ghost mgmt v. layer six media - weedmarps cfaa trademark complaint.pdf

8/18/2019 Ghost Mgmt v. Layer Six Media - Weedmarps CFAA trademark complaint.pdf

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John B. Sganga, Jr. (SBN 116211) [email protected] Y. Yee (SBN 239114)[email protected]

Nicholas M. Zovko (SBN 238248)[email protected]

KNOBBE, MARTENS, OLSON & BEAR, LLP2040 Main StreetFourteenth FloorIrvine, CA 92614Phone: (949) 760-0404Facsimile: (949) 760-9502

Attorneys for PlaintiffGHOST MANAGEMENT GROUP, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF CALIFORNIA

GHOST MANAGEMENTGROUP, LLC, a Delawarelimited liability company,

Plaintiff,

v.

LAYER SIX MEDIA, INC.,a Delaware corporation,

Defendant.

)))))))))))))))))))))

))))))))))

Civil Action No. 8:16-CV-00635

COMPLAINT FOR DAMAGES ANDINJUNCTIVE RELIEF:

1. VIOLATION OF THE COMPUTERFRAUD AND ABUSE ACT, 18 U.S.C.§ 1030, et seq.

2. TRADEMARK INFRINGEMENTAND FALSE DESIGNATION OFORIGIN UNDER 15 U.S.C. §§ 1114,1125(a)

3.

TORTIOUS INTERFERENCE WITHCONTRACTS AND ECONOMICRELATIONS

4. UNLAWFUL, UNFAIR, ANDFRAUDULENT COMPETITION

UNDER CALIFORNIA BUSINESS &PROFESSIONS CODE § 17200, et seq.

5.

COMMON LAW UNFAIRCOMPETITION

DEMAND FOR JURY TRIAL

Case 8:16-cv-00635-AG-JCG Document 1 Filed 04/05/16 Page 1 of 19 Page ID #:1


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Plaintiff GHOST MANAGEMENT GROUP, LLC (“Plaintiff”), for its

Complaint against Defendant LAYER SIX MEDIA, INC. (“Defendant”),

alleges as follows:

INTRODUCTION

1. This action arises from Defendant’s infringement of Plaintiff’s

intellectual property rights, its improper solicitation of and false statements to

Plaintiff’s clients, its unauthorized use of Plaintiff’s clients’ login information to

gain access to Plaintiff’s protected computer network, and its unlawful removal

of content from Plaintiff’s computer network.

2. Plaintiff is the owner of a highly successful online software

platform located at www.weedmaps.com. The platform provides listing

services for medical cannabis dispensaries, doctors’ offices and delivery

services. The platform also provides a forum for dispensary reviews and patient

social networking, and creates an online community that promotes safe access.

3. Plaintiff’s online software platform has become the largest and

most widely used dispensary directory. The medical cannabis community views

Plaintiff as a premiere source of information and trusted authority.

Understandably, dispensaries, doctors’ offices and delivery services all believe

that listing their business on Plaintiff’s website is necessary to build credibility

with patients. As a result, Plaintiff has developed a tremendous amount of

goodwill in its brand.

4. Plaintiff’s clients include dispensaries, doctors’ offices and

delivery services that make information about their business available onPlaintiff’s website. This information includes the location of dispensaries,

menus of available products, pricing information, and reviews from patients.

Plaintiff provides confidential login account and password information to its

clients so that the clients can securely login to Plaintiff’s online software

platform and update content relating to their business.



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5. Defendant operates a competing website at www.wheresweed.com.

Without authorization, Defendant has contacted Plaintiff’s clients and falsely

represented that Defendant is affiliated with Plaintiff. Defendant has done so

improperly to gain the trust of Plaintiff’s clients, and to deceive them into

disclosing to Defendant their confidential account login information and

password for Plaintiff’s online software platform. Defendant then proceeded to

use the improperly obtained account login information to access secure portions

of Plaintiff’s platform and, without permission, deleted content on Plaintiff’s

website, including menus of products available from Plaintiff’s clients.

6. Defendant has also used, without authorization, Plaintiff’s logos on

Defendant’s website in a manner that suggests there is some affiliation or

connection between Defendant and Plaintiff, when there is none. To further free

ride on Plaintiff’swork, Defendant has taken content from Plaintiff’s website to

populate Defendant’s own website, including copying verbatim reviews posted

on Plaintiff’s website.

