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Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 1 of 87 Page ID #:415

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Charles M. Coate (SBN: 140404)


ABRAMS COATE LLP
12400 Wilshire Boulevard, Suite 1060
Los Angeles, California 90025
Tel. (310) 576-6161; Fax (310) 576-6160
Email: ccoate@abramscoate.com

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Michael M. Plotkin (SBN: 38170)


LAW OFFICES OF MICHAEL M. PLOTKIN
12400 Wilshire Boulevard, Suite 1060
Los Angeles, California 90025
Tel. (310) 551-4900; Fax (310) 576-6160
Email: mplotlaw@gmail.com
Attorneys for Plaintiff Aquarius Broadcasting Corp.

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION

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AQUARIUS BROADCASTING
CASE NO.
14 CORPORATION, a California corporation, 2:15-CV-01854-SVW (VBKx)
Assigned to the Honorable Stephen
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Plaintiff,
V. Wilson
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SECOND AMENDED COMPLAINT
vs.
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FOR:
18 VUBIQUITY ENTERTAINMENT
19 CORPORATION, a Delaware corporation
(formerly known as TVN
20 ENTERTAINMENT CORPORATION or
21 AVAIL-TVN) and DOES 1 through 10,
inclusive,
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Defendants.
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(1) INFRINGEMENT OF
TRADEMARKS 15 U.S.C. 1125 REVERSE PASSING OFF;
(2) CONTRIBUTORY
INFRINGEMENT OF
TRADEMARKS 15 U.S.C. . 1125 REVERSE PASSING OFF;
(3) BREACH OF WRITTEN
DISTRIBUTION AGREEMENT;
(4) BREACH OF COVENENT OF
GOOD FAITH AND FAIR
DEALING; AND
(5) VIOLATION OF CALIFORNIA
BUSINESS & PROFESSIONS
CODE 17200, ET SEQ.

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Action Filed: March 12, 2015

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DEMAND FOR JURY TRIAL

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SECOND AMENDED COMPLAINT

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 2 of 87 Page ID #:416

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JURISDICTION
1.

This Court has subject matter jurisdiction over this action because certain

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claims arise under the Lanham Act (15 U.S.C. 1121 et seq., 28 U.S.C. 1331 et seq.)
and 28 U.S.C. 1338.
2.

This Court has supplemental jurisdiction over the remaining claims in the

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Complaint arising under California law pursuant to 28 U.S.C. 1367.

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VENUE
3.

Venue is proper in the Central District of California pursuant to 28 U.S.C.

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1391 because a substantial part of the activities and events giving rise to the claims
occurred within this District and both Plaintiff and the Defendants conduct business and
have office locations within the county of Los Angeles, California.

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THE PARTIES

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4.

Plaintiff Aquarius Broadcasting Corporation (Aquarius or Plaintiff) is a

corporation organized and existing pursuant to the laws of the State of California, with

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its principal place of business in the Central District of California.


5.

Plaintiff Aquarius is informed and believes and, on that basis, alleges that

Defendant Vubiquity Entertainment Corporation is a corporation organized and existing

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under the laws of the State of Delaware and its principal place of business is located at
1881 Campus Commons Drive, Suite 101, Reston, Virginia 20191.

Vubiquity

Entertainment Corporation also maintains offices in Sherman Oaks, California;

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Kalispell, Montana; and London, England. Vubiquity Entertainment Corporation has


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SECOND AMENDED COMPLAINT

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previously conducted business under the names Avail Media and/or Avail-TVN
and/or TVN Entertainment Corporation. For purposes of this Complaint, Defendant

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Vubiquity Entertainment Corporation will be referred to as TVN. TVNs California


office is located at 15301 Ventura Boulevard, Suite 3000, Sherman Oaks, California
91403.

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6.

Aquarius is unaware of the true names and capacities of Defendants sued

herein as DOES 1 through 10, inclusive, and therefore sues these Defendants by such
fictitious names. Nevertheless, Aquarius is informed and believes and on that basis

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alleges that each of the fictitiously named DOE Defendants was, at relevant times,
complicit in the conduct of TVN and/or is either intentionally, negligently, or in some
other manner,

a contributing cause of the damages suffered by Aquarius and is

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responsible for such damages. Aquarius will seek leave to amend this complaint to
allege the true names and capacities of each DOE Defendant, together with such
allegations as may be appropriate, when their names have been ascertained.

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A.

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GENERAL ALLEGATIONS

Background Facts Regarding Aquarius


7.

Aquarius was incorporated in California in January 2006.

Aquarius

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principal business has been to license audio-visual material from adult feature films
which it then combines into adult videos from which it manufactures digital files
intended for delivery to cable networks, telephone companies and satellite delivery

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SECOND AMENDED COMPLAINT

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companies (Operators) which deliver programming to home viewers, i.e., their


subscribers, on a Video On Demand (VOD) basis.

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8.

Aquarius does not produce the audio-visual materials which it acquires and

which it combines into the digital files which it delivers to Operators. Since 2006,
Aquarius has manufactured and delivered over 2,000 separate files for delivery to

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subscribers by way of the facilities of Operators throughout the United States and
Canada. (For convenience, Aquarius digital compilations are sometimes referred to
herein as Broadcast Titles.)

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9.

Between 2006 and 2013, adult audio visual materials have been made

available to the home viewing public in the United States and Canada by Operators
utilizing several delivery methods: cable television, satellite television, television

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delivered by telephone companies over their wired systems and/or television delivered
by internet protocol. Irrespective of delivery method, Operators deliver to subscribers
who pay to access and/or download files offered by that Operator by means of

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transmission to their televisions at home. It is made available on a VOD basis; the


subscriber orders a particular Broadcast Title from a menu presented by the Operator,
and the subscriber is separately charged a one-time fee for the specific Broadcast Title

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transmitted.
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Throughout its years of operation, Aquarius has sought to reach home

viewers by entering into agreements with Operators throughout the United States and

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Canada for carriage of its VOD Service. Such agreements allowed Aquarius to reach the
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SECOND AMENDED COMPLAINT

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collective audience of the Operators tens of millions of subscribers throughout the


United States and Canada.

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John Chambliss ("Chambliss") and Robert Herrera ("Herrera") were well

respected programmers of adult-themed audio-visual materials who developed a process


to fabricate such materials into digital files which could be manufactured into a finished

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product, a fully-manufactured digital product which could be delivered to subscribers.


In addition, they formulated a menu of files which subscribers of Aquarius systems
could download for viewing at home. For several years prior to the formation of

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Aquarius, Chambliss had a productive relationship with Defendant TVN.

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The TVN Agreement

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12.

Plaintiff is informed and believes, and on that basis alleges, that TVN is a

privately-held company engaged in the acquisition, delivery and management of


digitalized video files for VOD Services to Operators throughout the United States and

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Canada. TVN acts as a distributor on behalf of manufacturers of digitized files who


engage TVN's services to provide encoding and delivery of their digitized files to
Operators throughout the United States and Canada. Operators to which TVN delivers

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digital files containing audio-visual materials from numerous manufacturers include


virtually all of the major media and telecommunication companies throughout North
America including, by way of example, Comcast, AT&T and Verizon.

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SECOND AMENDED COMPLAINT

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13.

Both Chambliss and Herrera recognized the need to expand Aquarius

ability to reach Operators and their subscribers throughout North America and to provide

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for technical expertise to deliver its content to those Operators. To fulfill those needs,
Aquarius entered into an agreement entitled TVN-Aquarius VOD Services Agreement
(the TVN Agreement) pursuant to which TVN agreed to act as Aquarius exclusive

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distributor of Aquarius products, i.e., fully-manufactured digital files (referred to for


convenience as "Broadcast Titles") as part of Aquarius VOD Service throughout the
United States and Canada. A true and correct copy of the TVN Agreement is attached

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hereto as Exhibit A and incorporated by reference herein. (The TVN Agreement


mistakenly refers to Aquarius Broadcasting Corporation as Aquarius Broadcasting
Systems, Inc.)

