Microsoft Corporation v. Creativo LLLP et al

Filing 1

COMPLAINT against All Defendants ( Filing fee $ 350 receipt number 0416-3495161.), filed by Microsoft Corporation. (Attachments: # 1 Civil Cover Sheet, # 2 Exhibit 1, # 3 Exhibit 2, # 4 Exhibit 3, # 5 Exhibit 4, # 6 Exhibit 5, # 7 Summons to Creativo, # 8 Summons to Chafitz)(Roche, John)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
NORTHERN DIVISION
MICROSOFT CORPORATION, a
Washington corporation,
One Microsoft Way
Redmond, WA 98052-6399

Civil Action No.

Plaintiff,
vs.
CREATIVO, LLLP, a Maryland Limited
Liability Limited Partnership d/b/a E-END
USA; and ARLENE CHAFITZ, an
individual,
Serve: Steven R. Chafitz (Resident Agent)
12337 Legore RD,
New Midway, MD 21775
County: Frederick County
Defendants.

COMPLAINT
Microsoft Corporation ("Microsoft") brings this action against Defendants Creativo,
LLLP, a Maryland Limited Liability Limited Partnership doing business as E-End USA, and
Arlene Chafitz, an individual (collectively “Defendants”), alleging that they engaged in
copyright and trademark infringement; false designation of origin, false description and
representation; and unfair competition. Microsoft seeks damages, an accounting, the imposition
of a constructive trust upon Defendants' illegal profits, and injunctive relief.

41826-5600.0028/LEGAL23593469.1

THE PARTIES
1.

Microsoft is a Washington corporation with its principal place of business located

in Redmond, Washington. Microsoft develops, markets, distributes and licenses computer
software.
2.

Upon information and belief, defendant Creativo, LLLP is a Maryland Limited

Liability Limited Partnership doing business as E-End USA (“Creativo”) that does business on
Internet websites and in Frederick, Maryland. Creativo is engaged in the business of advertising,
marketing, installing, offering, and distributing computer hardware and software, including
purported Microsoft software.
3.

Upon information and belief, defendant Arlene Chafitz, an individual, is a partner,

owner, operator, officer, shareholder, and/or otherwise controls Creativo. Upon information and
belief, Arlene Chafitz resides and transacts substantial business in this district. Upon
information and belief, Arlene Chafitz (a) personally participated in and/or (b) had the right and
ability to supervise, direct and control the wrongful conduct alleged in this Complaint, and (c)
derived direct financial benefit from that wrongful conduct.
JURISDICTION
4.

This Court has subject matter jurisdiction over Microsoft's claims for trademark

infringement, copyright infringement and related claims pursuant to 15 U.S.C. § 1121, 17 U.S.C.
§ 501, 28 U.S.C. §§ 1331 and 1338(a).
5.

This Court has supplemental jurisdiction over Microsoft's claims arising under the

laws of Maryland pursuant to 28 U.S.C. § 1367(a) because these claims are so related to
Microsoft's claims under federal law that they form part of the same case or controversy and
derive from a common nucleus of operative fact.
VENUE
6.

Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) and § 1400(a)

because (a) the acts of infringement and other wrongful conduct alleged occurred in the District
of Maryland, (b) Defendants may be found in the District of Maryland, and (c) Defendants have

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a sufficient connection with the District of Maryland to make venue proper in this district, all as
alleged in this Complaint.
FACTS COMMON TO ALL CLAIMS
7.

Microsoft develops, advertises, markets, distributes, and licenses a number of

computer software programs. Microsoft's software programs are recorded on discs, and they are
packaged and distributed together with associated proprietary materials such as user's guides,
user's manuals, end user license agreements, and other components.
8.

