Bernina vs. Riddick/Imageline: 081810-17-1

Case 1:10-cv-04917 Document 17-1 Filed 08/18/10 Page 1 of 62
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BERNINA OF AMERICA, INC., )

)
Plaintiff, ) Case Number: 1:10-cv-4917
)
v. )
) Judge Milton I. Shadur
IMAGELINE, INC., ISLANDVIEW )
TECHNOLOGIES LLC, ISLANDVIEW )
DESIGNS LLC, and GEORGE ) Magistrate Judge Martin C. Ashman
P. RIDDICK, III, )
)
Defendants. )
INDEX OF EXHIBITS
8/9/2010 Court Hearing Transcript ......................................................................................... Ex. A
3/18/1997 Copy of Deposit for VA 841-528 “Imageline Design Gallery” ............................ Ex. B
5/1/1996 Letters from George P. Riddick III to the U.S. Register of Copyrights .................. Ex. C
8/27/1998 Complaint, Xoom v. Imageline, 98 CV 542 (E.D. Va.) ......................................... Ex. D
7/12/2010 Email from George Riddick to Select Bernina Dealers ..........................................Ex. E
8/13/2010 Letter from the U.S. Copyright Office.................................................................... Ex. F

Exhibit
A
1 IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
2 EASTERN DIVISION
3
BERNINA OF AMERICA, INC., )
4 )
Plaintiff, )
5 )
-vs- )
6 ) Case No. 10 C 4917
IMAGELINE, INC., ISLANDVIEW )
7 TECHNOLOGIES, LLC, ) Chicago, Illinois
ISLANDVIEW DESIGNS, LLC, and ) August 9, 2010
8 GEORGE P. RIDDICK, III, ) 9:15 a.m.
)
9 Defendants. )
10 TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE MILTON I. SHADUR
11
APPEARANCES:
12
For the Plaintiff: WINSTON & STRAWN, LLP
13 BY: MR. NORMAN K. BECK
MR. MARC H. TRACHTENBERG
14 MR. KEVIN P. McCORMICK
35 West Wacker Drive
15 Chicago, Illinois 60601-9703
(312) 558-5600
16
17 For Defendant MR. GEORGE P. RIDDICK, III, pro se
Riddick:
18
(via telephone
19 conference call)
20
21 Court Reporter:
22 CHARLES R. ZANDI, CSR, RPR, FCRR
Official Court Reporter
23 United States District Court
219 South Dearborn Street, Room 1728
24 Chicago, Illinois 60604
Telephone: (312) 435-5387
25 email: Charles_zandi@ilnd.uscourts.gov
1 (Proceedings heard in open court:)

2 THE CLERK: 10 C 4917, Bernina versus Imageline. And
3 I need to get Mr. Riddick on the line.
4 (Short interruption.)
5 THE CLERK: Okay. This is 10 C 4917, Bernina versus
6 Imageline.
7 THE COURT: Out on the phone, Mr. Riddick, is that
8 right?
9 MR. RIDDICK: Yes, it is. Is this Judge Shadur?
10 THE COURT: So, do you want to give your name for the
11 record, please.
12 MR. RIDDICK: Okay. It's George P. Riddick, III.
13 THE COURT: Okay. Counsel here in court.
14 MR. BECK: Good morning, your Honor. Norman Beck,
15 Marc Trachtenberg and Kevin McCormick on behalf of the
16 plaintiff.
17 THE COURT: Okay. Mr. Riddick has sent -- and I
18 don't know whether he sent this to you as well -- what he
19 calls some clarifying facts and declarations that arrived this
20 morning. And if you haven't gotten them, I'll have Sandy make
21 copies for you.
22 MR. BECK: We have not, your Honor.
23 THE COURT: Okay.
24 Mr. Riddick, you should understand, however, that, of
25 course, because you're just one of the defendants in this
1 action and there are two corporate defendants, two limited

2 liability companies, as a non-lawyer, you can't appear for the
3 corporations. Under the regular practice in all litigation,
4 only lawyers can appear for entities other than individuals.
5 An individual can appear for himself or herself, but that's
6 the extent of it.
7 MR. RIDDICK: I'm aware of that, your Honor.
8 THE COURT: Okay. Now, the -- as it happens, it's
9 not a good day to be considering a motion for a temporary
10 restraining order simply because I have a preset hearing on
11 just such a motion that's going to start at 9:30. However, I
12 read over Bernina's presentation, and I have had a chance to
13 look, Mr. Riddick, as counsel have not, at your submission.
14 And the question that I have for you is that you
15 claim ownership of a whole group of items as to which you're
16 claiming and have claimed that Bernina is an infringer, and
17 indeed, the people who are Bernina's various authorized
18 dealers are also infringers.
19 I'd like you -- their complaint has said that the
20 only things that you have asserted copyright interests in, at
21 least as far as properly recognized interests, are some
22 collections of items that do not, under law, give you
23 proprietary interest in the various items that make up the
24 collection.
25 So, you tell me, if you would, just in your own
1 words -- I recognize you're a non-lawyer, but you tell me what

2 is the basis of the ownership that you're talking about --
3 MR. RIDDICK: Okay. I'd be happy to do that.
4 THE COURT: -- of the various designs.
5 MR. RIDDICK: I'll be happy to do that, your Honor.
6 As I said in the summary, we've been doing this for 25 years.
7 THE COURT: You're going to have to speak up better
8 than that.
9 MR. RIDDICK: I'm sorry. As I said in the summary,
10 we have been doing this for 25 years, and we have never had
11 anyone contest the ownership legally of any one of our images.
12 I personally participated in the design and production of
13 every image, and every image --
14 THE COURT: Wait, wait, wait. Try me again. Listen
15 to my question instead of answering one that you want to
16 answer.
17 My question is: What gives you an entitlement to
18 some kind of proprietary interest in the individual designs,
19 when, as I understand it, checking with the -- with the
20 government office reflects that your efforts at protection
21 have been for collective matters that include a large number
22 of designs, which does not give you, of itself, a proprietary
23 interest in any of those individual designs?
24 Do you understand the question?
25 MR. RIDDICK: Yes, sir.
1 THE COURT: All right. Tell me.

2 MR. RIDDICK: Okay. Let me answer it in -- directly,
3 if I can. Number one, the copyright in the individual
4 designs, at the moment we do them and affix them in tangible
5 form, so we need to make sure we understand the distinction
6 between copyright and proprietary ownership and registration
7 procedures. The plaintiff apparently does not understand that
8 law, but I've tried to clarify it for you with the document I
9 sent this morning.
10 We own every single individual image, number one. We
11 owned it when we produced it. Number two, we submitted it in
12 registration to the copyright office as individual images.
13 Several of those registrations were also compilations, but not
14 all of them.
15 This issue has been brought to the attention of
16 circuits throughout the country. We've unfortunately been
17 involved in 25 or 30 different federal lawsuits. There has
18 never been a question of ownership of a single one of our --
19 THE COURT: Well, there's a question now, so don't
20 tell me there's never been a question.
21 MR. RIDDICK: There's never previously --
22 THE COURT: They have provided information that says
23 that they have had searches made and that the only searches --
24 the only items that came up in the searches are these
25 compilations; and if that's so, that does not entitle you to
1 claim ownership in the -- in the items within the

2 compilations, but just the compilations. That's how copyright
3 law works.
4 MR. RIDDICK: But that's just not what the -- the way
5 that the law works for --
6 THE COURT: Is that true? So, now you're -- now
7 you're representing yourself and you're telling me how
8 copyright law works; is that the idea?
9 MR. RIDDICK: If you would look at the ruling in the
10 Fourth Circuit on appeal in 2002, you will --
11 THE COURT: I'll tell you what you better do, because
12 as I say, I can't -- I can't deal with it this morning. But
13 what you're going to do right now is to stop any amount of
14 communication that goes out to any of these people that makes
15 the claim until we have an opportunity to sort the thing out.
16 And what I expect that you're going to -- you do have a
17 lawyer, I trust, do you not?
18 MR. RIDDICK: I personally at this point do not have
19 one. The companies are in negotiations with --
20 THE COURT: But the companies are looking for
21 counsel?
22 MR. RIDDICK: Yes.
23 THE COURT: And how soon do you expect you're going
24 to do that --
25 MR. RIDDICK: Probably within the next --
1 THE COURT: -- because I expect to have a

2 professional response, not this amateur response.
3 MR. RIDDICK: Probably within -- well, I don't really
4 appreciate that, because I do know what I'm --
5 THE COURT: I'm sorry. I can't hear you.
6 MR. RIDDICK: I said I don't really appreciate that,
7 because I do know what I'm talking about, having worked on
8 this for 25 years. However, I know --
9 THE COURT: You know, I'm glad you've been at this
10 25 years. I guess I had a misspent youth, because I've been
11 30 years at the bench here just last month; and I appreciate
12 your education, but I've got to tell you, it doesn't -- it
13 doesn't seem to work the way you seem to think it does. So,
14 you'd better have something professional in the way of a
15 response.
16 MR. RIDDICK: I will, your Honor. There is a
17 distinction between the underlying work and a compilation that
18 are not owned by the claimant and --
19 THE COURT: Let me -- listen to me again. Okay?
20 You're going to be doing nothing along the lines that you have
21 been engaged in up to now for a very limited period of time to
22 allow you to provide some input in written form, professional
23 input is what I want to emphasize once more, that deals with
24 this question that has been posed by the Bernina complaint.
25 And I'm going to give you -- because I don't want to
1 knock you out of your business communications, so I'm going to

2 give you a short period of time because I don't want to have
3 you restrained inappropriately for any period of time.
4 The short answer, then, is that -- is there any
5 reason that you cannot get something in hand here by a week
6 from today?
7 MR. RIDDICK: Well, the only answer I could tell you
8 is that I -- my preferred attorney --
9 THE COURT: I'm sorry. You know what, you're --
10 THE CLERK: You're going to have to speak up. We're
11 having a difficult time hearing you.
12 MR. RIDDICK: Okay. I'm sorry. The only answer that
13 I can give you is that I tried to contact our preferred
14 attorney for one of the companies this weekend and was told
15 that he is on vacation for the next two weeks.
16 THE COURT: So, two weeks, you -- that's the -- are
17 you dealing with a one-lawyer lawfirm, or what?
18 MR. RIDDICK: In this particular case, it's a
19 three-lawyer lawfirm, but only one has been briefed on this
20 subject matter.
21 THE COURT: Well, I'll tell you what you're then
22 dealing with. A week ought to be plenty of time. And if the
23 particular lawyer that you're talking about is out of pocket
24 for two weeks, then what's going to happen is that if I don't
25 get something within a week from now, I'm going to have to
1 consider the entry of a temporary restraining order that puts

2 things in sort of the deep freeze for a limited period of
3 time, which is all that temporary restraining orders do.
4 So, I'm going to provide that anything that gets
5 filed is to be -- is to be here by let's make it Tuesday, the
6 10th, rather than -- I'm sorry, I've got the wrong date,
7 instead of -- instead of the 16th, by Tuesday, the 17th, and
8 then I'm going to set the matter for either Wednesday, the
9 18th, or Thursday, the 19th, at 9:15.
10 So, let me find out from counsel here what -- which
11 of those days might be preferable. And then I'll find out
12 from you, Mr. Riddick, what -- which of those two days you
13 might like or not like.
14 MR. RIDDICK: Okay.
15 MR. BECK: Your Honor, I have a conflict for the
16 18th, but the 19th would be fine.
17 THE COURT: All right. Mr. Riddick, can you make the
18 19th, you and counsel make the 19th, that's Thursday, at 9:15?
19 MR. RIDDICK: Yes, we can, your Honor. And how long
20 of a hearing will that likely be?
21 THE COURT: How long what?
22 MR. RIDDICK: How long of time would you have
23 docketed for that hearing?
24 THE COURT: You mean how long would the proceeding on
25 that day likely take?
10
1 MR. RIDDICK: Yeah, yes, your Honor.

2 THE COURT: Oh.
3 MR. RIDDICK: Excuse me?
4 THE COURT: Well, you know, here in Illinois, we like
5 to use Abraham Lincoln for some of our quotes, and there's one
6 in which the lady says to Mr. Lincoln, "My, what long legs you
7 have," and his response was, "Yes, ma'am, long enough to reach
8 the ground."
9 I can't tell you. I would not expect that it would
10 be very long. It's going to be -- I would think that morning
11 should be more than enough to deal with issues that are
12 typically involved in a temporary restraining order where
13 there's no formal proof contemplated. Because I really ask a
14 more narrow question, and that is the basis of your claim of
15 entitlement.
16 So, we're set then for a filing in response on or
17 before August 17 and a hearing then set for 9:15 on
18 August 19th. Okay?
19 MR. RIDDICK: Okay.
20 THE COURT: Thank you all.
21 MR. RIDDICK: Thank you.
22 MR. BECK: Thank you, your Honor.
23 MR. TRACHTENBERG: Thank you, your Honor.
24 THE COURT: Sandy, you gave counsel a copy of those
25 things?
11
1 THE CLERK: I did. And you want that filed on the

2 docket?
3 THE COURT: Yeah, sure.
4 THE CLERK: Okay.
5 (Which were all the proceedings heard.)
6 CERTIFICATE
7 I certify that the foregoing is a correct transcript from
8 the record of proceedings in the above-entitled matter.
9
10 /s/Charles R. Zandi August 9, 2010
11 Charles R. Zandi Date
Official Court Reporter
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Exhibit
B
Exhibit
C
Exhibit
D
Hu :iu
Hug 3_ _ L4:.2p
L#:J2p Gecre
Case 1:10-cv-04917
George P.
P. RLddck,
Document 111
R_ddxck, 17-1 (G04I28-186
[II Filed 08/18/10 Page 28 of 62
(804|228-1S8S p.8
p.8
LX[
LN THE UNLTED STATES
THE UNITED STATESDISTRICT
DISTRICT COURT
COURT
FOR THE
FOR THE EASTERN
EASTERN DISTRICF
DISTRICT OF
OF VIRGINIA
VIRGINIA
- RICHMOND DIVISION
RICHMOND DIVISION
, I L E nl
XOOM, INC.,
XOOM, INC.,
300
300 Montgomery Street, Tldrd
I_tontgomery S=-.et, Third Floor
Floor
San Francisco,
San California 94104
Francisco, California 94 [04
Plaintiff',
Plaintiff,
CLR.No V.
MACMILLAN DIGITAL
MACMILLAN PUBLISHING USA,
DIG/TAt, PUBLISHING USA,
a division
division of PRENTICE-hALL, INC.,
ofPRENTICE-HALL, INC.,
Plaintiff (Joined),
Plaintiff (J'oine.d),
AZTECH
AZTECH NEW
NEW MEDIA
MEDIA INTERNATIONAL
INTERNATIONAL CORP.,
CORP.,
Plaintiff (Joined),
Plaintlff(Jolned),
MEDIA GAPI-11CS
MEDIA GRAPHICS INTERNATIONAL, INC.,
IJq'I'ERNATIONAL, INC.,
Plaintiff (J'oincd),
Plaintiff (Joined),
v. CivilAction
Civil ActionNo.No.3:
i_,: _ _ _'_'5 k{ _..
IMAGELrNE, INC.,
Defendant,
Defendant,
GEORGEP.P.RIDDICK,
GEORGE RIDDICK,Ill,Ir
-k
4.
Defendant,
Defendant1
COMPLIANCE SERVICES, INC.,

