Perfect 10, Inc. v. Megaupload Limited et al

Filing 1

COMPLAINT with Jury Demand against DOES, Megaupload Limited, Kim Schmitz ( Filing fee $ 350 receipt number 0974-3257303.), filed by Perfect 10, Inc.. (Attachments: # 1 Exhibit 1)The new case number is 3:11-cv-191-IEG-BLM. Judge Irma E. Gonzalez and Magistrate Judge Barbara Lynn Major are assigned to the case. (Eric Benink)(ecs) (cap).

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Eric J. Benink, Esq., SBN 187434
Krause Kalfayan Benink & Slavens, LLP
625 Broadway, Suite 635
San Diego, CA 92101
[phone] (ph)
[phone] (fax)
[e-mail]

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Attorneys for Plaintiff

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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CASE NO.

PERFECT 10, INC., a California
corporation,

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COMPLAINT FOR:
Plaintiff,

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'11CV0191 IEG BLM

v.
MEGAUPLOAD LIMITED, a Hong
Kong corporation; KIM SCHMITZ,
an individual; and DOES 1 through
100, inclusive,

(1) COPYRIGHT INFRINGEMENT;
(2) TRADEMARK INFRINGEMENT
(FEDERAL); (3) TRADEMARK
DILUTION (FEDERAL); (4)
VIOLATION OF 15 U.S.C. § 1125
(5) UNFAIR COMPETITION; AND
(6) VIOLATION OF RIGHTS OF
PUBLICITY

Defendants.
DEMAND FOR JURY TRIAL

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COMPLAINT

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Plaintiff Perfect 10, Inc. (“Perfect 10”) avers:

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JURISDICTION AND VENU
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Jurisdiction. This action arises under the Copyright Act, 17 U.S.C.

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§ 101 et seq., and the Lanham Act, 15 U.S.C. § 1051 et seq. This Court has

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jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331,

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1338(a) and (b) and principles of supplemental jurisdiction.

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2.

Venue. Venue is proper in this judicial district pursuant to 28

U.S.C. § 1391 (b)(2), (c), and § 1400(a).
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Personal Jurisdiction. Personal jurisdiction is proper over the

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Defendants because the wrongful activity at issue concerns Defendants’

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operation of commercial businesses through which Defendants knowingly

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transact business and enter into contracts with individuals in California,

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including within the County of San Diego. Specifically, Defendants contract

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with California customers to sell monthly memberships for their services, and

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receive much of their revenue directly from Paypal, a corporation with

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headquarters in San Jose, California. One of the primary websites through

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which Defendants conduct their business, megaupload.com, states that its Terms

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of Service are to be construed in accordance with the laws of California. Each

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of the Defendants, therefore, has purposefully availed itself of the privilege of

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doing business in California and in the United States, and material elements of

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Defendants’ wrongdoing occurred in this State.

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THE PARTIES
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Plaintiff Perfect 10 is a California corporation. Plaintiff published

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the popular magazine PERFECT 10 and owns and operates the internet website

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located at perfect10.com.

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Defendants Megaupload Limited and Kim Schmitz (“Schmitz”)

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(collectively, “Megaupload”) collectively own, operate, and/or control the

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internet websites located at megaupload.com, megarotic.com, megaporn.com,
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COMPLAINT

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megavideo.com, and megaclick.com among others, and have various advertising

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operations, data storage facilities, and other businesses, which among other

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things, copy, store, distribute, display, and profit from unauthorized copyrighted

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materials, and induce and assist others to infringe copyrighted materials.

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Megaupload Limited was formed in Hong Kong.

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6. Schmitz is the moving, active, conscious force behind the infringing

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and illegal activities described herein in that he personally directs, controls,

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ratifies, and participates in such infringing and illegal activities. According to

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Forbes magazine, Schmitz has served time in prison for computer hacking and

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insider trading.

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The computer servers that host megaupload.com, megarotic,com,

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megaporn.com, megavideo.com, and megaclick.com are located in Ashburn,

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Virginia and are managed and operated by Schmitz. Schmitz was initially listed

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as the official contact for megaupload.com in Internet Registrar filings but his

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name was subsequently removed from those filings.

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Does 1 through 100, inclusive, which are businesses owned or

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controlled by Megaupload or individuals affiliated with Megaupload, which

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either directly or indirectly profit from and/or directly or indirectly infringe or

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facilitate the infringement of Perfect 10 intellectual property, are sued herein

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under fictitious names because their true names and capacities are unknown to

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Perfect 10.

