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Jerry Mowery (Bar No. 240469)
Ring Plus, Inc.
468 N Camden Dr., 2nd
Floor
Beverly Hills, CA 90210
Telephone: (424) 293-6765
Facsimile: (424) 210-5014
Attorney for Plaintiff
RING PLUS, INC.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
RING PLUS, INC., a Texas
corporation,
Plaintiff,
v.
SPRINT SPECTRUM L.P., a
Delaware limited partnership; and
SPRINT CORPORATION, a
Kansas corporation,
Defendants.
CASE NUMBER:
_________________________________
JURY TRIAL DEMANDED
COMPLAINT FOR FRAUD,
BREACH OF CONTRACT,
EXTORTION, ATTEMPTED
EXTORTION, TRADE DRESS
INFRINGEMENT, PATENT
INFRINGEMENT, UNFAIR
PRACTICES AND COMPETITION,
UNJUST ENRICHMENT,
DECLARATORY JUDGMENT, AND
INJUNCTIVE RELIEF
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Plaintiff Ring Plus, Inc. (“RingPlus”) complains and alleges as follows
against Defendants Sprint Corporation and Sprint Spectrum L.P. (referred to
collectively herein as “Sprint”).
NATURE OF THE ACTION
1. Sprint fraudulently induced RingPlus to contract, has infringed RingPlus’
intellectual property, and has engaged in additional unlawful and intentional
conduct to harm RingPlus and its wireless phones service subscribers.
2. RingPlus is a wireless phone services provider with approximately 90,000
retail consumers (i.e., subscribers) depending on RingPlus for their own and their
families’ cell phone service. RingPlus is an MVNO (Mobile Virtual Network
Operator) operating exclusively on Sprint’s nationwide network in the United
States (“U.S.”).
3. Sprint has reported that is has approximately 60 million subscribers. Sprint is
one of only four U.S. wireless carriers known as MNOs (Mobile Network
Operators). The other three MNOs are AT&T, Verizon and T-Mobile. All other
U.S. wireless service providers are MVNOs (like RingPlus) operating on one (or
more) of the four MNOs.
4. RingPlus has developed intellectual property and a telecommunications
business model for using the existing talk, text and data channels to provide
consumers with free wireless phone service (talk, text and data) paid for by the
generation of alternative revenue streams including paid and sold content (e.g.,
advertisements, news, music and other content) which is, inter alia, played to
consumers when they make a call instead of hearing the traditional “ring” they
would otherwise hear while they wait for the person they called to answer the
phone (e.g., ringtones and ringback tone replacement) (the “RingPlus Model”).
5. RingPlus holds two U.S. patents, trade dress, and trade secrets covering the
RingPlus Model.
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6. Sprint has offered (and continues to offer) products and services, including
Sprint’s Music Plus, that directly infringe (and induce infringement of) RingPlus’
patents, technology and trade dress. Music Plus makes, offers to sell, and sells,
inter alia, ringtone and ringback tone replacements.
7. RingPlus entered into a written agreement (hereinafter the “Free Plan
Agreement”) with Sprint to co-invest in a project to grow the RingPlus Model on
the Sprint nationwide network (the “Project”). The Free Plan Agreement required,
inter alia, that RingPlus give Sprint (and its affiliates) licenses to both of RingPlus’
patents.
8. Sprint fraudulently induced RingPlus into the Free Plan Agreement in order
to trick RingPlus into giving Sprint (and its affiliates) licenses to RingPlus’ patents
for their infringing products and services, and to get whatever amount of money
Sprint could get out of RingPlus before driving RingPlus out of business (while
keeping the patent licenses in place).
9. Sprint rendered the Free Plan Agreement voidable by knowingly, and
without disclosure, placing RingPlus on a system (the “Sprint System”) that
RingPlus relied on and that Sprint knew (a) would produce unusable in-call delay
(i.e., mouth-to-ear delay in a phone call) (which has been reported by RingPlus
subscribers to be one, two, or more seconds), and (b) could not support the high
volume of API (Application Program Interface) transactions between the Sprint
and RingPlus systems required to sign up the amount of new RingPlus subscribers
needed to reach the projections. Sprint has now admitted these items to RingPlus.
10. Sprint also knows that, at all times, it has been in breach of the Free Plan
Agreement by placing RingPlus on the Sprint System that made it impossible for
Sprint and RingPlus to perform, and for the Project to succeed and reach the
forecasts.
11. These circumstances forced RingPlus to develop new technology to fix the
in-call delay problem by going around the in-call delay inherent in the Sprint
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System. RingPlus asked Sprint to compensate it for these problems and
development, but Sprint refused to share the financial burden of this stage of
development of the RingPlus Model as a co-investor.
12. Instead, Sprint ran up RingPlus’ bills in order to extort, and attempted to
extort, money out of RingPlus by threatening that, unless RingPlus paid Sprint
more money for the truly inadequate Sprint System, Sprint would turn off wireless
phone service to all of RingPlus’ subscribers, and turn off RingPlus’ API access to
Sprint to activate new subscribers (and, therefore, not be able to generate new
revenue and subscribers).
