Académique Documents
Professionnel Documents
Culture Documents
Defendants Infospace Mobile, Inc. (for itself and as successor to Premium Wireless
Services USA, Inc. and Premium Wireless Services USA, Inc. d/b/a Moviso), Premium Wireless
Services, Inc. Canada (“PWS Canada”), Moviso LLC, and Infospace, Inc. (collectively,
“Defendants”) hereby answer the First Amended Complaint (the “Complaint”) of Plaintiffs EMI
Entertainment World, Inc. (“EMI”), Avon Gate Music, Inc., Barham Boulevard Music, Inc.,
Beechwood Music Corp., Burbank Plaza Music, Inc., Carwin Music Inc., Colgems-EMI Music
Inc., Combine Music Corp., EMI Affiliated Catalog Inc., EMI Al Gallico Music Corp., EMI
Algee Music Corp., EMI April Music Inc., EMI Belfast Music, Inc., EMI BMPC Corp., EMI
Blackwood Music Inc., EMI Brillig Music, Inc., EMI Duce Music, Inc., EMI Easy Listening
Music Corp., EMI Feist Catalog Inc., EMI Gold Horizon Music Corp., EMI Golden Torch Music
Corp., EMI Grove Park Music, Inc., EMI Hastings Catalog Inc., EMI Intertrax Music Inc., EMI
Jemaxal Music Inc., EMI Miller Catalog Inc., EMI Mills Music, Inc., EMI Mogull, Inc., EMI
Norbud Music, Inc., EMI NTM Holdings, Inc., EMI PST Holdings, Inc., EMI Robbins Catalog
Inc., EMI Sosaha Music Inc., EMI Slithy Songs, Inc., EMI TSM Holdings, Inc., EMI U Catalog,
Inc., EMI Unart Catalog Inc., EMI Variety Catalog Inc., EMI Vine Music, Inc., EMI Virgin
Music, Inc., EMI Virgin Songs, Inc., EMI Waterford Music, Inc., EMI Worldtrax Music, Inc.,
Foray Music, Glenwood Music Corp., Jobete Music Co., Inc., New Tandem Music, Inc., Screen
Gems-EMI Music Inc., Stone Diamond Music Corporation, Triple Star Music, Inc., EMI Full
Keel Music, EMI Longitude Music, and Fun Glenwood Music Corp. (collectively, “Plaintiffs”)
as follows. To the extent not explicitly admitted, all allegations of the Complaint are denied.
NATURE OF DISPUTE
1. Defendants deny the allegations in paragraph 1.
Company Ltd., Colgems-EMI Music Inc., Combine Music Corporation, Donna Music Ltd., EMI
April Music Ind., EMI Blackwood Music Inc., EMI Feist Catalog Inc., EMI Gold Horizon Music
Corporation, EMI Miller Catalog Inc., EMI Mills Music, Inc., EMI Music Publishing Lid., EMI
Robbins Catalog Inc., EMI U Catalog Inc., EMI Unart Catalog Inc., EMI Vine Music, Inc., EMI
Virgin Music Ltd., EMI Virgin Music, Inc., EMI Virgin Songs, Inc., Hit & Run Music
(Publishing) Ltd., Jobete Music Co., Inc., Keith Prowse Music Pub. Co. Ltd., Queen Music Ltd.,
Robbins Music Corporation Ltd. and Screen Gems-EMI Music, Inc. brought a lawsuit in 2000
alleging copyright infringement against Global Music One LLC (“GMO”) and its Chairman
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SUMMARY OF CLAIMS
4. Defendants admit that: Infospace Mobile, Inc. (f/k/a Premium Wireless Services
USA, Inc., and/or Premium Wireless Services USA, Inc. d/b/a Moviso) and PWS Canada
(collectively, the “Infospace Subsidiaries”) are or have been providers of musical content to
certain mobile operators; the Infospace Subsidiaries, together with certain mobile operators,
provide various types of downloadable content to consumers, including “ringtones” for use on
cellular phones: a “ringtone” is a digital snippet of music that a mobile phone user may select (by
downloading from a service such as the Infospace Subsidiaries’) to signal an incoming call; the
ringtones at issue do not embody actual sound recordings of popular artists; and certain of the
Infospace Subsidiaries created monophonic and/or polyphonic ringtones. Defendants are
without knowledge or information sufficient to form a belief as to the truth as to the allegation in
the first sentence of Paragraph 4, and on that basis deny the allegation. Otherwise Defendants
5. Defendants admit that: in accordance with certain license agreements between EMI
Entertainment World, Inc., as licensor, and Premium Wireless Services USA, Inc. (“PWS USA”)
and PWS Canada as licensees (collectively, the “Licensees”), Plaintiffs provided lists of
available musical compositions they claimed to hold an interest in for licensing and distribution
as ringtones (the “EMI Ringtones”) by the Licensees and through third-party websites and
mobile networks; the Licensees agreed to pay a royalty to Plaintiffs for every downloaded EMI
Ringtone; throughout the term of the license agreement, EMI and Licensees generated
substantial revenue from customers downloading Ringtones during the term of the license
6. Defendants admit that: in 2005 and early 2006, Infospace, Inc. did not have complete
records for the period prior to its acquisition of Moviso LLC on site; that the parties negotiated a
non-disclosure agreement; and that Plaintiffs’ agent falsely reported that: (i) Infospace, Inc.
and/or its subsidiaries or predecessors owed additional royalties, fees and interest to Plaintiffs in
an amount in excess of $10 million; and (ii) it was possible that further underpayment of
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royalties might exist but could not be determined because of lack of documentation. Otherwise
8. Defendants admit that the Infospace Subsidiaries, with EMI’s full knowledge and
consent, and indeed at EMI’s urging, continued to offer certain EMI Ringtones for download
after May 30, 2006 and until Plaintiffs filed this action. Otherwise Defendants deny the
allegations in paragraph 8.
