CleanFlicks, a company that once edited movies to make them family-friendly, has hit a snag as it tries to make a comeback after losing a copyright-infringement case to Hollywood. According to one of its owners, customers are associating it with a former manager of one of its stores who was arrested last week on charges that he paid two under-age girls for sex.

CleanFlicks got into legal trouble with Hollywood for copyright violations and lost its case in federal court in 2006. But its effort to make a comeback as an online retailer -- now of unedited movies -- is being hampered by the past association with Thompson, according to CleanFlicks co-founder and partner Ray Lines.

On Friday, Lines and his attorney announced a $1.1 million trademark infringement lawsuit against Thompson, who they say made use of the CleanFlicks name to do business. Thompson has tainted the company in the eyes of customers, the lawsuit alleges.

Lines said that all ties with Thompson were severed in 2003 when the company dissolved its dealerships nationwide in a move to become an online DVD rental retailer. But he said Thompson's sex charges have damaged CleanFlicks' business nonetheless.

CleanFlicks suffered a backlash from customers after Thompson's arrest was disclosed last week. Orem police said he was using Flix Club, which is now defunct, as a front for the creation and distribution of pornography. Thompson's past association with CleanFlicks and alleged attempts to trade off CleanFlicks' reputation, confused the public into thinking the two companies are still doing business with each other, Lines said.

On Friday, CleanFlicks, in an effort to clear the negative publicity cast on the company and the clean-film retailing industry in the wake of Thompson's arrest, held a press conference denying any current affiliation with Thompson and filed a trademark-infringement lawsuit against him in U.S. District Court in Salt Lake City.

"Our name has been dragged through the mud just as we're trying to launch our new business model. And now we look like perverts," Lines said.

CleanFlicks is seeking to recover $1.1 million in damages from Thompson, alleging he passed himself off as a CleanFlicks founder and profited from using its name to sell DVDs at Flix Club.

Thompson and his business partner, Isaac R. Lifferth of Springville, were released from Utah County Jail on bond last Friday. Thompson was arrested last Thursday on two charges of forcible sexual abuse and two charges of unlawful sexual activity with a 14-year-old. Lifferth was arrested on two charges of forcible sexual abuse, a charge of unlawful possession of a prescription drug, two charges of aiding prostitution, two charges of unlawful sexual activity with a 14-year-old and two charges of patronizing a prostitute.

"We just opened a CleanFlicks information booth at the Festival Cinemas at University Mall a few weeks ago. But in the past week, we've had nothing but negative responses. Everyone from my family members to customers are confused and upset. They keep asking if Thompson is my partner. But he isn't," Lines said.

In a written statement Friday, Lines said Thompson was "NOT a founder of any CleanFlicks entity. In addition, Thompson has NEVER been a partner, officer, affiliate, dealer, franchisee, collaborator, consultant or representative of any CleanFlicks entity in any capacity."

CleanFlicks sold three Utah County stores to Thompson's father, Bruce, in 2002. Bruce Thompson hired Daniel as manager of the store, then at 818 S. State St. in Orem. A year later, the company notified Bruce that it would no longer do business with Daniel or allow him in its corporate office because of suspected fraudulent conduct, CleanFlicks said in Friday's statement.

"We were told Daniel Thompson was copying edited movies without authorization," Lines said.

In Friday's lawsuit, CleanFlicks sought a court order to stop Thompson from claiming business ties with the company. The company also accused Thompson of violating the Cyberpiracy Prevention Act when he allegedly registered a web site, "www.myspace.com/cleanflicks," and bought and resold edited movies under the CleanFlicks name. That Web site is now shut down.

Thompson could not be reached for comment Friday.

"People now associate CleanFlicks with child porn and the allegations against Thompson. In the court of public opinion right now, it's just devastating to CleanFlicks's business," said Barnard Madsen, CleanFlicks's attorney. "The company just came out with a new business model, but this stopped it dead in its tracks."

Madsen said he wasn't sure how much CleanFlicks sustained in business losses so far.

A Colorado judge ruled in July 2006 that CleanFlicks could not edit movies to remove objectionable content and then sell them.

Flix Club wasn't named in the Hollywood suit, and had tried to offer edited movies under a legal loophole that supposedly allows the company to edit movies for "educational" purposes. Ater being threatened with legal action by CleanFlicks and changing the stores' name to Flix Club, Thompson allegedly continued to trade off CleanFlicks's reputation, the company said.

"When he didn't stop using CleanFlicks's name, our attorneys notified the Hollywood attorneys and told them that there was no relationship between CleanFlicks and Flix Club. We didn't want Hollywood to think we're still editing movies or violating our legal agreement with them," Madsen said.

Flix Club closed on Dec. 31 after Hollywood attorneys warned the company of copyright violations.

To clear misperceptions about CleanFlicks, the company has launched a Web site, www.FreeCleanFlicks.com. The site includes information about the history of CleanFlicks and copies of Thompson's criminal records that were filed in the Fourth District Court in Provo.

"We want everyone to see that we stand for the antithesis of everything with which we have been erroneously linked in recent reports," Lines said.