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14.

Pursuant to the TVN Agreement, TVN was engaged and agreed to act on

Aquarius behalf as Aquarius exclusive distributor in the United States and Canada.
TVN had exclusive right to offer Aquarius Broadcast Titles as part of Aquarius VOD

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Service to Operators licensed by Aquarius. TVN was also engaged and agreed to encode
and deliver Aquarius files as part of this service which TVN agreed to provide on
Aquarius' behalf to Operators licensed by Aquarius to provide Aquarius Broadcast

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Titles to their subscribers. Such services were set forth on Schedule B of the TVN
Agreement. For convenience, such Operators are referred to as Aquarius Systems.
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Each month during the term of the TVN Agreement, Aquarius

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manufactured up to fifty (50) fully-manufactured digital files and delivered them to


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SECOND AMENDED COMPLAINT

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TVN. TVN encoded them to the specifications of Aquarius Systems and delivered them
to all such Operators to be added to their subscriber menus. In addition to providing,

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encoding and delivery, the services which Aquarius engaged TVN to perform, TVN
supported Aquarius sales efforts to increase Aquarius Systems to include the services
which Aquarius engaged TVN to perform additional Operators.

TVN had close

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relationships with Operators throughout North America and adding Operators would
increase the Aquarius subscriber base and, if Aquarius Broadcast Titles were successful
with subscribers, increase the revenues of both TVN and Aquarius.

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16.

In 2006, when the Aquarius/TVN relationship began, Aquarius was a small

company delivering to a handful of cable systems with a total audience of approximately


165,000 subscribers. Its growth between 2006 and 2012 brought Aquarius to virtually

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every major Operator in North America, reaching an audience well in excess of


50,000,000 subscribers.
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The term of the TVN Agreement was seven (7) years. Throughout that

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term, TVN was empowered to receive all revenues generated from Aquarius Systems in
the United States and was required to remit to Aquarius its share of revenues on a
monthly basis. Substantially all of Aquarius total corporate revenue was collected by

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TVN on behalf of Aquarius and Aquarius relied on TVNs remittance to maintain its
business operations.
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The TVN Agreement obligated TVN to provide Aquarius with monthly

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reports setting forth specific information from each of Aquarius Systems.


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SECOND AMENDED COMPLAINT

That

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 8 of 87 Page ID #:422

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information was to include the then-current number of subscribers, number of buys,


retail price and gross revenues generated for each Aquarius System.

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Under the TVN Agreement, Aquarius entrusted many of its critical business

functions to TVN. Aquarius inventory was exclusively entrusted to TVN; Aquarius'


trademarks were entrusted to TVN; and Aquarius relationships with its singular group

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of customers, Aquarius Systems throughout the United States and Canada, were
exclusively controlled by TVN. Most importantly, all revenues generated by Aquarius
licensed Operators were collected directly by TVN.

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20.

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Aquarius relied on TVNs faithful performance of its obligations as it

would a fiduciary. Aquarius entrusted its principal assets and key business functions to
TVN.

TVN exclusively controlled Aquarius inventory, its revenue stream and its

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relations with Aquarius Systems throughout North America. Aquarius relied on TVN to
act in good faith as Aquarius exclusive distributor.

In fact, the TVN Agreement

required Aquarius reliance, indeed, its dependence on TVN. The TVN Agreement

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created a confidential relationship, given the extent of the sensitive and essential
business functions undertaken by TVN on which Aquarius was exclusively dependent
throughout the TVN Agreements seven (7) year term.

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Aquarius VOD Service

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Each month, Aquarius provided TVN with the upcoming months materials:

the Broadcast Titles which included Metadata relating to each digitally manufactured file

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and promotional materials intended to promote and advertise the proprietary trademarks
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SECOND AMENDED COMPLAINT

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owned by Aquarius: Club Taboo, Reality_FirsTimers and Urban Sin. The fullymanufactured files delivered by Aquarius to TVN included information which

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specifically identified Aquarius as the manufacturer of each digital audio-visual file and
instructions to TVN as to which menu (identified by Aquarius trademark name) was to
list that particular fully-manufactured Broadcast Title.

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22.

Each Aquarius System would display on its menus which were branded

with Aquarius' trademarks all Broadcast Titles available for download by subscribers for
home viewing. Those menus were branded as Club Taboo, Reality_FirsTimers or

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Urban Sin. The digital materials provided TVN specific information as to what was to
be listed on which menu. Aquarius brands and the corresponding promotional materials
were designed by Aquarius to make most effective use of the menus offered by each

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Aquarius System and were an integral part of Aquarius VOD Service.


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Aquarius VOD Service consisted of (i) its Broadcast Titles; (ii) the

Metadata delivered to TVN each month along with the Broadcast Titles; and (iii)

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promotional materials relating to each such title which included still photographs,
synopses and fanciful titles all of which were part and parcel of the Aquarius VOD
Service. In addition, an essential ingredient of the Aquarius VOD Service was its

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brands, Club Taboo, Reality_FirsTimers and Urban Sin. The Metadata, as well as
the promotional materials, specifically tied each Broadcast Title to one of Aquarius
proprietary brands.

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SECOND AMENDED COMPLAINT

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24.

The materials which constituted Aquarius VOD Service were intended to

provide the broadest coverage of Aquarius Broadcast Titles throughout the menus

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offered by Aquarius Systems. Attached hereto as Exhibits E-1 through E-4 are
true and correct copies (Screen Captures) of the menus used by AT&T U-verse as of
May 10, 2015. AT&T U-verse was an Aquarius System. Exhibit E-1 is the menu

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listing all categories of materials available to subscribers of AT&T U-verse on a VOD


basis. A subscriber wishing to access adult materials is instructed to click on the
Adult category, and, upon doing so, the subscriber is directed to a Second Menu

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(Exhibit E-2) for adults only. From the Second Menu, adult materials can be
downloaded by a subscriber through several specific sub-menus. One of those specific
sub-menus allows the viewer to peruse and select adult offerings by Brand. When the

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subscriber clicks on By Brand, he is directed to another sub-menu which lists the


brand names of each of the manufacturers whose digital materials are made available to
be accessed by subscribers to the digital AT&T U-verse. Attached hereto as Exhibit

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E-3 is a true and correct copy of the By Brand menu on AT&T U-verse as of May 10,
2015. As of that date, AT&T U-verse offered 14 brands, two of which are TVN's "Club
Fantasy" and "Urban Fantasy."

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25.

When a subscriber selects a specific brand, he is directed to a sub-menu

which displays all of the offerings by that particular manufacturer. Attached hereto is a
true and correct copy of Exhibit E-4 which is the brand menu of Club Fantasy as it

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appeared on AT&T U-verse as of May 10, 2015. Club Fantasy offered a total of sixty
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SECOND AMENDED COMPLAINT

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(60) different Broadcast Titles. After the subscriber selects his or her preferred brand,
the subscriber may review all of the materials offered by that brand and select the

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specific Broadcast Title he or she wishes to download for viewing. That file which
contains that material is delivered by the Operator to the subscribers television screen,
and the subscriber is billed on his or her monthly invoice for the VOD charge. Plaintiff

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is informed and believes and thereon alleges that while there were and are minor
differences in the menu structure of the numerous Aquarius Systems, the menu offerings
of AT&T U-verse as reflected in Exhibits E-1, E-2, E-3 and E-4 are fairly

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representative of the menus utilized on all of the 141 Aquarius Systems.