13. The Free Plan Agreement became modified by oral agreements, emails,
draft documents and the Parties’ conduct that resulted in the terms that RingPlus
would pay Sprint what money it could when it could, and Sprint accepted
RingPlus’ payments, over approximately the last eight months.
14. Despite the modified terms of the Free Plan Agreement, on January 31,
2017, Sprint sent RingPlus a notice of breach for non-payment with five days to
cure. Sprint then sent RingPlus a notice of termination effective February 1, 2017,
stating that Sprint would turn off all service to RingPlus and its subscribers in just
10 days. Both notices violated the notice terms of the Free Plan Agreement as well
as the modified payment terms.
15. As of the date of this filing, Sprint has turned off RingPlus’ APIs for new
subscriber activations, and has informed RingPlus that Sprint will turn off all
service to RingPlus and its subscribers on February 11, 2017.
16. Sprint also has attempted to drive RingPlus out of business by engaging in
unfair business practices and competition: (a) Sprint has engaged, and continues to
engage, in below-cost pricing of its (and its affiliate MVNOs’) retail wireless
services; (b) those prices are far below the wholesale prices Sprint demands from
RingPlus, (b) Sprint has offered, and continues to offer, loss leaders (e.g., free
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phones and free wireless service), and (c) Sprint has continuously engaged in
overbilling RingPlus.
17. Sprint’s unlawful conduct has harmed RingPlus and its subscribers. If
Sprint does not stop its behavior, turn the APIs for new activations back on, stop its
plans to turn off all service to RingPlus and its subscribers, and compensate
RingPlus for the harm it has caused, Sprint will likely drive RingPlus out of
business and leave its subscribers without wireless phone service (and without
reasonable time to find another wireless provider).
18. As of the date of this filing, Sprint’s licenses to RingPlus’ patents have been
terminated.
19. RingPlus repeatedly tried to peacefully resolve these issues with Sprint to
no avail.
20. RingPlus is seeking injunctive relief to stop Sprint’s harmful and unlawful
conduct, to stop its infringement of RingPlus’ intellectual property and to preserve
its subscribers’ wireless service. RingPlus also seeks to obtain compensation for
Sprint’s past unlawful conduct as well as damages to RingPlus’ future operations
and goodwill.
THE PARTIES
21. RingPlus is a Texas corporation having its principal place of business at 468
N Camden Dr, 2nd
Floor, Beverly Hills, CA 90210. RingPlus is an MVNO
operating exclusively on Sprint nationwide network to offer retail consumers
wireless phone services.
22. Sprint Spectrum L.P. is a Delaware limited partnership having its principal
place of business at 6500 Sprint Parkway HL-5ASTX, Overland Park, KS 66251.
On information and belief, Sprint Spectrum markets, sells, or offers for sale a
variety of wireless goods and services including minutes, texts, data, phones and
other telecommunications devices for resale. On information and belief, Sprint
Spectrum L.P. is one of the four largest wholesalers of wireless services in the U.S.
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23. Sprint Corporation is a Kansas corporation having its principal place of
business at 6500 Sprint Parkway, Overland Park, KS 66251. On information and
belief, Sprint Corporation is one of the four largest MNOs selling wireless goods
and services in the U.S., and it designs, manufactures, and provides to the U.S.
wholesale and retail markets a wide range of goods and services including minutes,
texts, data, phones and other telecommunications devices.
24. Due to the likely existence of entities, individuals, agreements and
relationships unknown to RingPlus at this time, RingPlus may be ignorant of the
complete information about Sprint’s unlawful conduct, and the true names or
capacities of individuals and/or entities contributing to Sprint’s unlawful conduct.
RingPlus reasonably expects to obtain such additional information in the course of
this action. Accordingly, RingPlus has sued defendants herein under the fictitious
names DOES 1 through 10, inclusive, and they are sued herein pursuant to CCP §
474. As soon as RingPlus ascertains said Defendants’ true names and capacities,
RingPlus will amend this Complaint as a matter of course, or seek leave of the
Court to amend this Complaint, pursuant to Fed. R. Civ. P. 15.
25. RingPlus is informed and believes, and based thereon alleges, that each
Defendant acted as the agent or employee of each and every other Defendant. At
all relevant times, each such Defendant was acting within the scope of his, her or
its agency, employment or relationship with the other Defendants at the time the
wrongful acts and omissions alleged herein were committed.
JURISDICTION
26. This Court has subject matter jurisdiction under 28 U.S.C. § 1331 (federal
question); 28 U.S.C. § 1338(a) (any Act of Congress relating to patens or
trademarks); 28 U.S.C. § 1338(b) (action asserting a claim of unfair competition);
28 U.S.C. § 1332 (on the basis of diversity of citizenship and amount in
controversy); and 28 U.S.C. § 1367 (supplemental jurisdiction).