9. Defendants deny the allegations in paragraph 9, and specifically deny that Plaintiffs
are entitled to benefit for their complaint in this action.
PARTIES
10. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in Paragraph 10, and on that basis deny the allegations therein.
13. Defendants admit that PWS Canada is a Canadian corporation, and that PWS Canada
is a wholly owned subsidiary of Moviso LLC, which is a wholly owned subsidiary of Infospace,
14. Defendants admit that: Moviso LLC is a California limited liability corporation with
a place of business at 10904 Wilshire Boulevard, 9th Floor, Los Angeles, California 90024, and
that Moviso LLC is a wholly owned subsidiary of Infospace, Inc. Otherwise Defendants deny
15. Defendants admit that: Infospace Mobile, Inc. is a California corporation with a
place of business at 10904 Wilshire Boulevard, 9th Floor, Los Angeles, California 90024;
Infospace Mobile, Inc. was formerly known as Premium Wireless Services USA, Inc. and/or
Premium Wireless Services USA, Inc. d/b/a Moviso; and Infospace Mobile, Inc. is a wholly
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owned subsidiary of Moviso LLC, which is a wholly owned subsidiary of Infospace, Inc.
16. Defendants admit that: Infospace, Inc. is a Delaware corporation with a place of
business at 601 108th Avenue NE, Suite 1200, Bellevue, Washington 98004; and Infospace, Inc.
acquired Moviso LLC, which at the time of acquisition owned PWS USA and PWS Canada.
18. Defendants admit that in its Form 10-Q, filed November 2, 2004 with the S.E.C.,
Infospace, Inc., on behalf of itself and its subsidiaries that comprise Infospace, Inc.’s “Mobile
division,” stated that the Mobile division “had relationships with many leading wireless carriers,
. . . and media publishers, including . . . EMI”; and that in its Form 10-Q, filed with the S.E.C. on
November 7, 2006, Infospace, Inc., on behalf of itself and its subsidiaries that comprise
Infospace, Inc.’s “Mobile business,” reported an increase in revenue in the Mobile business
“primarily attributable to an increase in sales of our media download products, such as ringtones
22. Defendants admit the Court has subject matter jurisdiction over the claims asserted by
the copyright plaintiffs. Otherwise Defendants deny the allegations in Paragraph 22.
25. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in Paragraph 25, and on that basis deny the allegations therein.
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26. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in Paragraph 26, and on that basis deny the allegations therein.
27. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in Paragraph 27, and on that basis deny the allegations therein.
28. Defendants admit that Exhibit A to the Complaint lists musical compositions together
with their alleged copyright registration numbers. Defendants are without knowledge or
information sufficient to form a belief as to the truth of the allegation in Paragraph 28 that
Plaintiffs are the owners of copyrights in and to the musical compositions at issue and have
complied in all respects with all applicable laws in securing copyright registrations and
protecting and maintaining their rights, and on that basis deny the allegation. Otherwise
29. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in Paragraph 29, and on that basis deny the allegations therein.
30. Defendants admit that certain of the Infospace Subsidiaries are providers and
publishers of mobile content, products and services that assist customers with finding
personalization tools and entertainment for mobile phones and that through a website located at
31. Defendants admit that certain of the Infospace Subsidiaries provide or have provided
media products, content and related services to certain mobile operators that allow such operators
to use their websites (the “Third Party Websites”) to deliver content, including ringtones, to
32. Defendants admit that the Infospace Subsidiaries acquire or did acquire the rights to
certain content they make available to mobile carriers for downloading by their customers onto
wireless devices through licensing agreements with content owners, such as Plaintiffs.
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33. Defendants admit that Infospace, Inc. acquired Moviso LLC, which is the parent
company of the Infospace Subsidiaries. Otherwise Defendants deny the allegations in paragraph
33.
34. Defendants admit that in or about August 2000, EMI, Beechwood Music Corporation,
B. Feldman and Company Ltd., Colgems-EMI Music Inc., Combine Music Corporation, Donna
Music Ltd., EMI April Music Ind., EMI Blackwood Music Inc., EMI Feist Catalog Inc., EMI
Gold Horizon Music Corporation, EMI Miller Catalog Inc., EMI Mills Music, Inc., EMI Music
Publishing Lid., EMI Robbins Catalog Inc., EMI U Catalog Inc., EMI Unart Catalog Inc., EMI
Vine Music, Inc., EMI Virgin Music Ltd., EMI Virgin Music, Inc., EMI Virgin Songs, Inc., Hit
& Run Music (Publishing) Ltd., Jobete Music Co., Inc., Keith Prowse Music Pub. Co. Ltd.,
Queen Music Ltd., Robbins Music Corporation Ltd. and Screen Gems-EMI Music, Inc. brought
a lawsuit alleging copyright infringement against GMO and its Chairman Ralph Simon.