26.

By September 2012, Aquarius was reaching more than 50,000,000

subscribers. Aquarius VOD Service was being carried by and broadcast to viewers

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throughout North America over approximately 140 Aquarius Systems in the United
States and Canada.

Aquarius Systems included virtually every cable system and

telephone company in the United States and Canada. A true and correct list of the

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Operators which were authorized by Aquarius as Aquarius Systems is attached hereto as


Exhibit D and is incorporated herein as though fully set forth.

Aquarius was

delivering approximately 50 fully-manufactured Broadcast Titles per month to TVN in

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the form of digital files which also contained unique marketing material with respect to
each such Broadcast Title. Each of the Broadcast Titles was crafted to fit within one of
Aquarius proprietary brands identified with Aquarius' trademarks: "Club Taboo,"

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"Reality_FirsTimers," amd "Urban Sin." TVN was receiving approximately $400,000 in


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SECOND AMENDED COMPLAINT

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VOD revenues from Aquarius Systems from subscriber downloads of Aquarius


Broadcast Titles each month.

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27.

Aquarius products were among the best commercially performing adult

materials available to Operators and their respective subscribers throughout the United
States and Canada.

At the retail level (at the level of the Operators), Aquarius

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Broadcast Titles were generating revenues from VOD orders of approximately


$5,000,000 per month.
28.

The TVN Agreement provided that revenues produced by the subscriber

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downloads and VOD payment by the Aquarius Systems were to be paid directly to TVN.

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Therefore, with respect to Aquarius' Broadcast Titles, all but three of the Aquarius

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Systems paid TVN directly; TVN was to account for all such payments and the Aquarius

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share was to be remitted to Aquarius within 30 days of its receipt by TVN. Both

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Aquarius and TVN knew that TVNs monthly remittance was Aquarius most significant

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revenue stream and was relied upon by Aquarius to fund its business operations.
Aquarius Brands, i.e. Proprietary Trademarks

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29.

From its inception, Aquarius sought to create and develop proprietary trade

names to provide Operators and subscribers with recognizable brands which identified

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Aquarius as the source of its unique Broadcast Titles. Aquarius Broadcast Titles were

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created to fit specific content categories reflected by each of Aquarius brands.

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30.

From 2006 until approximately October 2012, Aquarius Broadcast Titles

were delivered to Aquarius Systems and their subscribers as part of Aquarius


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SECOND AMENDED COMPLAINT

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branded platforms and menus. Aquarius brands included its premier platform Club
Taboo, as well as its highly successful platform, Reality_FirsTimers. During 2012,

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Aquarius developed and established a third brand, Urban Sin. Those marks or brands
were designed to be distinctive and were an integral and essential element of Aquarius
VOD Service.

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31.

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Each digital file delivered by Aquarius to TVN and then by TVN to

Aquarius Systems contained the fully-manufactured product information and marketing


material which correlated with the Aquarius brand to which it was to be delivered. The

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Metadata file which was delivered by Aquarius to TVN for each Broadcast Title
identified both Aquarius and its distinctive brand as the source of the product. Aquarius
Systems offered its product to viewers by means of menus which allowed viewers to

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select the specific product the viewer wanted sent to his or her home. Those menus were
substantially in the form of the menus on AT&T U-verse which are reflected on
Exhibits "E-1" through "E-4" which are attached hereto and incorporated herein. That

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information was made available by Operators to their subscribers who ordered a


download with the expectation that they would receive an Aquarius Broadcast Title.
Over the seven years of the TVN/Aquarius relationship, Aquarius delivered more than

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2,000 fully-manufactured Broadcast Titles to TVN for distribution to Aquarius Systems


in the United States and Canada. Each file was specifically assigned to a brand and
menu designated by Aquarius, e.g., Club Taboo, Reality_FirsTimers or Urban

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Sin.
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SECOND AMENDED COMPLAINT

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32.

The TVN Agreement acknowledged the unique value of Aquarius

trademarks and brand identifications. The TVN Agreement also acknowledged the

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unique quality of Aquarius Broadcast Titles and the unique promotional materials
which accompanied those Broadcast Titles, including the unique titles, synopses which
drew viewers and other promotional materials delivered to Operators to advertise

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Aquarius Broadcast Titles, all of which were contained in the fully-manufactured


products which were delivered to TVN. The TVN Agreement expressly recognized that
Aquarius VOD Service, comprised of Aquarius brands, its Broadcast Titles and the

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unique promotional materials, were the exclusive property of Aquarius and that TVN did
not acquire any rights therein by reason of the TVN Agreement or of the conduct of the
parties thereunder.

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33.

Throughout the term of the Aquarius-TVN relationship, Club Taboo was

Aquarius principal platform and was, in fact, one of the most successful adult brands
distributed by TVN. Club Taboo often ranked among the most successful adult brands

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carried by Broadcast Operators throughout the United States. Aquarius' Broadcast Titles
consistently placed among the most successful titles broadcast by Aquarius Systems.
34.

On or about April 20, 2010, the United States Patent and Trademark Office

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issued to Aquarius an original Certificate of Registration for the service mark Club
Taboo. The Certificate bore Registration Number 3,779,187 and recognized that the
first use of the service mark in commerce occurred in August 2007. A true and correct

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SECOND AMENDED COMPLAINT

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copy of the Certificate of Registration for Club Taboo is attached hereto as Exhibit
B and incorporated fully herein.

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35.

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On or about September 6, 2011, the United States Patent and Trademark

Office issued to Aquarius an original Certificate of Registration for the service mark
Reality_FirsTimers.

The Certificate bore Registration Number 4,024,163 and

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recognized that the first use of the service mark in commerce occurred on November 18,
2009.

A true and correct copy of the Certificate of Registration for

Reality_FirsTimers is attached hereto as Exhibit C and incorporated fully herein.

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FIRST CLAIM FOR RELIEF

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Violation of 15 U.S.C. Section 1125 (The Lanham Act - Reverse Passing Off)

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(Against TVN)

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36.

Aquarius repeats and re-alleges each and every allegation set forth in

paragraphs 1 to 35 of this Second Amended Complaint and incorporates each herein by


reference.

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37.

From approximately March 2006 and throughout the term of the TVN

Agreement, Aquarius established three unique brands or trade names, i.e. Club Taboo,
Reality_FirsTimers and Urban Sin.

These proprietary trademarks defined

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categories through which Aquarius Broadcast Titles were brought to the viewing
audience. Club Taboo was registered for trademark by Aquarius in August 2007 and
has been used by Aquarius continuously in interstate commerce since that date.

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Reality_FirsTimers was registered for trademark by Aquarius on November 18, 2009,


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SECOND AMENDED COMPLAINT

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and has been used by Aquarius continuously in interstate commerce since that date.
Urban Sin was not registered but was established and has been used by Aquarius

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continuously since 2012.

Each of Aquarius proprietary brands was an essential

ingredient of Aquarius VOD Service.


38.

As Aquarius exclusive distributor, TVN licensed Aquarius VOD Service

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and the Broadcast Titles included therein to Operators approved by Aquarius throughout
the United States and Canada. Each of those Operators became Aquarius Systems. The
list of Aquarius Systems, Operators that were licensed to carry Aquarius Broadcast

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Titles, is set forth on Exhibit D. Throughout the term of the TVN Agreement, TVN
distributed Aquarius Broadcast Titles accompanied by metadata specifying that each
title was to be included on one of Aquarius branded menus; that information and

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metadata were delivered by TVN to Aquarius Systems.

The success of Aquarius

products throughout that term helped to establish "Club Taboo," "Reality_FirsTimers,"


and "Urban Sin" as recognizable brands which commanded the attention of

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subscribers.
39.