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27. This Court has personal jurisdiction over Sprint Spectrum L.P. and Sprint
Corporation (collectively “Sprint”) because each of these entities has committed
and continues to commit acts of infringement in violation of 35 U.S.C. § 271 and
15 U.S.C. § 1125, and places infringing goods and services into the stream of
commerce with the knowledge and understanding that such goods and services are
sold in the State of California, including this District. The acts of Sprint have
caused and will continue to cause injury to RingPlus within this District. Upon
information and belief, Sprint has derived substantial revenue from the sale of
infringing goods and services within this District, expect their actions to have
consequences within this District, and derive substantial revenue from interstate
commerce.
VENUE
28. Venue is proper under 28 U.S.C. §1391 (b) and (c) because Sprint transacts
business within this District and offers for sale in this District goods and services
that infringe the RingPlus patents and trade dress. Venue is also proper because
RingPlus’ principal place of business is in the District, RingPlus suffered harm
from all claims in this District, and a substantial part of the events giving rise to the
claims occurred in this District.
BACKGROUND
RingPlus Innovations and Intellectual Property
RingPlus’ Innovations
29. RingPlus has spent a decade investing in and developing its intellectual
property and a telecommunications business model for using the existing talk, text
and data channels to provide consumers with free wireless phone service (talk, text
and data) paid for by the generation of alternative revenue streams including paid
and sold content (e.g., advertisements, news, music and other content) which is,
inter alia, played to consumers when they make a call instead of hearing the
traditional “ring” they would otherwise hear while they wait for the person they
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called to answer the phone (e.g., ringtones and ringback tone replacement)
(“RingPlus Model”).
30. RingPlus holds two U.S. patents, trade dress, and trade secrets covering the
RingPlus Model.
31. Beginning in 2007, RingPlus successfully implemented the RingPlus Model
over a VoIP (Voice over Internet Protocol) platform for calls from the U.S. to
international destinations. RingPlus sold advertisements that were played to its
customers by replacing the traditional ringback tone. RingPlus quickly grew in
popularity with consumers, and developed a loyal following.
RingPlus’ Patents
32. In 2006 and 2007, RingPlus was granted U.S. Patents 7,006,608 and
7,227,929. The patents cover, inter alia, ringtones (such as music played when
your phone rings rather than a traditional “ring” sound), ringback tone replacement
(such as advertisements played when you make a call until the person you call
answers rather than the traditional “ring” sound), and reverse ringback tone
replacement (such as playing music to people who call while they wait for you
answer the phone rather than the traditional “ring” sound).
33. These patents are listed below, and attached as Exhibits 1-2. RingPlus owns
all rights, title, and interest to the patents.
34. Patent 7,006,608 (the “608 Patent”) titled “Software Algorithm and Method
Enabling Message Presentation during a Telephone Ringing Signal Period.” (See
Ex. 1.)
35. Patent 7,227,929 (the “929 Patent”) titled “Telecommunication System
Using Message Presentation during a Ringing Signal Period.” (See Ex. 2.)
RingPlus’ Trade Dress
36. RingPlus has trade dress protected under Section 43(a) of the Lanham Act
in the use of the word “Plus” to describe use of its patented technology to deliver,
among other things, ringtones, ringback tones, and reverse ringback tones.
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Sprint’s Infringing Products and Services
37. Sprint has offered (and continues to offer) products and services, including
Sprint’s Music Plus, that directly infringe (and induce infringement of) RingPlus’
patents, technology and trade dress. Music Plus makes, offers to sell, and sells,
inter alia, ringtone and ringback tone replacements.
38. Rather than develop its own technology and trade dress, Sprint chose to
copy RingPlus’ technology and trade dress with its infringing product and services.
39. When a consumer sees, hears, or uses Sprint’s Music Plus products and
services, there can be little doubt that it would be viewed as a RingPlus product.
40. Sprint chose to infringe RingPlus’ patents and trade dress rights through its
design, marketing, and implementation of its Music Plus, and it did so willfully to
trade upon the goodwill that RingPlus has developed in connection with its
patented technology, products and services.
Sprint’s Infringement of RingPlus’ Patents
41. Sprint’s infringement of the RingPlus patents identified in this Complaint
provided Sprint with unique functionality for its products and services that were
the result of RingPlus’ innovation, and not Sprint’s. Sprint does not have
permission from RingPlus to use its inventions identified in the patents because
Sprint’s licenses to RingPlus’ patents are void or revoked.
Sprint’s Infringement of RingPlus’ Trade Dress
42. Sprint announced Music Plus in April of 2011.
43. RingPlus started in April of 2006.
44. The “Plus” in Music Plus embodies a key element of the RingPlus trade
dress.
Sprint’s Unfair Practices and Competition
45. Sprint is unlawfully using below-cost pricing and loss leader products and
services.
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46. Sprint offers retail consumers and other MVNOs wireless phone service at
prices that are lower than the wholesale prices it offers RingPlus, and below
Sprint’s own cost.
47. Sprint is offering retail consumers free wireless phone services as loss
leaders to sell other products and services.
48. Sprint is offering retail consumers free iPhones and other phone brands as
loss leaders to sell its wireless phone service.
49. Sprint has announced it will now enter the free consumer wireless service
market in January 2017 by offering loss leaders in the form of free phones (and
other devices) and free wireless phone service (including unlimited talk, text and
data) to 1 million people.