COMPLIANCE SERVICES, INC.,
Defcndant,
Def=ndant,
WAYNE K.
WAYNE K NYSTROM,
NYSTROM,
Defendant,
Defendant,
and
and
SPRINT SOFTWARE
SPRINT SOFTWAREIrl'Y
flY LTD,
LTD,
• Defendant.
Defendant.
-30--
—30— 1..
Rug 30
Aug 30 88
S8 C34:22p
04:22p Geor-geP. P.Riddick,
George Rdd±ck,I!IIII
Case 1:10-cv-04917 Document 17-1
(8041228—1888
(8041228-168S
Filed 08/18/10 Page 29 of 62 p.S
p.S
COi4PLAINT FOR
COMPLAIMT FOR INJUNCTIYE
Ii_JUNCTIVE RELIEF,
RELIEF,
DECLARATORY RELIEF,
DECLARATORY RELIEF AND
AND DAMAGES
DAMAGES
Plaintiff
Plainti XOOM, Inc.
ffXOOM, ("XOOM") files
inc. ("XOOM") this complaint
files thEs complaint against
against defendants
defendants Imageline,
lmageline, md.
ind.
("Imageiine"), George P.
("Imagelin&), George P. Riddick,
Riddick, III
Ill ("Riddick"),
("Riddick"), Compliance
Compliance Services, Inc.
Services, Inc. ("ComplEance
("Compliance
Services"), Wayne K.
Scrvice"), Wayric K. Nystrom
Nystrom ("Nystrorn")
("Nystrom") and
and Sprint
Sprint Software
Software Pty
Pty Ltd
Ltd ("Sprint").
("Sprint").
Colletivcly, Irnagelinc,
Collectively, Imageline, Riddick,
Riddick, Compliance
Compliance Services
Services and
and Nystrom
Nystrom will
will be referred
ret'crrcd to as
as the
the
"Irnagelirie Defendants."
"Lmageline Defendants." XOOM
XOOM also joins as
also joins as plaintiffs,
plaintiffs, pursuant
pursuant to Rule 19(a)
toRule of the
i9(a) of the Federal
Federal
Rules of
Rules of Civil
Civil Procedure,
Procedure, iMacmilian Digital Publishing
Macmillan Digital Publishing USA,
USA, a division of Prentice-Hall,
division of Prentice-Hall, Inc.
inc.'
("Macmillan"), Aztech
("Macmillan"), Aztech New
New Media
Media international
International Corp.
Corp. ("Aztech")
("A.ztech") and Media Graphics
and Media Graphics
International, Inc.
International, inc. ("Media
("Media Graphics") on the
Graphics") on the grounds
grounds that
that (i)
(i) complete relief cannot be
complete reliefcamlot be accorded
accorded
if such
such plaintiffs
plaintiffs are
are notjoined,
not joined, and
and (ii)
(ii) such
such plaintiffs
plaintifi_ claim
claim an
an interest
interest relating to the
relating to the subject
subject
matter of
matter of this
this action
action and
and their
their absence
absence will leave XOOM,
will leave and perhapso_cr
XOOM, and perhaps other parties,
parties, subjcct
subject toto aa
substantial risk
substantial risk of incurring multiple
ofincurrlng or otherwise
multiple or otherwise inconsistent
inconsistent obligations.
obligations. In the alternative,
In the alternative,
• .
XOOM joins
XOOM joins Macmillan,
Macmillan, Aztech
Azteeh and
and Media Graphics as
Media Graphics as defendants
defendants and requests that
and requests that the
the Court
Court
realign them
realign them as
as plaintiffs
plaintiffs in
in its
its discretion
discretion pursuant,
pursuant to Rule 19
to Rule of the
19 of Federal P,.ul_
the Federal Rules of Civil
of Civil
Proccdurc.
Procedure.
'A
.,,t
SUMMARY'OF THE
SUMMARY'OF ACTION
THE ACTION
1. In June 1997,
In June 1997,XOOM,
XOOM,a adistributor
distributor
of of
clipclip
art art (, electronically-fomiattcd
(i.._e. electronically-formatted
graphic
graphic images)
images) acquired
acquired license rights to
license rights to certain
certain clip
clip art
art from
from Sprint.
Sprint. An Electronic Content
An Electronic Content
License
License Agreement,
Agreement, effective
effective June
June 4,
4, 1997, between XOOM
1997, between XOOM and
and Sprint
Sprint (the "Sprint License
(the "Sprint License
Agreement") granted
Agreement") granted XOOM paid-up, world-wide
X©OM paid-up, world-wide license
licenserights
rights toto4,500
4,500clip
clipart
artimages.
images. These
These
rights included
rights included the
the right
right to
to distribute
distribute and
and sub-license
sub-license the
the clip
clip art
art to
to other
other entities
entities for
For further
further
distribution, and
distribution, and to incorporate
incorporate the images in
thc images in XOOM's
XOOM's services
services and
and products.
products. The Sprint
The Sprint
—31—
i.,ecree r. Riødic,
LIZ (8O4I228-iSS p.LO
License Agreement
License Agreement alsorequired
also requiredSpdnt
SprinttoindemnifyXOOM forany
to indemriiiXOOM for copyrightinfringement
any copyright inflingernent
arising from
arising from XOOM's
XOONI's exercise
exercise oof its license
.fits license rights.
rights.
2.
2. XOOM
XOOM "folded"approximately
"folded" approximately4,500
4,500Sprintimages
Sprint images intoits
into its collection
collectionof
ofclipart
clip art
licensed from various

licensedfrom variousparties
partiesand entered
and enteredintoa
into anumber
numberof
of agreements
agreements with
with sub-distributors
sub-distributors that
that
granted them the

grantedthem right todist'dbutc
theright to distributetheclipartimages
the clip art imagestoend-usersand
to end-users andothcrentities.
other cntities.The
Thesub-
sub-
distributors included
distributors joined plaintiffsMacmillan,
includedjoinedplaintiffs Macmillan,Aztech
Aztechand
andMedia
MediaGraphics.The
Graphics. Theagreements
agreements
with each
wlth each sub-distributor
sub-distrlbutor requiredXOOM
requiredXOOMto
to]ndenm{fy
indemnifythesub.distrlbutor
the sub-distributor intheeventor"
in the event of any
any
claims of copyright
claimsof inflingemeat arising
copyrightin.fi-ingemeatarisingffrom the sub-distributor'slicensing
rom thesub-distributor's licensingaand distributionof
nd distribution of
the licensed
the licensedclip art.
clipart.
3.
3. Until January 1998,
Until January 1998,XOOM
XOOMhad
hadno
noactual
actualknowledge
knowledge nor
nor any
any reasonable
reasonablebasis
basistoto
believe its exercise

believeits exercise of its license rrights
ofitslicense under theSprintLicense
ightsunder the Sprint License Agreement
Agreement ".,lleg_ly
allegedly infringed
infringed
any copyrights.
any In January 1998, XOOM fu-'st
copyrights,halanuar/1998,XOOM first learned
learned from
from Imageline's
rrnageline's agent,Compliance
agent, Compliance
Services, that
Services, some clip
thatsome art licensed
clipan licensedbby XOOMfrom
y XOOM fromSprintallegedly
Sprint allegedly lrLfringcd
infringed copyrights
copyrights owned
owned
by
by Irnageline.
Imagelinc.
4.
4. Assuming thevalidity'and
Assuming the vaiidityand enforceability
enforceability ooffImageline's
Imageline's copyrights,
copyrights, XOObl
XOOM in
in
good faith
good faith,has
has attempted (o cease alLallegedlyinfri_ging
attemptedtbceaseeli.allegedly infriiigingcconduct. But XOOM
onduct. But XOOM has
has been
been
prcvcntcd from doing

prcvontcdfrom doing so
so because the Imageline Defendantshave
became theImagelincDefendants have refusedtoprovideXOOM
refused to provide XOOM the
the
identity, to
identity, to the full extent
thefuU of theImagelineDefendants'
extentof the Imagelinc Defendants'knowledge,
knowledge,of
ofXOOM's allegedly
XOOM's allegedly
infringing clip
infringing clip art,
art. Spccillcally,
Speei_cally, the
the Imageline Defendants have
I.mageline Defendants have retiised
refused to disclose their
disclose their
complete
complete knowledge
knowledge regarding the identity
regarding the identityofofclip
clipart
artimages
imagesatat issue,
issue and
andthe
the allegedly
allegedlyinfringing
infringing
products that
products that contain
contain them.
them. They
They have done so
have done so in
in an
an attempt
attempt to
to coerce
coerce XOOM--:as
XOOM—'aswell
wellasasitsits
sub—distributors——to
sub-distributors----to paypay grossly
grossly excessive
excessive license
license fees
fees forfor entireclip
entire clipartartcollections
collections that
that
XOOM—and
XOOM_and its
its sub-distributors-—do
sub-distributors---do notwant
not waxiand
andthat
thathave
havenot
notbeen
beenallegedly
allegedlyinfringed.
infringed. This
This
-3 Z—
rlL u iecre -. 1dick, 111 (8O4J228-1S8 p.11
conductalsohasprevented from exercising its

XOOMfromexercising
conduct also has prevented XOOM its license
I{censcrights under the Sprint License
rightsundertheSprintLicense
Agreement thatdonot
Agreement that do not relate
relate to
to _clip
clip aart
rtallegedlyownedby
allegedly owned by Imagcline. Infact,
Irnageline. In fact,Imageline's
Imageline's
actions
actions havebe=n its standard
have been its standardoperating procedure inin the
operating procedure the copyright
copyright infringement
infi"ingement claims
claims it
it has
has
asserted against
asserted against other
other clip
clip art publishers, including
art publishers, including licensee:;
licensees ofiXOOM
of XOOM and other clip
and other clip art
art
publishers sued
publishers sued by
by Irnageline
Imagel,.'ne in
in this
tiffs vexy Court.
very Court.
5.
5. Accordingly,
Accordingly, XOOM brings
XOOM brings this
this action
action agains_
againsc the
the Imageline Defendants to
Imageline Defendants to (i)
(i)
obtain an
obtain an injunction
injunction directing the lraagetine
directing the Imageline Defendants
Defendants toto identify
identify (a)
(a) each
each clip art image
clip art iniage inin
which Irnageline
which owns aa valid,
l.mageline owns valid, enforceable
enforceablecopyright,
copyright,Co)
(b)each
eachsuch
such clip
clip art
art image
image which
which
allegedly has
allegedly has been
been infringed
inflinged by
by XOOM
XOOMoror its
its licensees
licensees (including
(including Macmillan,
Macmillan, Aztech
Aztech a.ad
andMedi_t
Media
Graphics),
Graphics), and (c) each
and (c) each alleged
allegedoccurrence
occurrencewhen
whenXOOM,
XOOM,itsitslicensees
licenseesand
andsub-distributors
sub-disibutars
(including Macmillan, Aztech
.Aztech and Media Graphics)
and Media Graphics) and
and such
such sub-distribu.tors'
sub-distributors' licensees have
licensees have
infringed copyrights
i.n_nged copy'Hghta in
in clip
clip art claimed to
art claimed to be
be owned
owned by
by Imageline;
Imageline; (ii)
(ii) obtain
obtain aa declaration
declaration that
that
linageline's alleged
Imageline's _.lleged copyrights
copyrights in
i_ certain
certain clip
clip art axe invalid
art are invalid and
and unenforceable
unenforceable under
under the
the
Copyright
Copyright Act,
Act, t717U.S.C. .; (iii) redress
I01 e_!tse.q.q.;(iii)
U.S.C.§ §§ 101 violations and
retires violations and recover
recover damages
damages arising out
arising out
of the
of the Imageline
Imageline Defendants' misuse ofl.mageline's
Defendants' misuse of Imagelin&scopyrights
copyrights under
under the
the Copyright Act; (iv)
Copyright Act; (iv)
obtain aa declazatiort
obtain declarationestablish.hag
establishingthetheanlount
amountof of damages,
damages, if 4, under
ff any, the Copyright
under the Copyright Act
Act owed
owed
by XOOM
by XOOM to
to Imagelirie, for which
Imageline, for whichSprint
Sprinthas
hasagreed
agreedtotoindemnify
indemnify XOOM;
XOOM; (v)
(v) obtain
obtain aa
declaration
declaration establishing
establishing the
the amount of damages,
amount of damages, ifif any,
any, under
under the
the Copyright Act owed
Copyrig, ht Act by
owed by
Macmillan, Aztech
Macmillan, and Media
Aztech and Media Graphics
Graphics totoImageline
Imageline for
for which
which XOOM
XOOM has
has agreed to indemnify
agreed to indemnify
them (and
them (and for which Sprint
for which Sprint haz
has agr.e'_
agred toto indemnity
indemnify XOOM);
XOOM); (vi)
(vi) recover
recover damages
damag_ for
for the
the
Imageline Defendants'
Imagel,ine Defendants' intentional interference with
intentional interference with XOOM's
XOOM's contracts
contracts with
with Spriit
Sprir]t and
and XOOM's
XOOM's
sub-distributors; and
sub-distributors; and (vii)
(vii) recover damages for
recover damages for the
the Imageline
IrnagelineDefendants'
Defendants' conspiracy to
conspiracy to
intentTionallyinterferewith
intenfionaIlyinterfere with XOOM's
XOOM'scontracts
contractswith
withSprint
Sprint and.
and XOOM's
XOOM's sub-distributors.
sub-distributors.
4 - -
—33.-
Rue 30 S3
30 $8 L.4:23p
G4:23p Gecre P.
GecrceP. RtddLck,
R_ddtck, 111
tII t8O4i228-188
(8041228-1SS8 p.12
p.iR
6.
6. XOOM
XOOM also brings this action
alsobringsthis action against
against Sprint, XOOM's supplier.
Sprint, XOOM's supplier, as aa defendant
as defendant
for alleged copyright