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9. When Perfect 10 ascertains the Doe Defendants’ true names and

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capacities, it will seek leave to amend this complaint to insert such true names

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and capacities. Perfect 10 is informed and believes, and on that basis avers, that

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each Doe Defendant acted with Defendants and is responsible for the harm and

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damages to Perfect 10 herein averred. Each of the Defendants and the Doe

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Defendants are referred to hereinafter collectively as “Defendants.”

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10.

Perfect 10 is informed and believes, and on that basis avers, that at
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COMPLAINT

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all times material herein, each of the Defendants was the agent and/or employee

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of the other Defendants, and, in doing the things herein averred, was acting

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within the course and scope of such agency and employment.

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Each of the entity defendants herein is the alter ego of Schmitz in

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that a unity of interest and ownership exists between he and the corporate

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entities such that there does not exist a separateness between them and an

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injustice would result if the acts in question were treated as those of only one of

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the entities defendants. Schmitz formed Megaupload for the specific purpose of

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engaging in the business of illegally storing, displaying, and distributing the

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intellectual property of others. On information and belief, Schmitz alone profits

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from the revenues derived from these entities and neither Megaupload entity

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pays any taxes in the United States. Furthermore, neither is registered to

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conduct business in the United States with any Secretary of State office. The

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megaupload.com, megaporn.com, megarotic.com, megavideo.com, and

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megaclick websites fail to identify a telephone number, or the identities of any

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officers or directors.

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THE BUSINESS OF PERFECT 10
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The business of Perfect 10 consists of the design, creation,

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production, marketing, promotion, and sale of copyrighted adult entertainment

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products, including photographs, magazines, video productions, cell phone

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downloads, and other media.

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Perfect 10 was the publisher of the well-known magazine

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PERFECT 10, but was forced to close that magazine because of rampant

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infringement.

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Perfect 10 creates or created, and sells or sold, calendars and other

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merchandise featuring its images, and was involved in the licensing of

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downloads of images for cell phones, but is not currently earning revenue from

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that endeavor because of rampant infringement.
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COMPLAINT

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Perfect 10 owns and operates the internet website perfect10.com.

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Consumers are provided access to content owned by Perfect 10 and made

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available by payment of a membership fee of $25.50 per month.

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Perfect 10’s revenues are currently derived predominantly from

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sales of memberships to its perfect10.com website. Sales of memberships to the

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perfect10.com website are made by providing the customer with an individual

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user name and password to access the website.

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The Perfect 10 Copyrighted Works: Perfect 10 owns thousands of

valuable and unique copyrighted photographs, as well as video productions and

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other proprietary materials, some of which are identified in Exhibit 1. As set

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forth in Exhibit 1, a substantial number of the copyrighted photographs are

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registered with the U.S. Copyright Office and others are pending registration.

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Perfect 10 owns the copyrights in and to these works (the “Perfect 10

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Copyrighted Works”). Perfect 10 has invested, and continues to invest,

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substantial sums of money, time, effort, and creative talent, to make and produce

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the Perfect 10 Copyrighted Works. In addition, in order to produce and sell the

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Perfect 10 Copyrighted Works, Perfect 10 is required to make numerous

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payments, including but not limited to model fees, photographer fees, location

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costs, styling costs, make up costs, printing costs, film and processing costs,

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travel costs, as well as distribution, public relations, legal, and advertising and

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promotion costs.

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The Perfect 10 Marks: Perfect 10 also is the owner of the valuable

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and well-known Perfect 10 family of trademarks, including but not limited to

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PERFECT 10, PERFECT10.COM, and P10 (the “Perfect 10 Marks”). These

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marks are used in commerce by Perfect 10 on and in connection with the sale of

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its products and services, including PERFECT 10 magazine and perfect10.com.

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Perfect 10 has spent millions of dollars advertising and promoting the Perfect 10

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Marks and Perfect 10 products and services bearing these marks. Perfect 10 has
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COMPLAINT

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built and owns the valuable goodwill symbolized by the Perfect 10 Marks.

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Three of Perfect 10's registered trademarks, registration numbers 2235145,

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2202643, and 2573998, have become incontestable under Section 15 of the

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Lanham Act, 15 U.S.C. Section 1065.

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Goods and services bearing the Perfect 10 Marks have been

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featured and/or talked about on numerous television and radio shows (including

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The Tonight Show, The Sopranos, The Amazing Race, Entourage, The Howard

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Stern Show, Dawson’s Creek, Battledome, Fox News, Hard Copy, Entertainment

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Tonight, Extra, The Dating Game, Temptation Island, Monday Night Football,

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Hannity & Colmes, The O’Reilly Factor, The View, and Jenny Jones), in motion

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pictures (including Orphan, Superbad, Knocked Up, Spiderman, American Pie,

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Hollow Man, and The Way of the Gun), and in newspapers and periodicals.

