united states district court - dsl reports91cedd338b05bf4deb46… · case 2:17-cv-00835-rswl-agr...

RING PLUS’ COMPLAINT - 1

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Jerry Mowery (Bar No. 240469)

[email protected]

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

Case 2:17-cv-00835-RSWL-AGR Document 1 Filed 02/02/17 of 26 Page ID #:1


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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)



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)



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)



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))



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)



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)





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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.)



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)



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


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


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


Ring Plus, Inc.


united states district court - dsl reports91cedd338b05bf4deb46… · case 2:17-cv-00835-rswl-agr...

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