foralleged infringement oflrnagelin¢'s
copyrightinfi'ing_m.entoflmageline's copyrights,
copyrights, to (i) determine
[o(i) deten'ninein
in this single action
thissingle action
thevalidity oflmageline's
the validity of allegation
Iningelinc's allegation thatIrnagcline
that Imageline nnever
ever granted
granteddistributiort
distribution fights
rights toSprint,
to Sprint1
and. (ii) rrecover

and.(ii) damages and obtain
ecoverdamages obtain indemnification
indemnification ffrom. Sprint forany
rom Sprint for any damages
damages that
thatXOOM
XOOM
may be
may be found
found to
toowe
owe to Imageline and XOOM's
toImagelineand XOOM's sub-distributors.
sub-distributors.
7.
7. Finally,
Finally, XOOM brings this
XOOM brings this action
action to
to join
join its
its sub-distributors---.'_,iacmillan,
sub-distributors—Macmillan, AztechAztech
and Media
and Medda Graphics—as
Graphlcswas plaintiffs
plaJnt2R's (or,
(or, in
in the
the alternative1
akemative, to join them
rejoin them as
as defendants
defendantsand
andrequest
request
that the
that the Court,
Court, in
in its
its discretion,
discretlon, realign, them as
r_allgrt them as plaintiffs)
plaintiffs) solely
solely to
to determine
determine isin this
this eonsoEdzted
consolidated
action the
action the amount
amount of
of damages
damag_ owed
owed by
by each
each sub-distributor,
sub-distributor, ifif any,
any, to Imagcline
[raagelhle (for which
(for which
XOOM is liable
XOOM liable under its indemnication
under its indemnification obligations
ob[igatiors toto such
such sub-distributors)
sub-distributors) so
so that
that XOOM
XOOM _—
may rccovcr
may recover damages
damages and obtain indemnification
and obtain indemnification from
from Sprint.
Sprint.
JURISDICTION
JURISDICTION .M'_-D
A1'D VENUE
VENUE
8.
8. This
This action
action arises
arises unde'r the Copyright
under the Copyright Act,
Act, 17
17 U.S.C.
U.S.C. _§ 10
101Letct seq.,
seq.1under
under the
the
Declaratory Judgraem
Declaratory Judgment Act,
Act, 28
28U.S..C. 2201 --02,
U.S.C.§§§ 2201 02, and
and under
under California
California law.
law.
9.
9. This
This Court has jurisdiction
Court has jurisdiction over
over the
the subject
subject matter
matter of
of this action pursuant
this action pursuant to
to 28
28
,A
U.S.C.
U.S.C.§§§ 1331
1331 and 1338(a) and Co),
1338(a) and (b), as
as well/s
well as 28 U.S.C. §§ 1332
28 U.S.C, and 1367.
1332 and 1367.
10.
10. Venue is pt'vper
Venue is proper ininthis
thisCourt
Courtpursuant
pursuanttoto2828U.S.C.
U.S.C.§§§ 1391
1391 and
and 1400.
1400.
PARTIES
PARTIES
A. XOOM.
A. X'OOM, mc.
l'ne_
11.
1 t. Plaintiff XOOM, Inc.
PlaintiffXOOM, Inc. ("XOOM")
(XOOM") is
is a corporation
corporation organized and
organized anti '
existing under
existing under the
the laws of the
laws of State of
the State of Delaware,
Delaware,having
havingitsitsprincipal
prIncipalplace
placeofbusiness
olbusinessininSan
San
Francisco, California.
Francisco, Califomia.
—34-.
, rcICCLCpc, .O4I22-1BS p.13
12.
12. Founded in September
Founded in September 1996,
1996,XOOM
XOOMowns,
owns,manages
managesand
and operates
operates on
on the
the Interact
Internet
a
a World
World Wide Web ("Web")
Wide Web ("Web') site
site located
locatedatat"www.xoom.com".
"www.xooxn.com".XOOM
XOOMisisnow
now aa leading
leading
community-based
_mmunity-bazed direct selling
direct sellingc.harmel
channelononthetheInternet.
Internet.To
Toattract
attract members
members toto its
its Web
Web site,
site,
XOOM provides
XOOM provides aa variety of free
variety of free member
member services,
services, including
including Web
Web site
site ere_.tion
creation arid
and Web site
Web site
hosting, e-mail,
hosting, chat rooms,
e-ma/I, chat rooms, online
onlineclip
clip,art
artand
andonline
onlinegreeting
greetingcards.
cards. XOOM
XOOM also
also offers
offers its
its
members the
members the opportunity
oppommJty toto join
join topical
topicalcommunities
communitieswhere
wherethey
theycan
can exchange
exchange ideas
ideas and
and
information. Upon
information. Upon registration,
registration, members agreetotoreceive
members agree receiveperiodic
periodicoffers
offers ofof products
products and
and
services via e-mail.

services via e-maiL These
These offerings are continuously
offerings are continuously updated
updated mad
and include
include computer
computer software,
sort',rare,
computer accessories
computer accessories mad
and peripherals,
peripherals,consumer
consumerelectronics,
clccftcnics,music
musicCDs,
CDs, clip
clip art
art on
on CD-ROM,
CD-ROM,
and even
and even credit
credit card services, Since
card service_. launching its
Since launching its Web
Web site
siteininJune
June 1997,
1997, XOOM
XOOM has
has enrolled
enrolled
approximaicly 2.9
approximately 2.9 million
million members.
members.
B.
B. XOOM's Sub-Distributors: Macmillan,
XOOM.'LSub-Distributors: Mazmillan, Aztech and
Az'tech and Media
Media Glmphics
Graphics
13.
13. Plaintiff Macmillan isisaa division
PlaintiffMacmillan of Prentice-Hall_
division of Prentice-Hall3Inc.,
Inc.,which
which isis organ/zed
organized and
and
existing under
existing under the laws of
the laws of Delaware,
Delaware,with
withitsitsl_rincipal
principalplace
placeo ofbusiness
fbusiness ininNew
New York,
York, New
New
York. Macmillan
York. Macmillan is
is in
in the
the business
business of
of software
softwareand
andbook
bookpubffshing.
publishing. Maemilian
Macmillan sells
sells products
products
and
and otherwise
otherwise conducts
conducts business throughoutthe
business throughout theUnited
UnitedStates,'-includifig
States,'-ncludiñg Virginia.
Virginia.
14.
14. Plaintiff Aztcch New
Plaintiff Aztech NewMedia
MediaInternational
tnterriationalCorp.
Corp.("Aztech")
("Aztech") isis aa company
company
organized and
organized and existing
existing under
under the
the laws of Canada,
Iaws of Canada, with
with its
its principal
principal place
place of
of busixless
business in Don
in Don
Mills, Ontario,
Mills, Canada. Aztcch is
Ontario, Canada..Aztech is in
in the
thebusiness
businessofofsoftware
softwarepublishing.
publishing. Aztech
Aztech sells
sells products
products
and otherwise
and otherwise conducts
conducts business
business in
in Virginia,
Virginia.
15.
[5. Plaintiff Media Graphics
PlaintiffMedia OraphicsInternational
International("Media
("Media Graphics")
Graphics") isis orgahize.d
orgahized and
and
existing
existing under
under the
the laws
laws of
of Colorado, with its
Colorado, with its principal
principal place
place ofb
of business in Arvada,
u_ine_ in Arvada, Colorado.
Colorado.
—35—
r. tGC.CK, t8041225—IEBS p.14
MediaGraphics
Media Graphics iis
s in
in the business
business ot'sogware
of software publishing,
publishing. Media
lvfedia Graphics
Graphics sells
sells products
products and
and
otherwise
otherwise conducts business in Virginia.
conducts business Virginia,
C.
C. JmacIjne, Inc.
/ma_.eline, ln_. and
and George
George P.
P. Riddick TIT
Ridd_ck 111
1.6.
16. Defendant Irnageline,
Dcfcadmt Inc. ("Imageline") is
Imagcline,Inc.C'Imageline") isaa corporation
corporation organized and existing
organizedmd existing
under the
under _e laws of the Commonwealth
of_e of Vffglnia_
Commouwealth of Virginia, with
with its
its principal place of business inAshland,
pdncipa[placeof'business in Ashland,
Virginia. Imageline
Vh'ginia. Imagelinc markets
markets and distributes clip
and distributes clip art.
art.
17.
17. Defendant George
Defendant P. Riddick,
George P. Riddick, 111 (uRiddicktI)isisthe
Ill ("Riddick") thefounder
founderand
andPresident
Presidentofof
Irnageline. He
irnageline. He also
also is
is the
the sole
sole oficer
officer and
and sole
sole director
dffector of Imageline and
ot'Imageline and is
is aa Virginia
Virginia residenL
resident.
D.
D. tnc. _4Id
Services. inc.
Covnntipnce Services.
Cornnl'i;_Diqe and W_iv_e
WayneK.K.Nvstr0rfi
Nvtrpm
18.
18. Upoa information
Upon information and
and belief,
belief, d_fendant Compliance Services,
defendant Compliance Services, Inc.
Inc. ("Compliance
("Compliance
Services") is a corporation
Services") corporation organized under the
o:ganizcd under the laws
laws of the Commonwealth
of the Coramoawcaltk of
of Virginia, with its
Virgida, with its
principal place
principal place of
of bu.siness in Richmond,
business hi Richmond,Virginia.
Virginia. Based
BasM on
on information
information and
and belief, Compliance
belief, Compliance
Serviccs provides,
Services among other
provide.% among other _ervices,
services,copyright
copyright et_orcum_nt
enforcement aervices.
services. The
The Virginia State
Virginia S[ate
corporation
Corporation Coumiission,
Commission, however,
however, does
does not
not have
have aa record
record of
of aa"Compliuncc
*Comp1iancc Scrvlces,
Services, Inc."
Inc."asasaa
Virginia corporation
Virginia corporation active
active and in good
and in good stafiding,
staiding, or
or as
as aa foreign
foreign corporation
corporation presently
presently licensed
licensed to
to
do business
do business in
irl Virginia.
Virginia. -_.
19;
19, Defendant
Defendant Waynel(
V/ayne K. Nystrom
Nystrom (Nystrom")
("Nystrom'9 isis the
the President
President of
of Compliance
Compliance
Services
Services and
and a Virginia
Virginia resident.
resident,
E.
E. Sprint
S_fint Software Ptv l_td
8oftw_e "Ply Ltd
20.
20. Defendant Sprint SoRwam
D_fcndant Sprint Software Ply
Pty Lid
Ltd ("Sprint")
("Sprint") is
is a company
company organized and existing
organized and existing
under the
under the laws ofAustralia,
laws of Australia, with
with its
its principal place of
prindpat place of business
business in
in Richmond, Victoria, Australia.
Richmond, Vicloriih Australia.
Sprint is
Sprint in the
is in the business
business ofsoRware
ofsoftwarepublishing.
publishing.
—86—
eore . Riddick, III (8C4]229-16S p.15
FACTS
FACT S
A.
A. XOOM's Distribution
XOOM'_ ofClip art
D.istrib_)i0n ofCli_ aa
21.
21. Since
Since its
its inception in 1996,
inception in 1996,XOOM
XOOMhas
has acqui.'red
acquired the
the rights
rights to
to use
use arid
and license
license the
the
use of
use of over 250,000 software
over 250,000 software "clips,"
"clips," consisting cfclip
consisting of clip art
art images,
images, graphics, photos, web
graphics, photos, web objects,
objects,
animations, sounds,
animation, sounds, music and videos.
music and videos. These.clips
Thcsc,ctips have
have been
been a.cquired
acquired ¢rom
from over
over forty
forty artists
artists
and
and ten
ten companies
compo.nies that
that have
have created or acquired
created or acquired distribution
distribution rights
rights for
for thee
these clips.
clips.
22.
22. Clip art
Clip art consists
consistsofofelectronically-formatted
electronically-formattedgraptdcal
aphical images
images that can be
that can be
distributed, for
distributed, for example,
example, on
on optical media (such
optical media (such as
as CD-ROMs,
CD-ROMs, or
or "CDs")
_CDs") or
or via
via online
online services
services
(such as
(such as aa Web
Web site).
site). The
The disfributor of aa clip
distributor of clip art
art collection
collection isis permitted
permitted and
and expected
expected toto
w
reproduce the
reproduce the clip
clip art
art in massive quantities, In
massive quantities. In typical end-user license
typical end-user license agreements
agreements the
the end-user
end-user
(i.irtlikethe
(unlike thepurchaser
purchaserofof aa book)
book) isislice_ed
licensedtotoreproduce
reproduceand
anduse
usethe
theclip
clip art
art inin any
any fashion,
fashion,
except that the

except that the end-user
end-user is prohibited fromsublicensing
prohibited fi'om sublicensing toto distributors
distributors the
the fight
right to
to reproduce the
reproduce the
clip art.
clip art.
23.
23. Commencing
Commencing in July 1997,
in July XOOMdistributed
1997, XOOM distributcd aa two-disc
two-disc CD
CD product known as
product known as
WEB
WEB CLIP
CLIP EMPIRE
EMPIRE 50,000, which cont_inc.d
50,000, which containedapproximately
approximately 50,000
50,000software
softwareclips,
clips,including
including
.,,It
clip
clip art
art images.
images. Subsequcntly,
Subsequently, as
as XOOM obtained distribution ri_ts
XOOM obtaineddistribution rig.hisforforodier
othr software clips,
sollwm-e clips,
XOOM has
XOOM has expanded its collection
expanded its anddistributed
collection and distributedWEB
WEBCLIP
CLiP EMPIRE
EMPIRE 7.5,000,
75,000, WEB
WEB CLIP
CLIP
EMPIRE 150,000
EMPIRE 150,000 arid
and WEB
WEB CLIP
CLiP EMPIRE 250,000.
EMPIRE 250,000.
24.
24. XOOM
XOOM distributed its WEB
distributed its WEB CLIP
CLIP EMPIRE
EMPIRE products
products directly
directly to end-users
end-users
through XOOM's
through XOOMs Web
Web site,
site, and
ant indirectly through third
indirectly through third patti
parties that in
.es that in turn
turn marketed
marketed the
the pre-
pre-
packaged
packaged WEB
WEB CLIP
CLIP EMPIRE
EM_HR.E products to end-users.
products to end-users.
25.
25. In addition, XOOM
In addition, sublicensedportions
XOOM sublicet_sed portionsofofitsitscoliection
collectionofof software
software clips
clips toto third
third
party sub-distributors.
party sub-distributors. Each
Each sub-distributor
sub-distributor would select certain
would select certain software
soft'ware clips
clips from
from aa collection
collection
-37-
—3 •T—
uuCe . ccic. LIFiled 08/18/10041228-L5E5
Case 1:10-cv-04917 Document 17-1 Page 36 of 62
p.15
available by
made available
made by XOOM
XOOM andthenwouldincorporate
and then would incorporateXOOM's
XOOM's clips
clips withother
with other clips
clips obtained
obtained
from multiple
from multiple sources aand
sources repackagethesoRwar¢clips
ndrepackage the software clipsuunder a newbrandname.
nderanew brand name. Among
Among
XOOM's sub-distributors
XOOM's sub-distributors were Macmillan,AztechandMedi_.
wereMacmillan, Aztech and Media Graphics.
Graphics.
26.
26_ Effective
Effective August 25, 1997, XOOMgranted
August25,1997,XOOM grantedMacmillantheright
Macmillan the right todistribute
to distribute
16,000 clip
16,000 clip art
art images from XOOM's collect[oa
imagesfromXOOM's collection,&clip
of clipart,
art1aalong with ccrtain photos,
longwithcertain photos, musicand
music and
It ° • •
sound clips, video

soundclips, clips, animations
videoclips, animations andweb
and web objects
objects (theMacmillanLtccnse
(the "Macmillan License Agreement").
Agreement").
Macmillan used the images llcenscd