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The Perfect 10 Rights of Publicity: Perfect 10 contracts with

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models in connection with its magazine and website. Perfect 10 secures

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assignments from some of those models of their rights of publicity (the “Perfect

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10 Rights of Publicity”). The Perfect 10 Rights of Publicity are valuable

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because the identities, including the names and likenesses, of these models are

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well-known and popular and attract/attracted purchasers of PERFECT 10

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magazine and visitors and subscribers to perfect10.com.

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The success of Perfect 10’s business is almost entirely dependent

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on its intellectual property rights. Therefore, the ongoing and massive

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infringements of Perfect 10’s rights, as herein described, is devastating to, and

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threatens the existence of, Perfect 10’s business.

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THE BUSINESS OF MEGAUPLOAD
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Megaupload operates the internet websites megaupload.com,

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megaporn.com, megarotic.com, megavideo.com, and megaclick.com, among

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others, which are accessible throughout the United States and the world.

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Megaupload.com, megaporn.com, megarotic.com, and megavideo.com are pirate
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COMPLAINT

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websites that sell access to large amounts of unauthorized intellectual property to

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the public without paying the rightful owners of that property. Megaupload and

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its users upload copyrighted and trademarked intellectual property (movies,

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songs, software, pictures, etc.) to its computer servers. In the case of

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megaupload.com, after a file is uploaded, Megaupload provides to its users a

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unique Uniform Resource Locator (“URL”) which allows its users to view or

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download the file from the website. The URL’s are disseminated throughout the

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internet by Megaupload and its users, which enable anyone with the URL to

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access, copy, and download the intellectual property from Megaupload’s servers.

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In order to view, copy, or download such files from the megaupload websites

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without waiting, the customer must purchase a membership fee, for as little as

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€9.99 per month. Megaupload stores billions of dollars of pirated full-length

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movies, songs, software, and images on its servers. It copies, distributes, and

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sells such pirated materials to hundreds of thousands of consumers, without

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permission and without compensating the rightful owners of those materials.

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Megaupload is aware that its websites are being used as a vehicle to

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illegally copy and distribute large amounts of infringing materials. Indeed,

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megaupload.com has become among the hundred most popular websites on the

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Internet, with a reported 45 million unique visitors per day. Because it charges

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membership fees for immediate access to the copyrighted materials stored on its

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servers, it is a distributor and seller of pirated materials.

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In addition to its direct infringements as discussed above,

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Megaupload encourages, facilitates, induces, and materially contributes to the

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infringements of its users through its Rewards Programs. Megavideo.com and

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megaporn.com have a rewards program called the “Megaporn Rewards

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program.” Megaupload.com has a rewards program which it runs in a similar

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fashion. Megaupload.com states with regard to its Rewards Program:

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“The more downloads your files get, the more you can earn through our
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COMPLAINT

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Megaupload Rewards program.” “Every qualifying download of one of your
files will earn you a reward point. When you have reached a certain number of
points, you can redeem them for premium status or even cash.” “There is no
limit! And even better: The more downloads your files get, the more you can
earn through our Megaupload Rewards program.”
Megaupload offers $10,000 USD for 5,000,000 reward points.
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In other words, Megaupload induces its customers to post content

that is likely to be massively downloaded, such as high quality infringing nude
images and popular full length movies and songs. Such activity very
substantially damages copyright holders, as Megaupload does not pay them for
their works.
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Numerous affiliate websites operated by Megaupload customers

have received substantial payouts from Megaupload for posting URLs of pirated
materials stored on Megaupload’s servers. For example, the website,
Megaupload.net provides a search engine to search for specific types of files
(e.g. Perfect 10 images, Frank Sinatra songs, the movie Avatar, etc.) The search
engine provides URLs to Megaupload’s website responsive to the search
request. Thus, the person performing the search is directed to Megaupload’s
website and is offered an opportunity to purchase a membership. Some of the
affiliates display samples of the infringing materials directly from the affiliate
website. Megaclick.com places ads on, receives traffic from, and promotes,
infringing websites.
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Megaupload is not a legitimate file storage company and has none

of the characteristics. Its megaporn.com website is a pornographic website
which shows images of sexual intercourse on its tour pages to visitors of any
age. A site similar in operation to Megaupload.com was recently characterized
by the Congressional anti-piracy caucus as one of the six worst infringing
websites in the world. Pirate websites such as megaupload.com, which

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COMPLAINT

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obviously infringe massive quantities of movies, songs, images, and other

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extremely valuable copyrighted works, and directly profit from the infringing

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activity over which they have complete control, were never meant to be eligible

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to receive a DMCA safe harbor. Furthermore, none of the five Megaupload

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websites listed above, including megaupload.com, identify the name, address, or

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phone number of their respective DMCA agents as required by 17 U.S.C. §

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512(c)(2).

