PEGASUS COMMUNICATIONS CORP
8-K, EX-99.1, 2000-12-05
TELEVISION BROADCASTING STATIONS
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<PAGE>
                                                                    EXHIBIT 99.1

                       IN THE UNITED STATES DISTRICT COURT
                          FOR THE DISTRICT OF DELAWARE



PEGASUS DEVELOPMENT CORPORATION and         )
PERSONALIZED MEDIA                          )
  COMMUNICATIONS, L.L.C.                    )
                                            )
                           Plaintiffs,      )
                                            )
                  v.                        )         C.A. No. _______
                                            )
DIRECTV, INC., HUGHES ELECTRONICS           )       JURY TRIAL DEMANDED
CORPORATION, THOMSON CONSUMER               )
ELECTRONICS, INC., and PHILIPS              )
ELECTRONICS NORTH AMERICA                   )
CORPORATION                                 )
                                            )
                           Defendants.      )


                                    COMPLAINT
                                    ---------

         Plaintiffs Pegasus Development Corporation ("Pegasus") and Personalized
Media Communications, L.L.C. ("PMC") (collectively "Plaintiffs"), by and through
their attorneys, hereby demand a jury trial and complain of Defendants DIRECTV,
Inc. ("DIRECTV"), Hughes Electronics Corporation ("HEC"); Thomson Consumer
Electronics, Inc. ("Thomson"); and Philips Electronics North America Corporation
("Philips") (collectively "Defendants"), as follows:

                              NATURE OF THE ACTION
                              --------------------

         1. This is an action for patent infringement under 35 U.S.C. section
271 and to enjoin and obtain damages resulting from Defendants' unauthorized
manufacture, use, sale, offer to sell and/or importation into the United States
for subsequent use or sale of products, services and/or systems that fall within
the scope of Plaintiffs' patented automated broadcast control system, and
Plaintiffs' patented signal processing apparatuses and methods. Plaintiffs seek
injunctive relief to prevent Defendants from continuing to infringe Plaintiffs'
valuable family of patents. In addition, Plaintiffs seek a recovery of monetary
damages resulting from Defendants' past infringement of these patents.


<PAGE>

Defendants are using Plaintiffs' patented technology with actual knowledge of
Plaintiffs' patent rights, and are acting in willful disregard thereof.
Therefore, the damages awarded to Plaintiffs should be trebled, and Plaintiffs
should be awarded their attorneys' fees, costs, and expenses for this
exceptional case.


                                   THE PARTIES
                                   -----------

         2. Plaintiff PMC is a limited liability company organized and existing
under the laws of the State of Delaware, with its principal place of business at
110 East 42nd Street, Suite 1704, New York, New York 10017-5611.

         3. Plaintiff PMC is the lawful assignee of the patents in suit, which
are U.S. Patent Nos. 4,694,490; 4,704,725; 4,965,825; 5,109,414; 5,233,654;
5,335,277; and 5,887,243, all of which are entitled "Signal Processing Apparatus
and Methods," and all of which were lawfully issued to John C. Harvey and James
W. Cuddihy as named inventors (hereinafter collectively, "the Harvey Patents").

         4. PMC is in the business of designing, patenting, and licensing
personalized communications and media technology that covers apparatus and
processes that integrate broadcast communication networks with computer
processing hardware and software capabilities, thereby enabling control over and
personalization of the programming content received and displayed on a display,
such as a television receiver.

         5. Pegasus is a corporation organized and existing under the laws of
the State of Delaware, with its principal place of business at 2711 Centerville
Road, Suite 400, Wilmington, Delaware 19085.





                                      -2-

<PAGE>

         6. PMC Satellite Development, L.L.C. ("PMC Satellite") was granted an
exclusive field-of-use license from PMC under the Harvey Patents to provide
satellite communication services to consumers. Under this license, PMC Satellite
holds the exclusive right to sublicense the Harvey Patents within the designated
field-of-use, as well as the right to enforce these patents in this
field-of-use.