Each of the Operators had their own on-screen menus which served as a

road map for adult viewers. On those menus, Operators presented to their subscribers

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choices from the adult film manufacturers whose products were carried by that Operator.
The menus used by AT&T U-verse as reflected in Exhibits "E-1," "E-2," "E-3" and
"E-4." All such titles were offered on a VOD basis. When subscribers accessed a

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menu, that menu listed Urban Sin, Club Taboo and Reality_FirsTimers which
16
SECOND AMENDED COMPLAINT

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1
2

were Aquarius proprietary brands. A subscriber would be directed to the individual


menu under Club Taboo, Reality_FirsTimers or Urban Sin and each of the

3
4
5
6

Broadcast Titles listed thereon could be ordered by the subscriber on a VOD basis.
40.

During and throughout the term of the TVN Agreement, Aquarius

Broadcast Titles were uniquely successful in producing subscriber buys on the

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8
9
10

Aquarius Systems listed on Exhibit D. Plaintiff is informed and believes and on that
basis alleges that Aquarius Broadcast Titles produced levels of subscribers buys
which were among the most successful of any manufacturer of adult-themed product not

11
12
13
14

available throughout the United States. Each of those buys resulted in billing by the
individual Operator to the subscriber of as much as $14.00 per buy.
41.

From March 2006 through approximately November 2012, Aquarius

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18

Broadcast Titles and their success in the marketplace established Club Taboo,
Reality_FirsTimers and Urban Sin as successful and recognizable brands throughout
the broadcast community and among the VOD subscribers to whom Aquarius Broadcast

19
20
21
22
23

Titles were delivered.


42.

In November 2012, TVN (as Vubiquity Entertainment Corporation) filed

trademark applications with the U.S. Patent and Trademark Office to register the

24

following trade names: Club Fantasy, First Time Fantasy and Urban Fantasy.

25

Plaintiff is informed and believes and thereon alleges that the names selected were

26
27

intended to be confusingly similar to Aquarius successful and well-known brands.

28
17
SECOND AMENDED COMPLAINT

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1
2

43.

Plaintiff is further informed and believes and on that basis alleges that on or

about December 1, 2012, TVN instructed all Aquarius Systems to remove from their

3
4
5
6

menus all references to the Aquarius brands. Specifically, the Aquarius Systems were
told that Club Taboo was to be removed and in its place, the System was to insert
TVNs newly-registered Club Fantasy; Aquarius Reality_FirsTimers was to be

7
8
9
10

removed from the Aquarius Systems and in its place, the Aquarius Systems were to
insert TVNs newly-registered First Time Fantasy; and the Aquarius Systems were
advised that Urban Sin was to be removed from the Aquarius Systems and in its place,

11
12
13
14

the Aquarius Systems were to insert TVNs newly-registered Urban Fantasy. In all
other respects, the Broadcast Titles had been entrusted to TVN and which comprised the
entire inventory of products of the Aquarius VOD Service were to remain in place

15
16
17
18

unchanged.
44.

Throughout the period December 1, 2012 through March 31, 2013, all

Broadcast Titles on each of the Aquarius Systems were Aquarius Broadcast Titles which

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21
22

had been delivered to TVN for distribution to Aquarius Systems as part of Aquarius
VOD Service as required under the TVN Agreement. At TVNs direction, Aquarius
Broadcast Titles were to remain unchanged; however, each of the branded menus of the

23
24
25
26

141 Aquarius Systems were to be changed to reflect TVNs brand names in place of
Aquarius brands.
45.

The menus on all Aquarius Systems were changed to comply with TVNs

27
28

instructions. Aquarius brands were removed and the menus were re-labeled to reflect
18
SECOND AMENDED COMPLAINT

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1
2

TVNs newly-acquired and confusingly similar brands. The titles displayed on the
relabeled menus remained Aquarius Broadcast Titles. References to Aquarius brands

3
4
5
6

were removed and replaced with TVNs newly-acquired and confusingly similar brands.
46.

As a result of TVN's re-labeling, when a subscriber accessed adult-themed

"By Brand," Aquarius' "Club Taboo" was removed and in its place, TVN's "Club

7
8
9
10

Fantasy" was substituted.

Aquarius' "Reality_FirstTimers" was removed and in its

place, TVN's "First Time Fantasy" was substituted and Aquarius' "Urban Sin" was
removed and in its place, TVN's "Urban Fantasy" was substituted.

11
12
13
14

As a result of TVNs instructions, if a subscriber accessed adult-themed materials By


Category, all references to Aquarius and its brands were removed from the individual
Broadcast Titles as well as the promotional and advertising materials which Aquarius

15
16
17
18

had provided to TVN as part of the fully-manufactured digital files which TVN had
agreed to distribute as they had been delivered to TVN.
47.

All promotional materials delivered by Aquarius to TVN were then

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20
21
22

delivered by TVN to the Aquarius Systems without any reference to Aquarius Club
Taboo, Reality_FirstTimers or Urban Sin. The promotional materials, which were
intended by Aquarius to advertise Aquarius brands, were instead used by TVN and

23
24
25
26

DOES 1 through 6 to advertise TVNs confusingly similar brands. TVN secretly relabeled and re-packaged all of Aquarius Broadcast Titles and replaced Aquarius labels
with TVNs counterfeit brand labels.

27
28
19
SECOND AMENDED COMPLAINT

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1
2

48.

On the 141 Aquarius Systems menus, Plaintiffs Broadcast Titles were

labeled with TVNs counterfeit branding. As Exhibits E-1 through E-4 reflect,

3
4
5
6

Aquarius Systems still continue to use and display TVNs counterfeit brands. In doing
so, the commercial value of Aquarius brands has been effectively destroyed. Aquarius
was, in fact, advised by one or more Aquarius Systems that Broadcast Operators simply

7
8
9
10

could not carry two confusingly similar brands. Inasmuch as it was then offering TVNs
counterfeit brands, it would be confusing to subscribers to be offered two similar adult
brands.

11
12
13
14

49.

Aquarius was never advised of nor did it authorize such changes made in

the terms and conditions of its agreements with its authorized Aquarius Systems.
Moreover, Aquarius was never advised of TVNs secret and fraudulent activity. TVN

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18

traded upon and utilized successful Aquarius products to establish its newly-registered
trade names/brands, each of which was intentionally named to be so similar to Aquarius
brand names as to confuse the consumer, ie. subscriber.

19
20
21
22

50.

Plaintiff is informed and believes and on that basis alleges that TVN

instructed each of Aquarius Systems to remove all references to Aquarius and/or its
proprietary trademarks from any of the menus and/or promotional materials available to

23
24
25
26

viewers/subscribers. TVN falsely designated the source of the Broadcast Titles as Club
Fantasy, its own registered trade name, instead of the manufacturer of the product, i.e.,
the Broadcast Titles true source, Aquarius Club Taboo. TVN falsely designated the

27
28

source of the Broadcast Titles as First Time Fantasy, its own registered trade name,
20
SECOND AMENDED COMPLAINT

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1
2

instead of Broadcast Titles true source, Aquarius Reality_FirsTimers. TVN falsely


designated the source of the Broadcast Titles as Urban Fantasy, its own registered

3
4
5
6

trade name, instead of Broadcast Titles true source, Aquarius Urban Sin. TVN
obtained Aquarius fully-manufacture4d digital files and effectively removed therefrom
references to Aquarius and its trademarks and re-packaged Aquarius titles under its own

7
8
9
10

labels, its counterfeit brand names. TVNs conduct in re-labeling Aquarius Broadcast
Titles constituted reverse passing-off under the Lanham Act.
51.

