MANHATTAN (CN) - The New York Times claims a California-based company called Kachingle is trying to attract customers by abusing Times trademarks and copyright and falsely claiming that 85 percent of any payments it receives will be paid to the Times or its bloggers.
The Times claims Kachingle posted the misleading information on two recently launched websites.
"Those statements were made by Kachingle Inc. to induce consumers, including consumers residing in the State of New York, to pay money to Kachingle Inc. based on the false representation that 85% of that money would be paid by Kachingle to The New York Times Company or its bloggers and that these payments to the New York Times Company are intended to persuade the Times not to begin charging subscription fees for access to its online content in 2011," according to the federal complaint.
"Kachingle has made and continues to make these representations even though it was and is aware that the Times does not intend to cooperate or partner with Kachingle, that the Times has not and will not accept any payments from Kachingle purportedly for use of the New York Times Company's online content and that, most importantly, Kachingle's actions will not influence the Times' decision to begin charging subscription fees for access to its online content," the complaint states.
The Times claims Kachingle is copying copyrighted content without permission, while asking consumers to pay Kachingle for access.
On its website, Kachingle calls itself an "online usage-based service that automatically rewards the blogs you love with real money," according to the complaint.
The website continues: "And now you can support the New York Times blogs you love directly, with a voluntary contribution of just $5/month". It claims that "the money goes to the creatives (content producers, application developers, bloggers, etc.)"
The Times says it declined an offer Kachingle made in February 2009 to forego subscription fees and instead send the Times the "voluntary" payments from Kachingle customers.
"The parties' discussion ended at that point," the complaint states. "The Times never accepted Kachingle's business proposal; never entered into a business relationship with Kachingle; nor did the Times agree to allow its content or other intellectual property used by Kachingle in any way."
The Times claims Kachingle gives the impression on its website that it is affiliated or in a business relationship with the newspaper, and that when readers connect to the Times through Kachingle, they receive targeted Google advertisements that the Times never agreed to run.
"Kachingle is making this representation in order to induce consumers to make payments to Kachingle," according to the complaint. "It is doing so even though it knows that the Times had already rejected an arrangement with Kachingle and does not intend to accept any such payments from Kachingle."
Kachingle also tells its website readers that the Times doesn't know about the Kachingle's service, "but we hope they will like it," the Times claims.
"Kachingle already knew, at the time the website was launched, that the Times did not 'like' the business model that Kachingle had proposed and that the Times had rejected Kachingle's business model," according to the complaint.
"Moreover, Kachingle has continued to publish this false representation even after the Times advised Kachingle that Kachingle needed permission from the Times to use the Times' content, and that permission had not, and would not, be granted. Indeed, Kachingle has now admitted that it did not seek permission to use the intellectual property owned by the Times because 'to ask permission is to seek denial.'"
Kachingle also insinuates on its websites that its business model could change the Times' decision to begin charging for online content, the Times says.
"Contrary to the representations made on the Kachingle websites, Kachingle's interest in the 'Stop the Paywall' campaign against the Times is not to prevent the Times from instituting a paid subscription program," the complaint states. "On information and belief, the purpose of Kachingle's 'Stop the Paywall' campaign is to piggy-back off the Times' goodwill, reputation and popularity, and to use the reputation and popularity of the Times' blogs for Kachingle's financial gain."
The Times seeks an injunction, treble damages and punitive damages, alleging trademark infringement, unfair competition, deceptive business practices and false advertising. It is represented by house counsel David McCraw and Steven Lieberman with Rothwell Figg of Washington, D.C.
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