CECash's move follows a lawsuit filed by New Destiny Internet Group (Homegrown Video) and Xplor Media in February against CECash parent company Trade News Corp., a Netherlands Antilles Corp., and subsidiaries Voice Media Inc. and Internet Business Services LLC.
The lawsuit, filed in the U.S. District Court for the Central District of California, alleged copyright and trademark infringement and sought injunctive relief from a contractual agreement with CECash.
The crux of the allegations against the defendants is that the Trade News 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 Trade News and Voice Media overbilled and repeat-billed numerous Homegrown end users in an "egregious" manner.
Spike Goldberg of Homegrown Video/New Destiny claims to have entered the reseller agreement with only Voice Media, and not Trade News, which Goldberg claims sold its licensing rights to Trade News and Internet Business Services of Anaheim, Calif.
Goldberg claims in his lawsuit that New Destiny never authorized Trade News and Internet Business to link and gain access to the Homegrown website.
The case was sent to arbitration last month and a separate lawsuit filed by Xplor Media against CECash is currently in limbo, however U.S. District Judge Consuelo B. Marshall's arbitration order in June stated that Xplor Media was entitled to return to federal court when the New Destiny arbitration is completed.
CECash issued a statement Tuesday to all webmasters in its affiliate program:
"As a CECash affiliate and pursuant to paragraph 3 of the affiliate agreement between you and CECash you must therefore immediately remove all CECash 'homegrown' program materials, including any banners and text links that advertise the homegownvideo.com website via any CECash affiliate program."
CECash attorney Ira Rothkin of San Rafael, Calif., told XBiz that New Destiny's allegations are false and that his client intends to counter sue New Destiny Internet Group for breach of contract with CECash and "failure to pay monies owed and act appropriately in the agreement."
CECash and Homegrown entered into a "Website Reseller and Marketing Agreement" in January 2000, giving CECash the power to operate Homegrown's official affiliate program for purposes of marketing, promotion, and ecommerce processing.
"New Destiny had the responsibility to share revenues with the CECash defendants and they haven't been doing that since the fourth quarter of 2003," said Rothkin. "Now that CECash has been successful at getting the case to arbitration, it is going to assert its own rights in a counter claim against New Destiny."
Rothkin added that the purpose behind the notice is that CECash is no longer interested in doing business with Homegrown, particularly since they claim they are no longer obligated under the original agreement.
According to New Destiny's attorney, David S. Olson, the news that CECash has terminated the affiliate program is good news for his client.
"Our first principal objective in this litigation was to stop the copyright and trademark infringement and minimize the wrongful billing practices," Olson told XBiz. "And it sounds like this is a pretty good step in that direction."