Second Amended Verified Original Petition and Application for TRO and Temporary Injunction, Universal Image, Inc. v. Yahoo, Inc.
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TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW Universal Image, Inc. d/b/a Chalkboardtalk.com, complaining of the acts of Yahoo, Inc., Broadcast.com, Inc., Mark Cuban, Individually and Todd Wagner, Individually, and for cause would respectfully show unto this Court, as follows:
. . . .
IV. FACTUAL BACKGROUND
A. Introduction
8. On or about March 31, 1999, Broadcast and Yahoo announced a highly publicized and much celebrated transaction, where in Yahoo acquired Broadcast for a total acquisition price of $5.7 billion dollars. . . . However, Yahoo's acquisition of Broadcast was based on a fraud - a fraud on the public and a fraud on Universal - for a substantial portion of the assets and value of Broadcast was fraudulently obtained and unlawfully converted from universal.
9. At the time of the acquisition, Broadcast was under the contractual obligation to provide Universal with extremely valuable registration and address information and to provide Universal with key "links" on Broadcast's web page. The registration information (hereinafter "registration information") has been collected on a video registration form, and has in various iterations included, at various times, e-mail addresses, passwords, users names, and user street addresses. Address information (hereinafter "addresses" or "address information") includes various categories of data storage places where interrelated data may be maintained . . . . The registration and address information and this "virtual real estate" are extremely valuable in the World Wide Web internet industry. . . . As a result of the acquisition, Yahoo assumed this contractual obligation of Broadcast.
10. Yahoo and Broadcast have refused to honor their contractual commitments to Universal. Moreover, Yahoo and Broadcast have negligently and maliciously published a "Privacy Policy" and "Disclaimer" falsely stating to their users that, among other things, no registration information shall be distributed without the user's consent. This Privacy Policy and Disclaimer contradict and violate the Contract and transactions between Universal and Broadcast.
11. By this suit, Universal seeks a temporary restraining order; temporary injunction and permanent injunction against Broadcast and Yahoo, prohibiting them from displaying the Privacy Policy and Disclaimer and prohibiting them from altering Universal's product or using Universal's product in any way inconsistent with the Contract between Universal and Broadcast. Universal further seeks a mandatory injunction ordering Broadcast and Yahoo to comply with their contractual obligations. Universal further requests this court appoints a receiver to take control of all registration information and address information subject to the Contract in question. Universal further seeks a judgment for specific performance, ordering Broadcast and Yahoo to comply fully with the Contract in question. Universal further seeks judgment for all damages suffered as a result of the Defendants’ breach of contract tortious interference, fraud and conversion.
B. The Contract
12. Universal is a World Wide Web "internet company" that, among other things, provides "content development and acquisition." That is, Universal acquires rights to videos and with Yahoo uses a process know as "streaming" whereby the video content is digitalized [sic] into a format that may be viewed on a computer over the World Wide Web internet. . . .
13. Broadcast is a company which provides video and audio products over the World Wide Web internet. . . .
. . . .
15. In the Contract, Universal agreed to provide Broadcast with video programming to transmit over the World Wide Web Internet. In return, Broadcast agreed to provide Universal with registration and address information provided by those who accessed the video programming.
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E. The "Privacy Policy" and "Disclaimer"
35. Yahoo and Broadcast have announced a Privacy Policy to its users, although one that is on its face contradictory and fraudulent . . . . Under this Privacy Policy, Yahoo and Broadcast represent to their users that registration and address information is not disseminated by Yahoo or Broadcast, or is disseminated only to certain identified parties.
36. This Privacy Policy is fraudulent and misleading, as it leads previous users and registrants to believe that their submission of information is also protected by the Privacy Policy, when it is not so protected.
37. The Privacy Policy and Disclaimer were announced and instituted by Yahoo and Broadcast without notice to, approval or, or consent of Universal, yet they falsely indicate to registrants that Universal is and has been bound by these rules at all relevant times.
