained must be consistent with what is promoted in the advertisement copy;

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m.

With respect to subscription services, the promoted website must clearly and

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accurately display the price and billing interval on the landing page as well as on any page that

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prompts a user for personally identifiable information or billing information (including a mobile

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phone number or credit card number); and

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n.

If the service is a subscription, the website must provide a prominent opt-in

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checkbox or other clear mechanism indicating that the user knowingly accepts the price and

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subscription service.

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ANSWER:

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Guidelines. To the extent the allegation is inconsistent with those terms, or incomplete, or if the

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Statement has changed over time, it is denied.

Facebook‟s Advertising Guidelines record the terms of the Advertising

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39.

Facebook‟s current Advertising Guidelines are incorporated here by reference and

attached as Exhibit D.

ANSWER:

Admitted.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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D.

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Defendant’s Unauthorized and Fraudulent Activities
40.

Defendant is a registered Facebook user, operating a Facebook Page in support of its

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business, and during all relevant times has been and is bound by its express agreement to abide by

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Facebook‟s Statement, Pages Terms, and Advertising Guidelines.

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ANSWER:

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allegation is denied.

Admitted that MaxBounty has a Facebook Group page. The remainder of the

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41.

Defendant has engaged, and continues to engage, in advertising activities on the

Facebook website and elsewhere.

ANSWER:

Denied.

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42.

At no time has the Defendant received permission from Facebook to conduct any

15

commercial activity on Facebook‟s website that exceeds the authorization provided in the Statement

16

and

17

http://www.maxbounty.com/faq.cfm, Defendant is an advertising company that operates an affiliate

18

marketing program, otherwise known as a Cost Per Action (or "CPA") marketing program. Under

19

this program, Defendant recruits individuals (or "affiliates") to create advertisements that drive

20

traffic to Internet websites that have contracted with Defendant. Under the CPA marketing model,

21

the contracting website pays for the traffic these affiliates generate only when some specific action

22

is taken on the website, such as filling out a form or completing a purchase. The advertiser defines

23

this action in advance. As a general rule, the more complex the action required, the higher payment

24

Defendant‟s affiliates receive per participant.

incorporated

Advertising

Guidelines.

As

described

on

Defendant‟s

website,

25

ANSWER:

26

MaxBounty lacks knowledge or information sufficient to form a belief about the truth of these

27

allegations. Additionally, MaxBounty denies that it “recruits individuals (or „affiliates‟) to create

28

Because the Statement and Advertising Guidelines may have changed over time,

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

16

1

advertisements.” Admitted that MaxBounty hosts a website at www.maxbounty.com including

2

frequently asked questions. To the extent the allegations are inconsistent with the MaxBounty

3

website, they are denied.

4
5
6

43.

Many of Defendant‟s Affiliates generate traffic for Defendant‟s customers through

7

fraudulent and deceptive means, including false and deceptive promotions posted to Facebook

8

Pages.

9

ANSWER:

Denied. MaxBounty has moved to dismiss Facebook‟s causes of action

10

concerning allegations of fraud and related conspiracy for failure to state a claim on which relief

11

can be granted pursuant to Fed.R.Civ.P. 12(b)(6).

12
13
14

44.

For example, one of Defendant‟s affiliate‟s Pages, which necessarily displayed the

15

Facebook Trademarks, was titled "MACeosmetics.com Earn a $250 GIFT CARD! Registrant

16

Required", and included the following text: "You Are Invited To Receive This Exclusive Offer For

17

A Limited Time Only! Act Now To Get Your Free $250 M.A.C. Gift Card! This is only for a

18

limited time, so be sure to enter right now! Get started by following the three steps below." This

19

Page was active on Facebook between at least March and June 2010. "Step 1" required Facebook

20

users to "Become a Fan" of this Page, which would in turn reveal steps 2 and 3. Step 2 asks users to

21

"Invite your friends" to the Page,. noting that "If you do not invite ALL of your friends you may not

22

be eligible [for the gift card]." Step 3 is to "Register for your $250 gift card", which explains that

23

"After a short Registration process your gift card will be mailed to you shortly."

24

ANSWER:

25

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

26

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

17

1
2

45.

The statements that completing the three steps would result in a free $250 M.A.C. gift

3

card were false and misleading, Once Facebook users completed these three steps, they were not

4

given a free $250 M.A,C. gift card, but instead directed to a domain registered to and managed by

5

Defendant that then redirected users to a third party commercial website, in this case Superb-

6

Rewards.net.

7

ANSWER:

8

activities. It has moved to dismiss Facebook‟s causes of action concerning allegations of fraud

9

for failure to state a claim on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6).

10

MaxBounty denies that it has been involved in any “false or misleading”

Accordingly, no answer to those allegations is required.

11
12
13

46.

The website at Superb-Rewards.net collected personal information from Facebook

14

users and tricked Facebook users into spending money on commercial products and services that

15

were unrelated to the original "free $250 M.A.C. gift card" promise on Defendant‟s affiliate‟s

16

Facebook Page. The landing page at Superb-Rewards.net explains that to receive a gift card, the

17

user must complete three additional steps, including to sign up for 13 "sponsor offers", which for the

18

most part are offers for membership to various subscription-based services for music, movies,

19

coffee, newspapers, magazines, and other services many of which required payment of significant

20

monthly fees~ Defendant received payment for the traffic that it delivers to Superb-Rewards.net

21

based on the users who successfully completed the steps to receive a free gift.

22

ANSWER:

23

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

24

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

18

1

47.