Macmillanusedtheimagc.s licensed fromXOO/vl
from XOOMina
in a collection
colicetion ofCDs
of CDs published
published by Macmillan
Macmillan
lnown as
known "Moly Cow! 250,000
as"HolyCowl 250,000 CrraphJ.cs."
Graphics." Under
Under _c
the MacmillanLicensc'Agrcemcnt,
Macmillan LicenseAgrecmcnt, XOOM
XOOM
agreed
agreedto "indemnity andholdharmless...
to"indemnify and hold harruluss. .. [ Macmillan]
(Macmillan] or its licensees
orits licensees against
against all
allclaims,
claims,
demands,suits, actions,
demands, suits, actions, judgments,
judgments, losses,
losses,costs,
costs, damages,
damages,reasonable
reasonable attorney's
attorney's fees
feesand
and
reasonable expenses
reasonable expensesthat...
that... [Macmillan)
[Macmillan]or its licensees
orits licenseesmay
may sustain
sustain or incur by
orincur reason" ofany
byreason" of any
breach of'XOOM'swarranty
breach ofXOOM's warranty that
thatthe clip art
theclip art andother
and other soRwareclips
software clips did not infringe upon
didnotinfringe any
uponarty
copyright ofanythird -
copyright of any third pparty.
arty.
27.
27. XOOM also
XOOM granted Aztech,
also granted Aztech,by
by agreement
agreement dated
dated 3uric
June 30,
30, 1997, the right to
1997, thefight to
subdistribute 50,000
subdistribute clip art
50,000 clip art images
images from
fromXOOM's
XOOM'scollection.
co'ilection. Azteoh
Aztcch incorporated and
incorporated and
otherwise repackagcd
otherwise repackagedssome of theseimageslicensed
ome ofthese images liccnsedfromXO¢DM
from XOM in a product published
inaproduct published by
by
Aztech under
Aztech under the
the title "75,000 Quality
title "75,000 Clipart and
Quality Clipart and Images."
Images." The
The June
.l'une 30,
30, 1997
1997 agreement with
agreement with
Aztech required
A._,echrequired XQOM
XOOM "to indemnify and
"toindemnify and holdharmless...
hold harmless . .. (Aztech3 from any liability
[Aztech]fromarty liability for
for
damages or
damages or costs,
costs, or
orany
anyclaims
claimsmade
madeinincircumstances
circumstanceswhere... [XOOM] is in breach"
where.. . [XOOM] of its
breach" of its
warranty that
warranty that the clip
clip art images did
art images did not
not "ir_f.nge
"infringe upon
upon any'
any proprietary
proprietary Hghts any third
rights of any third party."
party."
23.
28. By agreement
By agreement dated
dated December
Deemnber5,5, 1997,
1997,XOOM
XOOM licensed
licensed to
to Media'Graphi.es
Mcdia'Graphics the
the
right to sub-distribute
right 34,000 soRwarc
sub-distribute 34,000 softwareclips,
clips,including
includingdip
clipart,
art,from
fromXOOM's
XOOM'scollection.
colkction. Media
Media
Graphics selected
Graphics selected software
soware clips
clips from
from KOOM's
XOONPs collection
collection and
and incorporated
incorporated them
them in a product
product
—38-
tU4I228-18a p.17
published by
published by Media
Media Graphics
Graphics under
under the
the titles
titles "25,000
"25,000 Web Art" and
Web Ai-t" "Quarter Million
and "Quarter Million
Multimedia Graphics
Multimedia Pack." The
Graphics Pack." The agreement with Media
agreement with Media Graphics
Graphics also
also required
required XOOM to
XOOM to
indemnify and
indemnify and hold
hold harmless Media Oraphics
harmless Media Graphicsfi'om
fromat[
all liability
liability "which
"which may
may arise or result
arise or from.
result from.
[XOOM's sofh,vare
.. [XOOM's software clips]
clips] infringing
infringingthe
thecopyright..,
copyright. . . of
of any
any other
other person."
person."
B.
B. XOOM's
XOOM's Licensing of Clip Art
Licen_ir_g efCl{p Art from
from Sprint
Sprint
29.
29. While
While XOOM has commissioned
XOOM has commissioned the
thedevelopment
developmentofof clip
clip art
art for
forits
ts own use, most
own use, most
of the
of the clip
clip art
ar_ images
images that XOOM uses
that XOOM uses and
and distributes
distributes are
are licensed
licensedfrom
from third
third parties.
parties. Because
Because
XOOM intends
XOOM intends to
to distribute
distribute the clip art
the clip art toto end-users,
cnd-users, asas well
wall a_
as sub-distributors,
sub-distributors, XOOM
XOOM acquires
acquires
from
from any
any third
third party
party suppliers
supplier_ of clip art aa right
clip art right to
to license
license the
the clip
clip art
art dircctly
directly or through
through sub-
sub-
distributors.
distributors.
30.
30. One
One of
of the
the companies from which
companies f_om which XOOM
XOOM licensed
licensed clip
clip art
art was
was Sprint, an
Sprint, an
Australian company.
Australian company. Effective
Effective June
June 4,
4, 1997,
1997, XOOM
XOOM and
and Sprint
Sprint entered
entered into
into an
an "Electronic
"Electronic
Com.mcrce License
Commerce LicenseAgeement"
Agreement' pursuant
pursuanttotowhich
whichSprint
Sprintgranted-XOOM
grantedXOOM the
the right
right to license toto
to license
end-users, directly
end-users, directly or via
via sub-distributors,
sub-distributors, approximately 4,500
approximately 4,500 clip
clip art
art images
images (the
(the "Sprint
"Sprint
License Agreement").
License Agreemenc").
31.
3 I. At the
At the time
time of
of the negotiations with
thenegotiations with Sprint
Sprint and
and tt'ie execution of
rise execution of the Sprint License
the Sprint License
Agreement,
Agreement, XOOM
XOOM had
had no
no actual
actual knowledge
knowledge that
that any
any third
third party
party (including
(including Imageline)
I.mageline) claimed
claimed
that some
that some of the Sprint
of_e Sprint clip
clip art
art constituted copyright infringemen.ts,
constituted copyright nor was
im6"ingements, nor was there
there any
any reasonat_Ie
reasona6le
basis for
basis for XOOM
XOOM to
to suspect
suspect that
that the Sprint clip
the Sprint clip art
art may
may ha_'e
have infringed
infringed any
any third party's copyright.
third party's copyright.
32.
32. Furthermore,
Furthermore, in thc
in thc Sprint
Sprint Liccnsc
License Agreement., Sprint agreed
Agreement, Sprint agreed to:
to:
indemnify and
indemnify hold XOOM,
and hold XOOM, its
its officers,
officers, employees,
employees, successors,
successors, agents
agents arid
agd assigns, and
assigns, and
purchasers
purchasers of of XOOM
XOOM set-v-ices harmlessagainst
services harmless againstany
any and
and all
all penalties,
penalties, damages,
damages, costs,
costs,
attorneys
attorney's fees
fees or
or other
other expenses
expenses of any nature
of any nature whatsoever
whatsoever paid
paid or
or incurrcd
incurred in connection
connection
with
with claims
claims byby any person of
any person of copyright
infringement aris{ng
arising from
from XOOM's
XOOM's exercise
exerciseofof
the license granted in subparagraph
the license granted in subparagraph 2.a. of this Agreement.
2.a. of this Agreement. -
10
—39-.
—— . . —— ._.__
_mphasisadded.)
(Emphasis added.)
33.
33. After
After executing
executingtile
theSprint
SprintLice==
Liccae Agreement,
Agreement, XOOM
XOOM incorporated
incorporated the
the Sprint
Sprint
clip art
clip into XOOM's
art into XOOM's collection
collection of
of clip
clipart,
art,and
anddistributed
distributedthe
theSprint
Sprintclip
clipart
artvia
via CDs
CDspublished
published
by XOOM7
by the XOOM
XOOM, the XOOM Web
Web site
site and
anddistribution
distributionagreements
agreementswith
withthird
third parr/clip
party clip art
art publisher_
publishers
including Macmillan,
including Aztech and
bfacmi!Ian, A.ztcch and Mcdia
MediaGraphics.
Graphics. Some
Some CDs
CDs published
published as
as part
part of
of the WEB
the WEB
CLIP EMPIRE
CLIP FAfPIP,.E series included clip
scrles included clip art
art licensed
licensedbybyXOOM
XCOMfzon:t
froth Sprint
Sprint.
34.
34. At the
At the Lime
time ofofthe
theactions
actionsdescribed
describedininthe
thepreceding
precedingparagraph,
paragraph,XOObl
XOOMrelied
reliedinin
good faith
good fa/th on
on its
its license with Sprint
license with Sprint for
foritsitsrights
rightstotododoso.so. Also,
Also, atat that
that time,
time, XOOM
XOOM was
wasnot
not
aware and
aware and had
had no
no reason
reason to believe that
to beIisve that its
itsa_ts
actsconstituted
constitutedan
aninfringement
infringement ofofcopyl"ight.
copyright.
C.
C. Ima_etlne's Wrongful
Imageline's Wrongful Conduct
Conduct
1. Jniagclinc's
1. Withholdingot'hformatior_
hnagelinc's Withholdln_ oflnrormation
35.
3:5. In January
J'anuary 1998, Wayne IC
1998, Wayne K.Nystrom, presidentofofCompliance
Nystrom,president ComplianceServices
Services and
andthe
the
agent nflmageline,
agent contacted
vf I.magellnc,coagctedXOOM,
XOOM, alleging that clipartdistributed
aRegingRat clip art distributed by
by XOOM
XO0_[ had
h:,d irtt'ringed
infringed
Imagclinc's copyrights.
Imagelinc's copyrights. This
This was the first timethat
thefir-q time thatXOOM
XOOMbecame
becameaware
awareof
of any
anyclaim
claimof'such
of such
alleged
alleged infringement. Based on
infringement. Based on aasamplingof
sampling of images
imagesprovided
provided 6y
6y Compliance
ComplianceServicesand
Services and
Nystrdmn,XOOM
Nystzom, XOOMwas
wasableto
able totrace
tracetheallegedly
the allegedlyinfringing
infringingclip_art
clipart images
images to
to Sprint.
Sprint.
36..
36.. Since thattime,
Since that time, XOOIYl
XOOMrepeatedly
repeatedlyhhas requested that the Imagcline Defendants
as requestedthattheImagelin¢Defendants
identify, Lo.the
identify, I.o.the full extent
full extentof
of thek"
theirkImowledge, (i)theclipartimages
nowledge,(i) the clip art imagesallegedly
allegedlyinfringed
infringedbby
y
XOOM in
XOOM which Imageline
inwhich owns aa copyright,
Imagelineowns copyright, aand (ii)eeach
nd (ii) occurrence in thevarious
ach occurrencein the various soRware
software
products and Web

productsand Web sites
sitesproduced by XOOM
produced by XOOM and
and its
itsbusincsspartners
business partners of
of such
such alleged
alleged
in.fzingcment.
infringement.
'I
It
-40-
—40—
•.— — —. %á .â 1'. 7 a44 t0U7ICC0 1. 0 C 0 •i
37.
37. The
The Irnageline Defendants have
Imageline Defendants have refused
refused to
to supply
supply such
such complete
complete information to
information to
XOOM, choosing
XOOM, choosing instcad
instead to repcatcdly drop
to repeatedly drop hints
hints ofof continuing
continuing unidentified
unidentified infringements
infringements
("thousands of
("thousands infringements,' 'hundreds
of infringements," "hundreds of
of infringements,"
infringements," "under
"under a hundred
hundred infringements").
infringements").
3&
38. TheThe
Lmageline
I.mageline Defendants
Defendants also
also have
have accused
accused other
other software
software companies of
companies of
infringing Imageline's
infi--inging copyrights totoclip
I.magetine's copyrights clipart.
art. In
In so
so doing,
doing, the
the ImageIIne
Imageline Defendants
Defendants have
have
engaged in
engaged in a pa.ttcrn of refusing
pattern of refusing totoprovide
providetotothese
thesetarget
targetcompanies,
companies, to
to the
the full
full extent
extent of
of the
the
Imageline DefendanU'
Imageline Dcfendaiilc' knowledge,
lcnowkdge,the
theidentity
identityor:the
of thealleged
alleged copyright
copyright infringemen:s.
infringements.
39.
39. For
For example, based on
example, based on information
information and
and belief,
belief, I.mageline
Imageline deliberately
deliberately has
haswith_held
withheld
information
information in asserting
asserting copyright infringement claims
copyright infiingement claims against
against International
International Microcomputer
Microcomputer
Software, Inc.,
Software, Mindscapc, Inc.,
Inc., Mindscape, tue., and
and Media
McdiaSynergy,
Synergy,Inc.,
Inc.,before
before this
thisCourt.
Court. As
As discussed
discussed
below, XOOM'z
below, XOOM's own
own sub-distributors---Macmillan,
sub-diaibutors---Macmillan, Aztcch
Aztech and
and Media
Media Graphics—have
Graphics--have been
been
subjected to
subjected to the
the same
same pattern
pattern of
of refusal
refusal totoidentify
identify fully
fully tb.e
the aUeged
alleged infringements.
infringements.
40.
40. The
The Imnagcline Defendantshave
Imageline Defendants haveengaged
eagagcdininthis
thisconduct
conduct inin order
order to
to coerce
coerce target
target
companies
companies to
to license
license clip
clip art
art collections
collections that
that they
they do
do not
not want
want and. that extend
and. that extend beyond
beyond the
the scope
scope
of alleged
of alleged infringement,
infringement, at prices
at grossly inin excess
priccs grossly excess ofof market
market rates
rates for
for clip
clip art
art hcensing.
licensing. rn
In
effect, the
effect, the Imageline
Defendants are
areattempting
attemptingtoto"milk"
"milk"the
thes_uation
suation arid
and coerce
coerce alleged
alleged
innocent infringers into