7. Plaintiff, through this lawsuit, seeks to immediately stop Defendant

from its continuing injurious actions, from which Plaintiff has suffered

irreparable and incalculable harm, and which will continue unless Defendant is

enjoined from further abuse of Plaintiff’s intellectual property rights and

unauthorized access to its protected computers.

THE PARTIES

8. Plaintiff is a limited liability company organized and existing under

the laws of the State of Delaware, and has its principal place of business at41 Discovery, Irvine, California 92618.

9. Plaintiff is informed and believes, and thereupon alleges, that

Defendant is a corporation organized and existing under the laws of the State of

Delaware, and has its principal place of business at 36 S. 18th Ave, Suite D,

Brighton, Colorado 80601.



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JURISDICTION AND VENUE

10. This Court has federal question jurisdiction of this action under 28

U.S.C. § 1331 because this action alleges violations of federal statutes,

including the Computer Fraud and Abuse Act (18 U.S.C. § 1030) and the

Lanham Act (15 U.S.C. §§ 1114 and 1125(a)). The Court has supplemental

jurisdiction over the remaining claims under 28 U.S.C. § 1367.

11. Venue is proper in this Judicial District pursuant to 28 U.S.C.

§ 1391 because Defendant has substantial contacts within California, including

their participation in the acts and events occurring in this Judicial District

described herein, and because Plaintiff’s claims arose in this Judicial District.

12. Defendant has repeatedly, knowingly, and intentionally solicited

confidential login information from Plaintiff’s clients, and accessed or permitted

access to Plaintiff’s servers located in this Judicial District without Plaintiff’s

authorization. While accessing Plaintiff’s servers, Defendant made systematic

and continuous contacts with this Judicial District, and has targeted its wrongful

acts at Plaintiff, which is headquartered in this Judicial District.

FACTS AND BACKGROUND

A. Background

13. Plaintiff’s online software platform located at www.weedmaps.com

attracts over two million monthly visitors. The platform is widely regarded as

the leading directory of dispensaries and premiere source of information for the

medical cannabis community. Many of Plaintiff’s clients pay a monthly fee to

list their business on Plaintiff’s platform. Plaintiff’s clients are permitted toaccess Plaintiff’s secure computer network to update, change or maintain the

content of their listing.

14. To access its secure computer network, Plaintiff requires that its

clients register with a unique username and password. Only registered

dispensaries may access and update their information. Registered dispensaries



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may customize their profile by adding content such as product menus and

information about their location.

15. Access and use of Plaintiff’s online software platform is governed

by Terms of Service. Plaintiff’s Terms of Service require users to abide by

certain rules of user conduct. Those terms include, among other things, that

users agree not to do any of the following:

a. “Attempt to gain unauthorized access to the Service, user

accounts, computer systems or networks connected to the

Service through hacking, password mining or any other means”;

b. “Record, process, or mine information about other users”; and

c. “Modify, adapt, appropriate, reproduce, distribute, translate,

create derivative works or adaptations of, publicly display, sell,

trade, or in any way exploit the Service or Content (other than

Your Content), except as expressly authorized by Weedmaps.”

16. Plaintiff’s Terms of Service also provide that users agree not to

“[a]ccess, retrieve or index any portion of the Service for purposes of

constructing or populating a searchable database of business reviews.”

17. Plaintiff’s website is, by design, uniquely distinctive in its creative

composition and its comprehensive and user-friendly interfaces. Among the

significant unique elements of Plaintiff’s website are the distinctive product

menus for Plaintiff’s clients.

18. As an online venture, the intellectual property related to Plaintiff’s

website is a vital asset to Plaintiff.19. Plaintiff owns all common law rights in its WM and WEEDMAPS

marks. Plaintiff also owns all common law rights in various design marks and

logos used in connection with its goods and services.

20. Plaintiff is also the owner of United States federal trademark

registrations, including U.S. Registration Nos. 4,321,512; 4,321,513; 4,776,082;



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4,798,449; and 4,798,456. The design marks covered by U.S. Registration

Nos. 4,798,456 and 4,776,082, respectively, are shown below:

21. By virtue of the extensive marketing conducted by Plaintiff,

Plaintiff’s marks have become recognized by consumers as designating Plaintiff

as the source of Plaintiff’s branded services. Accordingly, Plaintiff’s

trademarks are extremely valuable to Plaintiff.

