Voice Media also stated in legal documents filed in U.S. District Court that its expects to see a potential loss of $4 million in costs and damages due to the issuance of the TRO, in both potential patent liability exposure and lost revenue.
Voice Media's response stems from court papers filed last month in U.S. District Court by plaintiffs New Destiny Internet Group, owner of Homegrownvideo.com, and Xplor Media alleging copyright infringement and breach of contract in a marketing and licensing deal gone awry.
The crux of the allegations against the defendants is that Voice Media's website Cybererotica.com/CECash contributed to infringement by making a copy of the “Homegrown Video Website Tour” available online without permission from New Destiny Internet Group, and that Voice Media overbilled and repeat-billed numerous Homegrown video end users in an "egregious" manner.
At issue is also a patent licensing agreement that Voice Media signed with Acacia Research in early 2003, which included Homegrownvideo. According to Voice Media, the agreement was intended to cover "all recorded video streaming" that occurred as a result of gross revenues from its affiliates, among them Homegrownvideo.
"We decided it was the prudent thing to do," Voice Media's attorney Ira Rothkin told XBiz. "It was an effort to protect CECash affiliates, many of whom couldn't afford to hire a lawyer in patent litigation. So CECash constructed a deal that benefited everybody that it did business with, its affiliate and site offerings, one of which happened to include Homegrownvideo."
However, according to the plaintiffs' claim, they were never in agreement to be party to the Acacia licensing agreement. New Destiny later became one of the defendants in a counter-suit against Acacia challenging Acacia's streaming media patents in a court proceeding that began last month.
"We believe that Homegrown's claims against CECash will be successfully defended," Rothkin said. "We believe that what Homegrown is trying to do through litigation is what it couldn't achieve through contract negotiations, and we believe that in the end, steps that CECash has taken will have been found to be sound business decisions."
Voice Media claims that the Homegrownvideo affiliate program took more than three years to build up and "at great expense." The defendants also state that yearly revenue on the Homegrown site was approximately $1.5 million.
According to New Destiny's attorney, David S. Olson, Voice Media's response to the TRO filing was a sign of "desperation to avoid a ruling by the court on its merits."
Olson was quick to point out that New Destiny's main concern was for its end users, which the TRO filing detailed as having been "harmed" by the billing tactics of Voice Media.
"Their response today was an attempt by the defendants to have the court pump this thing over into arbitration," Olson told XBiz. "Regardless of any arbitration, the district court has the authority to look at this and give injunctive relief to protect my clients and the members of the Homegrown site."
Olson was also annoyed that the defendants had been so quick to dismiss the numerous emails attached to the TRO detailing the travails of Homegrown's end users, instead calling the 271-page filing "reams of mostly irrelevant documents."
"If you read those emails and you see the harm and the practices conducted by the defendants," said Olson. "It is very relevant why we need injunctive relief at this point."
The TRO will be ruled on in the next couple of days, say attorneys from both sides of the suit.