innocent infringers into becoming
becoming unwilling
unwilling "partners."
"partners."
41.
4-1. In addition,
In addition, based upon information
based upon information and
and belief,
belief, Imageline
Imageline and
and Riddick
Riddick have
have
engaged
engaged in a pattern
pattern of
of deliberately withholding the
deliberately witI_olding the full
full extent
extent of
of tlaeir
their knowledge
knowledge of
of alIeged
alleged
copyright when tiling
inJ.i-i..ugement when filing copyrigt:tt
infringement lawsuits,
lawsuits, for
for the
the purpose of revealing
purpose of revealing
more alleged
more alleged infringements
inNngements at sensitiVe times later
sensitive times later inin litigation.
litigation. -
42.
42. By withholding from
By withl'lolding the full
XOOM the
from XOOM full extent
extent of
of their
their knowledge
knowledge of
ef alleged
alleged
copyright
copyright infringement,
infringement, the lrnageline Defendants
have prevented
prevented XOOM
XOOM and its sub-
and its sub-
12
12
-41-
—41—
...., e t-. CLC)'., LII (8041228-ICeS p.20
distributors from completely

distributors ceasing the
completelyceasing use, licensing and
theuse,licensing and distribution
distribution of
of theclip
the clip art
art aUegedly
allegedly
owned
owned by
by Imagcline.
linagclinc.
43.
43. By
By withholding
withholdingfrom XOOM
XOOM theidentity
the identity ooff theallegedly
the allegedly infringing
infringing clipart,
clip art, the
the
Irnagclinc DIDefeadants
/.magcline also haveprevented
efendantsalsohave preventedXOOM
XOOMfrom
frombenefiting
benetlting from
from (l)
(i) theuse,licensing
the use1 licensingand
and
distribution of the
distribution the clip
clip art
art licensed by XOOM
licensed by XOOM from
from Sprint
Sprint ininwhich
which Imagdine
Imageline has no claim
has no claim ofof
copyright infringement, and
and (ii)
(ii) XOOM's
XOOM's ongoing
ongoing business
business relationship
relationship with
with its
its sub-distributors1
sub-distributors,
including Macmillan,
including Macmillan, Aztech
A.ztech and Media Graphics.
and Media Graphics.
44.
44. By withholding from
By withholding XOOM the
from XOOM identity of
the identity of the
the allegedly
allegedly in_nging
infringing clip
clip art
art and
and
the extent ooffitsproliferation,

theextent its proliferation, the Imageline defendants have
theImagelinedefendants haveactedmaliciously
acted maliciously and inconscious
in conscious
disregard of
disregard of the rights ofXOOM
therights ofXOOM and
and its
itslicensees
licenseesand
a sub-distributors.
nd sub-distributors."
2.
2. The
The Jmaneflne]lefendants' Unlawfil Demands Made
Ima._eline Defendants' UnlawfttlDemands Made to Macmillan
Macmilla_
45.
45. In
In January 1998, Wayne
January 1998, Wayne K.
K. Nystrom,
Nystrom, the
thepresident
president ofof Compliance
Compliance Services,
Services,
acting
acting in
in concert with Imagcline,
concert with Imageline, wrote
wrote to Macmillan,XOOM's
to Macmillan, XOOM's l_censee
licensee and
and sub-distributor,
sub-distributor,
alleging that
alleging Macmillan's "Holy
that Maemillan's "Holy Cow! 250,000" product
Cow[ 250,000" product conta{ned
contained cllp
clip art
art iraagcs
images in which
which
Imageline owned
hnageline owned a copyright
copyright and accusing Macmillan
and accusing Macmillan of
of copyright
copyright infringement.
infringement.
46.
46. The
The Iniageline Defendants identified
Imagelinc Defendants identifiedsome
someofthc_a!legcdly
ofthda!lcgcdly infringing clip art
infringing clip art
images. Macmillan
images. Macmillan traced
traced these
these images
images to
to XOOM, who, in
XOOM, who, in turn, trace& themtotoSprint.
turn, traced-them Sprint.The
The
Irnageline Defendants,
I.mageline Defendants, however, refused to
however, refused to identify
identify to
toMacmillan
Macmillan the
the full
full extent
extent of
of the
the copyright
copyright
irtfzingement
ixi.fringementasserted
assertedbybyIm_geline,
Ixnageline,despite
despiteMacmillan's
Macmillan'sand
andXOObi's
XOOM!srepeated
repeatedrequests.
requests.
47.
47. Contemporaneously,
Contemporaneously, the Imageline Defendants
the Irnagellnc Defendants demanded
demanded that Macmillan enter
that Macmillan enter
into a clip
into clip art
art distribution
distribution agreement
agreement with
with Imageline and license
Imageline and license far
far more
more clip
clip art
art Images than the
_mages than the
nirnber for
number for which
which Imageline
fi'nageline claimed
claimed copyright
copyright nfrhigemex:it.
inf_ngement. For thes_
For these license
license rights,
iights, the
the
Imageline
Imageline Defendants demanded that
Defendants demanded Macmillan pay
that Macmillan pay Imagcline
Imageline an
an amount
amount substantially
substantiallygreater
greater
13
—42—
ecre I-. 1dLc, ii 8a4J22a-186 p.21
thanthenegligible
than the negligible market
market vvalue
alueofofthe
the right
righttotodistribute
distribute the
the contested
contested clip
clip art,
art, substantially
substantially
greater than
greater than the
the rather
rather insignificant profit ofof Macmillan
in._ignifieant profit Macmillan attributable
attributable to
to such
such clip
clip art,
art, and
and
substantially greater than

substantially greater than any
any actual
actualdamages
damages(including
(includinglost
lostprofits)
profts) of Imageline attributable
of Imageline attributable toto
the
the alleged copyright infringement.
alleged copyright infringement. Simply
Simplyput,
put,Imagelinc's
Imageline'sdemands
demandshave
havepractically
ptcLicaIlyamotinted
amoiited
to extortion.
to extordort.
42.
48. In response, Macmillan
In response, Macmillanwas
wasforced
forcedtotocreate
createaanew
ncwrelease
release of"Holy
of"Holy Cow!
Cow!
250,000" that
250,000" that did
did not contain any
not contain any ofof the
theclip
clipart
art that
that was
was licensed
licensed by
by Sprint
Sprint to
to XOOM
XOOM and
and
sublicensed to Macmillan.
subIicertsed Macmillan. Accordingly,
Accordingly, Macmillan had
Macmillan had toto strip
strip from
from its
its product
product clip
clip art
art
distributed by
distributed by Sprint
Sprint in which I.magelime
in which Imagelinecannot
cannotclaim
claim copyright
copyright infi'ingement.
infringement.
49.
49. By the
By the terms of the
terms of theMacmillan
MacmillanLicense
LicenseAgreement,
Agreement, XOOM
XOOM must
must indemnify
indemnify
Macmillan for
Macmillan for any
any copyright infringement liability
copyright b.Edngement liability arising
arising from
from the
the clip
clip an,
art licensed
licensed by
by XOOM
XOOM
to Macmillan.
to Macmillan.
3.
3. Th
The lmag1ine
Imazeline DcfendantL
Defendants-' Unlawful
Unlawful Demands
Demands Made
Made to Aztech
to Aztech
50.
50. On
On or about .rune
or about June26,
26,1998,
1998,George
GeorgeF.P.Riddiek,
Riddick,IH,
III,the
thepresident
presidentc ofimageline,
flmageline,
called Aztech,
called Aztech, another
another XOOM Iicenee and
XOOM Iicen_ee sub-distributor, .aUegingthat
mad sub-distdbutor,.atleging thatcertain
certainofofAztech's
Aztech's
products contained clip

products contained clip art
art images
images that
thatinfringed
infringedImagetine's
Imagetine'scopyright.
copyright. As'with Macmillan,
As'with Macmillan,
Riddick refused
Riddick refused to
to identily
identify all
all the
the alleged
atlegcd in.&ingements
infringements despite Aztech's
despite Aztech's repeated
repeated requests.
requests.
551.
i. Based
Based on
on the
the images Riddick did
images Riddick did identify,
identify, Az'tech
A.ztech traced
traced the
the clip
clip art
art images
images toto
XOOM, which
XOOM, which traced
traced them
them to Sprint. rn
to Sprint. July 1998,
In July 1998, XOOM wrote Imageline
XOOM wrote ImageHne and requested that
and requested that
Imageline identify
Imageline identify "each
"each and
and every image that
every image that the
the Aztech
Aztech product(s)
product(s) allegedly
allegedly infringed" and "all
infringed" and "all
copyright registrations
copyright registrations related to
related to each
each image."
image." Following its standard
Following its standard practice,
practice, Iniageline
I.r_ageIine
iored
ignoredthethe
request,
request,preferring
preferring instead
instead totokeep
keep both
both XOOM
XOOM and
and Aztech
Aztech in
in the
the dark
dark and
and thereby
thereby
14
—43—
u4:p Gecree P. RtdeLc ill t8a41229-1S2S p.22
prevent either party

prevent either party from
from taking
taking immediate
immediate corrective
corrective action
action to
to strip
strip away
away all
allallegedly
allegedlyinliinging
infringing
images.
images.
4. imageline's UnlawfulActfons
lmageline's Unlawful Regarding Media
Actions Regarding Graphics
Media Graphics
52.
52. As recently
As recently a._'early
as earlyAugust
August1998,
1998,Riddick
Riddickcontacted
contactedvet
yet another
anotherXOOb[
XOOMlicensee
licensee •
and
and sub-distributor, Media Graphics,
sub-distributor, Media Graphics, alleging
alleging that
thatcertain
certain clip
clip art
art images
images in
in Media
Media Graphics'
Graphics'
products in.fringed Irnageline's

products infringed Inlageline's copyrights.
copyrights. Riddick
Riddick identified XOObi (and
identified XOOM (and presumably
presumably Sprint)
Sprint)asas
thc source and

thcsource provided a few examples
and provided, examplesofof the
thealleged
allegedinfringement.
infringement.
53.
53. Despite
Despite Media
Media Graphics'
Graphics'request,
request,Imageliae
Imageline has
has failed
failed to
to pro_de
provide aa comprehensive
comprehensive
list oofallegedly
list faUegedly infringing
infringing clip
clip art
art so that
that Media
Media Graphics
Graphics and
and XOOM
XOOM could
could co=oct
correct the
theproblem.
problem.
D.
D. XOQMs Actions
XOOM's RegardingSprint
Actions l_egardin_Sorlnt
54.
54. Immediately upon hearing
Immediately upon hearingthat
that certain
certain of
of the
the Sprint
Sprint clip
clip art
art images
images might
might infringe
infringe
Imageline's
Imageline's copyrights,
copyrights, XOOM contacted Sprint
XOOb,t contacted Sprint and
and requested
requested that Sprint provide
that Sprint provide evidence
evidence of
of its
its
right to license
right license the
the contested
contested images.
images. XOOM also invoked
XOOM nl-qo invoked its indemnification
indemnification rights under the
rights under the
Sprint License Agreement.

Sprint License Agreement.
55.
55. To
To date,
date, Sprint has not
Sprint has notprovided
provided any
anywritten
written evidence
evidence ofits
of its rights
rights to
to redistribute
redistribute
the images
the images identIfied
identified by
by Imageline.
Imageline. -
-_
E.
E. The riw&iditv
Tile rnv_liditv of In,aczcline'sClaim
oflrnageline's ClaimofofValid
ValidCopyrights
Copyrights
I.
I. Tmageline's
Imagelinc's Copyright
Copyritht Registrations
Reaistratinna
5&
56. Based on
Based on information and belief,
information and belief,including
includingexamination
examination of
of tI'terecords
the recordsofofthe
the
Copyright Oft'ice, Itriageline