The Contract
50. In 2011, RingPlus decided to launch its technology as an MVNO on a U.S.
MNO for domestic and international call destinations.
51. In March of 2012 (after negotiations with multiple MNOs), RingPlus
entered into a written contract with Sprint for RingPlus to become a Sprint MVNO.
The contract incorporates two addendums and 10 amendments for a variety of
reasons, including Sprint’s introduction of new technology like LTE (Long Term
Evolution which is a 4G wireless communications standard), Sprint’s Bring Your
Own Device program, and Sprint price changes (collectively the “Contract”).
52. Sprint drafted two additional amendments after the 10th
Amendment which
were not effectively executed. Since the 10th Amendment, the Free Plan Agreement
became modified by oral agreements, emails, those draft documents and the
Parties’ conduct that resulted in the terms that RingPlus would pay Sprint what
money it could when it could, and Sprint accepted RingPlus’ payments, over
approximately the last eight months.
53. On January 31, 2017, Sprint sent RingPlus a notice of breach for non-
payment with five days to cure. Sprint then sent RingPlus a notice of termination
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effective February 1, 2017, stating that Sprint would turn off all service to
RingPlus and its subscribers in just 10 days. Both notices violated the notice terms
of the Free Plan Agreement as well as the modified payment terms.
54. Between March of 2012 and January of 2015, RingPlus implemented the
RingPlus Model and grew a modest subscriber base. During that time, RingPlus
repeatedly proved to Sprint in live demonstrations that RingPlus could generate
over 1,000 new customers in an hour based on the power of its technology,
marketing skills, and goodwill.
55. In January of 2015, Sprint and RingPlus began discussions to co-invest in
the Project to implement the RingPlus Model. Sprint and RingPlus spent six
months in negotiations of the Free Plan Agreement. It was based on projections
agreed to by Sprint and RingPlus for RingPlus to grow to 2.7 million subscribers,
$300 million in revenue, and over $260 million in profit by the 18th
month of the
Project. Sprint would contribute its excess network capacity, a system to
implement the RingPlus Model nationwide on the Sprint network, and the prices it
would charge RingPlus for the talk, text and data it was giving to consumers.
RingPlus contributed its technology, goodwill, and millions of dollars in monthly
payments to Sprint.
56. In June of 2015, RingPlus entered into the Free Plan Agreement (in the
form of the Eighth Amendment to the Contract) with Sprint to co-invest in the
Project to expand the RingPlus Model nationally. The Free Plan Agreement
required, inter alia, that RingPlus give Sprint (and its affiliates) licenses to both of
RingPlus’ patents.
57. Sprint fraudulently induced RingPlus into the Free Plan Agreement in order
to trick RingPlus into giving Sprint (and its affiliates) licenses to RingPlus’ patents
for their infringing products and services, and to get whatever amount of money
Sprint could get out of RingPlus before driving RingPlus out of business (while
keeping the patent licenses in place).
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58. Once the Free Plan Agreement was in place, RingPlus grew from
approximately 5,000 to 100,000 subscribers in the first year. It was far from the
projection of 2.7 million subscribers on which the Free Plan Agreement was based.
59. Sprint placed RingPlus on a Sprint System that Sprint knew (a) would
produce unusable in-call delay (i.e., mouth-to-ear delay in a phone call), and (b)
could not support the high volume of API transactions between the Sprint and
RingPlus systems required to sign up the amount of new RingPlus subscribers
needed to reach the projections.
60. Sprint had repeatedly told RingPlus the in-call delay problem was caused by
RingPlus, and not by Sprint. RingPlus has spent millions of dollars during the
Project to pay Sprint invoices, and to try to fix that problem and others.
61. RingPlus kept trying to fix the in-call delay because it was the most
significant factor preventing new people from signing up for RingPlus service,
which prevented RingPlus from performing and the Project from succeeding. It
also damaged RingPlus’ goodwill by giving it a reputation for terrible call quality
in the public eye. It caused current subscribers to leave and issue chargebacks
which, in turn, caused RingPlus to lose merchants and great amounts of money.
That reputation has also tremendously damaged RingPlus’ goodwill and ability to
operate going forward.
62. The Contract acknowledges and quantifies data latency (i.e., delay) inherent
in the Sprint System, and suggests steps to possibly minimize data delay. However,
the Contract never makes any disclosure of the in-call delay inherent in the Sprint
System.
63. In addition, the Contract states that RingPlus is allowed to have an average
of 10 API transactions per month, per subscriber. If the Project forecast of 2.7
million subscribers was to have been possible, RingPlus should have been allowed
27 million API transactions per month.
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64. Instead, in December of 2015, Sprint forced RingPlus to program into the
RingPlus system artificial API limits into RingPlus’ system. Sprint threatened to
turn off RingPlus’ API access to Sprint if RingPlus failed to comply. That limit
made it literally impossible for RingPlus and the Project to succeed.
65. Sprint knew before entering the Free Plan Agreement that it would place
RingPlus on the Sprint System, that it (and, therefore, RingPlus) could not perform
under the Free Plan Agreement, and that the Project could not succeed and reach
the forecasts.