35. Defendants admit that: on or about May 31, 2001, EMI and PWS USA, incorrectly
identified as Premium Wireless Services, Inc. in the agreement, entered into a one-year ringtone
license agreement (the “2001 Ringtone License”) covering the United States and Canada;
pursuant to the 2001 Ringtone License, EMI granted a license to PWS USA to arrange and
record certain musical compositions to create “EMI Ringtones” from certain catalogues of
musical compositions for which EMI claimed to control the music publishing rights; and certain
EMI Ringtones were then made available to mobile carriers for downloading by their customers
onto wireless devices. Otherwise Defendants deny the allegations in paragraph 35.
36. Defendants admit the language of paragraph 2(b) of the 2001 Ringtone License.
Defendants are without knowledge or information sufficient to form a belief as to the truth of the
37. Defendants admit that: under the 2001 Ringtone License, PWS USA was to pay to
EMI Entertainment World, Inc. (i) a recoupable advance of $10,000, and (ii) “a Royalty equal to
Publisher’s Prorata Share of US$.0755 (or the equivalent of the current statutory mechanical rate
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at the time of the transaction) for each Download Sold to a consumer”. Otherwise Defendants
38. Defendants admit the language of paragraph 6(c) of the 2001 Ringtone License, but
deny that EMI has accurately characterized the language. Defendants otherwise deny the
39. Defendants admit that paragraph 6(c) of the 2001 License Agreement provides in part
that:
40. Defendants admit that: Paragraph 6(f) of the 2001 License Agreement provides in
part that “Licensee shall reimburse EMI, within five (5) days from receipt of its invoice, for
EMI’s reasonable attorney’s fees and costs arising out of the occurrence of any Default Event (as
defined in paragraph 11), including, without limitation, any failure by Licensee timely to render
statements and account to Publisher with respect to royalties which accrue to Publisher in
connection with Licensee’s exploitation of its rights pursuant to the applicable provisions
hereof”; Paragraph 11(a) of the 2001 License Agreement defines “Event of Default” to include
“Licensee’s failure or inability to fulfill any of its material obligations hereunder”; and that
paragraph 8(d) of the 2001 License Agreement states in part that Licensee “will fully indemnify
EMI (and each Publisher . . . from any and all liabilities . . . which may be occasioned, suffered
or incurred by EMI (and each Publisher), . . . resulting from or in connection with any breach or
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threatened breach by Licensee of any of the terms, covenants, representations and warranties
41. Defendants admit that: on or about June 1, 2002, EMI entered into a Ringtone
License agreement with PWS USA and PWS Canada initially covering the United States and
Canada (the “2002 Ringtone License”); pursuant to the 2002 Ringtone License, EMI granted a
license to PWS USA and PWS Canada to arrange and record certain musical compositions to
create “EMI Ringtones” from certain catalogues of musical compositions for which EMI
controlled the music publishing rights; the 2002 Ringtone License provided that Licensees could
sell Downloads of the EMI Ringtones, on and through the “Network”; and “Network” was
defined to include “Approved Third Party Websites,” which included among others,
42. Defendants admit that the grant of rights under the 2002 Ringtone License was to
Publisher, and that Licensees could seek and obtain clearance of additional Compositions for use
in the creation of EMI Ringtones. Otherwise Defendants deny the allegations of paragraph 42.
43. Defendants admit that Paragraph 2(c) of the 2002 Ringtone License provides that:
44. Defendants admit that: under the 2002 Ringtone License, PWS USA and PWS
Canada were each to pay to “Publisher” (i) a recoupable advance of U.S.$10,000, and (ii)
“Publisher’s Prorata Share of, an amount equal to ten (10%) percent of the retail selling price of
each Download Sold to a consumer” in the United States and Canada “with a minimum royalty
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for each Download Sold of (Publisher’s Prorata Share of) Ten (US$.10) Cents. Otherwise
45. Defendants admit that the 2002 Ringtone License called for Royalties under the
Agreement to be paid on a quarterly basis and be accompanied by Royalty statements, and that
the 2002 Ringtone License called for PWS USA and PWS Canada to “to keep and maintain true
and accurate records and books of account in connection with the sale of Downloads and all
transactions related thereto or otherwise contemplated under this Agreement, and shall retain all
such records and books for a period of not less than three (3) years after each accounting to
Publisher.” Otherwise Defendants deny the allegations in paragraph 45.
46. Defendants admit that paragraph 7(c) of the 2002 Ringtone License provides in part
that:
47. Defendants admit that: Paragraph 7(f) of the 2002 Ringtone License provides in part
that “Licensee shall reimburse Publisher, within five (5) days from receipt of its invoice, for
Publisher’s reasonable attorney’s fees and costs arising out of the occurrence of any Default
Event (as defined in paragraph 14), including, without limitation, any failure by Licensee timely
to render statements and account to Publisher with respect to royalties which accrue to Publisher
in connection with Licensee’s exploitation of its rights pursuant to the applicable provisions
hereof”; Paragraph 14(a) of the 2002 Ringtone License defines “Event of Default” to include
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“Licensee’s failure or inability to fulfill any of its material obligations hereunder”; and that
paragraph 10(d) of the 2002 Ringtone License calls for Licensee “to fully indemnify Publisher . .