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Among the materials that Megaupload illegally stores, copies,

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distributes, sells, and displays, are thousands of Perfect 10 copyrighted images,

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Perfect 10 videos, and materials that infringe upon Perfect 10 trademarks, and

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rights of publicity.

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The five Megaupload websites listed above, including

megaupload.com, are hosted by Carpathia Hosting, Inc. in Ashburn VA.
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All of the Perfect 10 Copyrighted Works which Megaupload and its

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affiliates provide to consumers are used without authorization. Megaupload

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engages in and facilitates the massive and ongoing violations of Perfect 10’s

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rights even though Megaupload is aware that Perfect 10 never authorized or

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consented to the use by Megaupload of the Perfect 10 Copyrighted Works, the

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Perfect 10 Marks, or the Perfect 10 Rights of Publicity. Megaupload is aware of

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the lack of Perfect 10’s authorization and consent for the following reasons,

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among others:

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(a)

First, between July 23, 2010 and August 8, 2010, Perfect 10

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sent to Megaupload 22 notices notifying Megaupload that it was infringing a

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vast collection of third party copyright works, Perfect 10 rights of publicity, and

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Perfect 10 copyrighted works. As far as Perfect 10 can determine, most of these

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identified infringing works have not been removed.

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(b)

Second, Megaupload has offered complete electronic copies

of Perfect 10 magazine, as well as Perfect 10 Images that contain obvious
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COMPLAINT

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Perfect 10 copyright notices, along with files that are labeled “Perfect 10” or

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Perfect-10.
(c)

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Third, upon information and belief, Megaupload does not

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own anything that it sells access to. Whether or not someone else uploaded the

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copyrighted material to Megaupload servers does not give Megaupload the right

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to make copies of, distribute, display, or sell access to those works.

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FIRST CLAIM FOR RELIEF

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(Copyright Infringement)

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Against All Defendants

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31.

Perfect 10 re-avers and incorporates herein by reference each and

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every averment of paragraphs 1 through 30 above as though fully set forth

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herein.

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32.

Perfect 10 is the owner of all right, title, and interest to each of the

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Perfect 10 Copyrighted Works. Perfect 10 has registered its works with the

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United States Copyright Office. Perfect 10 has been issued United States

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copyright certificates some of which are listed on Exhibit 1, attached hereto.

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33.

Each of the Perfect 10 Copyrighted Works consists of material

original with Perfect 10 and each is copyrightable subject matter.
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Defendants have copied, reproduced, distributed, adapted, and/or

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publicly displayed the Perfect 10 Copyrighted Works without the consent or

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authority of Perfect 10, thereby directly infringing Perfect 10’s copyrights.

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35.

Defendants’ conduct constitutes infringement of Perfect 10’s

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copyrights and exclusive rights under copyright in the Perfect 10 Copyrighted

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Works in violation of Sections 106 and 501, et. seq. of the United States

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Copyright Act, 17 U.S.C. §§ 106 and 501.

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36.

Defendants have induced, caused, and/or materially contributed to

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unauthorized copying, reproduction, adaptation, public display, and/or

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distribution of the Perfect 10 Copyrighted Works.
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COMPLAINT

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37.

Defendants’ conduct constitutes contributory infringement of

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Perfect 10’s copyrights and exclusive rights under copyright in the Perfect 10

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Copyrighted Works.

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38.

Defendants have directly profited from the infringement of Perfect

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10’s copyrighted works, and possess the right and ability to supervise their

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directly infringing affiliates who provide them with customers by offering their

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visitors Perfect 10 images, and suggest that the full set is available through the

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Megaupload websites.

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39.

Defendants’ conduct constitutes vicarious infringement of Perfect

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10’s copyrights and exclusive rights under copyright in the Perfect 10

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Copyrighted Works.

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40.

The infringement of Perfect 10’s rights in and to each of the Perfect

10 Copyrighted Works constitutes a separate and distinct act of infringement.
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The acts of infringement by Defendants have been willful,

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intentional, and purposeful, in reckless disregard of and with indifference to the

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rights of Perfect 10.