66. Sprint also knows that it has, at all times, been in breach of the Free Plan
Agreement by leaving RingPlus on the Sprint System that made it impossible for
Sprint and RingPlus to perform, and for the Project to succeed and reach the
forecasts.
67. In September of 2016, Sprint finally admitted it always knew the in-call
delay existed, that it was caused by Sprint, and that Sprint could not fix it.
68. Sprint has admitted that the call latency is caused by Sprint “round-robin”
routing RingPlus call traffic over legacy network gear that has inherent in-call
delay. Sprint admitted that the in-call delay would always exist, and be at least 0.5
to 1.5 or more seconds (that entire range is well outside telecommunications
industry standards for acceptable in-call delay).
69. RingPlus asked Sprint to compensate RingPlus so it could fix the in-call
delay problem by developing its own technology solutions to go around the in-call
delay in the Sprint platform.
70. In response, Sprint extorted (and attempted to extort) money out of
RingPlus by threatening that, unless RingPlus paid (and continued to pay) Sprint
more money, Sprint would turn off wireless phone service to all of RingPlus’
subscribers, and turn off RingPlus’ API access to Sprint to activate new
subscribers. RingPlus had no choice but to pay Sprint, and Sprint accepted the
payments.
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71. Additional Sprint breaches have repeatedly threatened to destroy the Project
and RingPlus as well.
72. A two-week Sprint porting (bringing your phone number from another
carrier) outage caused both RingPlus activations and revenue to drop
approximately 35% from the prior month. Sprint agreed to settle this problem by
giving RingPlus a credit that was applied to invoices. The porting outage was
nowhere near as damaging as the inherent in-call delay and artificial API limits
that continued to plague RingPlus.
73. A major Sprint billing reporting outage prevented RingPlus from reporting
talk, text and data usage to it customers. It resulted in a lot of consumer usage that
RingPlus could not bill for, but for which Sprint demands payment. Sprint never
compensated RingPlus for it.
74. There are ongoing data leakage, allocation and billing problems caused by
Sprint that are extremely expensive for RingPlus, but for which Sprint wants
payment.
75. RingPlus invested all of its resources to make the Project a success. The
Sprint System delivered is not what RingPlus bargained or paid for. Sprint’s fraud,
breach, unlawful actions and System problems have made it impossible for
RingPlus to perform or for the Project to succeed. Sprint has wasted years of
RingPlus’ patents’ terms. Sprint has infringed RingPlus’ intellectual property.
Sprint has defrauded and extorted millions of dollars from RingPlus, and damaged
its goodwill.
76. Sprint now seeks to put RingPlus out of business, and to leave RingPlus’
subscribers without phone service on virtually advanced notice.
FIRST CLAIM FOR RELIEF
(Fraud)
77. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
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78. Pursuant to the mutually agreed upon forecasts made by the parties, Sprint
induced RingPlus to enter the Project Free Plan Agreement by misrepresenting
material facts about its ability to perform its side of the co-investment in the
Project by concealment and nondisclosure of the facts that the problems in its
platform existed and would make it impossible to for RingPlus to perform and for
the Project to achieve the forecasts.
79. Sprint has admitted that it knew its API limitations and inherent in-call
delay were present, that they were caused by Sprint, and that they could not be
fixed. Moreover, Sprint only made its admission regarding the in-call delay after
RingPlus had spent over a year and millions of dollars trying to achieve the Project
forecasts and fix the in-call latency.
80. Sprint intended to induce RingPlus’ reliance on its misrepresentations,
concealments, and nondisclosures so that Sprint could secure licenses to RingPlus’
patents to avoid paying RingPlus royalties or a lawsuit based on Sprint’s infringing
products and services, and to defraud RingPlus to get money.
81. RingPlus’ reliance on Sprint’s misrepresentations, concealments, and
nondisclosures was justifiable because both parties prepared and agreed on the
Project forecasts before entering the Contract and Free Plan Agreement, and only
Sprint was in the position to know the true state of its System.
82. RingPlus was damaged as a result of Sprint’s fraud because the true state of
Sprint’s platform made it impossible for RingPlus to perform or to reach the
Project forecasts agreed upon by the parties. RingPlus could never have grown its
subscriber numbers to the 500,000 customers needed to attract advertisers which
were necessary to generate the forecasted revenue and profits.
83. Sprint committed the alleged wrongful conduct with malice, intent, and
knowledge.
84. RingPlus’ reliance on Sprint’s fraudulent misrepresentations, concealments,
and nondisclosures was the substantial cause of RingPlus’ harm.
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85. Sprint’s unlawful conduct was a substantial factor in causing RingPlus’
damages. Were it not for Sprint’s unlawful conduct of misrepresentations,
concealments, and nondisclosures, RingPlus would not have entered the Project
Free Plan Agreement, it would not have spent millions of dollars on it, it would not
have wasted years of its patents’ terms, and its future business and goodwill would
not have been damaged.
86. Sprint’s unlawful conduct rendered the Contract voidable, and excused
RingPlus from all performance thereunder.