. from any and all liabilities . . . which may be occasioned, suffered or incurred by Publisher, . . .
resulting from or in connection with any breach or threatened breach by Licensee of any of the
56. Defendants admit that by letter dated August 12, 2005, Plaintiffs provided notice to
PWS USA of EMI’s intention, pursuant to ¶6(c) of the 2001 Ringtone License and ¶7(c) of the
2002 Ringtone License, to audit PWS USA’s “books and records, and verify the accuracy of all
accounts and statements . . . for the statement periods from inception through the period ending
June 30, 2005.”
57. Defendants admit that by letter dated September 1, 2005 to Infospace, Inc. EMI’s
agent, Gelfand, Rennert & Feldman L.L.P. (“GRF”) requested that certain documents and
information be made available for review by GRF. Defendants refer the Court to the September
1, 2005 letter for its content. Defendants are without knowledge or information sufficient to
form a belief as to the truth of whether the items requested by GRF “included standard items
typically reviewed during a royalty audit,” and on that basis deny the allegation. Otherwise
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58. Defendants admit that they requested that the parties negotiate a non-disclosure
agreement to govern EMI’s review of its subsidiaries’ records, which is standard procedure in
59. Defendants admit that non-disclosure agreements are commonly used in royalty
reviews involving licenses of musical compositions, and that the parties negotiated the terms of
the non-disclosure agreement to govern EMI’s review of records. Otherwise Defendants deny
60. Defendants admit that complete books and records for the years prior to November
2003 were not on site at Infospace, Inc. Defendants otherwise deny the allegations in paragraph
60.
61. Defendants admit that certain of the back-up materials provided to GRF during EMI’s
review of records comported perfectly with the royalty reports. Otherwise Defendants deny the
62. Defendants admit that EMI’s agent, GRF, claimed that it discovered deficiencies in
the royalty amounts paid by the Infospace Subsidiaries and that Plaintiffs have listed in
paragraph 62 those claimed deficiencies, but Defendants deny that such deficiencies actually
65. Defendants admit that: EMI’s agent GRF claimed that more than $6 million was due
for EMI Ringtones for the period from December 6, 2000 through December 31, 2002; and
Plaintiffs received at least $142,872 in royalty payments attributable to that period. Defendants
deny that GRF’s “estimates” have any merit and otherwise deny the allegations in paragraph 65.
66. Defendants admit that in a report dated July 6, 2006, EMI’s agent claimed that EMI
was owed more than $10 million in royalties, fees and interest, and EMI’s agent further claimed
that it was possible that additional amounts could also be due under the 2001 and 2002 Ringtone
Licenses (together, the “Ringtone Licenses”) but could not be determined because of lack of
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documentation. Defendants dispute GRF’s claims and otherwise deny the allegations in
paragraph 66.
67. Defendants admit that by letter dated July 20, 2006, Plaintiffs provided written notice
that the review conducted by its agent had resulted in what Plaintiffs claimed were findings of
incorrect accounting and provided written notice of Plaintiffs’ objection to “all Infospace
statements submitted during the Audit Period.” Otherwise Defendants deny the allegations in
paragraph 67.
download after May 30, 2006, and state that they did so with EMI’s knowledge and consent, and
71. Defendants admit that EMI sent a letter dated November 17, 2006 to Infospace, Inc.
and refer the Court to the November 17, 2006 letter for its contents. Otherwise Defendants deny
72. Defendants admit that by letter dated November 29, 2006, Infospace, Inc. responded
to EMI’s demand and, while strongly contesting its methodology and conclusions, proposed to
settle the dispute, and further stated that “[i]f EMI chooses to reject the settlement offer,
Infospace will deem the rejection as a notice of removal pursuant to Section 2(d) of the license
agreement and remove EMI-published compositions from its catalogue and all distribution
73. Defendants admit that they received no response to the November 29 letter, and no
other direction from EMI to cease use of EMI compositions and ringtones. Otherwise
74. Defendants admit that: the Infospace Subsidiaries made EMI Ringtones available for
download after May 30, 2006; the Infospace Subsidiaries made payments for royalties for
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downloads occurring after May 30, 2006; and EMI continued to accept payment for such
75. Defendants repeat and reallege their responses to paragraphs 1 through 74 as if fully
76. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in paragraph 76, and on that basis deny the allegations.
78. Defendants admit that PWS USA (later re-named Infospace Mobile, Inc.) undertook
the obligation to perform under the 2001 Ringtone License. Otherwise Defendants deny the
81. Defendants repeat and reallege their responses to paragraphs 1 through 80 as if fully
82. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in paragraph 82, and on that basis deny the allegations.
84. Defendants admit that PWS USA (later renamed Infospace Mobile, Inc.) and PWS
Canada undertook the obligation to perform under the 2002 Ringtone License. Otherwise
85. Defendants are without knowledge or information sufficient to form a belief as to the
truth of the allegations in paragraph 85, and on that basis deny the allegations.