Notwithstanding TVNs changes to the menus and promotional materials

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12
13
14

furnished by TVN for broadcast over Aquarius Systems, all Broadcast Titles available to
subscribers for the period December 2012 through March 2013 consisted of Broadcast
Titles delivered to TVN by Aquarius as provided in the TVN Agreement.

15
16
17
18

52.

No substantive change was made by TVN to Aquarius' Broadcast Titles.

They were as the TVN Agreement mandated, to be distributed, i.e. "handed off," to
Aquarius Systems with associated metadata as delivered to TVN by Aquarius. Instead

19
20
21
22

those titles were offered for purchase under TVNs labels. TVN simply re-labeled
Aquarius tangible products, the Broadcast Titles and sold them as their own. Plaintiff is
informed and believes and on that basis alleges that during the period April 1, 2013 to

23
24
25
26

June 30, 2013, TVN continued to distribute Aquarius Broadcast Titles over what had
been Aquarius Systems and to falsely designate the source of those Broadcast Titles
under TVNs newly-registered trade names.

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28
21
SECOND AMENDED COMPLAINT

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1
2

53.

Plaintiff is informed and believes and on that basis alleges that during the

period starting in November 2012 until sometime in February 2013, TVN, with the

3
4
5
6

active (albeit secret) and fraudulent involvement of one or more employees of Aquarius,
systematically removed from Aquarius Broadcast Titles any reference to Aquarius
brands Club Taboo and/or Reality_FirsTimers.

Such references were similarly

7
8
9
10

removed from the Metadata which accompanied those Broadcast Titles to Aquarius
Systems throughout North America.
54.

Plaintiff is informed and believes and on that basis alleges that TVN falsely

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12
13
14

designated and misrepresented the source of Aquarius Broadcast Titles by passing off
such titles as having been manufactured by TVN rather than Aquarius.

TVNs false

and fraudulent identification of the source of Aquarius titles was intended to divert

15
16
17
18

subscribers away from the Aquarius brands and establish TVNs similar infringing
brands by exploiting the proven quality of Aquarius Broadcast Titles.
55.

In or about February or March 2013, Aquarius contacted several Aquarius

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22

Systems which had successfully carried Aquarius Broadcast Titles during the previous
six years. Aquarius advised those Operators that its Broadcast Titles and its successful
brands would no longer be distributed by TVN. Aquarius requested the Operators

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24
25
26

continue to carry Aquarius Broadcast Titles under Aquarius established brands by


dealing directly with Aquarius rather than through TVN. Aquarius was advised by
several Operators that Aquarius Broadcast Titles had been broadcast for several months

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28
22
SECOND AMENDED COMPLAINT

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1
2

under TVNs similar brand names at TVNs instruction. Those Operators informed
Aquarius that they could not carry two such confusingly similar brands.

3
4
5
6

56.

TVNs misrepresentation of the source of the manufacture of Aquarius

Broadcast Titles, i.e., its reverse passing off, has destroyed Aquarius ability to
maintain continuity for its trade names. Those trade names which had been established

7
8
9
10

in the marketplace over many years were taken off the airwaves at the specific
instruction of TVN, Aquarius exclusive distributor, without the knowledge or consent
of Aquarius.

11
12
13
14

57.

Plaintiff is informed and believes and on that basis alleges that TVNs

conduct was intentional and willful. Aquarius has been severely damaged as its trade
names, which it had spent years to establish, are no longer of appreciable value to the

15
16
17
18

141 Operators which had successfully brought them to their subscribers for more than
six years. TVN co-opted those relationships and diverted them for its own exclusive
benefit. As a direct and proximate result of TVNs willful misconduct as alleged above,

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20
21
22

Aquarius has suffered damages to its goodwill, its brands and to its business, including
lost profits. The exact amount of the damages is unknown, but Plaintiff is informed and
believes and on that basis, alleges that such damage is not less than Five Million U.S.

23
24
25
26

Dollars ($5,000,000.00).
58.

Plaintiff is further informed and believes and on that basis, alleges that in

addition to the damage willfully caused, TVN and its affiliated companies made and

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28

continue to generate substantial revenues resulting from their willfully passing off
23
SECOND AMENDED COMPLAINT

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1
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Aquarius products as their own. The amount of such revenues is currently unknown but
Plaintiff believes them to be in excess of Five Million U.S. Dollars ($5,000,000.00).

3
4
5
6

Those amounts can only be ascertained by an accounting of all profits received by TVN
as a result of its illegal conduct.
59.

By virtue of TVNs willful violation of the Lanham Act, including,

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8
9
10

specifically, 15 U.S.C. 1125(a), Plaintiff is further entitled to recover from TVN all
damages permitted thereunder for willful infringement of Aquarius federally-registered
trademarks, including all direct and consequential damages, lost profits, defendants

11
12
13

profits, as well as treble damages to the extent provided by law, and all attorneys fees
and costs incurred in connection with this lawsuit.

14

SECOND CLAIM FOR RELIEF

15
Violation of 15 U.S.C. Section 1125 (The Lanham Act)

16
17

Contributory Infringement of Trademarks -

18

Reverse Passing Off

19
(Against Defendants Does 1-10)

20
21
22

60.

Aquarius repeats and re-alleges each and every allegation set forth in

paragraphs 1 to 35 and 37 to 59 of this Second Amended Complaint and incorporates

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24
25
26

each herein by reference.


61.

Plaintiff is informed and believes and based thereon alleges that TVNs

scheme to pass off Plaintiffs Broadcast Titles as its own was made known by TVN to

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28
24
SECOND AMENDED COMPLAINT

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1
2

not less than six of the Operators of the 141 listed in Exhibit D and to persons, firms
or corporations whose identities are not known to Plaintiff at this time.

3
4
5
6

62.

Plaintiff is informed and believes and based thereon alleges that Defendants

DOES 1 to 6 are Operators and/or individuals employed by such Operators who


knowingly and actively participated in TVNs scheme and received substantial benefits

7
8
9
10

from TVNs reverse passing off of Aquarius products, i.e. fully-manufactured


Broadcast Titles which TVN simply repackaged to remove Aquarius trademarks and
substituted its own. Plaintiff is informed and believes and, on that basis, alleges that

11
12
13
14

DOES 1 to 6 removed all Club Taboo, Reality_FirsTimers and Urban Sin


references from their menus with the knowledge that in so doing, they were knowingly
contributing to and were complicit in TVNs violations of the Lanham Act and the

15
16
17
18

infringement of Aquarius trademarks.


63.

Plaintiff is informed and believes and based thereon alleges that DOES 7, 8,

9 and 10 are individuals, persons, firms or corporations who actively participated in

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20
21
22

TVNs scheme and received substantial economic benefit from TVNs fraudulent
conduct, its reverse passing off. Plaintiff is informed and believes and on that basis,
alleges that one or more of DOES 7 , 8, 9 and 10 were or had been employees of

23
24
25
26

Aquarius and/or persons and companies who participated in and facilitated TVN's
scheme and that TVN compensated DOES 7 to 10 in some form or fashion for their
complicity in TVNs scheme. Each of DOES 7 to 10 was complicit in TVNs scheme

27
28

in order to assure themselves that after Aquarius brands were forced off the air and the
25
SECOND AMENDED COMPLAINT

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1
2

TVN Agreement had terminated, they would be guaranteed broadcast platforms to


populate TVNs infringing trademarks and/or the shelf-space which TVN had arrogated

3
4
5
6

to itself in violation of its obligations to Aquarius. Plaintiff is informed and believes that
TVN continues to compensate DOES 7, 8, 9 and 10 for such complicity.
64.

