Homegrown Counter-Responds: VMI/CE 'Ignores The Evidence'

New Destiny Internet Group and Xplor Media today submitted a blistering rebuttal to a VMI/Trade News court response that characterizes New Destiny/Xplor’s copyright/trademark infringement and unfair practices lawsuit against VMI/Trade News as little more than a contract dispute.

New Destiny Internet Group and Xplor Media said Voice Media, Inc. and two co-defendants are ignoring actual evidence in favor of a "shotgun fashion… series of arguments" aimed at destroying a good name and reputation.

New Destiny/Xplor also denied VMI/Trade's contention that the core motive for the original lawsuit against VMI/Trade News was New Destiny's displeasure with CE Cash entering into a licensing agreement with Acacia Research Corp. for Acacia’s streaming media patents. New Destiny and several other adult Internet companies are challenging those patents in federal court.

"[The] defendants ignore the damning and telling evidence of their egregious misconduct, including the scores of angry and threatening e-mails from customers and of defendants siphoning off monies from plaintiffs," said the New Destiny/Xplor response filing of March 25, a copy of which was obtained by AVN.com

"…[D]efendants, by ignoring the evidence, incredibly contend there is no showing of irreparable harm or exigent circumstances and that monetary damages could somehow compensate plaintiffs for the damage to their good names and goodwill," the New Destiny/Xplor response continued.

VMI/Trade News attorney Ira Rothken said his clients filed a supplemental declaration this week rejecting such contentions. Rothken told AVN.com that VMI/Trade News, via CE Cash, took "the proper step of pruning the database by terminating those who either hadn't paid or presented a greater credit card processing risk. Again, CE Cash believes it acted in a reasonable manner and certainly consistent with the standards in the industry."

New Destiny/Xplor's new filing charges the defendants with refusing to cancel accounts and improper billing on the expiration of three-day free trials, not to mention using unanswered customer service telephone numbers.

"[They] contend that [we] have failed to show 'the immediacy of their alleged need for relief.'… In fact, [we] have shown that as a result of the wrongful conduct of defendants… scores of customers have sent justifiably irate e-mails regarding recent double-billing… wrongful refusal to cancel their accounts, improper billing upon expiration of three-day 'free' trials, and use of a customer service telephone number that is not answered, among other unlawful practices," the counter-response said.

New Destiny/Xplor attorney David Olsen said "massive customer complaint e-mails" his side is bringing into evidence are "hard to characterize as much ado about nothing." He also said he received objections to introducing the e-mails in question from the defendants.

"It's pretty clear that we're trying to deal with the issues head on," Olsen told AVN.com, "and they're trying to distract the judge from what is really going on in this lawsuit. They're trying to mischaracterize what this case is all about. To me, it's blatantly obvious that that's what they're doing, and I don't think the judge is going to buy it."

Rothken said Trade News changed credit card processors and "some people were confused as to the origin of certain bills on their credit card." And, he continued, any overcharges that did happen were unintentional. "[They] were due mostly to system bugs, and Trade News would fix it," Rothken said. "In the end, we think their claims are much ado about nothing," he continued.

Rothken also reiterated his previous contention that the core issue was CE Cash licensing Acacia Research Corp.'s Digital Media Transmission group of streaming media patents last year, "a license that ironically covers [New Destiny]," he said. "And we find it hard to believe that Homegrown Video would rather take the Acacia patent risk for itself and its affiliates. CE Cash has always disagreed with the company's strategy, and CE Cash is in good company in its approach, including companies from Playboy to Disney. And, to sum up, we're very confident that we're going to prevail in this case on its merits."

New Destiny/Homegrown chief Spike Goldberg insisted that the VMI/Trade News litigation has nothing to do with his company's challenge to Acacia's patent claims. "Evidently," he told AVN.com, "[VMI/Trade News] have chosen to take one line out of a two-hundred-plus page [temporary restraining order request] and focus on the Acacia issue, which this has nothing to do with [lawsuit]."

Goldberg insisted the issue in the VMI/Trade News litigation is the way CE Cash treats the end user. "From a bigger perspective, it boils down to CE wanting everybody to think this has everything to do with anything but what it really has to do with," Goldberg said, "and that is the improper handling and improper methods of billing end users' credit cards, and the way they treat end users."

"This case has nothing to do with Acacia," Olsen said. "And I think the reason they're doing that is that they don't want to deal with this case, with the egregious misconduct we've already covered, the way they've abused the end users and infringed the copyright and trademark at issue. The bottom line is, that's the case I'm going to litigate and try. If they want to litigate a case about Acacia that doesn't exist, that's their prerogative."