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THIRD CLAIM FOR RELIEF
88. Defendants repeat and reallege their responses to paragraphs 1 through 87 as if fully
89. Defendants admit that Plaintiffs have identified in Exhibit A to the Complaint the
copyrights they claim in this action were infringed. Defendants are without knowledge or
information sufficient to form a belief as to the truth as to whether Plaintiffs are the owners of all
right title and interest in and to their music catalogues and the musical compositions and
copyright registrations therein, and on that basis deny the allegation. Defendants otherwise deny
93. Defendants admit that the Infospace Subsidiaries made certain EMI Ringtones
available for download after May 30, 2006, but deny they were not authorized to do so and
First Defense
96. The Complaint fails to state a claim upon which relief can be granted.
Second Defense
97. Plaintiffs’ claims are barred or limited by virtue of Plaintiffs’ license to Defendants,
Third Defense
98. Plaintiffs’ claims are barred or limited by estoppel.
Fourth Defense
99. Plaintiffs’ claims are barred or limited by acquiescence.
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Fifth Defense
100. Plaintiffs’ claims are barred or limited by waiver.
Sixth Defense
101. Plaintiffs’ claims are barred or limited by the applicable statutes of limitations.
Seventh Defense
102. Plaintiffs’ claims are barred or limited because of Plaintiffs’ unclean hands.
Eighth Defense
103. Plaintiffs’ claims are barred or limited by the doctrine of laches.
Ninth Defense
104. Plaintiffs’ claims are barred or limited by the doctrine of accord and satisfaction.
Tenth Defense
105. Plaintiffs’ claims are barred, in whole or in part, because certain of the Plaintiffs
do not have standing and/or capacity to assert any or all of the causes of action alleged in the
Complaint.
Eleventh Defense
106. To the extent that Plaintiffs suffered any damage or injury, which Defendants
expressly deny, Plaintiffs failed to take the necessary steps to mitigate the damage or injury
sustained.
Twelfth Defense
107. Plaintiffs’ claims are barred or limited by the doctrine of copyright misuse.
Thirteenth Defense
108. Plaintiffs’ claims are barred or limited on the grounds that the license agreements
Fourteenth Defense
109. Plaintiffs’ claims are barred, in whole or in part, because provisions of the
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WHEREFORE, Defendants respectfully request that the Court enter an Order:
(b) entering judgment in favor of Defendants and against Plaintiffs, and dismissing
(c) awarding Defendants the costs of defending against this lawsuit, including reasonable
(d) awarding such other and further relief as the Court deems just and proper.
COUNTERCLAIMS
Defendant and Counterclaimants Infospace Mobile, Inc. and Premium Wireless Services
Inc. Canada (collectively “Infospace Mobile”), by and through their undersigned counsel, allege
its own and in conjunction with certain operators of mobile telephone services, provided
various types of digital content such as games, wallpaper and “ringtones” for downloading onto
wireless devices. A ringtone is a snippet of music that a mobile phone user may download
from a service and use to signal an incoming call on her mobile phone. Infospace Mobile and
the mobile carriers with whom it had relationships generally charged a small per-download fee
2. Until shortly after the commencement of this suit, included among the ringtones
Infospace Mobile made available for download were monophonic and polyphonic ringtones of
and belief, owns or controls the publishing rights to numerous musical compositions from
leading songwriters.
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4. Between May 31, 2001, and January 11, 2007, Infospace Mobile and EMI were
parties to a ringtone license agreement. Pursuant to this agreement, EMI granted Infospace
Mobile the right to create and sell EMI Ringtones in exchange for the payment of specified
royalties.
5. At times the agreement between Infospace Mobile and EMI was memorialized
in a formal written contract. At other times, the agreement was implied by the conduct of the
parties, the course of dealing of the parties, and industry custom, all of which were to continue
or extend licensing agreements without a formal written agreement following the end date of a
written agreement’s specified term.
agreement, Infospace Mobile continued to offer EMI Ringtones, to provide royalty reports to
EMI, and to pay royalties for EMI Ringtones that had been downloaded. During such periods,
EMI continued to communicate with Infospace Mobile about compositions that had been newly
approved or were no longer available for use in EMI Ringtones, to encourage Infospace Mobile
to continue making EMI Ringtones available for download, to accept royalty payments from
Infospace Mobile and to treat Infospace Mobile in all respects as it had during the specified
7. Upon information and belief, such continued dealing under an implied contract
is standard in the music publishing industry.
8. Upon information and belief, EMI has dealt with other music licensees in a
manner that continued or extended a formal written licensing agreement by conduct after the
9. The course of conduct between EMI and Infospace Mobile during the period
between May 30, 2006 and the date on which EMI filed this action was substantially the same
as that during any other period in the five-year contractual relationship between the parties.
10. Between May 30, 2006 and January 11, 2007, EMI and Infospace Mobile
continued to communicate on a regular basis concerning the availability of songs for use as
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EMI Ringtones and Infospace Mobile continued to provide royalty reports reflecting EMI
Ringtones that had been downloaded, each time specifically referring to the existence of a
license agreement between the parties. Infospace Mobile continued making royalty payments,
11. At no time between May 30, 2006 and November 17, 2006 did EMI claim that
12. At no time between May 30, 2006 and the filing of this lawsuit did EMI direct
EMI’s repeated urgings of Infospace Mobile to offer new EMI Ringtones, and Infospace
January 11, 2007, EMI filed this action and made the claim that Infospace Mobile’s conduct in
making available EMI Ringtones after May 30, 2006 was unlicensed and therefore EMI was
entitled to “in excess of $100 million” in damages for willful copyright infringement.
14. By filing this action and anticipatorily repudiating its agreement to license
compositions to Infospace Mobile for another year, EMI breached the license agreement
between the parties, including the covenant not to sue that is the heart of the license agreement.