The conduct of TVN and DOES 1 to 10 was intentionally designed to

7
8
9
10

deprive Aquarius of the advertising value of its trade names Club Taboo,
Reality_FirsTimers and Urban Sin and of the goodwill that would result from public
knowledge of the true source of the manufacture of Aquarius Broadcast Titles in order to

11
12
13
14

establish the value of TVNs new trade names and to destroy the value of Aquarius
existing trade names. TVNs conduct and that of DOES 1 through 10 was willful and
intentionally done to damage Plaintiff. Aquarius was damaged to the extent that the

15
16
17
18

trade names which it had spent six years to establish were no longer of any value to the
141 Operators with whom it had successfully dealt during that six year period. Those
Operators and their subscribers represented and continue to represent the vast majority

19
20
21
22

of the total audience of adult VOD broadcasts in the United States. The exact amount of
such damages is unknown to Plaintiff at this time, but Plaintiff is informed and believes
and, on that basis, alleges that such damage is not less than Five Million U.S. Dollars

23
24
25
26

($5,000,000.00).
65.

By virtue of TVNs willful infringements of Plaintiffs registered

trademarks in violation of 15 U.S.C. 1125(a), and the knowing contribution of DOES 1

27
28

to 10 to those infringements,

Plaintiff is entitled to all damages and/or statutory


26
SECOND AMENDED COMPLAINT

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1
2

remedies provided under the Lanham Act for willful infringements of Aquarius
trademarks. Such damages include treble damages to the extent provided by law, lost

3
4
5

profits, defendants profits and attorneys fees and costs against each of the Defendants
DOES 1 to 10 who participated in and contributed to TVNs willful infringements.

THIRD CLAIM FOR RELIEF

7
Breach of Written Distribution Agreement

8
9
10

(Against Defendant TVN)


66.

Aquarius repeats and incorporates the allegations set forth in paragraphs 1

11
12
13
14

to 35 and paragraphs 37 to 59 of this Second Amended Complaint as if set forth in full


herein.
67.

Under the TVN Agreement, Aquarius engaged TVN as its exclusive

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16
17
18

distributor in the United States and Canada to encode, manage and deliver Aquarius
Broadcast Titles as part of Aquarius VOD Service to Aquarius Systems. TVN agreed
to deliver the Aquarius VOD Service intact, as it was delivered to TVN by Aquarius.

19
20
21
22

68.

Plaintiff is informed and believes and on that basis alleges that during and

throughout the term of the TVN Agreement, TVN entered into numerous agreements
with Operators, pursuant to which TVN licensed those Operators to carry Aquarius

23
24
25
26

Broadcast Titles. At no time during the term of the TVN Agreement did TVN provide
Aquarius with copies of any such agreements.

Notwithstanding TVNs specific

agreement to obtain Aquarius approval of the material terms of such agreements, TVN

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28

never fully disclosed the material terms of those agreements to Aquarius. Instead of
27
SECOND AMENDED COMPLAINT

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 28 of 87 Page ID #:442

1
2

entering into agreements as a licensor on behalf of Aquarius as required by the TVN


Agreement, TVN materially breached its contractual obligations to Aquarius by entering

3
4
5
6

into agreements with Operators solely in TVNs own name and for its own exclusive
benefit.

TVN acquired the rights to control an unknown quantity of hours of

programming time, bandwidth or shelf-space on the systems controlled by Operators.

7
8
9
10

69.

By entering into those agreements, the material terms of which it never

fully disclosed to Aquarius, TVN sought control of a majority of the shelf-space


available for manufacturers of adult products on major systems throughout the United

11
12
13
14

States. TVN used Aquarius successful adult Broadcast Titles to obtain shelf-space in
its own name and on its own behalf.
70.

The TVN Agreement expired on or about March 15, 2013. By that time,

15
16
17
18

Aquarius VOD Service was being carried on virtually every Operator (cable and
telephone companies) within North America. At relevant times herein, TVN never
advised Aquarius and Aquarius was unaware that its exclusive distributor had entered

19
20
21
22

into undisclosed agreements with Operators under which TVN used Aquarius products
to acquire shelf-space in TVNs own name. The agreements deprived Aquarius of the
benefits of any continuing relationship with Operators upon the expiration of the TVN

23
24
25
26

Agreement.

The shelf-space had been appropriated exclusively by TVN to the

exclusion of its client, Aquarius.


71.

During the term of the exclusive TVN Agreement, TVN co-opted the

27
28

relationships with each of the Operators which carried Aquarius products for TVNs
28
SECOND AMENDED COMPLAINT

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1
2

sole exclusive benefit. TVN failed to act as distributor of Aquarius Broadcast Titles on
behalf of Aquarius. Instead, TVN secretly utilized Aquarius proprietary trademarks and

3
4
5
6

licensed adult-themed products to reserve and appropriate the shelf-space on those


Operators. TVN continued to occupy that shelf-space after the TVN Agreement expired.
This deprived Aquarius of its ability to continue the business it had built for seven years.

7
8
9
10

72.

Plaintiff is further informed and believes and on that basis alleges that, prior

to the expiration of the TVN Agreement, in or about November 2012, TVN secretly
notified Operators that TVN would no longer be distributing Aquarius products, that all

11
12
13
14

shelf-space being occupied by Aquarius content was the property of TVN and that
Aquarius had no contractual rights under the agreements between TVN and those
Operators.

15
16
17
18

73.

During and throughout the term of the TVN Agreement, many of the

material terms of agreements between TVN and the Operators to which Aquarius
content was licensed by TVN were not disclosed to or approved by Aquarius in writing.

19
20
21
22

In fact, none of the agreements between TVN and Aquarius Systems were ever shown to
Aquarius.
74.

The TVN Agreement (Exhibit A) provides that revenues generated by

23
24
25
26

the Aquarius Broadcast Titles from Broadcast Operators to which TVN distributed
Aquarius Broadcast Titles were to be collected directly by TVN. TVN agreed to
account to Aquarius within thirty (30) days of receipt by TVN of any such revenues and

27
28

to pay to Aquarius its share of such revenues concurrently with such accountings.
29
SECOND AMENDED COMPLAINT

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1
2

75.

In or about the fall of 2012, TVN withheld significant portions of the

revenues to which Aquarius was entitled. TVN claimed those withholdings to be in

3
4
5
6

payment of a debt owed by Aquarius to TVN. TVN and Aquarius agreed that from
August 27, 2010 to August 15, 2011, TVN could withhold an agreed upon amount, i.e.
$75,000 per month to apply toward what TVN claimed to be the Aquarius debt.

7
8
9
10

76.

Notwithstanding TVNs specific agreement to act as Aquarius exclusive

distributor, to collect on Aquarius account all Aquarius revenues and remit those
revenues to Aquarius, starting in or about November 2012, TVN, unilaterally and

11
12
13
14

without the consent of Aquarius, withheld all of Aquarius share of revenues from
Aquarius Broadcast Titles.

TVN knew that the collections it made for Aquarius

account represented a significant majority of Aquarius revenues and that by withholding

15
16
17
18

such funds, Aquarius would be forced to cease its operations for lack of sufficient funds.
Because of TVNs conduct, Aquarius revenue was cut off, its relationships with the
Operators were co-opted and its ability to operate as an ongoing business was destroyed.

19
20
21
22

77.

In or about December 2012, four (4) months prior to the expiration of the

TVN agreement, TVN stopped sending any monthly accountings or payments to


Aquarius. To date, Aquarius has not received any accounting of revenues received by

23
24
25
26

TVN for the Aquarius Broadcast Titles since November 2012, when Aquarius received
an accounting of revenues for VOD buys during the month of August 2012. Typically,
Operators accountings and remittances followed the monthly period in which buys

27
28
30
SECOND AMENDED COMPLAINT

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 31 of 87 Page ID #:445

1
2

occurred, by three months (hence, a November accounting for revenues earned in


August).