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42.

As a direct and proximate result of the infringements by Defendants

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of Perfect 10’s copyrights and exclusive rights under copyright in the Perfect 10

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Copyrighted Works, Perfect 10 is entitled to its actual damages and Defendants’

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profits pursuant to 17 U.S.C. § 504(b).

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43.

Alternatively, Perfect 10 is entitled to statutory damages, pursuant

to 17 U.S.C. § 504(c).
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Defendants’ conduct is causing and, unless enjoined and restrained

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by this Court, will continue to cause, Perfect 10 great and irreparable injury that

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cannot fully be compensated in money. Perfect 10 has no adequate remedy at

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law. Pursuant to 17 U.S.C. § 502, Perfect 10 is entitled to injunctive relief

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prohibiting further infringements of Perfect 10’s copyrights.

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45.

Perfect 10 further is entitled to its attorneys’ fees and costs pursuant
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COMPLAINT

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to 17 U.S.C. § 505.

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SECOND CLAIM FOR RELIEF

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(Trademark Infringement)

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Against All Defendants

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46.

Perfect 10 re-avers and incorporates herein by reference each and

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every averment of paragraphs 1 through 45 above as though fully set forth

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herein.

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47.

Perfect 10 is the owner of the Perfect 10 Marks, including the

registered trademark/service marks PERFECT 10, PERFECT10.COM, and P10.

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The United States trademark/service mark registrations for PERFECT 10,

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PERFECT10.COM, and P10 include Registration Nos. 2,202,643, 2,235,145,

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2,573,998, 2,709,583, and 3,094,437 for, among other goods and services,

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entertainment services in the nature of adult entertainment and beauty contests

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provided via a global computer network; entertainment services in the nature of

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beauty contests; and magazines featuring adult entertainment, beauty contests,

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pictures of female models, interviews, fiction, and articles on human relations,

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sports, entertainment, lifestyles, fitness, and calendars and unmounted

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photographs.

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48.

The Perfect 10 Marks have been continuously used in commerce by

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Perfect 10 and its predecessors, and are widely known throughout the United

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States. Three of Perfect 10's registered trademarks, registration numbers

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2235145, 2202643, and 2573998 have become incontestable under Section 15 of

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the Lanham Act, 15 U.S.C. Section 1065.

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49.

Perfect 10 has spent millions of dollars promoting and advertising

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the Perfect 10 Marks and products and services bearing the Perfect 10 Marks,

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and has marketed and sold millions of dollars of products and services under the

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Perfect 10 Marks.

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As a direct result of the aforementioned use, promotion, and
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COMPLAINT

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advertisement of the Perfect 10 Marks, Perfect 10 has built up and now owns

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valuable goodwill symbolized by the Perfect 10 Marks.
51.

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As a direct result of the care and skill exercised by Perfect 10 over

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the nature and quality of goods and services sold under the Perfect 10 Marks and

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the extensive promotion, advertising, sale, and public acceptance thereof, the

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Perfect 10 Marks have become known as a symbol of the goodwill that Perfect

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10 has created throughout the United States and elsewhere by selling products

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and services of high quality and by fairly and honorably dealing with the trade

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and public in the sale of these products and services.
52.

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Defendants’ conduct, as averred herein, including using and

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reproducing the Perfect 10 Marks in commerce in connection with the sale,

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offering for sale, and advertising of goods and services on Megaupload websites

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and by Affiliated Infringing Websites, for the purpose or with the effect of

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directing consumers who are searching for authorized Perfect 10 products and

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services to the Affiliated Infringing Websites and to Megaupload, constitutes

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infringement of the Perfect 10 Marks in violation of Sections 32 and 43 of the

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Lanham Act, 15 U.S.C. §§ 1114 and 1125.
53.

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Perfect 10 Marks.
54.

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Defendants’ conduct constitutes contributory infringement of the

Defendants’ conduct constitutes vicarious infringement of the

Perfect 10 Marks.

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55.

Defendants’ conduct has been and is willful and deliberate.

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56.

Perfect 10 is entitled to recover all damages sustained as a result of

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Defendants’ unlawful conduct, including (a) Defendants’ profits, (b) Perfect 10’s

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damages, (c) treble those amounts, (d) costs of suit, and (e) reasonable attorneys’

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fees.

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57.

Defendants’ conduct is causing and, unless enjoined and restrained

by this Court, will continue to cause, Perfect 10 great and irreparable injury that
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COMPLAINT

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cannot fully be compensated in money. Perfect 10 has no adequate remedy at

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law. Perfect 10 is entitled to injunctive relief prohibiting further infringements

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of the Perfect 10 Marks.