         7. Plaintiff Pegasus has been granted an exclusive sublicense by PMC
Satellite to utilize the technology covered by the Harvey Patents within the
designated field-of-use, which includes the communication of programming
services through a satellite communication system to a consumer. Under this
sublicense, PMC Satellite granted to Pegasus all of its rights to enforce the
Harvey Patents within the designated field-of-use. Pegasus is a subsidiary of
Pegasus Communications Corporation, which through subsidiary operating companies
provides satellite programming to customers throughout the United States,
notably in rural areas otherwise underserved by the traditional cable television
industry.

         8. DIRECTV is a corporation organized and existing under the laws of
the State of California, with its principal place of business at 2230 East
Imperial Highway, El Segundo, California 90245. DIRECTV provides, inter alia,
digital broadcast television services via satellite directly to consumers from
its automated satellite uplinking facilities located in Los Angeles, California
and Castle Rock, Colorado. Defendant DIRECTV is a subsidiary of Hughes
Electronic Corporation ("HEC").

         9. HEC is a corporation organized and existing under the laws of the
State of Delaware, with its principal place of business at 200 North Sepulveda
Boulevard, El Segundo, California, 90245. On information and belief, Hughes
Network Systems, Inc. ("HNS") is a division of HEC. HNS was a separate,
independent corporation until it was acquired by HEC in 1997. HNS was an
originator of the DIRECTV system, which includes the provision of broadcast
services directly to consumers via satellite. On information and belief, HEC


                                      -3-
<PAGE>

supplied equipment and systems used in DIRECTV's Los Angeles and Castle Rock
satellite uplinking facilities to provide the broadcasts originating from Los
Angeles and Castle Rock. HEC, through its HNS division, also makes and sells
Integrated Receiver Decoders ("IRDs") for receiving transmissions from a Direct
Broadcast Satellite ("DBS") of the video, audio and/or data service offered by
DirecTV from the Los Angeles and Castle Rock satellite facilities. HEC, as
stated in paragraph 12 herein, is also the parent company of DIRECTV.

         10. On information and belief, Defendant HEC is a successor in interest
to United States Satellite Broadcasting Company, Inc. ("USSB"), having acquired
USSB in 1999. USSB was an operator of a DBS system and made, used, sold and
offered for sale video, audio and data services via DBS satellite transmission
to the same IRDs that are used in connection with the provision of DirecTV's
services.

         11. Defendant Thomson is a corporation organized and existing under the
laws of the State of Delaware, with its principal place of business at 10330
North Meridian Street, Indianapolis, Indiana 46290. On information and belief,
Thomson is a manufacturer of IRDs that are used in conjunction with the DirecTV
system.

         12. Defendant Philips is a corporation organized and existing under the
laws of the State of Delaware, with its principal place of business at 1251
Avenue of the Americas, New York, New York, 10020. On information and belief,
Philips is a manufacturer and/or seller of IRDs that are used in conjunction
with the DirecTV system.

                             JURISDICTION AND VENUE
                             ----------------------

         13. This Court has jurisdiction over the subject matter of this patent
infringement action pursuant to 28 U.S.C. sections 1331 and 1338(a).




                                      -4-
<PAGE>

         14. Each of the Defendants is subject to personal jurisdiction in the
State of Delaware pursuant to Del. Code Ann. section 3104 because each Defendant
is regularly and systematically transacting business in the State of Delaware,
consisting in part of the sale of products and/or services nationally, and each
Defendant has committed acts of infringement within the State of Delaware.

         15. Venue is proper in this district pursuant to 28 U.S.C. sections
1391(b), 1391(c), 1391(d), and 1400(b) because all Defendants have committed
acts of infringement in this district, and Defendants Thomson, HEC and Philips
reside in this district.

                               FACTUAL BACKGROUND
                               ------------------

Overview of the Signal Processing Apparatuses and Methods of the Patents-in-Suit

         16. This case involves pioneering forms of media and communications
technologies which enable users to customize and personalize the processing of a
broadcast transmission, and to receive and exert far greater control over a
wider variety of displayed content than had ever before been possible. The
inventions also involve pioneering forms of computerized control technologies
that are used to automate the receipt, storage, scheduling and rebroadcast of
various forms of television programming and other media to end users. These
technologies are the inventions of John C. Harvey and James W. Cuddihy. Almost
twenty years ago, when the personal computer age was in its infancy, Messrs.
Harvey and Cuddihy foresaw the great potential that existed for overcoming the
inherent limitations of broadcast media. They envisioned systems and processes
that would enhance broadcast media's unmatched ability to convey general
information to large audiences by combining it with computer processes at the
broadcast and end user sites to allow almost unlimited flexibility of
programming choices from a variety of sources, as well as the generation of
information of specific relevance to each user in the broadcast audience.