22. In addition, the presence of Plaintiff’s marks on social media

websites has grown at a staggering rate. For example, Plaintiff’s Twitter page

has 59,000 followers. Additionally, since the launch of its website in 2008,

Plaintiff’s marks have received extensive press coverage in nationally circulated

media sources, including The Los Angeles Times, The Huffington Post, CNBC,

The Wall Street Journal, Entrepreneur, Business Insider, NBC News,

Bloomberg Businessweek, and The Washington Post.

23. Plaintiff’s successful brand promotion and widespread media

coverage of Plaintiff and its services have led to an unrivaled reputation with

consumers.

24. Plaintiff’s trademarks are among Plaintiff’s most important and

valuable assets.

B.

Defendant’s Unauthorized Activities25. Defendant’s website promotes a “Menu Syndication” feature for

dispensaries. According to Defendant, “Menu Syndication allows you to update

your product inventory across the web, all in real-time,” and “[b]y tying in your

login credentials, we’ll help you update your inventory listed on WeedMaps,

Leafly, THCFinder, Facebook and of course your own website.”



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Defendant’s Website

(https://wheresweed.com/california/newport-beach/marijuana-delivery/true-

green/reviews)

30. In addition, Defendant has improperly used Plaintiff’s federally-

registered trademarks on Defendant’s website.

31. For example, as shown below by the red circle, Defendant has used

and continues to use Plaintiff’s federally-registered trademark for the “WM”

design and logo:



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(https://biz.wheresweed.com/2014/nov/5-reasons-you-should-be-using-menu-syndication (annotation added))

32. In addition, as shown below by the red circle, Defendant has used

and continues to use Plaintiff’s federally-registered trademark for the

“WEEDMAPS” design and logo:


(https://wheresweed.com/tour.php (annotation added))



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33. Further, as shown below by the red underline, Defendant has used

and continues to use Plaintiff’s other federally-registered trademarks:


(https://biz.wheresweed.com/2014/nov/5-reasons-you-should-be-using-menu-

syndication (annotation added))

34. At no time has Defendant received permission from Plaintiff to

conduct any commercial activity on Plaintiff’s website.

35. At no time has Defendant received permission from Plaintiff to use

other users’ accounts to access Plaintiff’s computer systems.

36. At no time has Defendant received permission from Plaintiff to use

any of Plaintiff’s intellectual property, including Plaintiff’s trademarks.

37. Defendant’s actions are deliberate, intentional, willful, malicious,

and fraudulent.


Defendant does not disclose to Plaintiff’s clients that Defendant’s actions are

unlawful and violate Plaintiff’s Terms of Service. Indeed, Defendant

knowingly, willfully, intentionally, fraudulently, and maliciously induce,

encourage, and assist Plaintiff’s clients in abusing Plaintiff’s online platform

and violating Plaintiff’s Terms of Service.

39. Defendant’s acts have caused damage to Plaintiff in an amount to

be determined at trial, and such damages will continue to increase unless

Defendant is enjoined from its wrongful actions.



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Defendant has derived and received, and will continue to derive and receive,

gains, profits, and advantages from the acts complained of herein in an amount

that is not presently known to Plaintiff. By reason of Defendant’s acts, Plaintiff

has been damaged, and it is entitled to monetary relief in an amount to be

determined at trial.

41. Defendant’s acts complained of herein have caused damage and

irreparable injury to Plaintiff, and these acts will result in further damage and

irreparable injury if Defendant is not restrained by this Court from further

violations of Plaintiff’s rights for which Plaintiff has no adequate remedy at law.

FIRST CLAIM FOR RELIEF

(VIOLATION OF THE COMPUTER FRAUD AND ABUSE ACT,

18 U.S.C. § 1030, et seq.)

42. Plaintiff hereby realleges and incorporates by reference, as if fully

set forth herein, the allegations in all the preceding paragraphs.

43. Plaintiff’s computers are involved in interstate commerce and

communication, and are protected computers under 18 U.S.C. § 1030(e)(2).

44. On information and belief, Defendant knowingly and intentionally

accessed Plaintiff’s computers without authorization, and in excess of

authorization as defined by Plaintiff’s Terms of Service.

45. On information and belief, after gaining unauthorized access to

Plaintiff’s servers, Defendant obtained and used valuable information from

Plaintiff’s protected computers in transactions involving interstatecommunications. This information included, among other things, product

menus for Plaintiff’s clients. The use included removing content and data from

Plaintiff’s website, and copying proprietary data and re-displaying it on

Defendant’s website.