Copyright Office, Irnageline has
has been
been granted
granted the
the foIlowing
following copyright
copyright t'egistrations
registrations by
by the
the
Copyright Office
Copyright Oflice for
for works
works containing clip art:
containing clip art:
a
a. The work titled
The work titled "Imageline
"rmagelineDesign
Design Gallery,"
Gallery," Reg.
Reg. No.
No. VA
VA 841-528,
841-52S,
effective March 18,

effective March 18, 1997,
t997, authored
authoredby
by"lmagcline,
"In-iagdlin;Incorporated,"
Incorporated," containing
containing 2730
2730
15
-44..-
ri .U Uecree . R1.ddc.. LII
(804)228-1886
Filed 08/18/10 Page 43 of 62
p.23
electronic
electronic graphic designs. The
graphic designs. registration further
The registration fuither states
states that
that "[s]onie of the
"is]one of the Clip Art
Clip Art
used in
used in Design
Design Gallery
GalIery is
is from Imageline Master
from Imageline Master Gaflery."
Gallery."
b.
b. The work
The work titled
titled 9lmagelirie Master Gallery,"
"Imageline Master Reg. No.
Gallery," Reg. No. VA
VA 751-565,
751-565,
effective M_.y
effective May 3,
3, 1996, authored by
1996, authored by "Image_ine,
"Imagetine, Incorporated,"
Incorporated," containing
containing 9618
9618electronic
electronic
images. The
images. The registration
registration further states that
further states that "PicturePak
'PicturePak SuperBundle
SuperBtmdle is
is incorporated in
incorporated in
the tinageline
the I.mageline Master
Master Gallery."
Gallery."
c.
c. The work
The work titled "PicturePak SuperBtmdle,"
titled "PicturePak SuperBuridle," Reg.
Reg. No.
No. VA
VA 746-773,
746-773,
effective March
effective March 12, 1996, authored
t2, 1996, authoredby
by "ImageIine,
"Imageline, Incorporated,"
Incorporated," described
described asas an
an
"Elect.rorucCHp
"Elt._ctro_lic ClipArt
ArtPa=kage.".
Package.".The
Theregistration
registrationfurther
furtherstates
statcsthat
that"PicturePak
"PicturcPak
SuperBundle was
SuperBundle was compiled
compiled from
from five
fiveproducts
products created
created inin 1991:
1991: PieturePak
PicturePak 1;
1; PicturePak
PicturePak '
2; PicturePak
2; PicturePak 3; PicturcPak ValuePak
3; PicturcPak VatuePak 1;
1; a_d
and Office
Office Clips."
Clips."
d.
d. The
The work titled "I-lead.liners,"
work titled "Headliners," Reg.
Reg. No.
No. VA
VA 844-189,
844-189, effective
effective March
March 12,
12,
1997, authored
1997, authored by
by '°Lrnageline,
"Irnageline,Incorporated,"
Incorporated,"containing
cortaining :'Electronic
!'Electronic Graphical
Graphical
Expressions."
Expressions."
2.
2. Jniae!ine's
Imageline's Misrepresentation
Misrepr_atatiotl and Fra_t
and Fraud on
on,'he
theCop_'i_ht
Copvriht Office
Of Hce
57.
57. Clip
Clip art
art images contained inineach
images contained each ofof the
the four
four re_stered
reistcred works
works Listed above were
listed above were
authored by
authored by companies and entities
companies and entities other
otherthan
thanImageline.
Irnageline. Based
Based on
on information
information and
and belief,
belief,some
some
of the
of the actual
actual authors
authors of
of the
the clip
clip art included in
art included in tb.ese
these copyrightregistrations
copyright registrations did
did not
not assign
assign
copyright
copyright ownership
ownership to
to Imageline in aa written
Imageline in writtendocument
document signed
signed by
by the
the author.
author. Consequently,
ConsequentIy,
each
each of
of the
the Irnageline
Imageline copyrights is invalid
copyrights is invalid because
because the
the statements
statements in the copyright
in the copyright registration
registration
applications that
applications t.hat Imageline
I.mageline is author
author of all electronic
of all electronic images
images contained in these w6rks,
contained L,'zthese works, as
as well
well as
as
Imageline's failure
L"nagetJne's failure to
to identity
identify the
the true
true authors, constitutes misrepr_entation
authors, cormtitutez misrepresentation and
and fi'aud
fraud on
on the
the
Copyright Office.
Copyright Office.
16
—45—.
Rug 30
20 _ U4:26p
U4:26p neorce P.
George P. Riddick, IIIUI
Rxddick, c8a4J228-1ee
(8041228-168S p.24
p.24
58.
52. Upon information
Upon informationand
andbelief,
belief,pdor
priortotothe
thedate
dateofofthe
theapplications
applictions that
that matured into
matured into
such registrations,
such registrations, Imag1irie
Imageline marketed products confab'ring
marketed products containingaaportion
portion ofthz
of thc clip
clip art
art inin the
the
registered works
registered works but
but failed to identi_
failed to identi.j all
all such prior products
such.prior products on
oo the
the copyright
cop) right registration
registration
appLications.
app_cations. The omisdon'of
The orrthsio&ofthi¢
thisLrd'ormafion
in.fonnationalso
alsoconstitutes
constitutesraisrepresentation
misrepresentationand
andfraud
frudon
on
the
the Copyright
Copyright Office
Office and
and renders
renders the copyrights invalid.
the copyrights invalid.
3.
3. Irnaeline's Failure
Image]inn's Failure to
to Register
Register Undcrlvincr
Under|_n Copyrights
E (_opv_.'p.,hts
59.
59. Based on
Based on the statements made
the statements made in
in Imagel_ne's
Imageline's copyright
copyright reg[s_ation
registration applications:
applications:
(1) imageine
(i) Imageline Design
Design GalIe
Galle_ (Reg.
(Reg.No.
No.VA
VA841-528)
841-528) isisa aderivative
derivative work
work ofoflmagetine
ImageLine Master
Master
Gallon-y; (ii) Imageline

GalIciy; (ii) Iraageline Master
Master Gallery
Gallery (Copyright
(CopyrightRegls_"afion
RegistrationNo.
No.VA
VA751-565) is aaderivative
751-565),is derivative
work of
work of FicturePak
PictarePak SuperBundlc;
SuperBundle; and (iii)
and (iii) PictarePak
PicturepakSuperBundlc
SuperBundic (Copy'cilaht
(Copyright Reg.
Reg.I%.
No.VA
VA
—
746-773) is aa derivative
746-773) is derivative work
workofofFicturePak
FicturePak I,I PicturePak
PicturePak 2,
2, PicturePak
PicturePak 3,
3, PicturePak
PicturePa.k VatuePak
ValuePak
I and
and Office
Office Clips.
Clips. Each
Each of
of the
the foregoing
foregoing works is also
works is also aa derivative
derivative work
work of other products
or'other products that
that
Imagelinc failed
ImageIine failed to disclose in its
disclose in its copyright
copyright registration
registrationapplications.
applications.
60.
60. Imagetine has
Imagdlne has not
not registered
registered with
with the
the Copyright
Copyright Of.rice
Office aa copyright
copyright for._icturcPak
for PicturePak
1, Pictur_Pak
I, PicturePak 2,
2, PicturePak 3, PictureE'uk
PictureP._k 3, ValuePak I,1,Office
PicturePak ValuePak Office Clips
Clips oror other
other works
works that
that Imageline
Irnagelinc
failed
failed to
to disclose in its
disclose lit copyright registration
its copyriglit registrationapplications.
applications Ac_.
Acthrdingly,
rdingly, Imageline
Imageliae cannot
cannot
recover any statutory

recover arty or other
statutory or other damages
damages for
for aUcged
aUeged copyright
in.fringementofof clip
clipart
art images
images
contained in
contained in P_.cturePak
PicturePak 1,1, PictttrePak
PicttirePak2, PicturePak3,3,PicturePak
2, FicturePak PicturePakValuePak
ValuePak 1,I, Office
Office Clips
Clipsoror
other works
other works that Jmageline thiled
that/mageline fbilcd toto disclose
discloseinin its
itscopyright
copyrightregist'ratintt
registration applications.
applications.
4.
4. Failure of Various Images
"FaHur_ 0t:Varj0us images toto Oualifv
Otia1if' as OriRinal Works
as_Original W0rka of Authorship
ot'Authorshlp
61.
61. Some of the
Some of din at
the clip art images
images for
for which
which imageline
Imageline claims
el.aims copyright
copyright Ownership do
ownership do
not qualifi
not qualify as
as °original
"original works
works of
of authoih.ip"
authomldp" under
under 17 U.S.C. §§ 102
17 U.S.C. for the
I02 for the following
following reasons,
reasons,
among others:
among others: .
17
-46'-
-jug U U4:f/p (ecre P. Rtck, Iii (04)22S-i6 p.25
a.
a°
some clip
some clip art
art images
images were
were copied
copied from
from art
art that
that was
was inin the
the public
public domain;
domain;
b.
b. some
some clip art images
clip_art images were
were copied
copied fi'om
from art
art that
that isis the
the copyrighted
copyrighted property
property
of or.ben;
ofothers;
c.
C, some clip
some clip art
art images
images copied
copied oror infringed
infringed third,
third party
party trademarks
trademarks or
or service
service
marks; and
marks; and
d.
d. some clip
some clip art images do
art image_ do not
not embody
embody sufficient
sufficient originality
originality to
to cons titate an
constitute an
"originu work
"original of authorship"
work of authorship" under
under 17 U.S.C. §§ 102.
17 U.S.C. 102.
62.
62. By seeking to
By seeking to register images that
register image_ that arc clearly not
are clearly not "original
"original work[s] of authorship"
work[s] of authorship"
u.nder 17
under 17 U.S.C.
U.S.C. § I02, Imageline has
102, I.magellne has re%led
misled the
theCopyright
CopyrightOffice,
Office,other
otherclip
clipartartdistributors
disibutors and
and
this Court, thereby

this Court, thereby rendering
rendering its
us copyrights
copyrightsand
andcopyright
copyrightregistrations invalid.
regisations invalid.
COUNT
COUNT I
(Injunctive Relief:
(Injunctive Relief: Full
Full Disclosure
Disclosure of Alleged
of Copyright Infi':mgements)
Alleged Copyright Infringements)
63.
63. XOOM reallegcs and
XOOM realleges and incorporat_
incoxporatesby reference the-allegations
by reference the-allegationsset
setforth
forth inin
paragraphs
paragraphs 1-62
1-62 above.
above.
64.
64. XOOM requests that
XOOM requests that this
this Court
Court enter
enter aa preliminary
preliminary and
and permanent
permanent injunction
injunction
requiring that
requiring that I.mageKne,
Imagelinc, Compliance Services, Rid
Compliance Services, Riddick "_ystrom disclose:
and Nystrom
dick and disclose:
a. each
each clip art image
clip art image for
for which
which Iraageline
Imageline asserts
asserts copyright ownership;
copyright ownership;
b.
b. to the
the full
full extent of their
extent or" their knowledge,
knowledge, of
of the
the foregoing
foregoing clip
clip art,
art, which
which
images allegcdly
images have been
allegedly have been infringed
infringed under
under the
the Copyright
Copyright Act
Act by
by XOOM
XOOM oror any
any ofof
XOOM's licensees
XOOM's licensees (including Macmillan, Aztech
(including Macnfillan, Aztech and
and Media
Media Graphics);
Graphics); and
and
c.
c. to the fall
to the full extent
extentofoftheir
theirknowledge,
knowledge,each
eachoccurrence
occurrenceinineat_h
eah product
product or
or
service of
serv£ce of XOOM
XOOM or any
any of XOOM's licensees
of XOOM's licensees (including
Macmillan, Az'tech
Aztech and
and Media
Media
Graphics)
Graphics) of
of such
such clip
clip art
art for which Imageline
for which Imageline asserts
asserts copyright
copyright ownership.
ownership.
—41—
L-?:ip Lecre . lLCCLcc, ILL
tE041228—LSSS
Filed 08/18/10 Page 46 of 62
p.2S
COUNT 11
COUNT I!
(Declaratory 3ud_nent,
(D_laratory Judgment, Injunctive
InjunctiveRelief
Relief and
andDamages
Damages for
for Copyright
Copyright Misus=)
Misuse)
65.
65. XOOM realleges md
XOOM reaIIege_ and incoi'porates
incorporates by
byreference
reference the
thc allegations
allegations set
set l'or_h
forth in
in
paraaphs
pamg_aph_ 1-64
1-64 above.
above.
66.
66. If
If the Court detem'dnes
the Court determines that
thatImageI_e
Imageline owns
owns valid
valid copyrights
copyrights to
to any
any clip
clip mart
images, XOOM requests

images, XOOM requests that the Court
that the Court issue
issue aa de_lamto_jud'graent
declaratory judgment that
dmt tmageline
[mageline (directly and
(d{rectly and
through Servkes, Riddick

through Compliance giddickand Nystrom) has
and Nystrom) has misused
misused these copyrights and
thesecopyrights and that the
the
copyrights are invalid.

copyrightsarcinvalld.
67.
67. XOOM
XOOM also seeks a declaratoryjud_'ncnt
aim seeks._ declaratoiy judgment thatImagelincisnot
that Imagdlinc is not entitled
entitled torecover
to recover
any copyright infringement ddamages

copyrightinfringement for clip art imagesfrom
amages forclipartimages fromXOOM,
XOOM,its
itslicensees,
licensees,its
itssub-
sub. —
distributors, or
distributors, or the end-users of
theend.users of such
such clipart
clip artduc
due tosuch
to such misusc.
misuse.
68.
68. Because of Itnageline's copyrightmisuse,
oflmagclinc's copyright misuse, XOOM
XOOM further
further rrequests that the Court
equsststhattheCourt
enter a permanent injunction

enterapcrmancnt injunction restraining
restraining Imageline (and its
Imagclinc(and its officers,
officers, directors,
directors, employees and
employees and
agents, and all

agents,and allpersons together with
personstogether with Imagelirie) from ass_n'dng
Imageline)from asserting ttoo anyone
anyone that it owns
thatit owns aa valid
valid
copyright to any
copyright any clip
clip art
art images encompassed by
images encompassed by its
its copyright
copyright registrations.
registrations.
69.
69. As a proximateresult
As a proximate result ofImagetin¢'s
of Imnagellrt&s copyrightnisuse, XOOM
copyright*misuse, XOOM has
has lost
lost current
current
and potential
potential clip art licensing revenue and
clipartLiccmingrevenue and theresulting
the resulting profit,
profit, as
as well
well as
as thegoodwillof
the goodwill ofprescnt
present
arid potential
and potential cclip art licensees _.nd
llpartlicensees sub-distributors. XOOM
d sub-distributors. XOOM does
does not
not yet know the
yetknow full monetary
thefull monetary
extent of this damag; but

extentofthlsdamage, it believes
butit believesthat the damage far
thatthedamage exceeds $75,000.
farexceeds S75,000.
COUNT III
(Declaratory
(Declaratory Judgment
Judgment Regarding
Regarding Invalidity
Invalidity of
of Imageline's
Iniageline's Copyright
Copyright Registrations)
Registrations)
70.
70. XOOM realleges and
XOOM rcallegcs and incorporates
incorporates by
by reference
reference the
the allegations
allegations set
set forth
forth inin
paragraphs 1-69
paragraphs 1-69 above.
above.
19
—48—
ru ,o u-;ip L.ecre r. jtck, 111 (8041228-1686 p.27
7I.
71. XOOM seeks
XOOM seeks aa declaration
declaration that
that thc
the copyright
copyright registrations
registrations for
for the
the works
works titled
titled
"Imagclinc Master Gallery"