SECOND CLAIM FOR RELIEF
(Breach of Contract)
87. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
88. RingPlus and Sprint entered into the Project Free Plan Agreement due to
Sprint’s fraudulent inducement.
89. RingPlus performed all, or substantially all, of the significant things that the
Free Plan Agreement required it to do until the facts of Sprint’s fraud and breaches
were revealed by Sprint which excused RingPlus from performance under the Free
Plan Agreement since it was impossible for the Project to succeed.
90. Sprint did not perform all, or substantially all, of the significant things that
the Free Plan Agreement required it to do.
91. Sprint failed to provide RingPlus with a platform capable of putting the
RingPlus Model on the Sprint nationwide network, which made it impossible for
RingPlus to perform and for the Project to reach the Project forecasts.
92. Sprint’s breaches harmed RingPlus by causing RingPlus to lose market
share, revenue, profits, and years from its patents’ terms. It also damaged
RingPlus’ goodwill, and future business. RingPlus would not have spent millions
of dollars on the Project and trying to fix it.
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93. Sprint’s unlawful and material breaches excused RingPlus’ performance
under the Contract.
94. Upon learning of Sprint’s unlawful and material breaches, RingPlus
disputed all invoices under the Contract in full in, and in writing.
95. As a direct and proximate consequence of Sprint’s breaches, Ring Plus has
been generally, specially, and consequentially damaged in an amount to be
established according to proof at trial including, without limitation, compensatory
damages, attorney fees and fees and costs pursuant to Civ.C. § 1717(a).
THIRD CLAIM FOR RELIEF
(Extortion - Pen. C. §§ 518-524)
96. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
97. Sprint’s wrongful conducted alleged in this Complaint of extortion
constitutes violations of Penal Code Sections 518-519 and 523-524, and the
California Unfair Competition Law, California Business and Professions Code §
17200, et seq., by forcing Ring Plus to pay money it did not owe Sprint under
threat of termination of RingPlus’ wireless phone services and the wireless phone
services RingPlus provides to its customers.
98. Sprint financially gained from its wrongful conduct by direct payment from
RingPlus.
99. As a direct and proximate result of Sprint’s extortion, Ring Plus has been
generally, specially, and consequentially damaged in an amount to be established
according to evidence.
100. Sprint’s extortion was committed willfully and intentionally and by means
of oppression, fraud, and malice and in conscious disregard of Ring Plus’ rights.
Therefore, Ring Plus is entitled to an award of exemplary or punitive damages
under CC § 3294 in an amount to be established at trial to meaningfully punish
Sprint, and to thereby deter similar conduct in the future.
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FOURTH CLAIM FOR RELIEF
(Attempted Extortion - Pen. C. §§ 518-524)
101. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
102. Sprint’s wrongful conducted alleged in this Complaint of attempted
extortion constitutes violations of Penal Code Sections 518-519 and 523-524, and
the California Unfair Competition Law, California Business and Professions Code
§ 17200, et seq., by their intent to force Ring Plus to pay hundreds of thousands of
dollars it does not owe Sprint under threat of termination of RingPlus’ wireless
phone services and the wireless phone services RingPlus provides to its customers.
103. Sprint stands to gain financially from its wrongful conduct by direct
payment from RingPlus.
104. As a direct and proximate result of Sprint’s attempted extortion, Ring Plus
has been generally, specially, and consequentially damaged in an amount to be
established according to evidence.
105. Sprint’s attempted extortion was committed willfully and intentionally and
by means of oppression, fraud, and malice and in conscious disregard of Ring Plus’
rights. Therefore, Ring Plus is entitled to an award of exemplary or punitive
damages under CC § 3294 in an amount to be established at trial to meaningfully
punish Sprint, and to thereby deter similar conduct in the future.
FIFTH CLAIM FOR RELIEF
(Trade Dress Infringement
Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a))
106. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
107. RingPlus has valid and protectable prior rights in its trade dress under
Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and are therefore California
Business and Professions Code § 17200, et seq., in its use of the word “Plus” to
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describe use of its patented technology to deliver, among other things, ringtones,
ringback tones, and reverse ringback tones.
108. The RingPlus trade dress does not serve any function other than to identify
RingPlus as the source of its products and services. The RingPlus trade dress is
inherently distinctive. Due to RingPlus’ long use of its trade dress, it has come to
be associated solely with RingPlus as the source of the products and services on
which it is used.
109. Sprint’s use of its infringing trade dress is likely to cause confusion as to
the source of Sprint’s products and services, and it is likely to cause others to be
confused or mistaken into believing there is a relationship between Sprint and
RingPlus as to those products and services, or that Sprint’s products are affiliated
with or sponsored by RingPlus.
110. Sprint’s conduct and practices described herein are likely to mislead or
deceive the general public and therefore constitute fraudulent business practices in
violation of California Business and Professions Code § 17200, et seq.
111. Sprint’s conduct described herein constitute unfair competition and trade
dress infringement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),
and are therefore violations of California Business and Professions Code § 17200,
et seq.