38. The Privacy Policy states to Broadcast users that "[W]e will notify you at the time of data collection and transfer if your data will be shared with a third party and you will always have the option of not permitting the transfer."n9 This statement is fraudulent and deceptive to users because it falsely indicates that users who registered at any time may block Universal's access to information, and because it falsely indicates that a user my access programming provided by the Universal without allowing Universal access to registration and address information.
39. The fraudulent, misleading, or deceptive statements in the Privacy Policy and Disclaimer subject Universal to potential lawsuits from Yahoo and Broadcast's estimated 80 million users per month for fraud, conspiracy, conversion, deceptive trade practices and other common law and statutory causes of actions. Furthermore, current users have potential lawsuits against Universal if they refuse to grant the Universal access to their registration and address information and are denied access to Universal's programming.
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V. CAUSES OF ACTION
D. COUNT FOUR: CONVERSION - All Defendants
. . . .
59. Universal is the legal owner of the address information referred to in paragraph 1(c) of the Contract between Universal and Broadcast, and is entitled to possession of that information.
60. Broadcast, and/or Mark Cuban and/or Todd Wagner, have taken control of Universal's property and have wrongfully exercised that control in a manner inconsistent with Universal's ownership, and to the exclusion of Universal's rights in the property, specifically by depriving the Universal of the property and instead using the property for their own gain and providing the property to Yahoo and/or others.
61. Yahoo has taken control of Universal's property and has wrongfully exercised that control in a manner inconsistent with Universal's ownership, and to the exclusion of Universal's rights in the property, specifically by depriving the Universal of the property and instead using the property for its own gain and providing the property to others.
62. Universal has demanded that Broadcast, through its counsel and otherwise, as spokesman and agent of all Defendants, return the property wrongfully taken and cease and desist from further taking of Universal's property in the future, to which Defendants have refused.
63. As direct and proximate result of Defendants’ conversion of the property, Universal has sustained damages including, without limitation, diminished value of property, lost income, capital and profits, professional fees, expenses and liabilities, and other damages in an amount not less than $1,000,000,000 or One Billion Dollars.
. . . .
E. COUNT FIVE: Trespass to Personal Property - All Defendants
64. Universal reincorporates the foregoing statements and allegations of this Complaint as if expressly rewritten herein.65. Universal is the legal owner of the address information referred to in paragraph 1(c) of the Contract between Universal and Broadcast, and is entitled to possession of that information.
66. Broadcast, and/or Mark Cuban and/or Todd Wagner, have taken control of Universal's property and has wrongfully exercised that control in a manner inconsistent with Universal's ownership, and to the exclusion of Universal's rights in the property, specifically by depriving the Universal of the property and instead using the property for its own gain and providing the property to yahoo and/or others. As a result of these acts, the value of the property to Universal is significantly if not completely diminished.
67. Yahoo has taken control of Universal's property and has wrongfully exercised that control in a manner inconsistent with Universal's ownership, and to the exclusion of Universal's rights in the property, specifically by depriving the Universal of the property and instead using the property for its own gain and providing the property to others. As a result of these acts, the value of the property to Universal is significantly or completely diminished.
68. As a direct and proximate result of Defendants' trespass to Universal's personal property, Universal has sustained damages including, without limitation, diminished value of property, lost income, capital and profits, professional fees, expenses and liabilities, and other damages in an amount not less than $1,000,000,000 or One Billion Dollars.
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G. COUNT SEVEN: Civil Theft - All Defendants
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78. Broadcast, Cuban, and Wagner unlawfully obtained goods and services from Universal, in violation of Texas Civil Practice & Remedies Code §§ 134.001 et seq., by fraudulently inducing the Universal to enter the Contract, and to render performance thereon.
79. Yahoo unlawfully received goods and services from Universal and Broadcast, knowing that those goods and services had unlawfully been obtained from Universal.
80. Defendants' fraudulent appropriation of Universal's goods and services constitutes theft under Texas Penal Code §§ 31.03 through 31.05.