"Imagelinc Master Gallery" (Copyright
(Copyright Reg.
Reg. No.
No. VA 751-565), "PicturePak
VA 751-565), "PicturePak SuperBundl_."
SuperBundle"
(Copyright Reg.
(Copyright Reg. No.
No. VA
VA 746-773),
746-773), "Imagelirie Design Gallery"
"Imageline Design Gallery" (Copyright
(Copyright Reg.
Reg. No.
No. VA
VA841-
841-
52)
528) and
and "Headliners"
"Headliners" (Copyright
(Copyright Reg. No. VA
Reg. No. VA 44-189)
44-189) are
are invalid
invalid and,
and, therefore,
therefore, Imageline's
Imagelinc's
alleged copyrights
atlcged copyrights in
in the
the clip
clip art contained in
art contained in these works arc
these works are unenforceable.
unenforceable.
COUNT
CO_ TV
(Intentional
(Intentional Interferencewith
hterference withXOOM's
XOOMs Contracts
Contracts
with Sprint and
with Sprint and Its
Its Sub-Distributors)
Sub-Distributors)
72.
72. XOOM realleges and
XOOM realleg_ and incorporates
incorporates by
by reference
reference the
the allegations
allegations set
set forth
forth inin
paraaphs
paragraphs 1-71
1-71 above.
above.
73.
73. In January 1998,
In January 1998, the Irnageline Defendants
the I_,-nageline Defendants determined
determined that
that copyright
copyright
infringements
infringements alleg_ by
alleged by Imagelirie
I.mage[ine related
related toto clip
clip a_
art licensed
licenscd by
by XOOM
XOOM from
from Sprint.
Sprint.
74.
74. On or about
On or about March
March 18, 1998,XOOM
18, 1998, XOOMprovided
provided Imageline's
Imageline's counsel
counsel with
with aacopy
copyofof
the Sprint
the Sprint License
License Agreement
Agreement and subsequently a CD
and subsequently CD containing
containing the
the Sprint
Sprint clip
clip art
art images.
images.
75.
75. Because of
Because of the number of
the number clip art
of clip art images
images for
for which
which lrnageline
hnageline has
has asserted
a._erted
copyright infringement, it isis evident
it evidcn that
fltat Imagelinc does not
Imagelinc does not assert
assert copyright
copyright ownership
ownership toto all
allofof
the 4,500
the 4,500 clip
clip art
art images
images that
that XOOM
XOOM licensed
licensed from Sprint, and
from Sprint, and subsequently
subsequently licensed by XOOM
licensed by XOOM
to its
to its sub-distributors.
sub-distributors.
76.
76. Despite
Despite repeated
repeated requests by XOOM
requests by XOOM and
and its sub-distributors,
sub-distributors, Ixnagelirie
Imageline and
and
Compliance Services have

Compliance Services have refused
refused to
to identify
identify fully
fully ImageLine's
Imagetlne's alleged
alleged copyrighted
copyrighted property
property that
that
has
has been,
been, or
or still
still is,
is, incorporated
incorporated in
in the
the producl.s and services
products and servicesofofXOOM,
XOOM, its
its licensees
licensces and
and its
itssuh-
sub-
distr/butors.
distributors.
77.
77. Riddick
R.iddick and
and Nystrom personally have
Nystrom personally have directed
directed and
and participated
participated in
in the refusal toto
the refusal
identify fully Imagetine's

identify fully Imagetine's alleged copyrighted
alleged copyrighted property
property to
to XOQM
XOQM and its sub-distributors.
and its sub-distributors.
2O
20
-49-
—49—.
Hue .u
_U uu u4:p
u4:d_p ecree p. R,ddLck, III
Georee P. Rtdd_ck,
(8Q41228L68S
III t8041228-1S8S
p.8
p.28
78.
78. The
The Iniageine
Defendants intentionaUy
intentionally have
have forced
forced XOOM
XOOM (as
(as welt
well as
as XOOM's
XOOM's
sub-distributors, Macmillan,
sub-distributors, Aztechand
Macmillan, Aztech andMedia
MediaGraphics)
Graphics)totodiscontinue
discontinuethe
theuse,
us; distribution arid
distribution and
licensing of
licensing the clip
of the art that
clip art that XOOM
XOOM llcermed
licensed from
from Sprint by refusing
Sprnt by refusing to
to identify
identify fully
fully Ixnagelinc's
Irnageline's
alleged copyrighted property.

alleged copyrighted property.
79.
79. Thus, Imageline
Thus, Imageline Defendants'
Defendants' refusal
refusalhas
has interfered
interfered with.
with and
and disrupted
disruptedthe
the
contractual relationship
contractual rclatio_hip between
between XOOM and Sprint
XOOM and Sprint and
and between
betwe_rt XOOM
XOOM and
and its
its sub-distributors,
sub-distributors,
including Macmi1lan
including Macmillan, Aztech
Aztech and
and Media
Media Graphics.
Graphics.
80.
80. The
The Irnagcline Defendants' actions
Imagelinc Defendants' actions have
have proximately
proximately caused
caused inj uzy totoXOOM.
injury XOOM. As
As
aa. result,
result, XOOM
XOOM has
has been
been damaged,
damaged, since
since itit can
can rio
no longer
longer obtain
obtain any
any economic
economic benefit
benefit from clip
from clip
art lawfully
art lawfully licensed
licensed from
from Sprint
Sprint and not subject
and not subject toto arty
any claim
claim of
of copyright
copyright ownership by
ownership by
Imageline. XOOM
Imageline. XOOM does
do_ not
not yet
yet know
know the
the full monetary extent
full monetary extent oft.his
of this damage, but itit believes
damage, but bclieves
that the
that the damage
damage far
far exceeds
exceeds 75,O0O.
$75,000.
• o
COUNT V
COt.TNTV
(Conspiracy to
(Conspiracy to Intentionally
IntentionallyInterfere
Interferewith
with XOOM's
XOOM's
Contracts with
Contracts with Sprint
Sprint and
andXOOM's
XOOM's Sub-distributors)
Sub-distributors)
8El.
l. XOOM
XOOM reallcgcs and incorporates
realleges aaad by reference
incorporates by reference the
the allegations
allegations seC forthinin
so[ forth
..It.
paragraphs 1-80
paragraphs 1-80 above.
above.
82.
82. Each of
Each of the
the Irnagelirie Defendants has
Lrnageline Defendants has conspired
conspired with
with each
each other
other to refuse to
to refuse to
identify fully
identify fully Imageline's
Imageline's alleged copyrighted property
alleged copyrighted property to
to XOOM
XOOM and
and its
its sub-distributors.
sub.distributors.
83.
83. As
Aa a result of this
J:esult of conspiracy, XOOM
this conspiracy, XOOM was
was forced
forced to
to discontinue
discontinue the use,
the use,
distribution and
distribution and licensing
licensing of the clip
of the clip art
art that
that itit licensed
licensed from
from Sprint.
Sprint.
84.
84. Thus,
Thus, as
as a result
result of this conspiracy,
of this conspiracy, the
the contractual
contractual relationships
relationships between
between XOOM
XOOM
and Sprint
and Sprint and
and between XOOM and
between XOOM its sub-distributors
and its sub-distributors have
have been
been interfered
interfered with
with and disrupted.
and disrupted.
21
—50—
H U U4:.p
Hug _U _ (eore P. Rtdi.ck, 111
u*:_p 6eor_e (80412291699
P. Rtdc_ck,
I[i (8041228-IS8S p.29
_._
85.
85. This
This conspiracy
conspiracy has
has proximately
proximately caused
caused injury
injury to
to XOOM.
XOOM.. ,As
As aa result,
result, XOOM
XOOM
has been
h_ been damaged,
damaged, since
since it can
can no longer obtain
no longer obtain any
any economic
economic benefit
benefit from
from clip
clip art
art lawfully
lawfully
licensed from
licensed from Sprint and not
Sprint and not subject
subjecttotoany
anyclaim
claimofofcopyright
copyrightownership
ownershipby
byImageline.
Imageline. XOOM
XOOM
does not
does not yet
yet know
know the
the full
f_l.I monetary
monetary extent
extent of
of this damage, but
this damage, it believes
but it that this
believes that this damage
damage far
t_a_
exceeds $75,000.
exceeds $75,000.
COUNT VT
COUtCZ vr
(Declaratory Judgment
('Declaratory Judgment Establiahing
Establishingthe
theAmotmt
Amountofof
Copyright Infringement Damages,
Copyright Lrffringemeat Damages, IfIf Any,
Any, for
for which
which
XOOM
XOOM and and Its
Its Sub-distributors
Sub-distributors are
are Liable)
Liable)
86.
86. XOOM reafleges md
XOOM realleges andincorporates
incorporatcs by
by reference
reference the
the allegations
allegations set
set forth in
forth in
paraaphs
paragraphs 1-85
1-85 above.
above.
87.
87. Ia
In nearly all XOOM's
nearly all XOOMs agreements
agreementsliceusing
licensingclip
clipartarttotosub-distributors,
sub-disibutors, XOOM
XOOM
has agreed
has agreed to
to indemnify
indenmify its
its sub-distributors
sub-distributors for copyright
for copyright infringement
infringement damages
damages arising from use
arising from use
of the licensed
oft.he licensed clip
clip art.
art. •-
88.
88. After being
After being riotif_ed
notified by
by the
theImageline
ImageilneDefendants
DefendantsofofImageline's
Imageline'sclaim
claimofof
copyright in.t_.ngement, XOOM

copyright infringement, XOOM has
has attempted
attethpted toto stop
slop any
any alleged
alleged copyright infringement
copyright infringement in
in its
its
own products
owa products and
and services,
services, and
and in the products
in the products ofits
of its sub-distriSutors.
sub-distributors.
89.
89. Because
Because the Imageline Defendants
have refused
refused to
to identiFy fully to
identify fully to XOOM
XOOM and
and its
its
sub-distributors,
sub-dist.Hbutors, including Macmillan, A.z.tech
including Ma'cmillan, Aztech and
and Media
Media Graphles,
Graphics,all
all alleged
alleged copyright
copyright
infringements,
infringements, XOOM
XCK3M and its sub-distributors
and its sub-distributors have been
have been forced
forced to
to stop
stop the
the use
use and
and sublicensing
sublicemsing
ofall
of all images
images licensed
licensed from
from Sprint,
Sprint, including
including those
those with
with respect
respect to
to which
which the
the Imageline
Imageline
Defendants can
Defeadants can make no colorable
make no colorable claim.
claim. Nevertheless,
Nevertheless, the
the Imageline
tmagetine Defendan(s still allege
Defendanf.s still allege
that unspecified
that unspecified infi'ingements are continuing.
infringements arc continuing.
22
—51—
.., ..o —.cp uecre i. tcdi.ck, iii (804228-iEEE p.30
90.
90. Because of
Because of the
the Irnage]ine
IniagelineDefendants'
Defendants refusal
refi.isaltotoidentify
identij li.illy alleged copyright
fully alleged copyright
ix&ingements, XOOM
inR'ingements, XOOM isis not
not the
the proximate
proximate cause of copyright
cause of copyright infringement
inJ_'/ngement damages
damages that
that
Imagelinc
Irnageliric may
may have
have suffered.
suffered. Accordingly.
Accordingly,imageline
Imageline should
shouldnot
not recover
recover any
any copyright
copyright
damages (actual
damagc_ or statutory)
(ac0,ml or statutory)f_om
from.XOOM,
XOOM,its its licenses,ororthe
licenseds, theend-users
end-usersofsoRw_re
fsoft'ware products
products
disfributed by XOOM
distributed XOOM or
or its sub-distributors.
91.
91. At most,XOOM
At most, XOCM and
and its
sub-distributors ar:
are,innocent in.fringers ofany
innocentinfz_ngers of any Imageline
Irnageline
copyright to clip
copyrightto art.
cllpart.
92.
92. Accordingly, if the Court dstomdnes
Accordingly,iftheCourt determines thatImagclincowns
that Irnagelinc owns valid
valid copyrights
copyrights to
to any
any
clip art images, and ifif/.magelinc

clipartimages,and Imagdline hasnot
has not lost
lost my
any such copyrightdue
copyright due to
to misuses then XOOM
misuse,thenXOOM
seeks aa declaration
seeks declaration that
that Imageline isnot
Imageline is not entitled
entitled to
to recover
recover any
any copyright
copyright hffringement
infringementdamages
damages
fiom XOOM,
from XOOM, its
its sub-distributors,
sub-dishSbutors, or the
or the end-usera
end-users ofsoRware
of software products
products distributed
distributedby
byXOOM
XOOMoror
its sub-distributors. Alternatively,
Alternatively, XOOM requests that
XOOM requests that the
the Court
Court issue
issue a declaratory judgment
declaratory judgment
fixing the
fixing the amount
amount of
of its
its liability for XOObl's
liability for XOOM'scopyright
infringement and
and the
the copyright
copyright
infringement of
in.fringemeat of Macmillan,
Macmillan, Aztech and Media
Aztech and Media Graphics.
Graphics.
COU'lq'r
COUNT V'IT
VII
(lademn[ficztion
(lndcmnuficationbybySplint)
Sprint)_
93.
93. XOOM realleges
XOOM reallegcsarid
andincorporates
incorporates by
byreference
reference the
theallegations
allegations set
set forth
forth in
in
paragraphs 1-92
paragraphs 1-92 abdve.
abdve.
94.
94, In the event
In the event Sprint
Sprint delivered
deliveredtotoXOOM,
XOOM,pursuant
pursuanttotothe
theSprint
Sprint License
License
Agreement, clip
Agreement, clip art
art in which
which Imageline owns aa valid
Imagelinc owns valid and
and enforceable
enforceable copyright.
copyright, Sprint
Sprint has
has
breached
breached. its
its contract
contract with XOOM.
with XOOM.
95.
95. Pursuant
Pursuant to
to the Sprint License
the Sprint LicenseAgreement,
Agreement, Sprint
Sprint agreed
agreed to
to indemnify
indemnui' XOOM
XOOM
(and its
(and its officers,
officers, employees, successors,agents
employees, successors, agents _d
and assize,
assigns, and
and parties
parties that
that contract
contractwith
with
23
—52—
r. 1CC1C., 111 (Ba4I2231b8 p.31
XOOM) for any