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THIRD CLAIM FOR RELIEF

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(Trademark Dilution)

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Against All Defendants

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58.

Perfect 10 re-avers and incorporates herein by reference each and

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every averment of paragraphs 1 through 57 above as though fully set forth

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herein.

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59.

The Perfect 10 Marks have become and at all relevant times have

been “famous” within the meaning of 15 U.S.C. § 1125(c).
60.

The Affiliated Infringing Websites typically intermingle Perfect

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10’s high-quality images with images of poor quality or of an offensive or illegal

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nature. The acts of Defendants averred herein have lessened the capacity of the

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Perfect 10 Marks to identify and distinguish Perfect 10’s services and products

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from those of the Affiliated Infringing Websites, have tarnished the valuable

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image and reputation associated with the Perfect 10 Marks, and have created an

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undesirable, unwholesome, or unsavory mental association with Perfect 10 and

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the Perfect 10 Marks, damaging Perfect 10’s goodwill and disparaging Perfect

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10’s rights in the Perfect 10 Marks. Defendants’ acts and conduct are in

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violation of 15 U.S.C. § 1125(c). Defendants have willfully intended to trade on

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Perfect 10’s reputation and/or to cause dilution of the Perfect 10 Marks.

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Accordingly, Perfect 10 is entitled to recover all damages sustained as a result of

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Defendants’ unlawful conduct, including (a) Defendants’ profits, (b) Perfect

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10’s damages, (c) treble those amounts, (d) costs of suit, and (e) reasonable

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attorneys’ fees.

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61.

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Defendants’ conduct is causing and, unless enjoined and restrained

by this Court, will continue to cause, Perfect 10 great and irreparable injury that
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COMPLAINT

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cannot fully be compensated in money. Perfect 10 has no adequate remedy at

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law. Perfect 10 is entitled to injunctive relief prohibiting further dilution and

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disparagement of the Perfect 10 Marks.

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FOURTH CLAIM FOR RELIEF

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(Violation of 15 U.S.C. § 1125 et seq.)

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Against All Defendants

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62.

Perfect 10 re-avers and incorporates herein by reference each and

every averment of paragraphs 1 through 61 as though fully set forth herein.
63.

Without authorization or license, Defendants haves commercially

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exploited and used millions of marketable adult-oriented photographs and

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likenesses, which range from the most tame to the most explicit. Through these

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photographs, which make Defendants content providers for adult photographs of

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every type and quality, as well as the use of the names of the persons depicted,

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Defendants are unlawfully exploiting the publicity rights and trademark rights of

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Perfect 10, as well as the publicity rights, and trademark rights of third-parties.

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Defendants are also selling without authorization, in competition with Perfect

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10, billions of dollars in stolen songs, full-length movies, and even computer

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software. This conduct enables Defendants to compete directly and unfairly

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with Perfect 10 by, among other things, offering for free millions of valuable

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photographs and likenesses, and thousands of songs, and full length movies, as

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well as computer software that are not lawfully available to Perfect 10 or other

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competitors acting lawfully.

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64.

On information and belief, Defendants further engage in unfair

24

competition by commercially exploiting, through third-party affiliate websites,

25

Perfect 10 and third-party rights, including by placing ads next to Perfect 10

26

images on said websites.

27
28

65.

In connection with their third-party relationships, Defendants direct

and/or permit Megaupload download links offering tens of thousands of Perfect
14
COMPLAINT

1

10 copyrighted images, as well as Perfect 10 videos, to be juxtaposed on

2

Megaupload affiliated websites, next to photographs and likenesses of Perfect 10

3

models and other models or celebrities.

4
5
6

66.

Defendants are infringing and diluting Perfect 10’s and other

parties’ trademarks, as alleged herein.
67.

All of the above is causing direct injury to Perfect 10’s business.

7

Perfect 10 has suffered injury in fact and has lost money and property as a result

8

of such unfair competition.

9

68.

Perfect 10 is entitled to recover all damages sustained as a result of

10

Megaupload’s unlawful conduct, including (a) Defendants’ profits, (b) Perfect

11

10’s damages, (c) treble those amounts, (d) costs of suit, and (e) reasonable

12

attorneys’ fees. In undertaking the conduct alleged above, Defendants acted

13

with oppression, fraud, and malice, with the intent to cause injury to Perfect 10,

14

with the intent to deprive Perfect 10 of its property and legal rights, and with full

15

knowledge of the wrongfulness of Defendants’ conduct. Defendants’ conduct

16

was undertaken with a willful and conscious disregard of the rights of Perfect 10

17

and subjected Perfect 10 to cruel and unjust hardship. Therefore, Perfect 10 is

18

entitled to an award of punitive damages for the sake of example and to punish

19

Defendants, in an amount to be determined at trial.

