Forgive the late notice, but back in March, unbeknownst to all of us, a broken man sued Yahoo for robbing him of his world-changing invention. Yes, I am talking about ChatAbles.

Screenwriter Andy Burg sought to transform IM conversation with animated graphics. These graphics would replace actual words, acting as a "cyber Cyrano de Bergerac," according to Burg's filed complaint against Yahoo. They are totally not like emoticons, for reasons too fiddly and technical to explore.

They just aren't, okay?

Burg presented his idea to Yahoo, who declined, in 1999. Burg took this as a sign that he should invest $250,000 in building a messenger client that could handle ChatAbles. This amazing invention he dubbed "The Blabber."

Years later, Burg worked on a promotion deal with Pepsi. Pepsi brought Yahoo to the table. Yahoo's evil lawyers drafted an NDA full of loopholes, then secretly began work on cloning ChatAbles within their own IM service (launched in 2004 as "Audibles"), all the while stalling the ChatAbles deal.

Oh, it's a long and sordid story, all covered, at least from Burg's side, in the Los Angeles County Superior Court complaint after the jump.

Gerard P. Fox (Bar No. 151649)

Raul Perez (Bar No. 174687)

FOX & SPILLANE LLP

1880 Century Park East, Suite 1004

Los Angeles, California 90067

(310) 229-9300

(310) 229-9380 (fax)

Attorneys for Plaintiffs

ChatAbles, LLC and Burg Investment, Inc.

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

CHATABLES, LLC, a Delaware Limited Liability Company, and BURG INVESTMENT, Inc., a Delaware Corporation

Plaintiffs,

v.

YAHOO!, Inc., a Delaware Corporation;

Defendant.

Case No. 337499

FIRST AMENDED COMPLAINT
1. Breach of Contract

2. Breach of Confidence

3. Common Law Unfair Competition

4. Unfair Competition in Violation of California Business and Professions Code Section 17200

5. Fraudulent Concealment

6. Intentional Misrepresentation

7. Negligent Misrepresentation

JURY TRIAL DEMANDED

Plaintiffs ChatAbles, LLC ("ChatAbles") and Burg Investment, Inc. ("BI") (collectively, "Plaintiffs") allege as follows:

INTRODUCTION

1. Plaintiffs created ChatAbles, empowering a user to be instantly "One Click Cool" within the world of their instant messenger. ChatAbles was a completely unique innovation in the world of instant messaging, revolutionizing how users expressed their own unique personalities to one another online. ChatAbles was scheduled to be launched on a website owned by Pepsi Cola but exclusively developed and managed by YAHOO!. ChatAbles was extremely reluctant to share any confidential information with YAHOO!, but received assurances from YAHOO! that it was not interested in developing its own version of a program similar to ChatAbles. YAHOO! even drafted a written non-disclosure agreement and represented to Plaintiffs that such agreement should give them the peace of mind to share with YAHOO! their confidential innovations, marketing plans and content ideas. This was all a ruse. In reality, YAHOO! surreptitiously took what they learned about ChatAbles, including proprietary content ideas and marketing plans, and then through chicanery and deceit, set about releasing an exact replica of ChatAbles under the name Audibles with Plaintiffs' original content ideas, marketing ideas, and technology behind it. Accordingly, this is an action by Plaintiffs to vindicate their rights.
2. YAHOO!'s tortious and unconscionable conduct has forced Plaintiffs to file this action to protect their rights. As set forth more specifically below, Defendants' panoply of unlawful acts entitles Plaintiffs to injunctive relief, recovery of substantial actual damages, disgorgement, attorneys' fees, punitive damages and any and all other remedies afforded at law or equity.

Jurisdiction and Venue

3. Jurisdiction is proper in this Court as the amount in controversy exceeds $25,000.00.
4. Venue is proper in this Court because the causes of action arose in Los Angeles County.

Parties

5. Plaintiff ChatAbles is a limited liability company organized and existing under the laws of the State of Delaware, with its principal place of business located in Los Angeles, California.
6. Plaintiff Burg Investment, Inc., is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business located in Los Angeles, California.
7. ChatAbles is informed and believes and based thereon alleges, that defendant YAHOO!, Inc., ("YAHOO!") is a Delaware Corporation, with its principal place of business located at 701 First Avenue, Sunnyvale, California.

