Almost a month after a federal judge called for arbitration in a New Destiny Internet Group infringement suit against Trade News, Voice Media Inc., and Internet Business Services, Trade News said it was closing its CE Cash affiliate program for New Destiny's HomegrownVideo.com, and countersuing.
Trade News official Gary Luedke said they decided June 28 to close and countersue based on New Destiny's February lawsuit alleging copyright and trademark infringement against Trade News, VMI, and IBS.
"We are choosing to end this relationship and are filing a counter suit in arbitration against Homegrown for breach of their agreements," Trade News spokesman Guy Mizrachi said in a statement. "In my view they have concocted this controversy because they are trying to get out of the termination provision in the marketing agreements they signed. Quite frankly it's disingenuous."
"For over two years Trade News has operated the 'official affiliate program for Homegrown Video'," Mizrachi continued. "They have been using our marketing programs, building up the subscribers to the HomegrownVideo.com site, and cashing the checks without even flinching. Now they want out of the deal and because they don't like what they signed they claim that they have never heard of Trade News."
Mizrachi said the terms and conditions for Homegrown's Website and affiliate programs made it clear they were operated by Trade News. "These are sophisticated business people who run one Website. It does not pass the giggle test to say they never read their own terms and conditions."
Trade News/CE Cash attorney Ira Rothkin could not be reached for additional comment. But New Destiny chief Spike Goldberg called the countersuit "laughable."
"Needless to say, this follows the pattern that CE has laid out thus far, which is erratic behavior," Goldberg said when reached for comment. "Homegrown couldn't be any happier to see that, at least, people aren't sending traffic to a program that does not represent us, nor hold up to the ideals, the standards, that we maintain."
New Destiny and Homegrown parent Xplor Media sued VMI, Trade News, and IBB, charging them with copying of the Homegrown Video Website Tour without Homegrown's permission, further accusing IBS of contributory infringement because, as court papers put it, IBS "collect[s] income generated by Trade News' infringement as its agent, providing the market and environment for the infringement to thrive."
The suit also alleges breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the Unfair Business Practices Act, and recision [cancellation of contract]. Among other charges, the suit accused the defendants of sending traffic to other Websites with popups without reciprocating direction to New Destiny's site, creating other sites with content competing with New Destiny site content and sending traffic to the other sites, and co-mingling credit processing for New Destiny's account with other sites.
VMI chief Ron Levi said the lawsuit and subsequent bid for a temporary restraining order were "preposterous" because, as he told AVNOnline.com at the time, VMI had a deal with Homegrown and assigned the contract to Trade News, thus equaling no infringement.
The dispute centers around a Web marketing agreement between New Destiny and VMI in early 2000, in which a clause was included calling for binding arbitration "in the event of a dispute arising out of or in any way relating to" the deal. New Destiny "concedes that all of its claims against… VMI, with the exception of the copyright claim, are subject to this arbitration clause."
The arbitration order in early June also said Xplor Media was entitled to return to federal court when the New Destiny arbitration is completed. "[T]he relief sought by Xplor is so intertwined with the relief sought by New Destiny," wrote U.S. District Judge Consuelo B. Marshall, "that granting the relief would usurp the role of the arbitration to which New Destiny contracted."