                                      -5-


<PAGE>



         17. To realize these media, Messrs. Harvey and Cuddihy envisioned
detailed concepts for systems and processes that join the capacities of
broadcast communications and computer processing by using data and control
signals embedded in a broadcast transmission. Messrs. Harvey and Cuddihy created
a system within which such computerized systems, and the data and control
systems that run them, support an automated, intermediate broadcast facility
that receives television programming from a variety of broadcast and terrestrial
sources, processes and stores this programming input, and through a
sophisticated computerized switching operation, retrieves the programming input
and broadcasts it to consumers either over terrestrial cable lines, or via
satellite. They further envisioned that such a broadcast transmission could be
encrypted for conditional access, authorization control, and billing purposes.

         18. These inventions also relate to "personalized" media systems and
processes which would utilize (1) a sophisticated, automated broadcast
communications infrastructure to encode digital control information into
programming materials and deliver the new personalized media either over a
terrestrial cable, or via satellite, and (2) "smart" receivers to implement the
new personalized media systems and processes through the processing of the
digital control signals embedded into a broadcast transmission, which would
control the further processing of the broadcast transmission to deliver content
to an end user which was either for general viewing, or which was personalized
for such end user. The inventors duly disclosed their inventions in the form of
the patents in suit.

         19. The first patent in suit, United States Patent No. 4,694,490 ("the
`490 patent"), entitled "Signal Processing Apparatus and Methods," was duly and
legally issued to John C. Harvey and James V. Cuddihy on September 15, 1987 from
U.S. Patent Application, Serial No. 317,510, filed November 3, 1981 (the "1981
Harvey Application"). PMC is the assignee of the `490 patent, PMC Satellite is



                                      -6-

<PAGE>

the exclusive field-of-use licensee of PMC, and Pegasus is the exclusive
field-of-use sublicensee of PMC Satellite. Pegasus has been granted the sole
right, inter alia, to bring suit for infringement within the field-of-use of
satellite communications services, including the use of IRD's in conjunction
with the provision of the satellite communications services.

         20. The second patent in suit, United States Patent No. 4,704,725 ("the
`725 patent"), entitled "Signal Processing Apparatus and Methods," was duly and
legally issued to John C. Harvey and James V. Cuddihy on November 3, 1987,
claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey Application.
PMC is the assignee of the `725 patent, PMC Satellite is the exclusive
field-of-use licensee of PMC, and Pegasus is the exclusive field-of-use
sublicensee of PMC Satellite. Pegasus has been granted the sole right, inter
alia, to bring suit for infringement within the field-of-use of satellite
communications services, including the use of IRD's in conjunction with the
provision of the satellite communications services.

         21. The third patent in suit, United States Patent No. 4,965,825 ("the
`825 patent"), entitled "Signal Processing Apparatus and Methods," was duly and
legally issued to John C. Harvey and James V. Cuddihy on October 23, 1990,
claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey Application.
PMC is the assignee of the `825 patent, PMC Satellite is the exclusive
field-of-use licensee of PMC, and Pegasus is the exclusive field-of-use
sublicensee of PMC Satellite. Pegasus has been granted the sole right, inter
alia, to bring suit for infringement within the field-of-use of satellite
communications services, including the use of IRD's in conjunction with the
provision of the satellite communications services.

         22. The fourth patent in suit, United States Patent No. 5,109,414 ("the
`414 patent"), entitled "Signal Processing Apparatus and Methods," was duly and
legally issued to John C. Harvey and James V. Cuddihy on April 28,



                                      -7-
<PAGE>

1992, claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey
Application. PMC is the assignee of the `414 patent, PMC Satellite is the
exclusive field-of-use licensee of PMC, and Pegasus is the exclusive
field-of-use sublicensee of PMC Satellite. Pegasus has been granted the sole
right, inter alia, to bring suit for infringement within the field-of-use of the
satellite communications services, including the use of IRD's in conjunction
with the provision of satellite communications services.