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46. On information and belief, Defendant knowingly, willfully, and

with intent to defraud accessed Plaintiff’s computers without authorization or in

excess of authorization and obtained valuable information from Plaintiff’s

computers that, on information and belief, Defendant used to obtain something

of value.

47. On information and belief, Defendants knowingly, willfully, and

with intent to defraud trafficked in login information through which computers

were accessed without authorization, affecting interstate commerce.

48. Defendant’s conduct has caused a loss to Plaintiff during a

one-year period in excess of $5,000.

49. Plaintiff has been damaged by Defendant’s actions, including being

forced to expend resources to investigate the unauthorized access and abuse of

its computer network. Plaintiff seeks compensatory and other equitable relief

under 18 U.S.C. § 1030(g) in an amount to be proven at trial.

50. Plaintiff has suffered irreparable and incalculable harm and injuries

resulting from Defendant’s conduct, which harm will continue unless Defendant

is enjoined from further unauthorized use of Plaintiff’s protected computers.

Plaintiff has no adequate remedy at law.

SECOND CLAIM FOR RELIEF

(TRADEMARK INFRINGEMENT AND FALSE DESIGNATION OF

ORIGIN UNDER 15 U.S.C. §§ 1114, 1125(a))


set forth herein, the allegations in all the preceding paragraphs.52. Plaintiff owns U.S. Federal Trademark Registration

Nos. 4,321,512; 4,321,513; 4,776,082; 4,798,449; and 4,798,456. These

registrations are in full force and effect, and are enforceable.

53. At all relevant times, Defendant exercised ownership and control

over online advertising for its products, services, and websites, and knowingly



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cooperated in and/or induced, encouraged, enabled, or aided in the infringement

of Plaintiff’s trademark rights in online advertising for its products, services,

and website.

54.

Defendant’s false statements to Plaintiff’s clients wrongly

suggesting that Defendant is affiliated with Plaintiff is likely to cause confusion

or to cause mistake or to deceive as to the origin of the products or services

offered and sold by Defendant and as to their affiliation, connection, or

association with and/or endorsement or approval by Plaintiff.

55. Defendant’s use of Plaintiff’s marks in interstate commerce is

likely to cause confusion or to cause mistake or to deceive as to the origin of the

products or services offered and sold by Defendant and as to their affiliation,

connection, or association with and/or endorsement or approval by Plaintiff.

56. The foregoing acts of Defendants constitute false designation of

origin, association, affiliation, connection, endorsement and/or approval under

15 U.S.C. § 1125(a), and/or vicarious or contributory infringement of Plaintiff’s

rights under 15 U.S.C. § 1125(a).

57.

Defendant’s actions also constitute the use in interstate commerce

of a reproduction, counterfeit, copy, or colorable imitation of a registered

trademark of Plaintiff in connection with the sale, offering for sale, distribution,

or advertising of goods or services on or in connection with which such use is

likely to cause confusion or mistake, or to deceive, in violation of 15 U.S.C.

§ 1114.

58.

Plaintiff is informed and believes, and thereupon alleges, thatDefendant has engaged in such false designation of origin, association,

affiliation, connection, endorsement and/or approval knowingly, willfully,

deliberately, and in conscious disregard of Plaintiff’s rights, making this an

exception case under 15 U.S.C. § 1117.



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Defendant’s false statements have been, or will be, successful in diverting at

least some business from Plaintiff to Defendant.

68.

As a proximate result of Defendant’s false statements, Plaintiff has

suffered damages in an amount to be proven at trial.

69. On information and belief, Defendant’s conduct was intended

unfairly to harm Plaintiff through unlawful acts. Additionally, the conduct of

Defendant has been willful, malicious, and oppressive. Plaintiff is therefore

entitled to punitive damages.


Defendant threatens to, and unless restrained will, disrupt other contracts or

business relationships between Plaintiff and Plaintiff’s clients or potential

clients, which will cause irreparable harm to Plaintiff and for which damages

would not afford adequate relief in that damages would not completely

compensate for the injury to Plaintiff’s business reputation and goodwill.

FOURTH CLAIM FOR RELIEF

(UNLAWFUL, UNFAIR, AND FRAUDULENT COMPETITION UNDER

CALIFORNIA BUSINESS & PROFESSIONS CODE § 17200, et seq.)