XOOM) for penalties, damages,
any penalties, damages, costs,
costs, expenses
expenses or
or attorneys' fe_ incurred
attorneys' fees incurred because
because of
of any
any
copyright inNngemen= arising from
arising from XOOM's
XOOM's exercise
exercise ooffitsits license
license rights
fights under
under that agreement.
that agreement.
96.
96. Accordingly, in
Accordingly, in the
the event
event XOOM
XOOMisis declared
declared liable
liable to Imagelirie for
to Imageline far any
any copyright
copyright
infringement damages
in_ngement arising out
damages arising out of
of XOOM's
XOOM's exercise
exercise of
of the
the license
license rights
rights granted to itit in
granted to in the
the
Sprint Licensing
Sprint Licensing Agreement,
Aeement, Sprint
Sprint isis liable
liable for
for the
the full
fi.dI amount
amount of
of XOOM's
XOOM's liability including
liability including
XOOM's attorneys'
XOOM's fees and
attorneys' fees and costs
costs incurred
incurredbecause
becauseofof the
the alleged
alleged infringements
infringements of Imageline's
of Imageline's
copyrights. Sprints
copyr/ghts. Sprints indemnification
indemni.qcation liability
liability also includes XOOM's
also in=ludes XOOM's liability
liability for copyright
for copyright
infringement ouimageline
infmngement oflmageline clip art
clip art by
by XOOM's
XOOM'ssub-distributors
sub-distributors and
and end-users
end-users of
of products
productssold
soldoror
services provided
services provided by XOOM or
by XOOM or its
sub -dis-ibutors.
PRAYER FOR
PRAYER FOR RELIEF
RELIEF
WHEREFORE, plaintiffXOOM,
WHEREFORE, plaintifTXOOM,Inc.
lnc.requests
requeststhat
thatthe
the Court
Court grant
pant itit the
the following re!ieE
following relief."
1. A preliminary
A and pemlanent
preliminary and permanent injunction
injunction requiring
requiring that Imageline, Compliance
that Imageline, Compliance
. .
Scrvices, Riddick
Services, Riddiek and
and Nystrom
Nystrom disclose:
disclose:
a.
a. each
each clip art image.for
clip art image for which
which Imageline
Imageline asserts
asserts copyright
ownership;
b.
b. to
to thc
the €ill
full extent of their
extent of their knowledge,
knowledge, of
of the
the foregoing
foregoing clip
clip art, which
art, which
4,
images allegedly
images allegedly have
have been
been infringed
infringedunder
underthe
theCopyright.Act
Copyright.Act by
by XOOM
XOOM or
or any
any ofof
XOOM's licensees
XOOM's liccnscc (including
Aztech and Media Graphics);
Graphics); and
and
c.
c. to the full
to the fill extent
extent of their knowledge,
of tkeir knowledge, each
each eccurrence
occurrence in each product oror
each product
service of
service of XOOM
XOOM or
or any of XOOM's
any of XOOM's licensees
licensees (including
A.ztech and Media
Graphics) of
Graphics) of such
such clip
clip art for which
art for which Imageline
Iniageline asserts
asserts copyright
ownership;
2.
2. A declaratory
A declaratory judgment
judgment declaring
declaring the
the invalidity ofImageline's
invalidity of federafcopyright
Imageline's federal' copyright
registrations for "Imageline

registrations for utmagclineDesign Gallery," "Imageline
Desii Gallery," "Image[ine Master
Master 'Gallery,"
t3allery," "PicturePak
"PicturePak
-
SuperBundle" and
SuperBundle" "Headliners"; .
and "Headliners";
24
24
-53-
—53— -
ALC J U':2Sp C3eare P. dick, 111 (8041228-168a
3.
3. A declaratory
A declaratoryjudgment
judgmentdeterminingthevalidity
determining the validity
andand ownership
ownership of copyrights
of any copyrights
to clip art asserted by Imageline;

tocllpartasserted Imageline;
4.
4. An order
An declaring tthat
orderdeclaring Imageline has misused
hatImago1!nehas misused any
any such
such copyrights
copyrights inviolation
in violationof
of
federal law;
federal law;
5.
5. A
A permanent
permanent injunction
injunction restraining
r estrainingImageline, and
hnageline, and its
its d_fectors,
directors, officers,
officers,
employees and agents,

cmployc_ agents,and
and all
allpersons acting in. concert or
personsactinginconcc'rt orparttc[pat/on
participation with
with it,
it, from
from seekingto
seeking to
enforce these copyrights

enforcethese copyrights against
against X00M
XOOMor
orany
anyof
ofXOOM's licensees;
XOOM's licensees;
6.
6. Ajudgment
A judgment against
against Imageline,
hnagelino,Compliance Services, RRiddick,
Compliance Services, and Nystrom,
iddick,and Nystrom,
jointly and
jointly and severally,
severally, in
inan
an amount
amount to
tobe
bc determined at trial, for
determinedattrial, actual and
foractual arid punit[w
punitive damages,
damhges, for
for
copyright misuse;
copyrightmisuse;
7.
7. Ajudgruent against
Ajudgraent _gainst Irnageline,
Imag_l[ue,Compliance
Service.s,Riddick and
Riddick and Nystrorn,
lqystrom,
jointly
jointly and
and severally,
severally, in
inan
an amount
amount to be determined
tobc at trial, for
determinedattrial, actual and punitive
foractual punitive daniages, for
damages,for
intentional interference
intentional interference with. XOOM's contracts
with XOOM's contracts wwith Sprint and XOOM's
ith Sprintand XOOM's sub-distributor_;
sub-distributors;
8.
8. A judgment against
Ajudgrnent against £mageline,
Imageline, CompLiance Scrviccs,
Compliance Service.s,Riddick,and
Riddick, and Nystrom,
Nystrom,
jointly and
jointly and scvcrally,
severally, for actual and
foractual and punitive
punidvc damages,
damages, for conspiring to
forconspiring tointentionally
intentionallyinterfere
interfere
with XOO,V['scontracts
with XOOMS contracts with Sprint and XOOM's
withSprintand XOOM's sub-distributors:
sub-distributors;
9.
9. If this
If tiLtsCourt
Court detcrmines
determinesthat Imageline owns aa validcopyrightin
thatImagelineowns valid copyright in any
any clip art used
clipart used
or licensed
or licensedby
by XOOM,
XOOM, aa declaration
decl/traC[onof the extent and amount
oftheextentand amount ofXOOM's
of XOOM's liability,
liability,ififany
arty (i)
(i)
under
under the Copyright Act for
theCopyrightAct any copyright
forany copyrightinfringement and (ii)
infringementand (ii) under XOOM'S contracts
under XOOM'a contractswith
with
Macmillan,
bfaemilian,Aztcch and
and Media Graphics with respect
blcd/aGraphicswith rc.spectto
to damages arising from Imageline's
"damagesarising Imageline's
copyright infringement claims;

copyrightfnR'ingement claims;
10.
I0. Ajudgrnent
A judgment against
against Imageline and Riddick
Imagelineand Riddickfor the costs of suit
forthecostsof and attorneyst
suitand attorneys' fees
fees
incurred by
incurred by XOOM
XOOM in
in thls
this action,
action, ppursuant to L7
ursuantto Li U.S.C,
U.S.C. § 505;
505;
25
—54—
_-. r. CeLCA, iii IU4IdLSS P.53
11.
11. Should
Should this Court declare
this Court declare ororhoid
hold that
that XOOM
XOOM or
or its
sub-distributors have
have any
any
lia6ility
liability to
to Lmageline/or
Imageline forcopyright:
copyrightinfiiugement,
infringement,ajudgment for XOOM
ajudgrncnt far XOOM against
against Sprint
Sprint for
for the
the
full amount
full amount of(i)
of(i) XOOM's liability to
XOOM's liability to Imageli.ne,
Imageline, (ii)
(ii) XOOM's
XOOM's liability
liability to
to its
its su6-distributors
sub-distributors
(including Macn_llan,
(hacluding Macmillan, Aztcch
Aztccb and
andMedia
MediaGrapbJcs),
Graphics), end-users
end-users of
of its
its products
products and
and service_,
services, and
and
the _d-uscrs
the end-users of
of its
its sub-distributor's,
sub-distributor's, and (i_)
and (iii) XOOM's
XOOM's costs
costs and
and attorneys'
attorneys' fees
fees incurred
incurred because
because
ooff this
tl_s infringement;
infringement; and
and
12.
12. Such
Such other
other and further retief
and further relief as
as the
the Court
Court deems
deems just
just and
and equitab
equitable.he.
August 1998
August _,
t 998
XOOM, INC.,
XOOM, INC.,
By Counsel
By Counsel
Jo
Joker, armer, Virginia
Virginia State Bar no.
State Bar no. 29328
29328 -
THO SON && McMULLAN
THOMPSON McMtJLLAN
A Professional
Professional Corporation
Corporation
100 ShockoeSlip
100 Shockoe Slip
Richmond,
Richmond, Virginia 23219
Virginia 23219
(804) 649-7545
(804) 649-7545
Tobey B.
Tabey Marzouk, Virginia
B. Marzouk, Virginia State
State Bar
Bar no.
no. 28243
28243
Thomm M.
Thomas M. Parry
Parry
MARZOUK &
MA.RZOUK. & PARRY
PARRY"
11120
I20 19th
19th Street,
Street, N.W,,
N.W,, Suite
Suite 750
750
Washington,
Washington, D.C. 20036
D.C. 20036
(202) 463-7293
(202) 463-7293
Attorneys for
Attorneys for Plaintiff
Plaintiff XOOM,
XOOM, Inc.
Inc.
26
—55,—
Exhibit
E
From: dnoble2006@comcast.net [mailto:dnoble2006@comcast.net]

Sent: Monday, July 12, 2010 11:45 AM
To: BSC 110; BSC 120; bsc140@berninausa.com; BSC 180; BSC 205; BSC 210; BSC 225; BSC 245; BSC
250; BSC 255; BSC 270; bsc275@berninausa.com; BSC 300; BSC 305; BSC 310; BSC 315; BSC 320; BSC
330; BSC 400; bsva@swbell.net; bwhite@berninausa.com; byrne@byrnesewing.com;
calicorose22@aol.com; calicostationinc@bellsouth.net; captain.hide@nifty.com;
carol@edensewingcenter.com; ccrossings@aol.com; ccsalessv@aol.com; ccshop@goldrush.com;
celeste@thimblepleasures.com; gpaine3@yahoo.com
Subject: New Judicial Standards for Copyright Infringement
Dear Copyright Infringer,
Since we have not received any correspondence from you to the contrary, we must assume that
your use of Imageline’s copyright-registered image(s) on your website, as previously
documented and sent you on numerous occasions, constitutes serious copyright infringement.
While we do not agree with the two recent rulings (see below link) in Minnesota and
Massachusetts that significantly lowered well-reasoned jury damage awards, we are aware that
these rulings will establish rough guidelines that other federal jurisdictions are likely to follow,
or at least take into consideration.
http://www.pcmag.com/article2/0,2817,2366296,00.asp
As you know, Imageline is in the process of filing a federal lawsuit against you and your
organization. We have sent you specific documentation showing you each of our copyright-
registered clipart illustrations and designs you have infringed. It is also our view that the
unlawful display and distribution of images, which are often copied and infringed again and
again downstream, causes substantially more marketplace damages than the sharing of songs for
personal use. Therefore, we expect for the infringement damages award in our cases to be much
higher than the two cases referenced above.
While we believe we will be entitled to substantially more than the $2,250.00 per independent
infringement (3 times the minimum statutory award of $750.00 per infringement), as well as
additional DMCA Section 1202 damages and all attorneys fees, we are willing to accept the
amount awarded in these two highly publicized court cases if you decide to settle with Imageline
before July 16, 2010.
Please also remember that your customers, who downloaded or copied one of copyright-
registered images from your website, are also liable for copyright infringement and could have
additional damage claims against you if you do not try to resolve this dispute amicably.
Once we turn these claims over to our litigation attorneys these settlement amounts will go up
sharply. As of today, this case has not yet been assigned.
Please have your business owner(s) or your attorney contact me directly prior the end of business
on Friday July 16th if you would like to consider this alternative to a federal copyright
infringement lawsuit. If you need another copy of the documented infringements , please let us
know that request immediately.
Imageline has been actively fighting digital piracy for over fifteen (15+) years now, and we have
a well-deserved reputation of never letting a known infringement go unresolved.
Please contact me via e-mail and let us know which way wish for us to proceed.
Thank you.
George P. Riddick, III
Chairman/CEO
Imageline, Inc.
Exhibit
F

Bernina vs. Riddick/Imageline: 081810-17-1

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Case 1:10-cv-04917 Document 17-1 Filed 08/18/10 Page 1 of 62

IN THE UNITED STATES DISTRICT COURT

BERNINA OF AMERICA, INC., )

8/9/2010 Court Hearing Transcript ......................................................................................... Ex. A

8/27/1998 Complaint, Xoom v. Imageline, 98 CV 542 (E.D. Va.) ......................................... Ex. D

7/12/2010 Email from George Riddick to Select Bernina Dealers ..........................................Ex. E

8/13/2010 Letter from the U.S. Copyright Office.................................................................... Ex. F

1 IN THE UNITED STATES DISTRICT COURT

1 (Proceedings heard in open court:)

1 action and there are two corporate defendants, two limited

1 words -- I recognize you're a non-lawyer, but you tell me what

1 THE COURT: All right. Tell me.

1 claim ownership in the -- in the items within the

1 THE COURT: -- because I expect to have a

1 knock you out of your business communications, so I'm going to

1 consider the entry of a temporary restraining order that puts

1 MR. RIDDICK: Yeah, yes, your Honor.

1 THE CLERK: I did. And you want that filed on the

COMPLIANCE SERVICES, INC.,

licensed from various

granted them the

believe its exercise

prcvcntcd from doing

conductalsohasprevented from exercising its

for alleged copyright

and. (ii) rrecover

services via e-mail.

except that the

sound clips, video

Macmillan used the images llcenscd

Case 1:10-cv-04917 Document 17-1 Filed 08/18/10 Page 38 of 62

products and Web

innocent infringers into

distributors from completely

the extent ooffitsproliferation,

substantially greater than

products contained clip

prevent either party

products in.fringed Irnageline's

thc source and

Sprint License Agreement.

Copyright Oft'ice, Itriageline

effective March 18,

Gallon-y; (ii) Imageline

recover any statutory

this Court, thereby

images, XOOM requests

through Servkes, Riddick

copyrights are invalid.

any copyright infringement ddamages

enter a permanent injunction

agents, and all

extent of this damag; but

"Imagclinc Master Gallery"

Compliance Services have

identify fully Imagetine's

alleged copyrighted property.

copyright in.t_.ngement, XOOM

clip art images, and ifif/.magelinc

XOOM) for any

registrations for "Imageline

to clip art asserted by Imageline;

employees and agents,

enforce these copyrights