Summary of Facts Common to All Claims for Relief

8. In late 1998, Andy Burg ("Burg"), the principal and driving force for Plaintiffs, first developed the concept for ChatAbles, empowering a user to be instantly "One Click Cool" within the world of their instant messenger. Instant Messaging is an Internet application allowing two online "buddies" to type out real-time communication in hopes of mimicking the real world intimacy of a telephone experience. Burg found, however, that because of users inability to type at the same rate as they would converse using words, "conversations" within instant messengers were quickly reduced to acronyms (LOL - Laugh Out Loud & BRB - Be Right Back) and smiley faces (emoticons that express mood - e.g. happy, sad, excited, naughty, etc. ) all of which at the expense of demonstrating their unique personality to the online world.
9. Burg thus created ChatAbles - a multimedia personality driven instant messaging content divided into the various aspects of a conversation (i.e., saying hello, goodbye, flirting, joking, etc.) so that consumers could be "One Click Cool" while instant messaging. From a communication content point of view, Burg recognized that the vast majority of consumers cannot create their own content "on the fly", which is why people look outside of themselves to "adopt" communication content to better and more quickly represent their unique individualism.
10. Because Burg made his living as a screenwriter, putting words and phrases into actor's mouths, he decided the same could be done within the arena of instant messaging. Accordingly, Burg created a system that would allow consumers to access ChatAbles as their own personal online cyber Cyrano de Bergerac while they communicate with their friends within the world of instant messaging. With the invention of ChatAbles, users could instantly retain their own unique personalities within the instant messaging experience, without worrying about typing skills or content creation skills. At the time, however, the state of instant messaging only allowed for the use of fonts, inserting hypertext links and smiley faces, also known as emoticons. These emoticons are not graphics, but instead just an additional font residing on a consumer's computer, which means graphics were not being exchanged through instant messaging. In 1998, instant messaging could only utilize fonts.
11. For the Big Three providers (Microsoft, YAHOO! and America Online), instant messaging is one of the top two most popular, most often used free applications offered (email being the other). In order to maintain their respective user base, these providers must continually release cutting edge messengers. To attract new users, they must "differentiate" (by adding innovative features to an application) to keep users engaged. Instant Messaging is one of the most vital businesses the Big Three internet providers have, with current usage in excess of 100 million people and growing. Further, unlike email, instant messaging is the most intimate one-to-one relationship a brand can forge with their customers because it tethers the user to the brand for the consumer's entire online experience.
12. ChatAbles, as a business, was created to allow brand messages to be repurposed into animated conversation quips to be used within an instant messenger to help empower a consumer to communicate their own uniqueness online... while at the same time, helping brands to cement more meaningful relationships with consumers.
13. Instant Messaging is a core business that is worth in the high hundreds of millions of dollars to each of the Big Three. On information and belief, YAHOO! maintains a relationship with millions of users through their messenger. Accordingly, they must "keep it fresh" in order to retain their user base. To grow their market share, YAHOO! must continually find fresh innovations.
14. In or around Summer 1999, Burg in confidence pitched his idea for ChatAbles to the new media lab at his talent agency, Creative Artists Agency ("CAA") where he has been represented as a screenwriter since 1993.
15. The first generation of ChatAbles were static "Communication Stickers" that, with a click of the mouse, could be sent to friends online in their instant messenger to better display their personality.
16. Burg in confidence showed this presentation to a group of high-level agents from CAA (Richard Lovett, Bryan Lourd, Adam Kanter) with the goal of setting up meetings with the Big Three messaging services - Microsoft, YAHOO! and America Online - to provide them with the ChatAbles instant messaging content service.
17. In 1999, Burg went with Glen Meredith, of CAA Business Affairs and head of CAA's New Media department, to the YAHOO! campus to present in confidence ChatAbles and discuss the possibility of working together. YAHOO! passed, explaining that its messenger could not support ChatAbles multimedia content. Remarkably, YAHOO! intentionally misrepresented to Burg that it was not interested in ChatAbles in a transparent effort to discourage Burg from further developing this project that YAHOO! realized was worth millions. This meeting in 1999 was YAHOO!'s first exposure to ChatAbles.
18. Not accepting no for an answer, Burg then personally invested approximately $250,000 of his life savings to build/develop a messenger that could support the complex ChatAbles multimedia content. Burg hired a technical staff and created "The Blabber," which would allow consumers to share ChatAbles content.