As another example, Defendant‟s affiliates also created a Facebook Page with the

2

title "FREE Apple iPad TESTERS WANTED." This Page, which was active on the Facebook site

3

from at least March 2010 to June 2010, informed Facebook users that in order to become a "tester"

4

and receive a free Apple iPad, the user had to (1) become a fan of the Page, (2) send unsolicited

5

invitations to all of their Facebook friends to visit the Page, and (3) click on a link to a third-party

6

website and provide personal information to that site. This affiliate‟s Page also contained malicious

7

computer code that the user could cut and paste in order to automatically send invitations to the

8

user‟s friends. When users completed these three steps they were not given a free iPad but instead

9

their browsers were redirected through Defendant‟s website to a third-party commercial website,

10

Better-Gifts.net.

11

ANSWER:

12

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

13

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

14
15
16

48.

The website at Better-Chris.net, which is nearly identical in content to the website at

17

Superb-Rewards.net described above, collects personal information from Facebook users and

18

markets products and services that are unrelated to the original Facebook Page that users had

19

visited. Defendant receives payment for the traffic that it delivered to Better-chfts.net based on the

20

users who successfully completed the steps to receive their free gift.

21

ANSWER:

22

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

23

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

24
25
26
27
28

49.

Defendant, through its employees, knowingly assists its affiliates in creating these

Pages. For example, one of Defendant‟s employees Adam Harrison, contacts affiliates who use
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

19

1

Facebook Pages to generate customer traffic, identifies himself as Defendant‟s Facebook Affiliate

2

Manager, and encourages and directs these affiliates to make specific changes to their promotional

3

Facebook Pages in order to make them more profitable to Defendant

4

ANSWER:

5

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

6

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

7
8
9

50.

Defendant‟s Employees, including at least Mr. Harrison and likely others, directly

10

encourage certain of its affiliates to generate traffic for its contracting advertisers through fraudulent

11

and deceptive means, including posting false and deceptive promotions on the Facebook site.

12

ANSWER:

13

or false activities. It has moved to dismiss Facebook‟s causes of action concerning allegations of

14

fraud for failure to state a claim on which relief can be granted pursuant to Fed.R.Civ.P.

15

12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty denies that it encourages or participates in any fraudulent, deceptive,

16
17
18

51.

In order to accomplish this, Defendant‟s employees, including at least Mr. Harrison

19

and likely others, mislead its affiliates into believing that Defendant‟s campaigns are approved by

20

Facebook, provide instruction and support on how to design these unauthorized Facebook

21

campaigns, and provide substantial advance payments to its affiliates that agree to participate in

22

these campaigns.

23

ANSWER:

24

causes of action concerning allegations of fraud for failure to state a claim on which relief can be

25

granted pursuant to Fed.R.Civ.P. 12(b)(6).

26

required.

MaxBounty denies that it has misled anyone. It has moved to dismiss Facebook‟s

Accordingly, no answer to those allegations is

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

20

1
2

52.

For example, in March 2010, one of Defendant‟s affiliates, Mitchell Fillmore, created

3

Facebook Pages that offered a free IKEA gift card using the same scheme as generally described in

4

the paragraphs 44-48 above. Mr. Fillmore was then contacted by Mr. Harrison, who informed Mr.

5

Fillmore that he was a MaxBounty Affiliate Manager for affiliates who create Pages on Facebook.

6

Mr. Harrison provided Mr. Fillmore with technical help for designing Facebook Pages and for

7

increasing the number of Facebook users who would receive notice and act upon the offers

8

presented in Mr. Fillmore‟s Facebook Pages. Mr. Harrison also encouraged Mr. Fillmore to run

9

other Facebook campaigns for other similar offers and to use techniques that were designed to

10

increase the effectiveness of these campaigns.

11

ANSWER:

12

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

13

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

14
15
16

53.

Mr. Fillmore followed the advice given by Mr. Harrison, but noticed many of his

17

Facebook Pages were taken down by Facebook not long after they were posted. Mr. Fillmore grew

18

concerned that his campaigns were not permitted by Facebook. When Mr. Fillmore raised these

19

concerns to Mr. Harrison, Mr. Harrison assured Mr. Fillmore that MaxBounty approved of these

20

techniques used by Mr. Fillmore. He also offered Mr. Fillmore a $30,000 cash advance to continue

21

creating similar Facebook Pages.

22

ANSWER:

23

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

24

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

21

1

54.

Through Mr. Harrison, and likely through other employees, Defendant encourages

2

and instructs its affiliates on techniques intended to deceptively induce Facebook users to send

3

unsolicited commercial messages (spam) to their friends suggesting that they also visit Defendant‟s

4

affiliates‟ Facebook Pages. As described in the paragraphs above, Defendant‟s affiliates accomplish

5

this by inducing Facebook users to send the messages, by stating on the Facebook Page that users

6

will not receive their free gift unless they send such a message to ALL their Facebook friends, and

7

by tricking Facebook users into executing malicious computer code that causes messages to be

8

automatically sent to all their Facebook friends.

9

ANSWER:

MaxBounty denies that it encourages or instructs any deceptive or malicious

10

activities. It has moved to dismiss Facebook‟s causes of action concerning allegations of fraud

11

for failure to state a claim on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6).

12

Accordingly, no answer to those allegations is required.

13
14
15

55.

Defendant knows and keeps track of which affiliates send traffic to its customers‟

16

websites as well as the volume of traffic that originates from Facebook. Defendant monitors its

17

affiliates‟ performance and actively works to improve the effectiveness of campaigns that are run on

18

Facebook.

19

ANSWER:

20

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

21

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

22
23
24

56.

Defendant knows or should know that the techniques that it is recommending and

25

encouraging its affiliates to use violate Facebook‟s Statement, Pages Guidelines and Advertising

26

Guidelines, and are otherwise deceptive.

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

22

1

ANSWER:

2

concerning allegations of fraud for failure to state a claim on which relief can be granted

3

pursuant to Fed.R.Civ.P. 12(b)(6).

Denied.

MaxBounty has moved to dismiss Facebook‟s causes of action

4
5
6

57.