Microsoft Windows XP: Microsoft has developed, advertises, markets,

distributes, and licenses a software package known as Microsoft Windows XP Professional
("Windows XP"). Windows XP is an operating system for desktop and laptop systems. It
performs a number of computer-related operations including, but not limited to, providing
support for various applications and allowing remote access to data and applications stored on
Windows XP desktops from network connections. Microsoft holds a valid copyright in
Windows XP (including user's reference manuals, user's guides, and screen displays) that was
duly and properly registered with the United States Copyright Office. A true and correct copy of
the Registration Certificate for Microsoft Windows XP, bearing the number TX 5-407-055, is
attached hereto as Exhibit 1 and is incorporated by reference.
9.

Microsoft has also duly and properly registered a number of trademarks and a

service mark in the United States Patent and Trademark Office on the Principal Register,
including, but not limited to:
A.

"MICROSOFT," Trademark and Service Mark Registration No.

1,200,236, for computer programs and computer programming services;
B.

"MICROSOFT," Trademark Registration No. 1,256,083, for computer

hardware and software manuals, newsletters, and computer documentation;
C.

WINDOWS, Trademark Registration No. 1,872,264 for computer

programs and manuals sold as a unit; and

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D.

COLORED FLAG DESIGN, Trademark Registration No. 2,744,843, for

computer software;
True and correct copies of the Trademark Registrations for A through D above are
attached hereto as Exhibits 2 through 5, respectively, and are incorporated by reference.
Defendants' Infringement
10.

Defendants advertised, marketed, installed, offered and distributed unauthorized

copies of Microsoft software.
11.

On information and belief, Defendants advertise that the computers that they sell

come installed with Microsoft software, and in their advertisements, Defendants misappropriate
and/or infringe Microsoft's copyrights, advertising ideas, style of doing business, slogans,
trademarks and/or service mark.
12.

Computers sold by Defendants actually have infringing copies of Microsoft

software installed.
13.

In or about November 2011, Defendants joined the Microsoft Registered

Refurbisher Program (the "MRR Program"). As members of the MRR Program, Defendants
were provided with information on how to distribute refurbished computer systems with licensed
Microsoft software installed.
14.

Nevertheless, in or about March 2012, Defendants distributed to an investigator a

computer system with an unauthorized copy of Windows XP installed on it.
15.

On information and belief, this is not an isolated incident. Rather, Defendants

have been and continue to be involved in advertising, marketing, installing, offering, and/or
distributing counterfeit and infringing copies of Microsoft's software and/or related components
to unidentified persons or entities.
16.

On information and belief, Defendants have committed and are continuing to

commit acts of copyright and trademark infringement against Microsoft. On information and
belief, at a minimum, Defendants were willfully blind and acted in reckless disregard of
Microsoft's registered copyrights, trademarks and service marks.

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17.

On information and belief, Microsoft has been harmed by Defendants' activities,

including their advertising activities and the unauthorized use of Microsoft’s copyright protected
material, and the unauthorized use of Microsoft’s marks to describe the items that Defendants are
distributing.
First Claim
[Copyright Infringement – 17 U.S.C. § 501, et seq.]
Against All Defendants
18.

Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 17, inclusive.
19.

Microsoft is the sole owner of Microsoft Windows XP, and of the corresponding

copyright and Certificate of Registration.
20.

Defendants have infringed the copyrights in Microsoft's software, including but

not limited Microsoft Windows XP, by advertising, marketing, installing, offering, and/or
distributing infringing materials in the United States of America without approval or
authorization from Microsoft.
21.

At a minimum, Defendants acted with willful blindness to and in reckless

disregard of Microsoft's registered copyrights.
22.

As a result of their wrongful conduct, Defendants are liable to Microsoft for

copyright infringement. 17 U.S.C. § 501. Microsoft has suffered damages. Microsoft is entitled
to recover damages, which include any and all profits Defendants have made as a result of their
wrongful conduct. 17 U.S.C. § 504. Alternatively, Microsoft is entitled to statutory damages
under 17 U.S.C. § 504(c).
23.

In addition, for the reasons set forth above, the award of statutory damages should

be enhanced in accordance with 17 U.S.C. § 504(c)(2).
24.