         23. The fifth patent in suit is United States Patent No. 5,233,654
("the `654 patent"), entitled "Signal Processing Apparatus and Methods," was
duly and legally issued to John C. Harvey and James V. Cuddihy on August 3,
1993, claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey
Application. PMC is the assignee of the `654 patent, PMC Satellite is the
exclusive field-of-use licensee of PMC, and Pegasus is the exclusive
field-of-use sublicensee of PMC Satellite. Pegasus has been granted the sole
right, inter alia, to bring suit for infringement within the field-of-use of
satellite communications services, including the use of IRD's in conjunction
with the provision of the satellite communications services.

         24. The sixth patent in suit is United States Patent No. 5,335,277
("the `277 patent"), entitled "Signal Processing Apparatus and Methods," was
duly and legally issued to John C. Harvey and James V. Cuddihy on August 2,
1994, claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey
Application. PMC is the assignee of the `277 patent, PMC Satellite is the
exclusive field-of-use licensee of PMC, and Pegasus is the exclusive
field-of-use sublicensee of PMC Satellite. Pegasus has been granted the sole
right, inter alia, to bring suit for infringement within the field-of-use of
satellite communications services, including the use of IRD's in conjunction
with the provision of the satellite communications services.


                                      -8-

<PAGE>

         25. The seventh patent in suit is United States Patent No. 5,887,243
("the `243 patent"), entitled "Signal Processing Apparatus and Methods," which
was duly and legally issued to John C. Harvey and James V. Cuddihy on March 23,
1999, claiming the benefit under 35 U.S.C section 120 of the 1981 Harvey
Application. PMC is the assignee of the `243 patent, PMC Satellite is the
exclusive field-of-use licensee of PMC, and Pegasus is the exclusive
field-of-use sublicensee of PMC Satellite. Pegasus has been granted the sole
right, inter alia, to bring suit for infringement within the field-of-use of
satellite communications services, including the use of IRD's in conjunction
with the provision of the satellite communications services.

    Defendants' Products, Services, and Systems Infringe Plaintiffs' Patents

         26. Defendants DIRECTV and HEC manufacture and use a DBS system and
offer for sale, sell and provide services which directly or contributorily
infringe, are used to conduct processes which infringe, or which induce others
to infringe, one or more claims of the Harvey Patents. The DBS system generally
receives program content at a broadcast reception and satellite uplinking
facilities located in Los Angeles, California and Castle Rock, Colorado and
transmits such program content, via satellite, to millions of remote IRD's
located in subscribers' homes and businesses throughout the United States. For
example, such program content may be received at the Los Angeles or Castle Rock
uplinking facilities as broadcast transmission "turn arounds" directly from
media sources such as CBS, NBC, ABC, CNN, etc., or it may be provided by motion
picture studios or broadcast television networks via digital video tape to be
stored and archived for later use.

         27. Defendants DIRECTV and HEC also directly infringe, contribute to
infringement, or induce others to infringe one or more claims of the Harvey
Patents by transmitting and using a DBS signal specifically encoded to enable
the subject IRD's to function in a


                                      -9-


<PAGE>


manner that infringes the patents in suit, and by selling and offering for sale
services via DBS transmission processes which infringe the patents in suit.

         28. Defendants HEC, Thomson and Philips manufacture, use, sell, offer
to sell and/or import into the United States for subsequent sale or use IRDs for
use with the DirecTV system that directly and/or contributorily infringe, are
used to conduct processes which infringe, or which induce others to infringe one
or more claims of the Harvey Patents.

          Defendants Have Been On Notice of Plaintiffs' Patent Rights

         29. Defendants have received actual notice from Plaintiffs of their
infringement of the above-described patents. In spite of this actual notice,
Defendants have continued their direct and/or contributory infringement of
Plaintiffs' valuable patent rights and in willful disregard thereof, and have
actively induced others to use infringing products, services, and systems or
engage in processes that infringe Plaintiffs' patent rights.