Ringtones available for download after May 30, 2006, thereby interfering with and reducing the
value of Infospace Mobile’s contracts with mobile carriers is sufficiently egregious to warrant
punitive damages against EMI in addition to monetary compensation for the damages caused
by EMI’s premature termination of its licensing agreement with Infospace Mobile and
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The Parties
16. Counterclaimant Infospace Mobile, Inc. is a California corporation with a place
of business at 10960 Wilshire Boulevard., Los Angeles California 90024. Infospace Mobile,
Inc. formerly was known as Premium Wireless Services USA, Inc. and/or Premium Wireless
Corporation with an address of 66 Wellington Street, West, Suite 3600, Toronto, Ontario
M5H3Y2.
18. Upon information and belief, Counterdefendant EMI is a New York corporation
with its principal place of business at 1290 Avenue of the Americas, New York, New York.
Factual Allegations
21. On or about May 31, 2001, EMI entered into a license agreement with Premium
Wireless Services USA, Inc. (“PWS USA”), incorrectly identified as Premium Wireless
22. Under the terms of the 2001 Ringtone License Agreement, EMI granted PWS
USA a license to create EMI Ringtones and make them available for downloading onto
23. The stated term of the 2001 Ringtone License Agreement was one year.
24. Sometime after June 18, 2002, EMI entered into new written agreement with
PWS USA and PWS Canada dated “as of” June 1, 2002 (the “2002 Ringtone License
Agreement”).
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25. Under the terms of the 2002 Ringtone License Agreement, EMI granted PWS
USA and PWS Canada a license to create EMI Ringtones and make them available for
26. During the time between the stated end of the term of the 2001 Ringtone License
Agreement and execution of the 2002 Ringtone License Agreement, the parties continued
dealing with each other as they had under the 2001 Ringtone License Agreement and EMI
never directed PWS USA or PWS Canada to stop creating and making available EMI
Ringtones even though no formal written contract existed between the parties.
27. The stated term of the 2002 Ringtone License Agreement was one year,
28. Section 14 of the 2002 Ringtone License Agreement provided that in the event
of a breach of the Agreement, EMI would notify PWS USA and PWS Canada in writing of
29. On or about January 10, 2003, PWS USA and PWS Canada executed an
amendment to the 2002 Ringtone License Agreement dated December 19, 2002.
30. The December 19, 2002 Amendment stated that it extended the term of the 2002
Ringtone License Agreement “for an additional period of one (1) year” until May 30, 2004.
31. The parties subsequently executed an amendment to the 2002 Ringtone License
Agreement dated October 20, 2003, but effective as of October 1, 2003.
32. The parties subsequently executed an amendment to the 2002 Ringtone License
33. Following May 30, 2004, the stated end of the term of the written 2002 Ringtone
Licensing Agreement as amended, the parties continued dealing with each other as they had for
the three years prior to May 30, 2004, and EMI never directed PWS USA or PWS Canada to
stop creating and making available EMI Ringtones while no formal written contract existed
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34. By Amendment dated August 10, 2004, the parties amended the 2002 Ringtone
License Agreement by retroactively extending the term of the formal written agreement from
35. At no time between May 30, 2004 and August 10, 2004 did EMI provide notice
to PWS USA or PWS Canada that it believed they were in breach of the agreement between the
parties or directed that PWS USA and PWS Canada otherwise should stop making EMI
Ringtones available for download until the parties had executed an amendment extending the
term of the formal written agreement. Instead, EMI continued to treat PWS USA and PWS
Canada as if they continued to be licensed per the terms of the written agreement.
36. Between May 31, 2001 and May 30, 2006, EMI periodically advised PWS USA
and subsequently Infospace Mobile of additional EMI controlled songs that had been approved
37. Between May 31, 2001 and May 30, 2006, EMI periodically advised PWS USA
and subsequently Infospace Mobile of EMI controlled songs that were no longer available for
38. Between May 31, 2001 and May 30, 2006, PWS USA and subsequently
39. Between May 31, 2001 and May 30, 2006, PWS USA and subsequently
Infospace Mobile provided to EMI and EMI accepted periodic royalty checks.
40. Between May 31, 2006 and January 11, 2007, EMI and Infospace Mobile
continued the same course of dealing with respect to the licensing of EMI controlled songs for
use in EMI Ringtones as they had engaged in during the prior five years.
41. Between May 31, 2006 and January 11, 2007, EMI periodically advised
Infospace Mobile of additional EMI controlled songs that had been approved for use in EMI
Ringtones.
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42. Between May 31, 2006 and January 11, 2007, EMI periodically advised
Infospace Mobile of EMI controlled songs that were no longer available for use in EMI
Ringtones.
43. Between May 31, 2006 and January 11, 2007, Infospace Mobile provided EMI
with periodic royalty reports, using the same text in its cover email as it had used in the cover
email for the last royalty report sent prior to May 31, 2006.
44. Between May 31 2006 and January 11, 2007, Infospace Mobile provided to EMI
Daniel Peters of EMI seeking information regarding the availability of certain compositions for
use under the parties’ “current license agreement”. Mr. Peters provided a response to Ms.
46. On over a dozen occasions after May 30, 2006, Ms. Bailey-Lemansky of EMI
sent e-mails to Infospace Mobile personnel regarding songs EMI had received clearance to
license and of which Infospace Mobile therefore could create and make available EMI
Ringtones. One such e-mail sent by Ms. Bailey-Lemansky to EMI was dated November 16,
2006.