Defendant‟s affiliates‟ Facebook Pages and deceptive campaigns violate Facebook‟s

7

Statement, Pages Guidelines and Advertising Guidelines in multiple ways, including but not limited

8

to: failing to provide notice of paid subscription offers; failing to offer the same products on the

9

Facebook Pages that are offered to the user on the commercial website landing pages; and inducing

10

Facebook users to send unsolicited commercial messages (spam) to other Facebook users.

11

ANSWER:

12

concerning allegations of fraud for failure to state a claim on which relief can be granted

13

pursuant to Fed.R.Civ.P. 12(b)(6).

Denied.

MaxBounty has moved to dismiss Facebook‟s causes of action

14
15
16
17

E.

Harm to Facebook
58.

Defendant‟s misleading and deceptive advertising scheme has tainted the Facebook

18

experience for the affected Facebook users and caused many of them real economic loss in the form

19

of undisclosed subscription fees.

20

ANSWER:

21

allegations of fraud for failure to state a claim on which relief can be granted pursuant to

22

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer to those allegations is required.

MaxBounty has moved to dismiss Facebook‟s causes of action concerning

23
24
25

59.

Facebook has suffered and continues to suffer significant harm to its reputation and

26

goodwill due to Defendant‟s actions. Facebook has suffered more than $5,000 in economic damages

27

attributable to its efforts and resources used to combat Defendant‟s affiliates‟ spam, to combat

28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

23

1

Defendant‟s and Defendant‟s affiliates‟ unauthorized access to Facebook accounts and servers, to

2

respond to user complaints and provide assistance in preventing Defendant and its affiliates from

3

continued unauthorized use of Facebook‟s services, and to identify and locate Defendant and its

4

affiliates.

5

ANSWER:

6

concerning allegations of fraud for failure to state a claim on which relief can be granted

7

pursuant to Fed.R.Civ.P. 12(b)(6).

Denied.

MaxBounty has moved to dismiss Facebook‟s causes of action

8
9
10

60.

Defendant has induced, and continues to induce, its affiliates to engage, willfully and

11

maliciously, in unauthorized access to and misappropriation of Facebook computers, servers,

12

systems, networks and data, including network information, and Facebook user information.

13

ANSWER:

14

concerning allegations of fraud for failure to state a claim on which relief can be granted

15

pursuant to Fed.R.Civ.P. 12(b)(6).

Denied. MaxBounty has moved to dismiss Facebook‟s causes of action

16
17
18

61.

Defendant has encouraged, and continues to encourage, its affiliates to induce

19

Facebook users to use automated means to initiate and send, willfully and maliciously, unsolicited

20

commercial messages, and has done so in order to defraud Facebook users and profit from these

21

illegal and improper spamming campaigns.

22

ANSWER:

23

concerning allegations of fraud for failure to state a claim on which relief can be granted

24

pursuant to Fed.R.Civ.P. 12(b)(6).

Denied.

MaxBounty has moved to dismiss Facebook‟s causes of action

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

24

1

62.

2

its users.

3

ANSWER:

Defendant has been unjustly enriched by its activities at the expense of Facebook and

Denied.

4
5
6
VI. CLAIMS FOR RELIEF

7
8
9
10
11

FIRST CAUSE OF ACTION – VIOLATION OF CONTROLLING THE ASSAULT OF NONSOLICITED PORNOGRAPHY AND MARKETING ACT OF 2003 (“CAN-SPAM”),
15 U.S.C. § 7701, et seq.

63.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth

herein, the allegations in paragraphs 1 through 62.

12

ANSWER:

13

this cause of action for failure to state a claim on which relief can be granted pursuant to

14

Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is required.

MaxBounty incorporates its responses to paragraph 1-62. It has moved to dismiss

15
16
17

64.

Facebook is an Internet access service as defined in 15 U.S.C. § 7702(11) because

18

it provides a service that enables users to access content, information, electronic mail or other

19

services offered over the Interact and may also include access to proprietary content,

20

information and other services as part of a package to consumers.

21

ANSWER:

22

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

23

required.

MaxBounty has moved to dismiss this cause of action for failure to state a claim

24
25
26
27
28

65.

Facebook‟s website and computers operate in interstate and foreign commerce

and communication and are therefore protected computers under 15 U.S.C. § 7702(13).
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

25

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6

66.

Electronic messages sent between users on the Facebook site, including direct

7

messages, Wall Posts, Page suggestions,

8

messages” as described in 15 U.S.C. § 7702(6).

9

ANSWER:

and other communications are “electronic mail

MaxBounty has moved to dismiss this cause of action for failure to state a claim

10

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

11

required.

12
13
14

67.

Defendant knowingly and willingly participates with Defendant‟s affiliates in

15

procuring Facebook users to send, or take actions that cause commercial electronic messages to

16

be sent, to all the Facebook users‟ friends on Facebook. Facebook users take such action

17

because they were led to believe they would receive valuable consideration if they send

18

commercial messages to their friends. The electronic messages initiated by Defendant‟s

19

affiliates are "commercial" electronic messages because their primary purpose was the

20

commercial advertisement or promotion of a commercial product or service (including content

21

on an Interact website operated for a commercial purpose) as provided in 15 U.S.C.

22

§ 7702(2)(A).

23

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

24

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

25

required.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

26

1

68.

Defendant induces its affiliates to initiate commercial messages on Facebook and

2

thereby procures the origination or transmission of such message as provided in 15 U.S.C. §

3

7702(9).

4

ANSWER:

5

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

6

required.

MaxBounty has moved to dismiss this cause of action for failure to state a claim

7
8
9

69.

Defendant intentionally misleads Facebook users by inducing its affiliates to

10

initiate the transmission of commercial electronic messages through Facebook‟s computers to

11

Facebook users that contain header information that is materially false or misleading as to the

12

true identity of the initiator of the messages in violation of 15 U.S.C. § 7704(a)(1).