3
4
5
6

78.

August 2012 was the last monthly period for which TVN furnished any

accountings to Aquarius. That accounting was received in November 2012. For the
periods from August 2012 through June 2013, Plaintiff is informed and believes and

7
8
9
10

based thereon alleges that TVN received from Operators not less than $3,000,000 on
account of revenues produced by VOD sales of Aquarius Broadcast Titles. The TVN
Agreement is specific in its requirement that Aquarius is to receive monthly accountings

11
12
13
14

with respect to each of the Operators on which its Broadcast Titles are carried. Those
accountings are required to show the specific income produced by each Broadcast Title
from each of the Operators to which TVN delivered Aquarius Broadcast Titles.

15
16
17
18

Aquarius is informed and believes and on that basis, alleges that all of the materials
which contain that specific information was provided by Aquarius Systems to TVN
setting forth all buys of Aquarius Broadcast Titles and all revenues for the periods

19
20
21
22

through and including the month of June 2013. Aquarius does not here, nor elsewhere,
acknowledge the truth or accuracy of those accountings which were furnished by TVN.
TVN refused and continues to refuse to provide any accountings for those periods and

23
24
25
26

has further refused to remit any of the revenues which it had received from Operators for
subscribers VOD buys of Aquarius products.
79.

Aquarius has performed all of its obligations under the TVN Agreement

27
28

except only those obligations which it was incapable of performing by virtue of TVNs
31
SECOND AMENDED COMPLAINT

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 32 of 87 Page ID #:446

1
2

retention of Aquarius revenues and breaches of TVNs obligations under the TVN
Agreement.

3
4
5
6

80.

By reason of the foregoing, Aquarius is entitled to an accounting of all

revenues received by TVN and its affiliated companies from VOD buys of Aquarius
Broadcast Titles under each and every agreement between TVN and any Broadcast

7
8
9
10

Operators which carried Aquarius Broadcast Titles and/or Aquarius VOD Service during
the period August 2012 to present. The exact amount of the damages is unknown but
could be ascertained based on detailed accountings from TVN.

11
12
13
14

81.

As a result of TVNs breaches of its obligations under the TVN Agreement,

including TVNs breach of its obligations to account for and pay Aquarius revenues,
Aquarius has been rendered unable to continue its business and has suffered significant

15
16
17
18

damages, including lost profits and loss of goodwill. Aquarius is unable to ascertain the
exact amount of such damage and losses without a detailed accounting which TVN has
refused to provide. Aquarius is informed and believes and on that basis alleges that such

19
20

amount is not less than Five Million U.S. Dollars ($5,000.000.00).

21

FOURTH CLAIM FOR RELIEF

22

Breach of Covenant of Good Faith and Fair Dealing

23
(Against Defendant TVN)

24
25
26

82.

Aquarius repeats and re-alleges each and every allegation set forth in

paragraphs 1 to 35, paragraphs 37 to 59 and paragraphs 67 to 81 of this Second

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Amended Complaint and incorporates each herein by reference.


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SECOND AMENDED COMPLAINT

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83.

Under California law, each and every contract is to be interpreted as

containing an implied promise of good faith and fair dealing that each party will act

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fairly and in good faith toward its contracting partner and will refrain from doing
anything to unfairly interfere with the right of any other party to receive the benefits of
the contract. The TVN Agreement is, by its terms, to be interpreted in accordance with

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California law.
84.

In the TVN Agreement, TVN undertook obligations which were

confidential in nature and tantamount to those of a fiduciary. TVN agreed to act as

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Aquarius exclusive distributor; TVN had the exclusive right to regulate the distribution
of Aquarius one and only product, its Broadcast Titles; TVN had the exclusive right to
collect virtually all of Aquarius revenues; and TVN had the exclusive right to enter into

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agreements on Aquarius behalf with Operators throughout North America, which


provided Aquarius only means to reach the viewing audience for its Broadcast Titles.
Virtually all of Aquarius business functions, the lifes blood of its business existence,

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were controlled by TVN, and TVN agreed to act in good faith and to deal fairly with
Aquarius in the performance of TVNs rights and obligations under the TVN
Agreement.

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85.

Aquarius placed its trust and reliance upon TVNs faithful performance of

each and all of its obligations under the TVN Agreement. TVN violated that trust and
used the discretion granted it under the TVN Agreement to deprive Aquarius of its

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benefits under the TVN Agreement.


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SECOND AMENDED COMPLAINT

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86.

TVN, without the knowledge of Aquarius, entered into agreements with

Operators not in Aquarius name but in its own. Rather than distributing Aquarius

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products in good faith, TVN used Aquarius products to acquire shelf-space on the
systems owned by Operators on which Aquarius products were made available to
subscribers on a VOD basis. Rather than distributing Aquarius Broadcast Titles for the

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benefit of Aquarius, TVN used Aquarius titles to acquire a proprietary interest in the
shelf-space on which Aquarius Broadcast Titles were carried.
87.

TVN knew that Aquarius acquired scenes from adult film producers and

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manufacture derivative compilations into digital files which contained fullymanufactured Broadcast Titles. TVN knew that Aquarius did not produce original adult
materials but acquired such materials from suppliers who had been associated with

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Aquarius throughout its years of operation. Notwithstanding its obligations to Aquarius,


TVN solicited the principal suppliers of content who provided the underlying material
from which Aquarius created its Broadcast Titles.

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88.

Plaintiff is informed and believes and on that basis alleges that TVN

represented to each of those providers that it, TVN, owned the shelf-space on which
Aquarius products were being carried. TVN offered to sell that shelf-space by

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promising that it would provide to each such provider a minimum number of hours of
shelf-space if those providers ceased to do business with Aquarius and commenced
doing business directly with TVN or companies over which TVN had substantial

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control.
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SECOND AMENDED COMPLAINT

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89.

Sometime in 2012, both TVN and Aquarius were aware that the TVN

Agreement was set to expire in March 2013.

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90.

Plaintiff is informed and believes and on that basis, alleges that in fact, prior

to March 13, 2013, which was the expiration date of the TVN Agreement, TVN entered
into agreements with one or more of Aquarius providers (one or more of DOES 7 10),

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8
9
10

and those providers did, in fact, refuse to do business with Aquarius from that point and
actively participated in TVNs fraudulent scheme.
91.

TVN withheld all funds of Aquarius for the seven (7) months preceding the

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expiration of the TVN Agreement, thereby and knowingly leaving Aquarius without
sufficient resources to continue its business. TVN co-opted and diverted to itself the
productive relationships with Operators who had carried Aquarius Broadcast Titles

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throughout the seven-year term of the TVN Agreement. TVN solicited the providers
from which Aquarius obtained the raw materials for its Broadcast Titles and induced
them to deal with TVN and not Aquarius. TVN solicited one or more employees of

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Aquarius to participate in its plan to undermine Aquarius and to divert Aquarius


business relationships from Aquarius to TVN and/or to persons, firms or corporations
controlled by TVN.

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92.

All of the aforesaid conduct was done with the intent to destroy Aquarius

ability to conduct its business and to appropriate unto itself the materials which Aquarius
needed to continue conducting its business. Essentially, TVN did everything it could to

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35
SECOND AMENDED COMPLAINT

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force Aquarius out of business while arrogating to itself or companies under its control
of all Aquarius business relationships, assets and, in some cases, its personnel.

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93.

Plaintiff alleges that it performed all, or substantially all, of its material

obligations under the TVN Agreement.

Plaintiff further alleges that all conditions

precedent to TVNs performance were duly and timely performed or were excused.

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TVN unfairly interfered with Aquarius rights to receive the benefits of the TVN
Agreement. Plaintiff has been harmed as a result of TVNs conduct.
94.

