Antitrust Law Daily Wrap Up, TOP STORY—N.D. Ill.: Karaoke DJs’ antitrust counterclaim hits sour note, (Jan 9, 2015)

By Greg Hammond, J.D.

A karaoke accompaniment track manufacturer successfully avoided a counterclaim that it engaged in anticompetitive behavior, in violation of the Sherman and Clayton Acts. The federal district court in Chicago dismissed the antitrust counterclaim, finding that it “sorely lacks specifics” (Slep-Tone Entertainment Corp. v. Coyne, January 8, 2015, Feinerman, G.).

Slep-Tone Entertainment Corp. is a manufacturer of karaoke accompaniment tracks that guide individuals as they sing along to songs. The company owns the trademark for SOUND CHOICE, which appears on a number of tracks and graphical displays that are sold to entertainers, known as karaoke disc jockeys (DJs). After registering “Sound Choice,” Slep-Tone sent letters to various DJs, claiming that they were infringing on Slep-Tone’s trademark, and threatening to sue unless the DJs purchased authorized tracks and allowed Slep-Tone to audit their digital media at any time. After Slep-Tone ultimately sued for trademark infringement, the DJs filed ten counterclaims, including allegations that Slep-Tone violated federal antitrust laws.

In their antitrust counterclaim, the DJs alleged that Slep-Tone attempted to intimidate venue owners into hiring “Slep-Tone approved” DJs; Slep-Tone’s owner publicly stated that “he would be happy to split the market share of karaoke throughout the U.S.” and that his company was bringing lawsuits to drive sales; and that Slep-Tone’s actions “hinder trade and represent unfair competition among those persons providing karaoke services or selling karaoke tracks.”

Noting that antitrust allegations typically require sufficient detail to give the opposing party notice of the claims at issue, the court concluded that the “barebones” antitrust counterclaim in this case “sorely lacks specifics.” Moreover, the court found: (1) the DJs’ Section 1 Sherman Act argument failed because they did not allege any concerted activity; (2) the DJs’ Section 2 Sherman Act argument failed because they did not allege that Slep-Tone possessed monopoly power or that its actions created a dangerous probability of monopolization of a relevant market; and (3) the DJs’ allegation that Slep-Tone violated the entire Clayton Act failed because they did not allege anything about Slep-Tone’s pricing, or that the company sold the same products at different prices. The antitrust counterclaim was therefore dismissed.

The case number is 13 C 2298.

Attorneys: Vivek Jayaram (Jayaram Law Group) for Slep-Tone Entertainment Corp. Matthew M. Saffar for John Coyne.

Companies: Slep-Tone Entertainment Corp.

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