47. Other EMI personnel, including Tami Lester, Oscar Mazzola, Doug James, and
Aaron Monty, sent e-mails to Infospace Mobile personnel after May 30, 2006 relating to
48. On June 6, 2006, Ms. Wueste of Infospace Mobile e-mailed Mr. Peters of EMI
requesting “the availability of the compositions on the attached spreadsheet for use under our
current license agreement”. On June 7, 2006, Mr. Peters responded by providing a revised
spreadsheet to Ms. Wueste that indicated which compositions were “approved” for use by
Infospace Mobile.
49. On June 14, 2006, Mr. Peters sent an e-mail to Derek McNeill and Ms. Wueste
of Infospace Mobile noting that Infospace Mobile should remove from the ringtones Infospace
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Mobile was offering for sale a particular ringtone for which EMI no longer had the right to
license. Mr. McNeill responded that same day that he had “alerted our content processing team
50. On July 13, 2006, Ms. Wueste of Infospace Mobile e-mailed Mr. Peters of EMI
requesting “the availability of the compositions on the attached spreadsheet for use under our
current license agreement”. That same day, Mr. Peters responded by providing a revised
spreadsheet to Ms. Wueste that indicated which compositions were “approved” for use by
Infospace Mobile.
51. On July 13, 2006, Ms. Wueste sent an e-mail to Ms. Bailey-Lemansky regarding
the proper “split control” for certain songs listed as being approved for use in an e-mail sent to
Ms. Wueste by Ms. Bailey-Lemansky that same day. Ms. Bailey-Lemansky referred Ms.
Wueste’s inquiry to Mr. Peters, who responded to Ms. Wueste on July 20, 2006 with a
52. On July 31, 2006, Ms. Bailey-Lemansky e-mailed Mr. McNeill and asked him to
provide EMI with the amount of royalties EMI could expect to receive for Infospace Mobile’s
sales of ringtones based on EMI-controlled compositions during the second quarter of 2006
(i.e., April, May, and June 2006). The two then exchanged e-mail correspondence regarding
EMI requesting “the availability of the compositions on the attached spreadsheet for use under
our current license agreement”. The next day, Mr. Peters responded by providing a revised
spreadsheet to Ms. Wueste that indicated which compositions were “approved” for use by
Infospace Mobile.
54. On September 5, 2006, Ms. Wueste e-mailed Mr. Peters requesting “the
availability of the compositions on the attached spreadsheet for use under our current license
agreement”. The next day, Mr. Peters responded by providing a revised spreadsheet to Ms.
Wueste that indicated which compositions were “approved” for use by Infospace Mobile.
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55. On December 5, 2006 Ms. Bailey-Lemansky of EMI sent an e-mail to Mr.
McNeill with a copy to Debra McMahon of EMI. Ms. Bailey-Lemansky informed Mr.
McNeill that she would no longer be handling ringtones and that Ms. McMahon would be Mr.
McNeill’s new EMI contact. Mr. McNeill responded by e-mail of December 5, 2006, in which
he stated “I look forward to working with you Debbie.” Ms McMahon responded to Mr.
McNeill in an e-mail dated December 14, 2006, in which she stated, “HI Derek: I look forward
57. There are numerous other communications between the parties after May 30,
2006 that reflect their mutual understanding that Infospace Mobile remained licensed to use
58. On or about August 11, 2006, Infospace Mobile sent a royalty payment check to
EMI for downloads of EMI Ringtones covered by the parties’ license agreement during the
second quarter of 2006 (i.e., the quarter ending June 30, 2006). EMI deposited the check.
59. On or about November 13, 2006, Infospace Mobile sent a royalty payment
check to EMI for downloads of EMI Ringtones covered by the parties’ license agreement
during the third quarter of 2006. EMI deposited the check.
60. In early 2007, Infospace Mobile sent a royalty payment check to EMI for
downloads of EMI Ringtones covered by the parties’ license during the fourth quarter of 2006.
61. During the period between May 31, 2006 and January 11, 2007, in neither its e-
mails to Infospace Mobile, nor in response to any of Infospace Mobile’s e-mails to EMI, did
62. By letter to Infospace, Inc. dated November 17, 2006, EMI first advised
Infospace Mobile of its position that Infospace Mobile’s continued sale of EMI Ringtones was
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“absent a valid license.” Nowhere in the letter did EMI direct Infospace Mobile to stop making
EMI Ringtones available for download. Instead, EMI stated that “[i]f EMI does not have a
favorable response to the audit and a new license agreement with you in place by December 1,
2006, EMI will turn the matter over to its outside litigation counsel.”
63. By letter dated November 29, 2006, Infospace, Inc. responded to EMI’s letter of
November 17, 2006. Infospace set forth its understanding that a license agreement continued to
exist between the parties, and stated that Infospace would like to continue its relationship with
EMI. Infospace specifically noted potential problems with its distribution partners if it had to
remove EMI Ringtones from its offerings.