81. As a direct and proximate result of Defendants' theft, Universal has sustained damages including, without limitation, diminished value of property, lost income, capital and profits, professional fees, expenses and liabilities, and other damages of One Billion times 3 or $3,000,000,000 or Three Billion Dollars.
82. Defendants' conduct constitutes an intentional or reckless disregard of Universal's rights, entitling Universal to an award of One Billion times 3 or $3,000,000,000 or Three Billion Dollars.
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N. COUNT FOURTEEN: Declaratory Judgment - Yahoo and Broadcast
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121. Pursuant to the Contract, Plaintiff is entitled to certain data gained by Broadcast from its users. In partial and often only momentary compliance with that contractual obligation, Broadcast has turned over certain data related to its users to the plaintiff, and in discovery, has made evident that more data exists.
122. The data includes the users’ first and last name, their e-mail address, their passwords, their zip codes, their country of residence, and their connection type and connection speed. These last two are derived, not from voluntarily provided registration information, but from so-called "cookie" information. However, even the registration information is only conditionally provided, with the users having the right to retract or protect that information before it is provided to third parties.
123. Unlike registration information, however, "cookie" information is taken from the users’ computer without the users’ consent. According to Yahoo!Broadcast's web page Privacy Policy:
As part of offering and providing our services, Yahoo!Broadcast uses cookies to store and sometimes track information about you. A cookie is a small amount of data that is sent to your browser from a web server and stored on your computer's hard drive. All areas on our web site where you are prompted to register require that you accept cookies.
124. The use of cookies by Broadcast appears to violate both the criminal and civil laws of Texas. Before Universal makes further use of this data or accepts further data for use when it is based on cookies, it would ask this Honorable Court for a declaration on the legality of Broadcast's use of cookies, its gathering of cookie information, and its transferring of data collected from cookies to Universal.
125. As admitted by Broadcast, a surveillance cookie of Broadcast is stored on users’ hard drives. That is, without consent or permission, without purchasing memory or renting space, absent any agreement with the owners of the hard drive permanently to give up space on their hard drives, such space is deliberately, intentionally, and without legal consideration converted, taken, and held. Within the privacy of users' homes, cookies have the ability to trace users’ every computer movement. The privacy that any computer user would and should and is justified in expecting is illusory; Big Brother shrunk to a miniature cyber spy always looms and never sleeps.
126. Under Texas law, the taking of property of another without their consent is theft. Specifically, under Texas Penal Code Sec. 31.03, "A person commits an offense if he unlawfully appropriates property with intent to deprive the owner of property. Appropriation is unlawful if it is without the owner's effective consent." Broadcast admits by its own Privacy Policy that it takes space on users’ hard drives and that users are required to accept cookies. This appears, prima facie, to constitute theft. As the Contract calls for the fruits of this apparent theft to be turned over to Universal, and to some extent that has already occurred, it is imperative that Universal know whether it is receiving the fruits of a poisonous tree.
127. According to the Privacy Policy of Broadcast, there are a number of purposes for and actions perpetrated by Broadcast in planting its cookies on the hard drives of its unconsenting users. Specifically,
Generally, we use cookies to:Taken in total, such uses allow Broadcast to watch, to spy, to conduct surveillance, to analyze the habits, inclinations preferences, and tastes, and otherwise to follow and stalk those who visit the Broadcast site.(1) Remind us of who [sic] you are and to access your account information (stored on our computers) in order to deliver to you a better and more personalized service. This cookie is set when you register so that you do not have to re-login on every visit to our web site.. . . .
(2) Estimate our audience size. Each browser accessing Yahoo!Broadcast is given a unique cookie which is then used to determine the extent of repeat usage, usage by a registered user versus by an unregistered user, and to help target advertisements based on user interests and behavior.