 Plaintiffs Have Been Irreparably Harmed By Defendants' Continued Infringement

         30. Plaintiffs have been irreparably harmed by Defendants' infringement
of their valuable patent rights. Defendants' continuing acts of infringement
damage Plaintiffs' reputation and goodwill as leading providers of technology
and know-how in the satellite broadcast communications industry. Moreover,
Defendants' unauthorized, infringing use of Plaintiffs' patented apparatuses and
processes has threatened the value of this intellectual property.

         31. Defendants' disregard for Plaintiffs' property rights similarly
threatens Plaintiffs' relationships with licensees that currently pay for the
right to use this intellectual property, because Defendants derive a competitive
advantage from using Plaintiffs' patented technology without paying
compensation. Defendants' infringing activities similarly erode the value of the



                                      -10-
<PAGE>


sublicense granted to Pegasus. Moreover, Defendants' infringing activities have
deprived Plaintiffs of licensing revenue and/or revenue from the sale of
products, services, and systems that they would have made, but for Defendants'
infringement. Accordingly, unless and until Defendants' continued acts of
infringement are enjoined, Plaintiffs will suffer further irreparable harm for
which there is no adequate remedy at law.

                                    COUNT I
                                    -------

           (Patent Infringement of United States Patent No. 4,694,490)
                            (Against All Defendants)

         32. Paragraphs 1 through 31 are incorporated by reference as if fully
restated herein.

         33. PMC is the assignee of the `490 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The `490
patent is attached as Exhibit 1 hereto.

         34. Each of the Defendants makes, uses, sells, offers to sell and/or
imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more of the claims of the `490 patent.

         35. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of one or more claims of the '490
patent by others.

         36. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are permanently enjoined by this Court.

                                      -11-
<PAGE>

                                    COUNT II
                                    --------

           (Patent Infringement of United States Patent No. 4,704,725)
                            (Against All Defendants)

         37. Paragraphs 1 through 36 are incorporated by reference as if fully
restated herein.

         38. PMC is the assignee of the `725 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The `725
patent is attached as Exhibit 2 hereto.

         39. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more of the claims of the `725 patent.

         40. On information and belief, each of the Defendants has contributed
to and/or induced infringement of one or more claims of the '725 patent by
others.

         41. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' acts of infringement and will suffer irreparable injury
unless Defendants are permanently enjoined by this Court.

                                   COUNT III
                                   ---------

          (Patent Infringement of United States Patent No. 4,965,825)
                            (Against All Defendants)

         42. Paragraphs 1 through 41 are incorporated by reference as if fully
restated herein.

         43. PMC is the assignee of the `825 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in


                                      -12-

<PAGE>

conjunction with the provision of satellite communications services. The `825
patent is attached as Exhibit 3 hereto.

         44. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more of the claims of the `825 patent.

         45. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of the claims of the '825 patent by
others.

         46. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are permanently enjoined by this Court.

                                    COUNT IV
                                    --------

           (Patent Infringement of United States Patent No. 5,109,414)
                            (Against All Defendants)

         47. Paragraphs 1 through 45 are incorporated by reference as if fully
restated herein.

         48. PMC is the assignee of the `414 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The `414
patent is attached as Exhibit 4 hereto.

         49. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more of the claims of the `414 patent.


                                      -13-

<PAGE>

         50. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of the claims of the '414 patent by
others.

         51. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are permanently enjoined by this Court.

                                     COUNT V
                                     -------

           (Patent Infringement of United States Patent No. 5,233,654)
                            (Against All Defendants)

         52. Paragraphs 1 through 51 are incorporated by reference as if fully
restated herein.

         53. PMC is the assignee of the `654 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The `654
patent is attached as Exhibit 5 hereto.

         54. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more claims of the `654 patent.

         55. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of the claims of the '654 patent by
others.

         56. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are permanently enjoined by this Court.


                                      -14-
<PAGE>

                                    COUNT VI
                                    --------

           (Patent Infringement of United States Patent No. 5,335,277)
                            (Against All Defendants)

         57. Paragraphs 1 through 56 are incorporated by reference as if fully
restated herein.

         58. PMC is the assignee of the `277 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The '277
patent is attached as Exhibit 6 hereto.