First Generation of the Blabber

19. Towards the end of 2000, with both The Blabber and ChatAbles in hand, and with new partners/investors, Burg in confidence made a presentation to Aaron Walton (consultant to Pepsi) and Rick Rock (Pepsi), for a possible Pepsi Cola partnership. Pepsi was very excited about ChatAbles and advised that it was interested in making a deal.
20. Burg then met in confidence with Danny Socolof, another Pepsi consultant, who also was very excited about ChatAbles and recommended it to Pepsi for their PepsiStuff2.com promotion where digital prizes were given out after redeeming Pepsi bottle top points. Pepsi ran a promotional website, PepsiStuff2.com, and was looking for ways to increase traffic there and more importantly, retain these users for meaningful online time.
21. In or around February 2001, Burg then flew to Pepsi headquarters in Purchase, New York, to present in confidence The Blabber and ChatAbles. Pepsi executives (Frances Britchford, John Vail, Jeff Dubiel, Vicki Brakl) were very enthusiastic about the presentation and a deal was initiated for ChatAbles to be used on PepsiStuff2.com.
22. In or around April 2001, Pepsi advised Plaintiffs that YAHOO! was the technology provider for PepsiStuff2.com and asked if ChatAbles would be willing to let YAHOO! handle the infrastructure messaging part of The Blabber and exclusively provide ChatAbles content in light of that partnership. Plaintiffs were extremely reluctant to share their highly confidential content ideas with YAHOO!, who was eager to obtain access to Plaintiffs' confidential and propriety content ideas, marketing plans, and technology. It is axiomatic that if YAHOO! had been developing its own competing or similar product on a parallel track with ChatAbles, Pepsi would have had no use for ChatAbles. No mention was ever made by either Pepsi or YAHOO! of any similar product or the fact that any similar product was in development.
23. Concerned about protecting its proprietary information, ChatAbles agreed to Pepsi's request provided YAHOO! execute a non disclosure agreement. Attached hereto as Exhibit "B" is a true and correct copy of the Non Disclosure Agreement (which was part of a larger Integration Agreement between YAHOO! and Plaintiffs dated September 30, 2001). Unlike the agreement with Pepsi, the reason for the delay in execution of the Integration Agreement between Plaintiffs and YAHOO! was caused solely by YAHOO! dragging its feet despite repeated requests by Plaintiffs and Pepsi to have an executed agreement in place. The preparation of the NDA, which was exclusively drafted by YAHOO! attorneys, was specifically delayed ostensibly to deny Plaintiffs, who have no prior legal or business experience, an opportunity to carefully review and discuss it. YAHOO! led Plaintiffs to believe that the NDA would provide Plaintiffs the peace of mind to share confidential content ideas, marketing plans, technology and the like without the fear that YAHOO! would steal such proprietary information to develop competing products. YAHOO! also led Plaintiffs to believe that with the NDA in place, YAHOO! would be precluded from developing a competing product even if ChatAbles was launched on the Pepsi website. Moreover, in order to give Plaintiffs a false sense of security, YAHOO! portrayed itself as an ethical company who would not use deceit and chicanery to steal from small companies it was doing business with. In reality, YAHOO! drafted the NDA with ambiguities so that it could argue years later that nothing in the NDA precluded them from ripping off the original content and marketing ideas and technology of ChatAbles. For example, YAHOO! inserted a hopelessly vague and ambiguous clause stating that it could use any confidential "residual" information "that remained in intangible form in the minds of those receiving individuals." This clause, as Plaintiffs understood it, was meant to severely limit the ability of YAHOO! to use the confidential content ideas, marketing plans, technology, and materials of ChatAbles. YAHOO! conveniently now believes this vague clause gives it a blank check to commit corporate theft. Essentially, YAHOO! seeks to undermine the very purpose and intent of the NDA—to protect each party's confidential ideas and innovations. Ironically, the same document (the NDA) that YAHOO! championed as the protector of Plaintiffs' creations is the same document that YAHOO! now maintains allows it to defraud and backstab Plaintiffs.
24. On or around May 4, 2001, Burg and Rita Chan, his Chief Technology Officer, met in confidence with Pepsi consultant Danny Socolof and Mark Papia and David Roman, both with YAHOO! and two other YAHOO! instant messenger developers. At this meeting Burg hesitantly presented a number of confidential content ideas, marketing plans, technology and documents, including, without limitation, The Blabber and ChatAbles, and explained how these products were a strong branding platform (a confidential idea). None of the foregoing was available to the public at large. Other confidential content ideas, marketing plans, technology and documents not available to the public at large which Plaintiffs demonstrated to YAHOO! in confidence included, without limitation, their custom skins, ChatAbles themselves, the interactivity of ChatAbles (where clicking them could take the consumer to web destinations including retail opportunities), the "TV" in The Blabber that allowed for streaming media (movie trailers, music videos), the fact that mega movie start Will Smith was already a part of ChatAbles (he allowed ChatAbles to use his image and likeness, a significant coup considering Mr. Smith does not grant endorsements), other potential celebrity involvement Pepsi was trying to secure such as recording star Britney Spears, ability for users to create custom ChatAbles, ability for users to ebcome their own ChatAble collection, text-to-voice ChatAbles, unique ChatAble themes, user saved favorite ChatAbles, toolbar accessed ChatAbles, international ChatAbles, pre-translated ChatAbles (send one in English and it is delivered in another language), clicking on a posted ChatAble which launches a microbrowser product that rotates 360 degrees to show a total view of retail products within instant messenger, tracking ChatAbles usage on a local and regional level, assigning demographics so that brand clients can track popular ChatAble usage, allow brands to test new brand slogans on the fly, and a marketing petrie dish that is instantaneous.