By reason of the foregoing, Aquarius is entitled to an accounting of all

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revenues received by TVN, its affiliated companies and any persons, firms or
corporations under its control or with which it entered into agreements by virtue of its
inducement to provide programming services and/or products to TVN directly (DOES 7

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- 10) and to damages measured by the amounts of all revenues received by TVN and/or
DOES 7 - 10. The exact amount of the damages is unknown but any such amount could
only be ascertained by means of detailed accountings from TVN.

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95.

Plaintiff further alleges that by virtue of TVN's breaches of its obligations

to act in good faith and deal fairly with Aquarius, including TVN's failure to account for
and pay Aquarius' revenues, Aquarius was unable to continue its business and suffered

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damages including lost profits and loss of goodwill as a result of such breaches.
Aquarius is unaware of the exact amount of such profits but Aquarius is informed and
believes and on that basis, alleges that such amount is not less than Five Million U.S.

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Dollars ($5,000,000.00).
36
SECOND AMENDED COMPLAINT

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FIFTH CLAIM FOR RELIEF

Violation of California Business & Professions Code 17200, et seq.

3
(Against Defendants TVN and DOES 7 - 10)

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96.

5
6

Aquarius repeats and re-alleges each and every allegation set forth in

paragraphs 1 to 95 of this Second Amended Complaint and incorporates each herein by

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reference.
97.

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10

The unlawful and unfair conduct of TVN and DOES 7 - 10 took place in the

State of California and specifically, in Los Angeles County. Reverse passing off is a

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prohibited conduct under, inter alia, California Business & Professions Code 17200,
et seq.
98.

Plaintiff is informed and believes and based thereon alleges that DOES 7, 8,

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9 and 10 are individuals, persons, firms or corporations who actively participated in


TVNs scheme and received substantial economic benefit from TVNs fraudulent
conduct in violation of its confidential, quasi fiduciary obligations to Aquarius and its

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reverse passing off in derogation of Aquarius' proprietary trademarks.

Plaintiff is

informed and believes and on that basis, alleges that one or more of DOES 7, 8, 9 and 10
were or had been employees of Aquarius who actively participated in TVN's scheme and

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that TVN compensated DOES 7 to 10 in some form or fashion for their complicity in
TVNs scheme. They were complicit in TVNs scheme in order to assure themselves
that after Aquarius brands were forced off the air and the TVN Agreement had

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terminated, they would be guaranteed broadcast platforms to populate TVNs infringing


37
SECOND AMENDED COMPLAINT

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2

trademarks, and/or to populate the "shelf-space" which TVN had arrogated to itself in
violation of its obligations under the TVN Agreement. Plaintiff is informed and believes

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5
6

that TVN continues to compensate DOES 7, 8, 9 and 10 for such complicity.


99.

The conduct of TVN and DOES 7 to 10 was intentionally designed to

deprive Aquarius of the advertising value of its trade names Club Taboo,

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10

Reality_FirsTimers and Urban Sin and of the goodwill that would result from public
knowledge of the true source of the manufacture of Aquarius Broadcast Titles in order to
establish the value of TVNs new trade names and to destroy the value of Aquarius

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existing trade names. That conduct was also designed by TVN and by DOES 7 to 10 to
unlawfully force TVN off the Aquarius Systems, to cut off its supply of scene4s from
which it could manufacture its products. In essence, that conduct was intended to force

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Aquarius out of business. TVNs conduct and that of DOES 7 through 10 was willful
and intentionally done to damage Plaintiff. Aquarius was damaged to the extent that the
trade names which it had spent six years to establish were no longer of any value to the

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141 Operators with whom it had successfully dealt during that six year period. Those
Operators and their subscribers represented and continue to represent the vast majority
of the total audience of adult VOD broadcasts in the United States. The exact amount of

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such damages is unknown to Plaintiff at this time, but Plaintiff is informed and believes
and, on that basis, alleges that such damage is not less than Five Million U.S. Dollars
($5,000,000.00).

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SECOND AMENDED COMPLAINT

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100. The conduct of Defendants TVN and DOES 7 to 10, in willfully and

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intentionally passing off TVN's confusingly and similar trade names as the source of

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Aquarius Broadcast Titles, constitutes reverse passing off as defined in said statutes and
is specifically designated as an unfair business practice under California law.

101. Defendants TVN and DOES 7 to 10 acts hereinabove alleged are acts of

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8

unfair competition within the meaning of Cal. Bus. & Prof. Code 17200, et seq.
102. Pursuant to Cal. Bus. & Prof. Code 17200, et seq., as a direct, proximate

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and foreseeable result of Defendants TVN and DOES 7 to 10 willfully and intentionally

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committing such unfair business practices, Plaintiff is entitled to relief, including full
restitution and/or disgorgement of all revenues, earnings, profits, compensation and
benefits that may have been obtained by Defendants TVN and DOES 7 - 10 as a result of

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such unfair business acts or practices.


103. Plaintiff has incurred and, during the pendency of this action, will incur

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expenses for attorneys fees and costs herein. Such attorneys fees and costs are

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necessary for the prosecution of this action.


\\\
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\\\
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SECOND AMENDED COMPLAINT

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PRAYER FOR RELIEF


WHEREFORE, Plaintiff prays for relief against Defendants, and each of them,

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6

jointly and severally, as follows:


1.

On the First Claim for Relief, Plaintiff be awarded damages in an

amount according to proof, but which Plaintiff is informed and believes to be

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not less than Five Million U.S. Dollars ($5,000,000.00), plus interest thereon;
2.

On the Second Claim for Relief, Plaintiff be awarded damages for

Defendants intentional and willful conduct in an amount according to proof,

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14

3.

but which Plaintiff is informed and believes to be not less than Five

Million U.S. Dollars ($5,000,000.00), plus interest thereon;


4.

On the First and Second Claims for relief, for Defendants' profits

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that are attributable to the infringement;


5.

On the Third Claim for Relief, a full and complete accounting and

that Plaintiff be awarded damages in an amount according to proof, but which

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Plaintiff is informed and believes to be not less than Five Million U.S.
Dollars ($5,000,000.00), plus interest thereon;
6.

On the Fourth Claim for Relief, Plaintiff be awarded damages in an

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amount according to proof, but which Plaintiff is informed and believes to be


not less than Five Million U.S. Dollars ($5,000,000.00), plus interest thereon;
7.

On the Fifth Claim for Relief, that Plaintiff be awarded full

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restitution

and/or

disgorgement

of

all

revenues,

40
SECOND AMENDED COMPLAINT

earnings,

profits,

Case 2:15-cv-01854-SVW-VBK Document 31 Filed 03/25/16 Page 41 of 87 Page ID #:455

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compensation and benefits that may have been obtained that resulted from
Defendants unfair business practices in an amount according to proof and

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5
6

pursuant to Cal. Bus. & Prof. Code 17200, et seq.;


8.

For costs of suit incurred;

9.

For reasonable attorneys fees to the extent permitted by law;

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and,

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10.

For such other and further relief as the Court may deem just and

proper.

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Dated: March 25, 2015

Respectfully submitted,
ABRAMS COATE LLP

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By:
/S/
Charles M. Coate
Michael M. Plotkin
Attorneys for Plaintiff Aquarius Broadcasting
Corporation

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41
SECOND AMENDED COMPLAINT

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DEMAND FOR JURY TRIAL

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Plaintiff hereby demands trial by jury on all issues triable to a jury.

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Dated: March 25, 2015

Respectfully submitted,
ABRAMS COATE LLP
By:
/S/
Charles M. Coate
Michael M. Plotkin
Attorneys for Plaintiff Aquarius Broadcasting
Corporation

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