         59. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more claims of the `277 patent.

         60. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of the claims of the '277 patent by
others.

         61. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are permanently enjoined by this Court.

                                    COUNT VII
                                    ---------

           (Patent Infringement of United States Patent No. 5,887,243)
                            (Against All Defendants)

         62. Paragraphs 1 through 61 are incorporated by reference as if fully
restated herein.


                                      -15-

<PAGE>

         63. PMC is the assignee of the `243 patent. Pegasus has been granted
the sole right, inter alia, to bring suit for infringement within the
field-of-use of satellite communications services, including the use of IRD's in
conjunction with the provision of satellite communications services. The `243
patent is attached as Exhibit 7 hereto.

         64. Each of the Defendants makes, uses, sells, and offers to sell
and/or imports into the United States for subsequent sale or use products and/or
services and/or employs systems and/or components and/or makes use of processes
that directly infringe one or more claims of the `243 patent.

         65. On information and belief, each of the Defendants has also
contributed to and/or induced infringement of the claims of the '243 patent by
others.

         66. Each of the Defendants has acted willfully, intentionally and
deliberately in derogation of Plaintiffs' patent rights. Plaintiffs have been
damaged by Defendants' infringement and will suffer irreparable injury unless
Defendants are enjoined by this Court.

                                PRAYER FOR RELIEF
                                -----------------

         WHEREFORE, Plaintiffs respectfully request that the Court:

         a. Enter judgment in Plaintiffs' favor on each cause of action stated
herein;

         b. Permanently enjoin each of the Defendants, and their parents,
subsidiaries, affiliates, successors and assigns, and each of their officers,
directors, employees, representatives, agents, and attorneys, and all persons
acting in concert or active participation with, or on their behalf, or within
their control, from making, using, selling, offering to sell, importing, or
advertising products and/or services and/or employing systems, hardware,
software and/or components and/or making use of processes that infringe any of
the claims of the Harvey patents, or otherwise engaging in acts of infringement
of the Harvey Patents, all as alleged herein;

                                      -16-

<PAGE>


         c. Award actual damages to Plaintiffs for said infringement together
with interest and costs pursuant to 35 U.S.C. section 284;

         d. Award treble damages to Plaintiffs pursuant to 35 U.S.C. section 285
as a result of Defendants' knowing and willful infringement of the Harvey
Patents;

         e. Enter an order declaring that this is an exceptional case pursuant
to 35 U.S.C. section 285 as a result of Defendants' knowing and willful
infringement of the Harvey Patents, and award Plaintiffs their attorneys' fees,
costs, and expenses incurred in bringing this action; and

         f. Grant to Plaintiffs such other, further, and different relief as may
be just and proper.

                                   JURY DEMAND
                                   -----------

         Plaintiffs demand a trial by jury of all matters to which they are
entitled to trial by jury pursuant to Fed. R. Civ. P. 38.

                                      Respectfully submitted,

                                      Signature Omitted
                                      ----------------------------
                                      Rudolph E. Hutz
                                      R. Eric Hutz
                                      Connelly, Bove, Lodge & Hutz LLP
                                      1220 Market Street
                                      P.O. Box 2207
                                      Wilmington, DE 19899
                                      Tel.: (302) 658-9141
                                      Fax: (302) 658-5614


                                      OF COUNSEL
                                      ----------

                                      Thomas G. Slater, Jr.
                                      Jack E. McClard
                                      R. Hewitt Pate
                                      HUNTON & WILLIAMS
                                      Riverfront Plaza, East Tower
                                      951 East Byrd Street
                                      Richmond, Virginia 23219-4074
                                      Tel.: (804) 788-8200
                                      Fax: (804) 788-8218

                                      James G. Gatto
                                      Jennifer A. Albert
                                      HUNTON & WILLIAMS
                                      1900 K Street, N.W.
                                      Washington, D.C. 20006
                                      Tel.: (202) 955-1500
                                      Fax: (202) 778-2201

                                      Attorneys for Plaintiffs
                                      -------------------------
                                      PEGASUS DEVELOPMENT
                                      CORPORATION and PERSONALIZED
                                      MEDIA COMMUNICATIONS, L.L.C.


                                      -17-



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