Microsoft is also entitled to injunctive relief pursuant to 17 U.S.C. § 502 and to an

order impounding any and all infringing materials pursuant to 17 U.S.C. § 503. Microsoft has no
adequate remedy at law for Defendants' wrongful conduct because, among other things, (a)

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Microsoft's copyrights are unique and valuable property which have no readily determinable
market value, (b) Defendants' infringement harms Microsoft such that Microsoft could not be
made whole by any monetary award, and (c) Defendants' wrongful conduct, and the resulting
damage to Microsoft, is continuing.
25.

Microsoft is also entitled to recover its attorneys' fees and costs of suit under 17

U.S.C. § 505.
Second Claim
[Trademark Infringement – 15 U.S.C. § 1114]
Against All Defendants
26.

Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 25, inclusive.
27.

Defendants' activities constitute infringement of Microsoft's federally registered

trademarks and service mark in violation of the Lanham Trademark Act, including but not
limited to 15 U.S.C. § 1114(1).
28.

Because Microsoft advertises, markets, distributes, and licenses its software under

the trademarks and service mark described in this Complaint, these trademarks and service mark
are the means by which Microsoft's software is distinguished from the software and related items
of others in the same or related fields.
29.

Because of Microsoft's long, continuous, and exclusive use of these trademarks

and service mark, they have come to mean, and are understood by customers, end users, and the
public to signify, software programs or services of Microsoft.
30.

The infringing materials that Defendants have and are continuing to advertise,

market, install, offer, and distribute are likely to cause confusion, mistake, or deception as to
their source, origin, or authenticity.
31.

Further, Defendants' activities are likely to lead the public to conclude,

incorrectly, that the infringing materials that Defendants are advertising, marketing, installing,

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offering, and/or distributing originate with or are authorized by Microsoft, to the damage and
harm of Microsoft, its licensees, and the public.
32.

Upon information and belief, Defendants advertised, marketed, installed, offered

or distributed infringing material with the purposes of misleading or confusing customers and the
public as to the origin and authenticity of the infringing materials and of trading upon Microsoft's
business reputation.
33.

At a minimum, Defendants acted with willful blindness to and in reckless

disregard of Microsoft's registered marks.
34.

As a result of their wrongful conduct, Defendants are liable to Microsoft for

trademark infringement. 15 U.S.C. § 1114(1). Microsoft has suffered damages. Microsoft is
entitled to recover damages, which include any and all profits Defendants have made as a result
of their wrongful conduct. 15 U.S.C. § 1117(a).
35.

In addition, because Defendants' infringement of Microsoft's trademarks and

service mark as described above, the award of actual damages and profits should be trebled
pursuant to 15 U.S.C. §1117(b). Alternatively, Microsoft is entitled to statutory damages under
15 U.S.C. § 1117(c).
36.

Microsoft is also entitled to injunctive relief pursuant to 15 U.S.C. § 1116(a) and

to an order compelling the impounding of all infringing materials advertised, marketed, installed,
offered or distributed by Defendants pursuant to 15 U.S.C. § 1116, subsections (a) and (d)(1)(A).
Microsoft has no adequate remedy at law for Defendants' wrongful conduct because, among
other things, (a) Microsoft's trademarks and service mark are unique and valuable property which
have no readily determinable market value, (b) Defendants' infringement constitutes harm to
Microsoft's such that Microsoft could not be made whole by any monetary award, (c) if
Defendants' wrongful conduct is allowed to continue, the public is likely to become further
confused, mistaken, or deceived as to the source, origin or authenticity of the infringing
materials, and (d) Defendants' wrongful conduct, and the resulting damage to Microsoft, is
continuing.

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37.

Microsoft is also entitled to recover its attorneys' fees and costs of suit under 15

U.S.C. § 1117.
Third Claim
[False Designation Of Origin, False Description And Representation –
15 U.S.C. § 1125 et seq.]
Against All Defendants
38.

Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 37, inclusive.
39.

Because Microsoft advertises, markets, distributes, and licenses its software under

the trademarks and service mark described in this Complaint, these trademarks and service mark
are the means by which Microsoft's software is distinguished from the software or products of
others in the same field or related fields.
40.

Because of Microsoft's long, continuous, and exclusive use of these trademarks

and service mark, they have come to mean, and are understood by customers, end users, and the
public to signify, software or services of Microsoft.
41.

Microsoft has also designed distinctive and aesthetically pleasing displays, logos,

icons, graphic images, and packaging (collectively, "Microsoft visual designs") for its software
programs.
42.

Defendants' wrongful conduct includes the use of Microsoft's marks, name, and/or

imitation visual designs, specifically displays, logos, icons, graphic designs, and/or packaging
virtually indistinguishable from Microsoft visual designs, in connection with their goods and
services.
43.

Upon information and belief, Defendants engaged in such wrongful conduct with

the purpose of misleading or confusing customers and the public as to the origin and authenticity
of the goods and services advertised, marketed, installed, offered or distributed in connection
with Microsoft's marks, name, and imitation visual designs, and of trading upon Microsoft's
goodwill and business reputation. Defendants' conduct constitutes (a) false designation of origin,

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(b) false or misleading description, and (c) false or misleading representation that the imitation
visual images originate from or are authorized by Microsoft, all in violation of § 43(a) of the
Lanham Trademark Act, set forth at 15 U.S.C. § 1125(a).
44.

Defendants' wrongful conduct is likely to continue unless restrained and enjoined.

45.

As a result of Defendants' wrongful conduct, Microsoft has suffered and will

continue to suffer damages. Microsoft is entitled to injunctive relief and to an order compelling
the impounding of all imitation marks and visual designs being used, advertised, marketed,
installed, offered or distributed by Defendants. Microsoft has no adequate remedy at law for
Defendants' wrongful conduct because, among other things, (a) Microsoft's marks, name and
visual designs are unique and valuable property which have no readily-determinable market
value, (b) Defendants' advertising, marketing, installation, or distribution of imitation visual
designs constitutes harm to Microsoft such that Microsoft could not be made whole by any
monetary award, and (c) Defendants' wrongful conduct, and the resulting damage to Microsoft,
is continuing.
Fourth Claim
[Unfair Trade Practices MD. CODE ANN., COM. LAW II §§ 13-301-303 (1998)]
Against All Defendants
46.

Microsoft realleges and incorporates by this reference each and every allegation

set forth in paragraphs 1 through 45, inclusive.
47.

Defendants committed unfair or deceptive acts or practices within the meaning of

MD. CODE ANN., COM. LAW II §§ 13-301-303, by the conduct alleged above, including but
not limited to Defendants’ false representation that the purported Microsoft software and/or
components marketed, advertised, distributed and/or offered for distribution by Defendants were
produced, sponsored and/or authorized by Microsoft.
48.

Defendants’ conduct as alleged above has damaged and will continue to damage

Microsoft and has resulted in losses to Microsoft in an amount that is unknown at the present
time.

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Fifth Claim
[Maryland Common Law Unfair Competition]
Against All Defendants
49.

Microsoft realleges and incorporates by this reference each and every allegation

set forth in paragraphs 1 through 48, inclusive.
50.

The acts and conduct of Defendants, as alleged above, including but not limited to

passing off goods as Microsoft software, and creating a likelihood of public confusion as to
whether the software, distributed by Defendants originate with, are sponsored by or are
authorized by Microsoft, constitute unfair competition at Maryland common law.
51.

Defendants’ acts and conduct as alleged above have damaged and will continue to

damage Microsoft and have resulted in losses to Microsoft and an illicit gain of profit to
Defendants in an amount which is unknown at the present time.
52.