13

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

14

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

15

required.

16
17
18

70.

Defendant, through its affiliates, initiates the transmission of commercial

19

electronic messages, in a pattern or practice, through Facebook‟s computers to Facebook users

20

that do not contain a functioning return electronic mail address or other Internet-based opt-out

21

mechanism in violation of 15 U.S.C. § 7704(a)(3).

22

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

23

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

24

required.

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

27

1

71.

Defendant, through its affiliates, initiates the transmission of commercial

2

electronic messages, in a pattern or practice, through Facebook‟s computers to Facebook users

3

that do not contain clear and conspicuous identification that the messages are advertisements or

4

solicitations, clear and conspicuous notice of the opportunity to decline to receive further

5

commercial emails from the sender or a valid physical postal address of the sender in violation

6

of 15 U.S.C. § 7704(a)(5).

7

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

8

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

9

required.

10
11
12

72.

Defendant, through its affiliates, initiates the transmission of commercial

13

electronic messages, in a pattern or practice, through Facebook‟s computers to Facebook users

14

that contain subject headings that are misleading regarding the contents or subject matter of the

15

message and misleading regarding Facebook‟s connection to the messages in violation of 15

16

U.S.C. § 7704(a)(2).

17

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

18

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

19

required.

20
21
22

73.

Facebook is informed and believes and, based thereon alleges, that Defendant

23

induces its affiliates to initiate the transmission of the misleading Commercial electronic

24

messages with actual knowledge or knowledge fairly implied on the basis of objective

25

circumstances that the messages‟ subject heading was likely to mislead a recipient acting

26

reasonably under the circumstances.

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

28

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6

74.

Facebook is informed and believes, and based thereon alleges, that Defendant

7

induces its affiliates to initiate the transmission of commercial electronic messages, in a pattern,

8

or practice, through Facebook‟s computers to Facebook users, that are misleading and unlawful

9

under 15 U.S.C. § 7704(a), as alleged above, or assists in the origination of such messages

10

through the provision or selection of addresses to which the messages are transmitted as defined

11

in 15 U.S.C. § 7704(b)(I).

12

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

13

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

14

required.

15
16
17
18

75.

Defendant has knowledge of its affiliates‟ violations of 15 U.S.C. § 7704 and

control over its affiliates‟ actions.

19

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

20

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

21

required.

22
23
24
25

76.

Defendant has knowledge of its affiliates‟ violations of 15 U.S.C. § 7704, and

intends that its affiliates take such actions.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

29

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6

77.

Defendant causes Facebook harm by causing higher-bandwidth utilization, by

7

causing Facebook to expend significant employee time and sums of money combating the

8

unsolicited commercial messages initiated by Defendant and responding to user complaints, by

9

deterring users and potential users from using Facebook, by damaging Facebook‟s goodwill and

10

reputation with its customers; and by causing other injuries to Facebook.

11

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

12

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

13

required.

14
15
16
17

78.

Facebook is entitled to the greater of its actual monetary loss or statutory damages

as provided by 15 U.S.C. § 7706(g)(1)(B), in an amount to be proven at trial.

18

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

19

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

20

required.

21
22
23

79.

Facebook is entitled to an award of aggravated damages in an amount equal to

24

three times the amount otherwise available pursuant to 15 U.S.C. § 7706(g)(3)(C) because

25

Defendant violated CAN-SPAM willfully and knowingly and because Defendant‟s unlawful

26

activity included one or more of the aggravated violations set forth in 15 U.S.C. § 7704(b).

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

30

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6
7

80.

Facebook is entitled to reasonable costs, including reasonable attorneys‟ fees as

provided by 15 U.S.C. § 7706(g)(4).

8

ANSWER:

9

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

10

MaxBounty has moved to dismiss this cause of action for failure to state a claim

required.

11
12
13

SECOND CAUSE OF ACTION – COMPUTER FRAUD AND ABUSE ACT,
18 U.S.C. § 1030, et seq.

14
15
16

81.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.

17

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

18

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

19

required.

20
21
22
23

82.

Facebook‟s computers are involved in interstate and foreign commerce and

communication and arc protected computers under 18 U.S.C. § 1030(e)(2).

24

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

25

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

26

required.

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

31

1
2

83.

Upon information and belief, Defendant knowingly and with intent to defraud

3

induces its affiliates to access Facebook‟s computers without authorization or in excess of

4

authorization as defined by Facebook‟s Statement, Pages Terms and Advertising Guidelines, and by

5

means of such conduct, furthers its intended fraud and obtained payment from affiliate marketers in

6

violation of 18 U.S.C. § 1030(a)(4).

7

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

8

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

9

required.

10
11
12

84.

Defendant knowingly and with intent to defraud provides inducement in the form of

13

misleading information, technical support, and monetary payments to its affiliates to access

14

Facebook‟s computers without authorization or in excess authorization as defined by Facebook‟s

15

Statement, Pages Terms and Advertising Guidelines, and by means of such inducement, furthered

16

its intended fraud and obtained payment from affiliate marketers in violation of 18 U.S.C. §

17

1030(a)(4).

18

ANSWER:

19

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

20

required.

MaxBounty has moved to dismiss this cause of action for failure to state a claim

21
22
23
24

85.

Through the activities described in paragraphs 81-84, Defendant conspires with its

affiliates to violate 18 U.S.C. § 1030(a)(4) in violation of 18 U.S.C. § 1030(b).

25

ANSWER:

26

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

27

required.

28

MaxBounty has moved to dismiss this cause of action for failure to state a claim

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

32

1
2

86.

Defendant‟s conduct caused a loss to Facebook during a one-year period in excess of

$5,000.

3

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

4

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

5

required.

6
7
8
9
10

87.