25. Plaintiff specifically discussed in confidence with YAHOO! that a huge breakthrough for ChatAbles was to have their content not reside on users computers, but instead have it "live" in the virtual world so that no matter what computer a consumer was using, they would be able to send and receive ChatAbles in real time. This flew in the face of current messaging standards, which dictated that both sender and receiver would both need the same fonts and emoticons in order to share the same experience. This was yet another confidential content idea and innovation not available to the public at large.
26. Throughout this process, Plaintiffs had been developing confidential business plans for ChatAbles and The Blabber. Among the many other ideas developed by Plaintiffs, which were also shared in confidence with YAHOO! and never made available to the public at large, included:
1. Online auction uses. Users could create their own ChatAbles using pictures of garage sale items they wished to get their peer-to-peer network to buy, similar to E-Bay.
2. Consumers become their own ChatAbles. Their likenesses would be used with audio clips and they become the ChatAble for further personalization.
3. Integration with cell phones and handheld wireless devices.
4. ChatAbles content ranging from:
1. General characters;
2. Celebrities;
3. Consumer & Retail Products ("transactional touchpoints");
4. Corporate identities;
5. Movie promotion;
6. Music promotion;
27. Additionally, ChatAbles was created understanding that Internet savvy Generations X & Y are loyal messaging users. The company that has their loyalty in this area will profit immensely as these "Transactional Touchpoints" (ChatAbles) exchanged within the instant messaging universe are segued into online spending/revenue. Plaintiffs created an innovation that was the first to seek to capitalize on this market within the instant messaging world.
28. YAHOO! assured Plaintiffs and Pepsi that their "next generation" messenger (to be released in or around September 2001) could support Plaintiffs' fully articulated instant messaging experience demonstrated in confidence to both Pepsi and now YAHOO!. Unfortunately, however, YAHOO! did not share its actual next generation messenger with Plaintiffs, only what it "purportedly" could do. Based upon this reliance, Plaintiffs told YAHOO! that for the sake of honoring ChatAbles deal with Pepsi, they would decouple ChatAbles content from their own proprietary messenger (The Blabber) and reprogram its ChatAbles experience to work within YAHOO!'s next generation messenger, allowing YAHOO! to become the distribution platform for ChatAbles communication content. YAHOO! thus now had access to ChatAbles proprietary messenger, another confidential innovation not available to the public at large.
29. YAHOO! understood that all of the proprietary information, including content ideas, marketing plans, technology and materials described above and shared by Plaintiffs, were to remain confidential even if they were not marked or identified as confidential. Through course and conduct, both parties waived any technical requirement or legal formality to mark or identify information as confidential because both parties understood all such information was in fact proprietary.
30. In the interim, YAHOO! continued to reassure Plaintiffs that they could be trusted in order to lure them into revealing more confidential information. For example, Plaintiffs were told by Mark Papia of YAHOO! that ChatAbles vision was in alignment with YAHOO!'s new direction and that they would be interested in pursuing the relationship further after some internal conversations. Attached hereto as Exhibit "C" is a true and correct copy of an email from John Vail, head of Pepsi's Internet marketing efforts, discussing YAHOO!'s desire to talk with Plaintiffs about a broader relationship outside the PepsiStuff2.com promotion. Never did YAHOO! reveal to Pepsi or Plaintiffs that were interested in developing their own competing product based on Plaintiffs' proprietary information.
31. In the ensuing months, YAHOO! started to do everything in its power to sabotage ChatAbles development by repeatedly failing to provide the infrastructure to support ChatAbles on the Pepsi website managed by YAHOO! Moreover, at no time during this process did YAHOO! indicate that they were concurrently developing Audibles or any similar program. In fact, a press release issued by YAHOO! discussing ChatAbles even talked about YAHOO! only introducing a new set of static smiley faces with their new "next generation" messenger ,while they refer to ChatAbles as "animated emoticons." Attached hereto as Exhibit "D" is a true and correct copy of the press release from YAHOO! discussing ChatAbles. Approximately three weeks before PepsiStuff2.com's launch, on or about September 4, 2001, Plaintiffs finalized a design acceptable to all parties after having had to go back to the drawing board at the 11th hour. YAHOO! would not let Plaintiffs test ChatAbles on their system, making them email it to YAHOO! for YAHOO! to test and then a few days later send it back to Plaintiffs with a bug list. Plaintiffs were literally left by YAHOO! to develop in the dark. Plaintiffs believe YAHOO! made them email ChatAbles so YAHOO! could steal its proprietary information.