20

69.

Defendants’ conduct is causing and, unless enjoined and restrained

21

by this Court, will continue to cause, Perfect 10 great and irreparable injury that

22

cannot fully be compensated or measured in money. Perfect 10 has no adequate

23

remedy at law. Perfect 10 is entitled to injunctive relief prohibiting further such

24

unfair competition.

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26
27
28
15
COMPLAINT

1

FIFTH CLAIM FOR RELIEF

2

(Violation of California Unfair Competition Law

3

– Cal. Bus. & Prof. Code §§ 17200, et seq.)

4

Against All Defendants

5

70.

Perfect 10 re-evers and incorporates herein by reference each and

6

every averment of paragraphs 1through 30 and 46 through 69 above as though

7

fully set forth herein.

8

71.

Without authorization or license, Defendants have commercially

9

exploited and used millions of marketable adult-oriented photographs and

10

likenesses, which range from tame to explicit. Through these photographs,

11

which make Defendants content providers for adult photographs of every type

12

and quality, as well as the use of the names of the persons depicted, Defendants

13

are unlawfully exploiting the publicity rights and trademark rights of Perfect 10,

14

as well as the intellectual property rights of third-parties. Defendants are also

15

selling without authorization, in competition with Perfect 10, billions of dollars

16

in stolen songs, full-length movies, and even computer software. This conduct

17

enables Defendants to compete directly and unfairly with Perfect 10 by, among

18

other things, offering for free millions of valuable photographs and likenesses,

19

and thousands of songs, and full length movies, as well as computer software

20

that are not lawfully available to Perfect 10 or other competitors acting lawfully.

21
22
23

72.

Defendants further engage in unfair competition by commercially

exploiting, through their affiliate programs, Perfect 10 and third-party rights.
73.

In connection with its affiliate program, Defendants direct and/or

24

permit Megaupload download links offering thousands of Perfect 10 copyrighted

25

images, as well as Perfect 10 videos, to be juxtaposed on Megaupload affiliated

26

websites, next to photographs and likenesses of Perfect 10 models and other

27

models or celebrities.

28

74.

Megaupload is infringing and diluting Perfect 10’s and other
16
COMPLAINT

1

parties’ trademarks, as alleged herein.

2

75. Defendants’ acts and practices alleged herein constitute unfair,

3

unlawful, and fraudulent business acts and practices within the meaning of

4

California Bus. & Prof. Code §§ 17200, et. seq.

5

76. Defendants engaged in unfair business acts and practices in that the

6

harm caused by its conduct outweighs any utility of such conduct and such

7

conduct offends public policy, is immoral, unscrupulous, unethical, deceitful and

8

offensive, and cause substantial injury to Perfect 10.

9

77.

All of the above is causing direct injury to Perfect 10’s business.

10

Perfect 10 has suffered injury in fact and has lost money and property as a result

11

of such unfair competition.

12

78.

Perfect 10 seeks an injunction prohibiting Megaupload from further

13

engaging in such unfair business acts and practices and for an order of restitution

14

and/or disgorgement.

15

SIXTH CLAIM FOR RELIEF

16

(Violation of Rights of Publicity –

17

Cal. Civ. Code § 3344 and Common-law Right of Publicity)

18

Against All Defendants

19

79.

Perfect 10 re-avers and incorporates herein by reference each and

20

every averment of paragraphs 1 through 30 and 46 through 69 above as though

21

fully set forth herein.

22

80.

Perfect 10 is the owner of the Perfect 10 Rights of Publicity, as the

23

assignee of publicity rights, including in the names, photographs, and likenesses,

24

of certain Perfect 10 models (“the Perfect 10 Rights of Publicity”). Largely as a

25

result of the efforts and expenditures of Perfect 10, the names, photographs, and

26

likenesses of these Perfect 10 models have received widespread recognition,

27

particularly among the consumers and potential consumers of adult

28

entertainment products.
17
COMPLAINT

1

81.

Defendants have infringed the Perfect 10 Rights of Publicity in at

2

least three ways, by selling Perfect 10 images for which Perfect 10 has been

3

assigned rights of publicity, by selling non-Perfect 10 copyrighted images for

4

which Perfect 10 has been assigned rights of publicity, and by partnering with

5

affiliate sites that violate Perfect 10 rights of publicity. Defendants have

6

knowingly used the Perfect 10 Rights of Publicity, without the prior consent of

7

Perfect 10 or any authorized party.