Defendant‟s conduct has also caused irreparable and incalculable harm and injuries to

Facebook and, unless enjoined, will cause further irreparable and incalculable injury for which
Facebook has no adequate remedy at law.

11

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

12

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

13

required.

14
15
16

88.

Facebook has been damaged by Defendant‟s actions, including by being forced to

17

expend resources to investigate and prevent the unauthorized access and abuse of its computer

18

network. Facebook seeks compensatory and other equitable relief under 18 U.S.C. § 1030(g) in an

19

amount to be proven at trial.

20

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

21

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

22

required.

23
24
25
26
27
28

THIRD CAUSE OF ACTION – FRAUD
89.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

33

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6
7

90.

Facebook is informed and believes and, based thereon, alleges that Defendant

intended to and in fact did defraud Facebook.

8

ANSWER:

9

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

10

MaxBounty has moved to dismiss this cause of action for failure to state a claim

required.

11
12
13

91.

Defendant‟s affiliates represent to Facebook and its users that the Facebook Pages

14

they develop contain content related to the subject of the Page and that the Pages comply with

15

Facebook‟s Statement, Pages Terms and Advertising Guidelines. These representations are in fact

16

false and Defendant and its affiliates know that the representations were false.

17

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

18

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

19

required.

20
21
22

92.

Defendant‟s affiliates initiate spam on the Facebook network and create and use

23

fraudulent and deceptive campaigns using Facebook Pages that promise free goods and services that

24

neither Defendant nor its affiliates provide or intend to provide.

25

prohibited by the Statement and by Facebook‟s Advertising Guidelines, which are incorporated into

26

the Statement.

27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

34

Each of these activities is

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6

93.

Defendant in aware that its affiliates are defrauding Facebook and Facebook‟s users

7

and intends that its affiliates take such actions.

8

employees, including Mr. Harrison, contact affiliates who are successful in using Facebook Pages to

9

generate customer traffic, including Mr. Fillmore, in order to provide encouragement and technical

10

Defendant authorizes and is aware that its

suggestions on ways to further profit from traffic originating from Facebook.

11

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

12

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

13

required.

14
15
16

94.

Defendant‟s employees review and approve affiliates‟ Pages that violate Facebook‟s

17

Terms.

18

ANSWER:

19

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

20

required.

MaxBounty has moved to dismiss this cause of action for failure to state a claim

21
22
23
24

95.

Defendant receives increased revenue from its customers as a result of these

deceptive acts.

25

ANSWER:

26

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

27

required.

28

MaxBounty has moved to dismiss this cause of action for failure to state a claim

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

35

1
2
3

96.

Defendant receives increased revenue from its customers as a result of these

deceptive acts.

4

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

5

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

6

required.

7
8
9

97.

Defendant directly conceals or suppresses material facts by representing that it is in

10

compliance with Facebook‟s Statement when it in fact encourages its affiliates to use the Facebook

11

Platform in ways that are expressly prohibited by the Statement.

12

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

13

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

14

required.

15
16
17

98.

Defendant induces its affiliates to make false representations to Facebook with the

18

intent to defraud and induce Facebook into permitting Defendant‟s affiliates to use Facebook‟s

19

platform and services and to defraud and induce Facebook users to visit the sites that pay Defendant

20

for traffic.

21

ANSWER:

22

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

23

required.

MaxBounty has moved to dismiss this cause of action for failure to state a claim

24
25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

36

1

99.

When Facebook hosts Defendant‟s affiliates‟ Pages on the Facebook platform,

2

Facebook does not know that Defendant‟s affiliates‟ representations are false but instead reasonably

3

relies on Defendant‟s affiliates‟ representations that their use complies with Facebook‟s Statement.

4

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

5

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

6

required.

7
8
9

100.

At the time Facebook users click on the links, the users do not know that the

Defendant‟s affiliates‟ representations were false and instead believe they are true.

10

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

11

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

12

required.

13
14
15
16

101.

Facebook and its users act in justifiable reliance upon the truth of the Defendant‟s and

Defendant‟s affiliates‟ representations.

17

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

18

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

19

required.

20
21
22

102.

In justifiable reliance upon Defendant‟s and Defendant‟s affiliates‟ agreement to

23

abide by the Statement and associated Guidelines, Facebook allowed Defendant and its affiliates to

24

create and maintain Pages on Facebook.

25

ANSWER:

26

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

27

required.

28

MaxBounty has moved to dismiss this cause of action for failure to state a claim

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

37

1

103.

Facebook has suffered and continues to suffer significant harm to its reputation and

2

goodwill as a result of its reliance on Defendant‟s and Defendant‟s affiliates‟ representations and

3

conduct. Facebook has already suffered significant economic damages attributable to the effort and

4

resources used to combat the Spam procured by Defendant‟s affiliates, to identify and remove the

5

Facebook Pages created by Defendant‟s affiliates, to combat Defendant‟s affiliates‟ unauthorized

6

access to Facebook accounts and servers, to address the harm to its reputation and goodwill, and to

7

identify and locate Defendant and certain of Defendant‟s affiliates.

8

ANSWER:

9

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

10

MaxBounty has moved to dismiss this cause of action for failure to state a claim

required.

11
12
13

104.

Through the actions described in the preceding paragraphs, Defendant aids and abets

14

its affiliates‟ fraud. Defendant has actual knowledge of its affiliates‟ fraud and provides substantial

15

assistance in furtherance of the fraud by assigning affiliates who are generating a significant amount

16

of Facebook traffic to specific Facebook Affiliate Managers like Adam Harrison, who reviews

17

affiliates‟ Pages and give suggestions for deals and content designed to maximize traffic to

18

defendant‟s customers‟ websites.

19

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

20

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

21

required.

22
23

105.