By reason of the acts and conduct set forth herein, Defendants have engaged and

are engaged in deceptive, fraudulent and wrongful conduct in the nature of passing off their
software genuine Microsoft software sponsored or approved by Microsoft. Microsoft believes
that Defendants maintain the illegal profits from their actions, all of which belong to Microsoft.
53.

By virtue of their wrongful acts, Defendants hold illegal profits as constructive

trustees for the benefit of Microsoft.
Sixth Claim
[For Imposition Of A Constructive Trust Upon Illegal Profits]
Against All Defendants
54.

Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 53, inclusive.
55.

Defendants' conduct constitutes deceptive and wrongful conduct in the nature of

passing off the infringing materials as genuine Microsoft software or related components
approved or authorized by Microsoft.

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56.

By virtue of Defendants' wrongful conduct, Defendants have illegally received

money and profits that rightfully belong to Microsoft.
57.

Upon information and belief, Defendants hold the illegally received money and

profits in the form of bank accounts, real property, or personal property that can be located and
traced.
58.

Defendants hold the money and profits they have illegally received as

constructive trustees for the benefit of Microsoft.
Seventh Claim
[Accounting]
Against All Defendants
59.

Microsoft repeats and incorporates by this reference each and every allegation set

forth in paragraphs 1 through 58, inclusive.
60.

Microsoft is entitled, pursuant to 17 U.S.C. § 504 and 15 U.S.C. § 1117, to

recover any and all profits of Defendants that are attributable to their acts of infringement.
61.

Microsoft is entitled, pursuant to 17 U.S.C. § 504 and 15 U.S.C. § 1117, to actual

damages or statutory damages sustained by virtue of Defendants' acts of infringement.
62.

The amount of money due from Defendants to Microsoft is unknown to Microsoft

and cannot be ascertained without a detailed accounting by Defendants of the precise number of
units of infringing material advertised, marketed, installed, offered or distributed by Defendants.
PRAYER FOR RELIEF
WHEREFORE, Microsoft respectfully requests judgment as follows:
(1)

That the Court enter a judgment against Defendants as indicated below:
(a)

that Defendants have infringed Microsoft's rights in the following

federally registered copyright, in violation of 17 U.S.C. § 501:
(1)
(b)

TX 5-407-055 ("Windows XP");

that Defendants willfully infringed Microsoft's rights in the following

federally registered trademarks and service mark, in violation of 15 U.S.C. § 1114:

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(1)
(2)

1,256,083 ("MICROSOFT");

(3)

1,872,264 ("WINDOWS"); and

(4)
(c)

1,200,236 ("MICROSOFT");

2,744,843 (COLORED FLAG DESIGN);

that the infringement described in 1(a) and 1(b) was committed, at a

minimum, with willful blindness and/or reckless disregard;
(d)

that Defendants have committed and are committing acts of false

designation of origin, false or misleading description of fact, and false or misleading
representation against Microsoft, in violation of 15 U.S.C. § 1125(a);
(e)

that Defendants have engaged in unfair trade practices in violation of MD.

CODE ANN., COM. LAW II §§ 13-301-303 and unfair competition in violation Maryland
common law; and
(f)

that Defendants have otherwise injured the business reputation and

business of Microsoft by the acts and conduct set forth in this Complaint.
(2)

That the Court issue injunctive relief against Defendants, and that Defendants,

their directors, principals, officers, agents, representatives, servants, employees, attorneys,
successors and assigns, and all others in active concert or participation with Defendants, be
enjoined and restrained from:
(a)

imitating, copying, or making any other infringing use or infringing

distribution of the software programs, components , end user license agreements ("EULA"),
certificates of authenticity ("COAs") and/or items protected by the following copyright
Certificate Registration No.:
(1)

TX 5-407-055 ("Windows XP");

or the software programs, components and/or items protected by Microsoft's registered
trademarks and service mark, including, but not limited to, the following Trademark Registration
Nos.:
(1)

1,200,236 ("MICROSOFT");