32. On or about September 6, 2001, Plaintiffs received their first look at a draft Agreement with YAHOO! With only a few weeks to go before Plaintiffs' Pepsi deal deadline, YAHOO! made it virtually impossible to negotiate any aspects of the proposed deal. YAHOO!, trying to accomplish exactly that, suggested to Pepsi that it delay ChatAbles launch to October 29, 2001 or just cancel it altogether. It was abundantly clear that YAHOO!, now realizing the potential of ChatAbles, did almost everything possible to sabotage Plaintiffs and their relationship with Pepsi. Despite YAHOO!'s best efforts, however, Plaintiffs still delivered to Pepsi on time and as promised.
33. Despite the technical issues caused by YAHOO!'s inability to facilitate the product demonstrated to them months previously, ChatAbles was flawless when launched for a limited 6 month run starting in or around October 2001 on the Pepsi website managed exclusively by YAHOO!. During this limited run, many of the confidential content ideas, marketing plans, technology and materials described above, among others, which were shared in confidence with YAHOO!, never were released to the public at large and remained proprietary. This proprietary information included the invaluable "know how" acquired by YAHOO! regarding how a program like ChatAbles works, and by extension, what does not work. Accordingly, YAHOO! had a continuing obligation to maintain the confidentiality of ChatAbles' proprietary information, and not to release a competing product.
34. Pepsi, excited by the successful performance of ChatAbles, then immediately sought to make another deal with ChatAbles to help launch the new Pepsi Blue soft drink product. This required ChatAbles to re-approach YAHOO!, which continued to manage Pepsi's websites.
35. ChatAbles partner and well-known entertainment attorney Ken Hertz and CAA then approached in confidence YAHOO! President Terry Semel's office to determine whether YAHOO! was interested in being the exclusive distributors of ChatAbles. Again, YAHOO! stated that it was not interested in ChatAbles. Moreover, YAHOO! never once said that it was working on Audibles. YAHOO!, however, was eager to continue to host Pepsi's website because it knew it would be able to obtain access to ChatAbles confidential information, technology and original content ideas.
36. Pepsi, undaunted by their technological partner's rejection of ChatAbles, asked Plaintiffs to redevelop their own stand-alone messenger, The Blabber, again. Plaintiffs developed their own stand-alone messenger with several innovations.
37. Above is a representation of Plaintiffs' next generation of The Blabber. Significantly, The Blabber continued to be hosted and exclusively available on Pepsi's website powered and run by YAHOO!. Accordingly, YAHOO! was intimately exposed to Plaintiff's next generation version of ChatAbles, and both parties understood that YAHOO! remained obligated to maintain the confidentiality of the proprietary content ideas, procedures, and technology shared with them in confidence by Plaintiffs. Further, both parties understood that despite any limited exposure of the ChatAbles to the public, the intent of the NDA was to preclude YAHOO! from developing a similar competing product based on the litany of confidential and proprietary information shared with YAHOO! and never made available to the public.
38. Following the failure of their efforts to partner with YAHOO! in or around March 2002, Plaintiffs had no further business dealings with YAHOO! and continued about their confidential development of ChatAbles. In late 2004, however, a friend contacted Burg to ask why YAHOO! was copying ChatAbles but now calling it something different. It was then that Burg first learned about YAHOO!'s Audibles.
39. On information and belief, YAHOO! launched Audibles sometime in 2004. Audibles is nothing more than a rip-off of ChatAbles: it provides exactly the same features, utilizes the same content ideas and technology, looks strikingly similar and even the name Audibles conjures up the ChatAbles experience. Attached hereto as Exhibit "E" are comparisons of ChatAbles to Audibles, including the characters used and messengers. It is transparent that YAHOO! improperly used in developing Audibles, the confidential content ideas, marketing plans, technology, and materials provided to them in confidence by Plaintiffs.
40. On information and belief, YAHOO! has introduced Audibles both here in the United States and internationally, in, among other countries, England, South America, Korea, Japan and India. Further, YAHOO! has introduced Audibles that try and encourage consumers to buy goods and services, yet another innovation developed by Plaintiffs, never released to the public, and shown to Yahoo! in May 2001 in confidence, and another example of a blatant copy by YAHOO! of Plaintiffs' proprietary concepts.
41. Internet sites featuring comments from instant messaging users have prominently featured critiques of Audibles, including numerous comments that Audibles appear to be nothing more than an exact copy of ChatAbles.
42. Plaintiffs are informed and believe, and based thereon allege, that YAHOO willfully and intentionally misled Plaintiffs into disclosing all material aspects of ChatAbles with the intention of stealing it for YAHOO!'s own profit and use, as Audibles.
43. The damages caused by YAHOO!'s theft and deceit are varied and immense. Aside from the panoply of remedies afforded under the causes of action set forth below, YAHOO!'s tortious conduct has robbed Plaintiffs of their ability to market a truly innovative and unique, first of its kind, product. ChatAbles was one of the most significant developments in instant messenging since the development of the medium and Plaintiffs have been deprived of their opportunities to capitalize on their investment of blood, sweat and tears. Irrespective of the possible recovery of substantial monetary damages, YAHOO!'s conduct has robbed ChatAbles of being recognized and compensated as the innovator of this dynamic and ground-breaking product.