Through the actions described in the preceding paragraphs, Defendant enters into

24

conspiracy with its affiliates to defraud Facebook by knowingly entering into an agreement to pay

25

its affiliates for traffic generated through deceptive Facebook Pages.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

38

1

ANSWER:

MaxBounty has moved to dismiss this cause of action for failure to state a claim

2

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

3

required.

4
5
6
7

106.

Facebook is entitled to injunctive relief, compensatory damages and punitive

damages in an amount to be determined at trial.

8

ANSWER:

9

on which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). Accordingly, no answer is

10

MaxBounty has moved to dismiss this cause of action for failure to state a claim

required.

11
12
13
14
15

FOURTH CAUSE OF ACTION – TORTIOUS INTERFERENCE WITH CONTRACT
107.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.

16

ANSWER:

MaxBounty realleges and incorporates by reference, as if set forth fully herein,

17

the answers of paragraphs 1-62.

18
19
20

108.

21

Statement.

22

ANSWER:

23

truth of the allegations.

Use of Facebook‟s site and services is governed by and subject to Facebook‟s

MaxBounty lacks knowledge or information sufficient to form a belief about the

24
25
26
27
28

109.

At all times relevant to this dispute, users of Facebook‟s site and services have been

required to agree to Facebook‟s Statement in order to access Facebook‟s site and services.
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

39

1

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

2

truth of the allegations.

3
4
5

110.

Defendant affirmatively accepted and agreed to Facebook‟s Statement and knew or

6

should have known that all Facebook users were required to accept and agree to Facebook‟s

7

Statement in order to access Facebook‟s site and services.

8

ANSWER:

Because the Statement may have changed over time, MaxBounty lacks

9

knowledge or information sufficient to form a belief about the truth of the allegations.

10
11
12

111.

Facebook‟s Statement prohibits users of Facebook from sending or otherwise posting

13

unauthorized commercial Communications (such as spare) on Facebook, from inducing other

14

Facebook users to breach the terms of this Statement, from misleading Facebook users and from

15

violating Facebook‟s Pages Terms and Advertising Guidelines.

16

ANSWER:

Facebook‟s Statement records the current terms of the Statement. To the extent

17

the allegation is inconsistent with those terms, or has changed over time, it is denied.

18
19
20
21
22

112.

Defendant intends to induce its affiliates to violate Facebook‟s Statement and send

spare to Facebook users.

ANSWER:

Denied.

23
24
25
26
27
28

113.

Defendant intends to induce Facebook users to breach the Statement by encouraging

its affiliates to induce such users to utilize automated scripts that sent spare to their friends.

ANSWER:

Denied.

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

40

1
2

114.

When Facebook users utilize Defendant‟s affiliates‟ automated scripts to send spare

to their friends, they breach Facebook‟s Statement.

3

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

4

truth of the allegations.

5
6
7
8
9

115.

Through the actions described in the preceding paragraphs, Defendant entered into a

conspiracy with its affiliates to intentionally interfere with Facebook‟s contracts with its users.

ANSWER:

Denied.

10
11
12

116.

As a result of this breach, hundreds of thousands of Facebook users receive unwanted

13

commercial communications disguised as personal messages from their friends that they otherwise

14

would not have received.

15

ANSWER:

Denied.

16
17
18
19
20

117.

The breaches induced by Defendant directly and proximately harmed Facebook.

Facebook has suffered and continues to suffer significant harm to its reputation and goodwill.

ANSWER:

Denied.

21
22
23
24
25

118.

Facebook is entitled to injunctive relief, compensatory damages and punitive

damages in an amount to be determined at trial.

ANSWER:

Denied.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

41

1
2
3

FIFTH CAUSE OF ACTION – BREACH OF CONTRACT
119.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.

4

ANSWER:

MaxBounty realleges and incorporates by reference, as if set forth fully herein,

5

the answers of paragraphs 1-62.

6
7
8
9
10

120.

Use of Facebook‟s site and services, the creation of Facebook Pages on the Facebook

network and the placement of advertisements on Facebook Pages are governed by and subject to
Facebook‟s Statement, Pages Terms and Advertising Guidelines.

11

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

12

truth of the allegations.

13
14
15

121.

At all times relevant to this dispute, users of Facebook‟s site and services have been

16

required to agree to Facebook‟s Statement in order to access Facebook‟s site and services, create

17

Facebook Pages on the Facebook network and place advertisements on Facebook Pages.

18

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

19

truth of the allegations.

20
21
22

122.

23

ANSWER:

24

knowledge or information sufficient to form a belief about the truth of the allegations.

Defendant affirmatively accepted and agreed to Facebook‟s Statement.

Because the Statement may have changed over time, MaxBounty lacks

25
26
27
28

123.

Facebook‟s Statement is binding on Defendant.

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

42

1

ANSWER:

This allegation is a legal conclusion for which no answer is required.

2
3
4
5

124.

Facebook has performed all conditions, covenants and promises required of it in

accordance with its Statement.

6

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

7

truth of the allegations.

8
9
10

125.

Defendant, through its actions as described above, knowingly, willfully, repeatedly

11

and systematically breached Facebook‟s Statement, Pages Terms and Advertising Guidelines

12

through its conduct as alleged in this Complaint.

13

ANSWER:

Denied.

14
15
16

126.

Upon information and belief, Defendant induces its affiliates to breach Facebook‟s

17

Statement, Advertising Guidelines and Pages Terms in direct violation of its own obligations under

18

the Statement. Defendant‟s affiliates‟ breaches include, but are not limited to, initiation of spare

19

messages, using automated scripts on Facebook‟s network, confusing, misleading, surprising and

20

defrauding Facebook users, placing advertisements on Facebook Pages that contain URLs that do

21

not end at that same landing page, placing false, misleading, fraudulent and deceptive

22

advertisements on Facebook, and offering recurring subscriptions without permission or proper

23

notice.

24

ANSWER:

Denied.

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

43

1

127.