8

82.

By reason of Defendants’ acts and conduct, Perfect 10 has suffered

9

substantial damage to its business in the form of diversion of trade, loss of

10

profits, injury to goodwill and reputation, and a dilution of the value of its

11

exclusive rights of publicity, all of which are not yet fully ascertainable. Perfect

12

10 is entitled to recover (a) its actual damages, (b) profits of the infringer, (c)

13

statutory damages, (d) punitive damages, and (e) attorneys’ fees and costs.

14

83.

Defendants’ conduct is causing and, unless enjoined and restrained

15

by this Court, will continue to cause Perfect 10 great and irreparable injury that

16

cannot fully be compensated in money. Perfect 10 has no adequate remedy at

17

law. Perfect 10 is entitled to injunctive relief prohibiting further infringements

18

of its rights of publicity.

19

84.

Perfect 10 is informed and believes, and on that basis avers, that the

20

aforementioned acts of Defendants were willful, oppressive, fraudulent, or

21

malicious, and Perfect 10 therefore is entitled to punitive damages.

22
23

85.

Perfect 10 further is entitled to its attorneys’ fees and statutory

damages pursuant to California Civil Code § 3344(a) and other laws.

24
25
26
27
28
18
COMPLAINT

1

PRAYER FOR RELIEF

2
3
4

WHEREFORE, plaintiff Perfect 10 prays for judgment against
Defendants, and each of the Doe Defendants, jointly and severally, as follows:

5

1.

That Defendants and their officers, agents, servants, employees,

6

representatives, successors, and assigns, and all persons in active concert or

7

participation with them, be temporarily, preliminarily and permanently enjoined

8

from:

9
10

a.

copying, reproducing, distributing, adapting, or publicly

displaying the Perfect 10 Copyrighted Works;

11

b.

posting Perfect 10 copyrighted photographs on the internet;

12

c.

using, authorizing the use of, copying, reproducing or

13

imitating the Perfect 10 Marks, or any confusingly similar or colorable

14

imitation thereof;

15

d.

violating the Perfect 10 Rights of Publicity;

16

e.

competing unfairly with Perfect 10 by violating the publicity

17

rights of Perfect 10 and others, and by infringing trademark rights; and
f.

18

inducing, causing, materially contributing to, and profiting

19

from the foregoing acts committed by others.

20

2.

That Defendants be ordered to destroy all photographs, documents,

21

and other items, electronic or otherwise, in its possession, custody, or control,

22

that infringe the copyrights, trademarks, or rights of publicity of Perfect 10.

23
24
25

3.

That Defendants be ordered to remove all links between its website

and all Affiliated Infringing Websites.
4.

For an order of restitution and/or disgorgement in the amount of the

26

benefit to Defendants by reason of their unlawful conduct, in an amount to be

27

proven at trial, but not less than $5 million

28

5.

For Perfect 10’s actual damages, in an amount to be proven at trial,
19
COMPLAINT

1
2
3
4
5
6
7
8
9

but not less than $5 million.
6.

For a full accounting of all profits, income, receipts, or other

benefits derived by Defendants as a result of its unlawful conduct.
7.

For statutory damages under the Copyright Act, in an amount to be

proven at trial, but not less than $5 million.
8.

For treble damages under the Lanham Act, in an amount to be

proven at trial, but not less than $5 million.
9.

For statutory damages under California Civil Code Section 3344, in

an amount to be proven at trial, but not less than $5 million.

10

10.

For the imposition of a constructive trust.

11

11.

For punitive damages.

12

12.

For attorneys’ fees and full costs.

13.

For such other and further relief as this Court deems just and

13
14
15

appropriate.

16
17

Dated: January 31, 2011

KRAUSE KALFAYAN BENINK &
SLAVENS, LLP.

18
19
20

By:/s/ Eric J. Benink
Eric J. Benink
Attorneys for Plaintiff

21
22
23
24
25
26
27
28
20
COMPLAINT

1

DEMAND FOR JURY TRIAL

2

Perfect 10 hereby demands a jury trial pursuant to Rule 38(b) of the

3

Federal Rules of Civil Procedure.

4
5
6
7
8

Dated: January 31, 2011

KRAUSE KALFAYAN BENINK &
SLAVENS, LLP
By: /s/ Eric J. Benink
Eric J. Benink
Attorney for Plaintiff

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
21
COMPLAINT

'11CV0191 IEG BLM