Yahoo!Broadcast does research on our users' demographics, interests, and behavior based on the information provided to us upon registration, during a promotion, from our server log files or from surveys. We do this to better understand and serve our users. This research is compiled and analyzed on an aggregated basis. Yahoo!Broadcast may share this aggregated data with advertisers or business partners.
128. By its own disclosures and declarations, Broadcast appears to have admitted, beyond any reasonable doubt, that it has knowingly participated in a series of wrongful acts or transactions, while engaged in interstate and foreign commerce, which conduct was and is predicted upon the unauthorized access to the computer systems and the unauthorized use of the property of persons who visit their website in that:
A. Broadcast knowingly uses and operates the property of another without the consent of the owner or person authorized to give consent;
B. Broadcast knowingly gains access to, attempts to gain access to, or causes access to be gained to computers, computer systems, or computer networks without the consent of, or beyond the scope of the express or implied consent of the owner of the computer, computer system, or computer network or other person authorized to give consent to the owner.
In short, Broadcast makes no attempt to ascertain and has no basis for knowing whose computer it is to which their cookies attach. Ownership of the property thus converted to Broadcast's use remains an enigma and Broadcast remains ultimately unconcerned with respect to the overarching privacy and ownership issues which, under the law of the State of Texas, should impede Broadcast's surreptitious trespass upon private property to plant ad cultivate their insidious and infernal honing and spying devices.
129. Under Texas law, tracking another in a way that would be perceived as threatening, as part of the act of committing an offense (such as theft), constitutes stalking. Specifically, under Texas Penal Code Sec. 42.072,
(a) a person commits an offense if the person, on more than one occasion and pursuant to the same scheme or course of conduct that is directed specifically at another person, knowingly engages in conduct, including following the other person, that:(1) the actor knows or reasonably believes the other person will regard as threatening:
. . . .(C) that an offense will be committed against the other person's property;
(2) causes the other persons or a member of the other person's family or household to be placed in fear of bodily injury or death or fear that an offense will be committed against the other person's property; and
(3) would cause a reasonable person to fear;
. . . .(C) that an offense will be committed against the person's property.
130. In addition to these criminal offenses, the above actions by Broadcast appear to constitute a number of civil wrongs under Texas law. Specifically, its actions appear to constitute civil theft, conversion, and trespass.
Broadcast appears to have committed civil theft pursuant to Texas Civil Practice and Remedies Code Secs. 134.00 et seq., in that it unlawfully obtained goods from users with intentional or reckless disregard or those users’ rights. These goods include part of the space on computer hard drives and personal information belonging to users.
Broadcast appears to have committed conversion, in that it has taken control of users’ property and wrongfully exercised control in a manner inconsistent with those users’ ownership. This includes taking control both of part of computer hard drives and personal information about users’ property and persons.
Broadcast appears to have committed trespass, in that it has wrongfully taken control of users’ property, exercised control in a manner inconsistent with users’ ownership and to the excluding of their rights in the property, and deprived them of the property by using the property for its own gain and the gain of others. This includes taking control and depriving users of part of the computer hard drive and the taking and sharing of personal information.
131. In all the actions under this Count, Yahoo has assisted, supervised or succeeded to the position of Broadcast, and would be liable and responsible for any and all offenses, crimes, torts, and defalcations in just the manner of Broadcast, and to the same degree and extent.
WHEREFORE, Universal would ask this Court for a declaration as to whether or not the information that has previously been provided and is owed in the future by Broadcast and Yahoo to Universal, in that part of it comes from the use of cookies, is illegal pursuant to Texas law as violations of:
1. Criminal theft laws.
2. Criminal stalking laws.
3. Civil theft laws.
4. Civil conversion laws.
5. Civil trespass laws.
. . . .
Respectfully submitted,
Friedman, Driegert & Hsueh, L.L.C., by Lawrence J. Friedman
and
Joel Levin, Esq.
ATTORNEYS FOR UNIVERSAL IMAGE, INC.
d/b/a CHALKBOARDTALK.COM
FOOTNOTES
9 Privacy Policy, ¶ 5(b).
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