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(2)

1,256,083 ("MICROSOFT");

(3)

1,872,264 ("WINDOWS"); and

(4)

2,744,843 (COLORED FLAG DESIGN);

and any other items or works now or hereafter protected by any Microsoft trademark or
copyright;
(b)

manufacturing, assembling, producing, distributing, offering for

distribution, circulating, selling, offering for sale, advertising, importing, promoting, or
displaying any software program, component, EULA, COA and/or item bearing any simulation,
reproduction, counterfeit, copy, or colorable imitation of any of Microsoft's registered
trademarks, service mark, or copyrights, including, but not limited to, the Trademark, Service
Mark, and Copyright Registration Numbers listed in Sections (2)(a) above;
(c)

using any simulation, reproduction, counterfeit, copy, or colorable

imitation of Microsoft's registered trademarks, service mark, or copyright including, but not
limited to the Trademark, Service Mark, and Copyright Registration Numbers listed in Section
(2)(a) above, in connection with the manufacture, assembly, production, distribution, offering for
distribution, circulation, sale, offering for sale, import, advertisement, promotion, or display of
any software program, component, EULA, COA, and/or item not authorized or licensed by
Microsoft;
(d)

using any false designation of origin or false or misleading description or

false or misleading representation that can or is likely to lead the trade or public or individuals
erroneously to believe that any software program, component, and/or item has been
manufactured, assembled, produced, distributed, offered for distribution, circulation, sold,
offered for sale, imported, advertised, promoted, displayed, licensed, sponsored, approved, or
authorized by or for Microsoft, when such is not true in fact;
(e)

engaging in any other activity constituting an infringement of any of

Microsoft's trademarks, service mark and/or copyrights, or of Microsoft's rights in, or right to use
or to exploit, these trademarks, service mark, and/or copyrights; and

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(f)

assisting, aiding, or abetting any other person or business entity in

engaging in or performing any of the activities referred to in subparagraphs (a) through (e)
above.
(3)

That the Court enter an order pursuant to 15 U.S.C. § 1116(a)(d)(1)(A) and 17

U.S.C. § 503 impounding all counterfeit and infringing copies of purported Microsoft software
and/or materials bearing any of Microsoft's trademarks or service mark, and any related item,
including business records, that is in Defendants' possession or under their control;
(4)

That the Court enter an order declaring that Defendants hold in trust, as

constructive trustees for the benefit of Microsoft, their illegal profits obtained from their
distribution of counterfeit and infringing copies of Microsoft's software, and requiring
Defendants to provide Microsoft a full and complete accounting of all amounts due and owing to
Microsoft as a result of Defendants' illegal activities.
(5)

That the Court order Defendants to pay Microsoft's general, special, actual, and

statutory damages as follows:
(a)

Microsoft's damages and Defendants' profits pursuant to 17 U.S.C. §

504(b), or alternatively, enhanced statutory damages pursuant to 17 U.S.C. § 504(c), and 17
U.S.C. § 504(c)(2);
(b)

Microsoft's damages and Defendants' profits pursuant to 15 U.S.C. §

1117(a), trebled pursuant to 15 U.S.C. § 1117(b), or in the alternative, statutory damages
pursuant to 15 U.S.C. §1117(c) for each counterfeit mark; and
(c)
(6)

Microsoft's damages and Defendants' profits pursuant to Maryland law.

That the Court order Defendants to pay to Microsoft both the costs of this action

and the reasonable attorneys' fees incurred by it in prosecuting this action; and
(7)

That the Court grant to Microsoft such other and additional relief as is just and

proper.

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DATED: May 16, 2012

Respectfully submitted,
/s/
John K. Roche (USDC-MD Bar No. 17531)
PERKINS COIE LLP
700 13th St., N.W., Suite 600
Washington, D.C. 20005-3960
[phone]
[phone] (facsimile)
[e-mail]
Attorneys for Microsoft Corporation

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