Defendant‟s breaches of Facebook‟s Statement, Pages Terms and Advertising

2

Guidelines directly and proximately caused and continue to cause Facebook irreparable and

3

incalculable harm and injury.

4

ANSWER:

Denied.

5
6
7
8
9

128.

Facebook is entitled to injunctive relief, compensatory damages and punitive

damages in an amount to be determined at trial.

ANSWER:

Denied.

10
11
SIXTH CAUSE OF ACTION – FEDERAL TRADEMARK DILUTION
15 U.S.C. § 1125(c)

12
13
14
15
16
17

129.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.

ANSWER:

MaxBounty realleges and incorporates by reference, as if set forth fully herein,

the answers of paragraphs 1-62.

18
19
20
21
22
23
24
25

130.

As a result of the enormous publicity afforded the Facebook Trademarks and the

strong and loyal base of customers that enjoy Facebook‟s services, the Facebook Trademarks have a
high degree of consumer recognition, are widely recognized by the general consuming public of the
United States as a designation of Facebook‟s goods and services and are famous.

ANSWER:

MaxBounty lacks knowledge or information sufficient to form a belief about the

truth of the allegations.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

44

1

131.

The Facebook Trademarks became famous before Defendant began its infringing

2

activities.

3

ANSWER:

4

truth of the allegations.

MaxBounty lacks knowledge or information sufficient to form a belief about the

5
6
7

132.

Defendant is liable for contributory infringement because it intentionally induces its

8

affiliates to use and cause to be displayed the Facebook Trademarks in the course of their

9

unauthorized activities. Defendant‟s affiliates‟ unauthorized use of the Facebook Trademarks causes

10

dilution by tarnishment of the distinctive quality of the Facebook Trademarks when Facebook users

11

associate the negative experience of participating in Defendant‟s affiliates‟ deceptive Facebook

12

Pages scheme with the goods and services normally offered by Facebook under those same marks.

13

ANSWER:

Denied.

14
15
16

133.

Facebook is informed and believes and, based thereon, alleges that Defendant intends

17

to induce its affiliates to create an association with the Facebook Trademarks and to trade on the

18

widespread recognition of the Facebook Trademarks.

19

ANSWER:

Denied.

20
21
22
23
24

134.

Defendant‟s affiliates‟ unauthorized use of the Facebook Trademarks is achieved

with Defendant‟s notice and full knowledge that such use is not authorized or licensed by Facebook.

ANSWER:

Denied.

25
26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

45

1

135.

Despite having knowledge or reason to know of Defendant‟s affiliates‟ infringement

2

of Facebook‟s marks, Defendant continues to allow Defendant‟s affiliates to promote and advertise

3

its advertisers‟ products and services.

4

ANSWER:

Denied.

5
6
7
8
9

136.

Through the actions described in the preceding paragraphs, Defendant entered into a

conspiracy with its affiliates to dilute Facebook‟s trademarks.

ANSWER:

Denied.

10
11
12
13
14

137.

Defendant‟s affiliates unauthorized use of the Facebook Trademarks is in direct

violation of Facebook‟s Statement, Pages Terms, and Advertising Guidelines.

ANSWER:

Denied.

15
16
17
18
19

138.

Defendant‟s aforesaid acts are in knowing and willful violation of Facebook‟s rights

under section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c).

ANSWER:

Denied.

20
21
22

139.

The distinctive nature of the Facebook Trademarks is of enormous value, and

23

Facebook is suffering and will continue to suffer irreparable harm if Defendant‟s wrongful conduct

24

is allowed to continue.

25

ANSWER:

Denied.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

46

1

140.

Facebook is entitled to injunctive relief against Defendant, as well as all other

2

remedies available under the Lanham Act, including, but not limited to, damages in an amount to be

3

proven at trial consisting of, among other things, disgorgement of Defendants‟ profits, diminution in

4

the value of the goodwill associated with the Facebook Trademarks, and costs and attorneys‟ fees.

5

ANSWER:

Denied.

6
7
8
9
10
11

141.

Defendant‟s conduct has caused irreparable and incalculable harm and injuries to

Facebook and, unless enjoined, will cause further irreparable and incalculable injury for which
Facebook has no adequate remedy at law.

ANSWER:

Denied.

12
13
14

142.

Defendant‟s wrongful use of the Facebook Trademarks is deliberate, willful,

15

fraudulent and without any extenuating circumstances and constitutes a willful intent to trade on

16

Facebook‟s reputation or to cause dilution of the famous Facebook Trademarks. It is an exceptional

17

case within the meaning of Lanham Act § 35, 15 U.S.C, § 1117. Facebook is therefore entitled to

18

recover three times the amount of its actual damages, attorneys‟ fees and costs incurred in this

19

action and prejudgment interest.

20

ANSWER:

Denied.

21
22
23
24
25
26
27
28

SEVENTH CAUSE OF ACTION – FALSE DESIGNATION OF ORIGIN
15 U.S.C. § 1125(a)
143.

Plaintiff Facebook realleges and incorporates by reference, as if fully set forth herein,

the allegations in paragraphs 1 through 62.

ANSWER:

MaxBounty realleges and incorporates by reference, as if set forth fully herein,

the answers of paragraphs 1-62.
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

47

1
2
3

144.

In connection with Defendant‟s services, Defendant has induced its affiliates to use in

commerce, without Facebook‟s authorization or consent, the Facebook Trademarks.

ANSWER:

Denied.

4
5
6

145.

Defendant‟s affiliates‟ unauthorized use of the Facebook Trademarks is likely to

7

cause confusion, mistake or deception among the consuming public regarding the affiliation,

8

connection or association of Defendant, its affiliates and its customers with Facebook.

9

ANSWER:

Denied.

10
11
12
13
14

146.

Through the actions described in the preceding paragraphs, Defendant has entered

into a conspiracy with its affiliates to misappropriate the Facebook Trademarks.