112. Sprint acted willfully and intentionally in designing its infringing trade
dress, with full knowledge of RingPlus’ prior rights in its distinctive trade dress,
and with an intent to cause confusion or mistake or to deceive consumers into
believing that there is an affiliation between RingPlus’ and Sprint’s products and
services.
113. Sprint’s conduct described herein presents a continuing threat to
intentionally deceive the public by wrongfully trading on the goodwill of
RingPlus’ trade dress.
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114. Sprint has produced, offered for sale, and sold Music Plus which infringes
and induces infringement by others of one or more of RingPlus’ intellectual
property rights. Music Plus makes, offers to sell, and sells, inter alia, ringtone and
ringback tone replacements.
115. As a direct and proximate cause of Sprint’s unlawful conduct, Sprint has
received and will continue to receive profit from the strength of RingPlus’
goodwill and trade dress.
116. As a direct and proximate cause of Sprint’s unlawful conduct, RingPlus
has been injured in fact and has lost money, profits, and goodwill. Such harm to
RingPlus will continue unless Sprint’s acts are enjoined by the Court. RingPlus has
no adequate remedy at law for Sprint’s continued violations of RingPlus’ rights.
117. Sprint should be required to restore to RingPlus any and all profits earned
as a result of Sprint’s unlawful actions, or provide RingPlus with any other
restitutionary relief as the Court deems appropriate.
SIXTH CLAIM FOR RELIEF
(Infringement of the ‘608 Patent - 35 U.S.C. § 271)
118. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
119. Sprint has infringed and continues to infringe and actively induces
infringement of one or more claims of the ‘608 Patent by making, using, selling
and/or offering to sell, in the United States and/or importing into the United States,
one or more of the Sprint products or services identified in this Complaint. Sprint’s
infringement violates 35 U.S.C. § 271.
SEVENTH CLAIM FOR RELIEF
(Infringement of the ‘929 Patent - 35 U.S.C. § 271)
120. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
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121. Sprint has infringed and continues to infringe and actively induces
infringement of one or more claims of the ‘929 Patent by making, using, selling
and/or offering to sell, in the United States and/or importing into the United States,
one or more of the Sprint products or services identified in this Complaint. Sprint’s
infringement violates 35 U.S.C. § 271.
EIGHTH CLAIM FOR RELIEF
(Unfair Business Practices and Competition, California Business and
Professions Code § 17000, et seq., and § 17200, et seq.)
122. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
123. The acts of Sprint described in this Complaint including (without
limitation) fraud, breach of contract, attempted extortion, trade dress infringement,
and patent infringement, constitute unfair practices and/or unfair competition
including fraudulent and unlawful business practices as defined by California
Business and Professions Code § 17000, et seq., and § 17200, et seq.
124. In addition to Sprint’s conduct referenced above, Sprint has engaged in
other unfair business practices by engaging in below cost pricing and loss leaders
to sell other products and services, mislead retail consumers, and to intentionally
injure and/or destroy competition including RingPlus by diverting business to
Sprint.
125. Sprint offers retail consumer wireless phone service at prices that are
lower than the wholesale prices it offers RingPlus and below Sprint’s own cost.
126. Sprint offers retail consumers loss leader products and services including,
without limitation, free phones, paid phones at a loss, paid wireless phone service
plans at a loss, and free wireless phone service.
127. As a direct and proximate cause of Sprint’s unlawful conduct, RingPlus
has been injured in fact and has lost money, profits, and goodwill. Such harm to
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RingPlus will continue unless Sprint’s acts are enjoined by the Court. RingPlus has
no adequate remedy at law.
128. Sprint should be required to provide RingPlus with any other relief as the
Court deems appropriate.
NINETH CLAIM FOR RELIEF
(Unjust Enrichment)
129. Ring Plus re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
130. As a result of the conduct alleged herein, Sprint has been unjustly enriched
to RingPlus’ detriment. RingPlus seeks an accounting and disgorgement of all ill
gotten gains and profits resulting from Sprint’s inequitable activities.
TENTH CLAIM FOR RELIEF
(Declaratory Judgment)
131. Plaintiff re-alleges and incorporates by reference as though set forth fully
at this point, each and every allegation contained in this Complaint.
132. Ring Plus alleges that there are actual disputes as to the parties’ rights and
obligations under the Agreement.
133. Ring Plus’ position is that the Agreement was modified by the Parties’
conversations, emails, draft documents and conduct. It is also RingPlus’ position
that Sprint breached of the Agreement; thereby, repudiating the Agreement, and
legally excusing Ring Plus’ performance under it.
134. Ring Plus requests declaratory judgment that Sprint committed breach of
the Agreement entitling Ring Plus to recover all amounts unjustly gained by
Defendants, and excusing Ring Plus’ performance under it.
135. Ring Plus requests declaratory judgment that Sprint does not now, and
never had, any licenses to RingPlus’ patents.
