Troyer filed the $20 million federal lawsuit Thursday in U.S. District Court in downtown Los Angeles. In addition to the privacy violation claims, Troyer alleges TMZ violated his right of publicity, infringed on his copyright and trademark and misappropriated his name and likeness.
SugarDVD, an adult rental sales website, was also named as a defendant in the lawsuit. The company announced earlier this week it was willing to make a $100,000 offer for the footage, provided Troyer and Shrider gave their consent.
Troyer said TMZ ignored cease-and-desist letters sent before and after the site posted a 25-second clip of Troyer and former girlfriend Ranae Shrider online and on TMZ TV.
The 50-minute tape reportedly includes oral sex, a close-up of Troyer's naughty parts and several shots of Troyer looking directly into the camera.
Troyer maintains the tape was stolen and ended up in the hands of Blatt, who has made a name for himself in recent years for brokering the "1 Night in Paris" celebrity sex tape and appearing in the film "American Cannibal." Blatt is named as a co-defendant in the case.
Blatt, without referring to the specific celebrity, posted on the popular adult webmaster forum GFY.com on June 13 that he had a "great sex tape," and needed the "right company" to "pull off the greatest publicity stunt I may ever concocted (sic)."
Blatt wrote that he thought the tape would "bring a lot of curious surfers and huge national publicity."
He also posted that the tape featured on the "big screen next week in the movie of the summer."
Troyer's latest film, "The Love Guru," which stars Mike Myers, opened in theaters June 20.
Representatives for Troyer, TMZ and Blatt were not immediately available for comment.