ANSWER:

Denied.

15
16
17

147.

Defendant‟s affiliates‟ unauthorized use of the Facebook Trademarks is likely to

18

cause confusion, mistake or deception among the consuming public that Facebook has authorized,

19

approved or in some way Sponsored Defendant‟s and its affiliates‟ services.

20

ANSWER:

Denied.

21
22

148.

Defendant‟s affiliates‟ unauthorized use of the Facebook Trademarks constitutes the

23

use of a false designation of origin and false description or representation of fact, all in violation of

24

15 U.S.C. § 1125(a).

25

ANSWER:

Denied.

26
27
28

ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

48

1

149.

Plaintiff is entitled to injunctive relief against Defendant, as well as all other remedies

2

available under the Lanham Act, including, but not limited to, damages in an amount to be proven at

3

trial consisting of, among other things, disgorgement of Defendant‟s profits, and diminution in the

4

value of the goodwill associated with the Facebook Trademarks, and costs and attorney‟s fees.

5

ANSWER:

Denied.

6
7
8
9
10
11

150.

Defendant‟s conduct has also caused irreparable and incalculable harm and injuries to

Facebook and, unless enjoined, will cause further irreparable and incalculable injury for which
Facebook has no adequate remedy at law.

ANSWER:

Denied.

12
13
14

151.

Defendant‟s wrongful use of the Facebook Trademarks is deliberate, willful,

15

fraudulent and without any extenuating circumstances and constitutes a willful intent to trade on

16

Facebook‟s reputation or to cause dilution of the famous Facebook Trademarks. It is an exceptional

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ease within the meaning of Lanham Act § 35, 15 U.S.C. § 1117. Facebook is therefore entitled to

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recover three times the amount of its actual damages, attorneys‟ fees and costs incurred in this

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action and prejudgment interest.

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ANSWER:

Denied.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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AFFIRMATIVE DEFENSES

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1.

The Complaint fails to state a claim upon which relief may be granted.

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2.

The CAN-SPAM Act, (15 U.S.C. §7701 et seq.) is not enforceable against

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MaxBounty for the allegations set forth in the Complaint.
3.

The Computer Fraud and Abuse Act (18 U.S.C. §1030, et seq.) is not enforceable

against MaxBounty for the allegations set forth in the Complaint.
4.

MaxBounty has not committed fraud, induced its customers to commit fraud, or

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conspired with its customers to commit fraud with respect to any advertisement on

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Facebook.com.

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5.

Facebook‟s Statement is not a legally binding contract.

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6.

MaxBounty has not breached Facebook‟s Statement.

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7.

MaxBounty has not caused or otherwise induced its customers to breach any

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contract with Facebook.com.

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8.

The Facebook Trademarks are not protectable or enforceable against MaxBounty.

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9.

The Facebook Trademarks are functional and descriptive.

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10.

The Facebook Trademarks are not distinctive.

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11.

The Plaintiff‟s alleged uses of the Facebook Trademarks are fair uses.

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12.

MaxBounty is not using Facebook Trademarks to cause a likelihood of confusion

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as to the source of their service or any affiliation with or endorsement by Plaintiff.
13.

MaxBounty has not conspired with or induced its customers to use Facebook

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Trademarks to cause a likelihood of confusion as to the source of their service or any affiliation

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with or endorsement by Plaintiff.

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14.

MaxBounty has not diluted or conspired to dilute Facebook Trademarks.

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15.

Plaintiff‟s alleged claims may be barred, in whole or in part, by the defenses of

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estoppel, unclean hands, waiver, or acquiescence.
16.

Plaintiff‟s alleged claims may be barred by applicable statutes of limitation or

repose, and/or the defenses of laches.
ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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1

17.

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from MaxBounty.

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18.

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MaxBounty has not caused harm to Plaintiff, and Plaintiff is entitled to nothing

MaxBounty reserves the right to add additional defenses that may become evident

during discovery or trial of this matter.

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WHEREFORE, MaxBounty asks the Court to:

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A.

Dismiss the Complaint with prejudice;

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B.

Award MaxBounty its costs and attorneys‟ fees; and

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C.

Grant MaxBounty all other relief to which it is entitled and that the Court deems

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just and proper.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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DEMAND FOR TRIAL BY JURY
MaxBounty demands a jury trial as to all issues so triable in this action pursuant to Fed.
R. Civ. P. 38(b).

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Date: May 13, 2011

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By:_/s/ Thomas A. Lewry
Thomas A. Lewry (Admitted Pro Hac Vice)
[e-mail]
John S. LeRoy (Admitted Pro Hac Vice)
[e-mail]
BROOKS KUSHMAN P.C.
1000 Town Center, Twenty-Second Floor
Southfield, MI 48075
Tel. [phone]; Fax [phone]

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Mark B. Mizrahi, State Bar No. 179384
[e-mail]
BROOKS KUSHMAN P.C.
6701 Center Drive, Suite 610
Los Angeles, CA 90045
Tel. [phone]; Fax [phone]

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Attorneys for Defendant, MaxBounty, Inc.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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CERTIFICATE OF ELECTRONIC SERVICE
I hereby certify that on May 13, 2011, I electronically filed the foregoing document with
the Clerk of the Court for the Northern District of California using the ECF System which will
send notification to the following registered participants of the ECF System as listed on the
Court's Notice of Electronic Filing: Joseph Perry Cutler, James R. McCullagh, and Brian Patrick
Hennessy.
I also certify that I have mailed by United States Postal Service the paper to the following
non-participants in the ECF System: NONE.

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By: /s/ Thomas A. Lewry
[e-mail]
BROOKS KUSHMAN P.C.

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Attorneys for Defendant, MaxBounty, Inc.

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ANSWER TO FIRST AMENDED COMPLAINT
Case No. 5:10-cv-04712-HRL

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