In a decision that spells serious trouble for RMG Technologies’s broker software and could effectively bankrupt the company, Ticketmaster has won an $18.2 million judgment and permanent injunction against RMG, which bars the company from creating software that gives brokers an advantage in buying tickets from Ticketmaster.
The judgment, handed down by a federal judge in Los Angeles, calls for RMG “to stop creating, trafficking in, or facilitating the use of” software that overrides certain security measures that Ticketmaster installed on its website. Ticketmaster won a temporary injunction against RMG this past fall, but RMG has denied that there is anything wrong with its software.
Ticketmaster spokesperson Albert Lopez did not return a message seeking comment, but Cipriano “C.J.” Garibay, president of RMG Technologies, told TicketNews that the only reason Ticketmaster won was because they could afford to outspend RMG in legal costs. RMG spent about $200,000 in legal fees, Garibay said, and ran out of money, which led to the default ruling.
“Ticketmaster didn’t win on the merits of the case. They out spent us and ran us into the ground with negative publicity and false allegations,” Garibay said, adding that he is now forced to consider filing for bankruptcy. “They won on a technicality because the other team couldn’t afford to show up.”
The $18.2 million judgment is for profits that RMG allegedly generated related to the sale of the software, which Garibay disputes, and entitles Ticketmaster to recoup more than $350,000 in legal fees from RMG.
Garibay maintains that RMG doesn’t sell “bot” software, which Ticketmaster effectively accused them of selling. Bots are sophisticated applications that can circumvent computer firewalls and other safeguards. Garibay said the way their software worked used real people stationed in India who manually entered web “captchas” to help brokers purchase blocks of tickets quickly.
“Ticketmaster knows how our software works because the judge forced us to give them our source code. They know we don’t use bots, but they still proceeded with this,” Garibay said.
At its peak, RMG had about 40 clients, and in 2007 generated $2 million in gross sales, according to Garibay. “I don’t even know how they came up with the amount of $18 million? How can they quantify a ‘loss of goodwill’?”
“Consumers understand that there often simply are not enough tickets to meet demand, but RMG’s technology was used by some to unfairly cut to the front of the line. Ticketmaster will continue to fight for an equitable ticket distribution process.”
Ticketmaster executive VP and general counsel Edward Weiss said in a statement to Billboard.
Barry Fox, president of the Central States Ticket Brokers Association, told TicketNews that the ruling could give Ticketmaster a license to go after brokers who used RMG’s software. “This can allow Ticketmaster to enforce this judgment against other brokers. They now have a tool in order to do that,” Fox said.
Earlier this month, RMG won a legal victory when a lawsuit filed against the company by a New Jersey man was dismissed without prejudice. The man had sued in part because he had been shut out of obtaining Hannah Montana tickets last year, but according to his attorney, he may re-file the lawsuit at a later date or against other companies.
Below is a copy of the original Ticketmaster/RMG Technologies lawsuit from the Web site Justia.com.