72. The acts and conduct of Defendant as alleged above in this

Complaint constitute unlawful, unfair, and/or fraudulent business acts or

practices as defined by Cal. Bus. & Prof. Code § 17200 et seq.73. Defendant’s acts of unlawful, unfair, and fraudulent competition

have caused harm to competition, to consumers, and to its competitors.

Defendant’s acts of unlawful, unfair, and fraudulent competition have

proximately caused Plaintiff to suffer injury in fact and loss of money and/or

property (including as a result of expenses that Plaintiff has incurred, and



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continues to incur, in its efforts to prevent and deter Defendant from engaging in

unlawful conduct) in an amount to be proven at trial.

74. Defendant’s acts of unlawful, unfair, and fraudulent competition

also have caused irreparable and incalculable injury to Plaintiff, to Plaintiff’s

marks and trade name, and to the business and goodwill represented thereby,

and, unless enjoined, could cause further irreparable and incalculable injury,

whereby Plaintiff has no adequate remedy at law.

75. Defendant’s misconduct was deliberate, and undertaken with

oppression, fraud, or malice within the meaning of California Civil Code

§ 3294, justifying an award of exemplary damages sufficient to punish

Defendant and to deter it from such misconduct in the future.

FIFTH CLAIM FOR RELIEF

(COMMON LAW UNFAIR COMPETITION)



77. The acts of Defendant, alleged herein, constitute unlawful, unfair,

and fraudulent business practices in violation of the California common law of

Unfair Competition.

78. Plaintiff is informed and believes, and thereon alleges, that

Defendant has willfully and in conscious disregard for Plaintiff’s rights and its

business, committed unfair and unlawful business practices including, but not

limited to, stealing Plaintiff’s computer information, using for Defendant’s own

purposes, and adversely to the interests of Plaintiff and its business venture,Plaintiff’s business information, removing and copying Plaintiff’s website data,

content, and information, and interfering with Plaintiff’s business.

79. These acts of Defendants were and continue to be willful,

oppressive, fraudulent, and malicious, warranting an award of punitive damages

in addition to the actual damages suffered by Plaintiff.



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80. As a direct and proximate result of Defendant’s willful, improper,

and unlawful conduct, Plaintiff has suffered, and will continue to suffer, great

harm and damage. Plaintiff will continue to be irreparably damaged unless

Defendants are enjoined from further committing unfair and unlawful business

practices against Plaintiff and Plaintiff’s business.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for judgment against Defendant and for

the following relief:

A. That the Court enters judgment in favor of Plaintiff and against

Defendant on all claims for relief alleged herein.

B. For injunctive relief as follows: A preliminary and permanent

injunction enjoining and restraining Defendant, and all persons and entities

acting in concert with them, during the pendency of this action and thereafter

perpetually from:

1. Soliciting and/or obtaining account login information to

Plaintiff’s online software platform;

2.

Accessing or attempting to access Plaintiff’s website and

computer systems;

3. Initiating and procuring unsolicited communications with

Plaintiff’s clients;

4. Displaying or otherwise using Plaintiff’s trademarks anywhere,

including on Defendant’s websites;

5.

Indicating or suggesting any affiliation with Plaintiff;6. Engaging in any activity that disrupts, diminishes the quality of,

interferes with the performance of, or impairs the functionality

of Plaintiff’s online software platform; and

7. Engaging in any activity that violates Plaintiff’s Terms of

Service.



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C. An award to Plaintiff of damages, including but not limited to

compensatory, consequential, statutory, enhanced, and punitive damages, as

permitted by law and in such amounts to be proven at trial.

D.

An award to Plaintiff of reasonable costs, including reasonable

attorneys’ fees.

E. For pre-judgment and post-judgment interest as allowed by law

F. For such other relief as the Court may deem just and proper.

KNOBBE, MARTENS, OLSON & BEAR, LLP

Dated: April 5, 2016 By: /s/ Nicholas M. ZovkoJohn B. Sganga, Jr.Thomas Y. Yee

Nicholas M. Zovko




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DEMAND FOR JURY TRIAL

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff

GHOST MANAGEMENT GROUP, LLC hereby demands a trial by jury on all

issues so triable that are raised herein or that hereinafter may be raised in this

action.

KNOBBE, MARTENS, OLSON & BEAR, LLP

Dated: April 5, 2016 By: /s/ Nicholas M. ZovkoJohn B. Sganga, Jr.Thomas Y. Yee

Nicholas M. Zovko


23011839


ghost mgmt v. layer six media - weedmarps cfaa trademark complaint.pdf

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