FIRST CLAIM FOR RELIEF
(BREACH OF CONTRACT)

44. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 44 as set forth fully herein.
45. BI and YAHOO! entered into the Integration Agreement and NDA as more specifically pled above. The primary intent of this agreement as represented by YAHOO! was to provide Plaintiffs the peace of mind to share confidential content ideas, marketing plans, technology and materials regarding ChatABles without the fear that YAHOO! would steal such proprietary information to develop competing products. This protection was necessary because YAHOO! managed and controlled the Pepsi website where ChatAbles was scheduled to be launched. Any provisions in the NDA inconsistent with the foregoing intent are invalid, void, unenforceable, waived, or entered under mistake of fact.
46. BI has performed all covenants and conditions required of it under the parties' agreements, except as BI has been excused from having to perform such covenants and conditions. As set forth above, Plaintiffs shared in confidence numerous confidential content ideas, business plans, technology, materials, and "know how" never disclosed to the public at large. Moreover, YAHOO! understood that all of the proprietary information, content ideas, technology, marketing plans and materials described above and shared by Plaintiffs were to remain confidential even if they were not marked or identified as confidential. Through course and conduct, both parties waived any technical requirement or legal formality to mark or identify information as confidential because both parties understood all such information was in fact proprietary.
47. All conditions, if any, required for performance by YAHOO! have occurred.
48. Despite demand therefor, YAHOO! has breached the parties' agreement by misusing Plaintiffs' confidential content ideas, materials, business plans, technology, and "know how" without the knowledge and permission of BI.
49. As an actual and foreseeable result of YAHOO!'s breaches of the Integration Agreement and non-disclosure agreement, BI has sustained damages in an amount to be proven at time of trial, in no event less than $50,000,000.00.

SECOND CLAIM FOR RELIEF
(BREACH OF CONFIDENCE)

50. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 49 as set forth fully herein.
51. Plaintiffs' content ideas, marketing plans, "know how" and technology for ChatAbles were novel at the time they were created and shared with YAHOO! in confidence.
52. When Plaintiffs disclosed the content ideas, marketing plans and technological innovations for ChatAbles to YAHOO!, they conditioned the disclosure on YAHOO! agreeing to maintain its confidentiality.
53. Plaintiffs are informed and believe, and based thereon allege, that YAHOO! understood before receiving the foregoing confidential information for ChatAbles that it would be required to maintain its confidentiality, and that with knowledge of Plaintiffs' demand for confidentiality, YAHOO! had an opportunity to reject disclosure of such confidential information for ChatAbles.
54. Plaintiffs are informed and believe, and based thereon allege, that YAHOO! accepted disclosure of the foregoing confidential information for ChatAbles with the understanding and agreement that it would maintain its confidentiality unless otherwise instructed or consented to by Plaintiffs. Any written documents inconsistent with the foregoing understanding and agreement are invalid, void, unenforceable, waived, or entered under mistake of fact.
55. Plaintiffs are informed and believe, and based thereon allege that YAHOO! knew that the foregoing confidential information for ChatAbles was valuable.
56. Plaintiffs are informed and believe, and based thereon allege that YAHOO! has received enormous profits by virtue of its breach of confidence, through which it obtained the content ideas, marketing plans, technology and "know how" for Audibles.
57. As a direct and proximate result of YAHOO!'s breach of confidence, Plaintiffs have suffered and will continue to suffer substantial damages in an amount to be proven at trial, but believed to be no less than $50,000,000. Plaintiffs have not received any compensation or recognition for the foregoing confidential information shared with YAHOO!. Moreover, Plaintiffs have been precluded by YAHOO!'s introduction of Audibles from developing and selling ChatAbles and thus profiting from Plaintiffs' original content ideas, marketing plans, and technological "know how". Plaintiffs' entire business was based on ChatAbles, its invention of ChatAbles and its role as the sole provider of ChatAbles. YAHOO!'s actions have therefore destroyed Plaintiffs' business.
58. Plaintiffs are informed and believe, and based thereon allege, that YAHOO! acted fraudulently, oppressively, and/or maliciously, with the intent to injure Plaintiffs, in conscious disregard of Plaintiffs' rights, and with the intent to profit to Plaintiffs' detriment. Accordingly, an award of punitive and exemplary damages is appropriate.

THIRD CLAIM FOR RELIEF

(COMMON LAW UNFAIR COMPETITION)

59. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 58 as set forth fully herein.
60. YAHOO!'s conduct as alleged herein constitutes unfair competition under the laws of the State of California. YAHOO!'s actions threatens or harms competition because it employed, among other things, fraud, concealment and misrepresentations to develop a competing product against a very small company to drive it out of business. This competing product was based on the proprietary content ideas, marketing plans, technology and materials shared in confidence with YAHOO!; much of this propriety information was not and has not been released to the public at large. The spirit of free competition in America does not condone the type of conduct engaged in by YAHOO! who utilized chicanery and deceit to gain a significant competitive advantage to dominate the market.
61. As a direct and proximate result of YAHOO!'s unfair competition, Plaintiffs have incurred and continue to incur substantial damages in an amount according to proof at trial.
62. As a direct and proximate result of their willful and wanton actions and conduct of YAHOO!, Plaintiffs have been injured and will continue to suffer irreparable injury to their business and reputation unless YAHOO! is restrained by this Court from unfairly competing with Plaintiffs.
63. Plaintiffs have no adequate remedy at law.
64. In doing the acts alleged herein, YAHOO! acted with oppression, fraud and malice, and in willful and conscious disregard of the rights of Plaintiffs, so as to entitle Plaintiffs to exemplary and punitive damages in an amount according to proof at trial.