///
///
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PRAYER FOR RELIEF
WHEREFOR, RingPlus prays for the following relief:
1. A declaratory judgment that the Contract is void due to Sprint’s fraudulent
inducement, or alternatively that RingPlus’ performance is excused as the Contract
is unenforceable because Sprint’s breaches of the Contract made RingPlus’
performance and the Project impossible;
2. A declaratory judgment that Sprint’s licenses to RingPlus’ patents are void,
or in the alternative revoked;
3. A judgment that Sprint’s conduct damaged RingPlus, and resulted in lost
profits;
4. A judgment that Sprint’s conduct damaged RingPlus’ goodwill;
5. A judgment that Sprint’s conduct constituted unfair business practices
pursuant to California Business and Professions Code § 17000, et seq.;
6. A judgment that Sprint’s conduct constituted unfair competition pursuant to
California Business and Professions Code § 17200, et seq.;
7. A judgment that Sprint’s conduct violated of Section 43(a) of the Lanham
Act, 15 U.S.C. § 1125(a);
8. A judgment that Sprint has infringed, contributorily infringed, and/or induced
infringement of one or more claims of each of RingPlus’ asserted patents;
9. An order granting a temporary restraining enjoining Sprint and its officers,
directors, agents, servants, employees, affiliates, attorneys, and all other acting in
privity or in concert with them, and their parents, subsidiaries, divisions,
successors and assigns from terminating RingPlus’ access to the Sprint system to
activate new customers and from turning off wireless phone service to any and all
of RingPlus’ current customers until an order to show cause hearing for a
preliminary injunction can be held on ruled on by the Court;
10. An order granting a preliminarily injunction enjoining Sprint and its
officers, directors, agents, servants, employees, affiliates, attorneys, and all other
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acting in privity or in concert with them, and their parents, subsidiaries, divisions,
successors and assigns from terminating RingPlus’ access to the Sprint system to
activate new customers and from turning off wireless phone service to any and all
of RingPlus’ current customers until this suit has been fully adjudicated, or
alternatively for a period of 30 days to allow RingPlus’ subscribers to find a
replacement wireless provider;
11. An order and judgment to preliminarily and permanently enjoining Sprint
and its officers, directors, agents, servants, employees, affiliates, attorneys, and all
other acting in privity or in concert with them, and their parents, subsidiaries,
divisions, successors and assigns from further acts of infringement of RingPlus’
asserted patents, trade dress and other intellectual property;
12. A judgment of restitutionary damages for Sprint to return all monies paid to
it by RingPlus under the Contract;
13. A judgment of actual damages suffered by RingPlus as a result of Sprint’s
unlawful conduct in an amount to be proven at trial, as well as prejudgment interest
as authorized by law;
14. A judgment awarding RingPlus all damages adequate to compensate for
Sprint's infringement of RingPlus' asserted patents, and in no event less than a
reasonable royalty for Sprint's acts of infringement, including all pre-judgment and
post-judgment interest at the maximum rate permitted by law;
15. A judgment awarding RingPlus all damages, including treble damages,
based on any infringement found to be willful, pursuant to 35 U.S.C. § 284,
together with prejudgment interest;
16. A judgment that this is an exceptional case and an award to RingPlus of its
costs and reasonable attorneys’ fees incurred in this action as provided by 35
U.S.C. § 285;
17. A judgment that Sprint’s conduct was the legal cause of RingPlus’ damages,
and awarding RingPlus lost profits damages based on the projections agreed on by
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Sprint and RingPlus, in an amount to be proven at trial, as well as prejudgment
interest as authorized by law;
18. A judgment awarding RingPlus all actual damages suffered by RingPlus as
a result of Sprint’s unlawful conduct, in an amount to be proven at trial, as well as
prejudgment interest as authorized by law;
19. A judgment awarding RingPlus treble damages and injunctive relief for
violations of California Business and Professions Code § 17000, et seq.;
20. A judgment awarding RingPlus restitution, civil penalties, and recovery of
attorney fees violations of California Business and Professions Code § 17200, et
seq.;
21. A judgment awarding RingPlus damages, injunctive relief, and seizure of
Sprint’s products for violations of Section 43(a) of the Lanham Act, 15 U.S.C. §
1125(a);
22. A judgment for a reasonable fund for future corrective advertising;
23. A judgment trebling any damages award pursuant to 15 U.S.C. § 1117;
24. A judgment for punitive damages pursuant to California Civil Code § 3294;
25. A judgment for restitutionary relief against Sprint and in favor of RingPlus
including disgorgement of wrongfully obtained profits and any other appropriate
relief;
26. Costs of suit and reasonable attorneys’ fees;
27. Any other remedy to which RingPlus may be entitled including all remedies
provided for in 15 U.S.C. § 1117, California Business and Professions Code §§
17200, et seq., 17500, et seq., and under any other California law; and
28. Such other relief as this Court deems just and proper.
DATE: February 2, 2017 Ring Plus, Inc.
By: /s/ Jerry Mowery
Jerry Mowery
Attorney for Plaintiff
Ring Plus, Inc.
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DEMAND FOR JURY TRIAL
Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, RingPlus
hereby demands a jury trial on all issues raised by the Complaint.
DATE: February 2, 2017 Ring Plus, Inc.
By: /s/ Jerry Mowery
Jerry Mowery
Attorney for Plaintiff
Ring Plus, Inc.
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