64. In its letter of November 29, 2006, Infospace, Inc., while strongly contesting the
methodology and conclusions of the “audit” to which EMI referred, offered to settle the matter
and stated that “[i]f EMI chooses to reject the settlement offer, Infospace will deem the
rejection as a notice of removal per Section 2(d) of the license agreement and remove EMI-
65. EMI never responded to Infospace, Inc.’s letter of November 29, 2006.
66. On or about January 11, 2007, EMI filed this action based in substantial part on
the allegation that between May 31, 2006 and the filing of suit there was no license agreement
in effect between EMI and Infospace Mobile and that therefore Infospace Mobile’s continued
offering of EMI Ringtones during that time period amounted to copyright infringement
67. As a result of EMI’s repudiation of its agreement, Infospace Mobile was forced
to remove all of the EMI Ringtones from its platform and instruct its mobile provider partners
69. EMI acted with knowledge that by repudiating its agreement with Infospace
Mobile, it was closing 40% of the music publishing market to Infospace Mobile and its mobile
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70. EMI’s repudiation of its agreement with Infospace Mobile was an abuse of its
market power to the detriment of consumers, Infospace Mobile, and Infospace Mobile’s mobile
71. If Infospace Mobile had not been forced to stop offering EMI Ringtones,
Infospace Mobile would have made at least $1.5 million in revenues from sales of those
73. An implied contract was formed between EMI and Infospace Mobile as of May
31, 2006, based upon the parties’ conduct, prior course of dealing, and industry custom.
promise not to sue for creating and/or making EMI Ringtones available for download.
76. Implicit in the implied contract was a covenant of good faith and fair dealing.
77. The implied contract was supported by consideration and constitutes a valid and
enforceable contract.
79. EMI’s actions as complained of herein have caused Infospace Mobile to suffer
and accrue monetary damages, including, but not limited to, lost profits from the loss of sales
of EMI Ringtones that Infospace Mobile would have made during the term of the implied
contract absent EMI’s breach; lost goodwill in that Infospace Mobile can no longer offer a full
complement of ringtones; and damages from being required to defend against a meritless
copyright infringement claim based upon downloads of EMI Ringtones following May 30,
2006.
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Second Cause of Action
81. An implied contract was formed between EMI and Infospace Mobile based upon
82. The implied contract was for a term of one year from May 30, 2006 through
83. EMI repudiated and anticipatorily breached that implied contract by claiming
that no contract existed between the parties and suing Infospace Mobile for copyright
infringement.
84. EMI’s anticipatory breach of its contract with Infospace Mobile has caused
Infospace Mobile to suffer and accrue monetary damages, including, but not limited to, lost
profits from the loss of sales of EMI Ringtones that Infospace Mobile would have made during
the term of the implied contract absent EMI’s breach; and lost goodwill in that Infospace
86. Throughout 2006, Infospace Mobile had valid contracts with numerous cell
phone carriers, including but not limited to T-Mobile and AT&T Mobility (f/k/a Cingular).
87. Pursuant to its contracts with cell phone carriers, Infospace Mobile made EMI
Ringtones available to the carriers’ subscribers, which generated income to Infospace Mobile.
88. EMI was aware of Infospace Mobile’s contracts with numerous cell phone
carriers.
Infospace Mobile’s contracts with cell phone carriers or done with knowledge that such
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90. EMI’s intentional actions, as complained of herein, were intended to interfere
and interfered with Infospace Mobile’s contracts with cell phone carriers in that Infospace
Mobile was forced to pull EMI Ringtones from the catalogues of ringtones offered to such
carriers.
91. Infospace Mobile has been damaged by EMI’s interference with its contracts
with cell phone carriers in that, among other things, the revenues paid by such carriers have
been significantly reduced as a direct result of the removal of EMI Ringtones from the
phone carriers was malicious, wanton, oppressive, fraudulent, reckless and in willful disregard
of Infospace Mobile’s rights and property interests in its contracts with the cell phone carriers.
In order to punish EMI and deter it from engaging in such outrageous conduct in the future
with its other licensees, EMI should be required to pay punitive damages.
94. Throughout 2006, Infospace Mobile had business relationships with numerous
cell phone carriers, including but not limited to T-Mobile and AT&T Mobility (f/k/a Cingular).
95. Pursuant to its business relationships with cell phone carriers, Infospace Mobile
made EMI Ringtones available to the carriers’ subscribers, which generated income to
Infospace Mobile.
97. EMI’s conduct as complained of herein was intended to interfere and interfered
98. Upon information and belief, following May 30, 2006, EMI induced Infospace
Mobile to include EMI Ringtones among those ringtones sold to the subscribers of the cell
phone carriers with whom Infospace Mobile had business relations and then declared Infospace
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Mobile’s conduct unauthorized for the improper purpose of laying the groundwork for a claim
of massive copyright infringement that EMI could use to extract an exorbitant settlement from
Infospace Mobile, far out of proportion to any actual amounts that EMI could possibly be owed
99. EMI acted solely to harm Infospace Mobile, or out of malice or relied upon
dishonest, unfair and improper acts in interfering with Infospace Mobile’s business relations
101. EMI’s intentional interference with Infospace Mobile’s contracts with cell
phone carriers was malicious, wanton, oppressive, fraudulent, reckless and in willful disregard
of Infospace Mobile’s rights and property interests in its contracts with the cell phone carriers.
In order to punish EMI and deter it from engaging in such outrageous conduct in the future
with its other licensees, EMI should be required to pay punitive damages.
Requested Relief
WHEREFORE, Counterclaimants respectfully requests that this Court:
trial;
(d) Award Counterclaimants its costs incurred in connection with this action;
(g) Award Counterclaimants such further and other relief as the Court deems just and
proper.
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Jury Demand
Defendants and Counterclaimants hereby demand a trial by jury on all claims and counterclaims
in this action.
Respectfully submitted,
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