FOURTH CLAIM FOR RELIEF
(UNFAIR COMPETITION IN VIOLATION OF CALIFORNIA BUSINESS AND PROFESSIONS CODE SECTION 17200)

65. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 64 as set forth fully herein.
66. The above described wrongful conduct of YAHOO!, including fraud, negligent misrepresentation and unfair competition as alleged herein, constitutes unlawful, unfair and/or fraudulent business acts or practices under California Business and Professions Code Section 17200 et seq.
67. Plaintiffs are informed and believe and thereon allege that YAHOO! undertook the acts alleged above willfully, for the purpose of enriching themselves to Plaintiffs' detriment.
68. Plaintiffs are entitled to the restitutionary disgorgement of profits earned by YAHOO! as a direct and proximate result its unlawful and/or unfair business acts or practices.
69. YAHOO! threatens to continue to do the acts complained of herein, and unless restrained and enjoined, will continue to do so, all to Plaintiff's irreparable damage. It would be difficult to ascertain the amount of compensation that could afford Plaintiffs adequate relief for such continuing acts, and a multiplicity of judicial proceedings would be required. Plaintiffs' remedy at law is not adequate to compensate it for injuries threatened.

FIFTH CLAIM FOR RELIEF

(FRAUDULENT CONCEALMENT)

70. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 69 as set forth fully herein.
71. As set forth above, YAHOO! concealed from Plaintiffs that it working on a secret identical version of ChatAbles, which has come to be known as Audibles.
72. At all times herein mentioned, Plaintiffs were unaware of YAHOO!'s clandestine scheme to rip off the content ideas, marketing plans and technological innovations intended for ChatAbles and launch its own competing product based on ChatAbles.
73. YAHOO! intended to deceive Plaintiffs by concealing the true facts from Plaintiffs, that it was surreptitiously developing its own Audibles product and engaging in a ruse to obtain the foregoing confidential information regarding ChatAbles in order to develop its own version, Audibles.
74. Plaintiffs reasonably relied upon YAHOO!'s fraudulent concealment to its detriment, including without limitation, by sharing confidential and proprietary information with YAHOO! regarding ChatAbles which enabled YAHOO! to steal such confidential information. Additionally, when YAHOO! represented that it had "no interest" in ChatAbles other than to provide the infrastructure to host ChatAbles on Pepsi's website, then Plaintiffs reasonable relied on that representation and disclosed its confidential and propriety information. But for YAHOO! fraudulently concealing its secret development of Audibles, Plaintiffs would not have shared their confidential content ideas, marketing plans, technology and materials regarding ChatAbles.
75. As an actual and proximate result of YAHOO!'s fraudulent concealment, Plaintiffs have suffered general and consequential damages in an amount to be determined according to proof at trial, in no event less than $50,000,000.00.
76. YAHOO!'s conduct was committed with willful and conscious disregard of Plaintiffs' rights such as to constitute malice, oppression and/or fraud under Section 3294 of the California Civil Code. Plaintiffs are therefore entitled to an award of punitive and exemplary damages against YAHOO!.

SIXTH CLAIM FOR RELIEF

(INTENTIONAL MISREPRESENTATION)

77. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 76 as set forth fully herein.
78. As set forth above, YAHOO! made a number of affirmative misrepresentations to Plaintiffs including, without limitation, concealing and denying it was secretly working on its version of ChatAbles, and employing a ruse to obtain confidential information regarding ChatAbles in order to develop a practically identical program, Audibles. Defendant's ruse included affirmatively misrepresenting to Plaintiffs that it was not interested in ChatAbles other than to host the Pepsi website— a misrepresentation of a present material fact in light of YAHOO! secretly developing its own version of ChatAbles. YAHOO!'s ruse included abusing its superior knowledge, resources and bargaining power as one of the "Big 3" internet providers by misrepresenting that ChatAbles was unworkable and ridiculous. These negative comments regarding ChatAbles were deliberate affirmations of fact by a company working confidentially with Plaintiffs to launch ChatAbles on a website managed by YAHOO! and ostensibly designed to break the spirit of Plaintiffs who had extremely limited resources in hope that Plaintiffs would abandon their project, resulting in YAHOO! being the only one offering services akin to ChatAbles. YAHOO! also misrepresented that the idea of ChatAbles was not a high priority to YAHOO! when YAHOO! was actually in a foot race to beat its rivals to release this innovative way to communicate through instant messaging. This ruse was also part of a larger scheme intended to deceive Plaintiffs into sharing confidential and proprietary information with YAHOO! regarding ChatAbles so as to enable Yahoo! to steal such information. Part of the deception including misrepresenting to Plaintiffs that the NDA would protect the confidential information concerning ChatAbles that was shared with YAHOO!
79. At all times herein mentioned, Plaintiffs were unaware of YAHOO!'s clandestine scheme to steal the confidential content ideas, marketing plans, and technology intended for ChatAbles and launch its own competing product based on ChatAbles.
80. YAHOO! intended to deceive Plaintiffs through its affirmative misrepresentations that it was not interested in ChatAbles other than to host the Pepsi website and that the NDA would protect Plaintiffs confidential and proprietary information.
81. Plaintiffs reasonably relied upon YAHOO!'s fraudulent conduct to its detriment, including without limitation, by sharing confidential and proprietary information with YAHOO! regarding ChatAbles so as to enable YAHOO! to steal Plaintiffs' concept. But for YAHOO!'s misrepresentations, Plaintiffs would not have shared their confidential content ideas, marketing plans, technology and materials regarding ChatAbles.
82. As an actual and proximate result of YAHOO!'s fraudulent misrepresentation, Plaintiffs have suffered general and consequential damages in an amount to be determined according to proof at trial, in no event less than $50,000,000.00.
83. YAHOO!'s conduct was committed with willful and conscious disregard of Plaintiffs' rights such as to constitute malice, oppression and/or fraud under Section 3294 of the California Civil Code. Plaintiffs are therefore entitled to an award of punitive and exemplary damages against YAHOO!.

SEVENTH CLAIM FOR RELIEF

(NEGLIGENT MISREPRESENTATION)

84. Plaintiffs repeat and reallege the allegations in paragraphs 1 through 83 as set forth fully herein.
85. YAHOO! represented to Plaintiffs that that it was not interested in ChatAbles other than to host the Pepsi website and, in fact, criticized Plaintiffs' concept for ChatAbles, claiming that it was ridiculous and unworkable. These were misrepresentations of a present material fact in light of YAHOO! secretly developing its own version of ChatAbles. Part of the deception including representing to Plaintiffs that the NDA would protect the confidential information concerning ChatAbles that was shared with YAHOO!
86. YAHOO!'s representations to Plaintiffs were of material facts, essential to the analysis undertaken by Plaintiffs and such that Plaintiffs would not have acted as they did without it.
87. YAHOO! made these negligent misrepresentations to Plaintiffs without any reasonable ground for believing them to be true.
88. YAHOO! intended to induce Plaintiffs to alter their position based on these misrepresentations.
89. Plaintiffs actually relied on YAHOO!'s negligent misrepresentations, to their detriment. Moreover, Plaintiffs' reliance on YAHOO!'s promises were both reasonable and foreseeable.
90. Plaintiffs have been injured by their reliance on YAHOO!'s negligent misrepresentation. YAHOO!'s negligent misrepresentation is the proximate cause of Plaintiffs' damages.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs request the following judgment against YAHOO!:

1. Preliminarily, during the pendency of this action, and permanently after final hearing, enjoining YAHOO! and its respective officers, agents, servants, employees, attorneys, and those persons in active concert or participation with any of them from any unauthorized use of ChatAbles' content ideas, marketing plans, technology and other proprietary information.
2. Requiring YAHOO! to pay to Plaintiffs such actual damages as they have sustained as a result of the acts of unfair competition, breach of contract, breach of confidence, and fraud.
3. Requiring YAHOO! to account for and pay over to Plaintiffs all gains, profits and advantages derived from its unfair competition.
4. Ordering YAHOO! to pay as damages for its conduct alleged herein a sum equal to three times the amount of the actual damages suffered by Plaintiffs.
5. Ordering YAHOO! to pay an appropriate amount as punitive damages to deter willful and wanton conduct such as theirs and to avoid future confusion or deception of the public and unfair competition with Plaintiffs.
6. For punitive damages in an amount sufficient to deter similar future conduct.
7. For an order compelling YAHOO! to account for and disgorge all of its gains, profits and advantages derived from its unlawful conduct.
8. For interest, costs of suit and reasonable attorneys' fees.
9. For such other and further relief as the Court deems just, equitable, and proper.

Dated: March 28, 2006 FOX & SPILLANE LLP

Gerard P. Fox

Raul Perez

By: ___________________________

Raul Perez

Attorneys for Plaintiffs ChatAbles, LLC and Burg Investments, Inc.

DEMAND FOR JURY TRIAL

Plaintiffs ChatAbles, LLC and Burg Investments, Inc., hereby demand trial of this

action by jury.

Dated: March 28, 2006 FOX & SPILLANE LLP

Gerard P. Fox

Raul Perez

By: ___________________________

Raul Perez

Attorneys for Plaintiffs ChatAbles, LLC and Burg Investments, Inc.