IP Law Daily, TRADEMARK—7th Cir.: Slep-Tone appeal founders in karaoke ‘bootleg’ case, (Jul 22, 2016)

By Mark Engstrom, J.D.

Slep-Tone Entertainment Corp. and its successor in interest, Phoenix Entertainment Partners LLC (collectively, "Slep-Tone"), failed to plausibly allege consumer confusion in its trademark infringement and unfair competition claims against an Illinois pub and its owner, who allegedly made unauthorized copies of Slep-Tone’s karaoke files and passed them off as genuine Slep-Tone tracks, the U.S. Court of Appeals in Chicago has ruled. The court affirmed a district court’s dismissal of Slep-Tone’s claims (Phoenix Entertainment Partners, LLC v. Rumsey, July 21, 2016, Rovner, I.).

Lawsuit. Slep-Tone brought trademark infringement and unfair competition claims against The Basket Case Pub and its owner, Dannette Rumsey, who allegedly made and used "bootleg" copies of Slep-Tone’s commercial karaoke tracks. According to Slep-Tone, the unauthorized performance of those tracks infringed its SOUND CHOICE mark and its distinctive trade dress, which distinguished Slep-Tone’s karaoke tracks from those of its competitors.

Slep-Tone argued that patrons of the Basket Case Pub would mistakenly think that copies of its karaoke tracks were genuine SOUND CHOICE tracks that were manufactured by Slep-Tone. In Slep-Tone’s view, the defendants’ unauthorized performances amounted to trademark infringement under Lanham Act §32 and unfair competition under Lanham Act §43(a).

Slep-Tone argued that the unauthorized use of its trademark and trade dress would likely cause confusion or mistake among customers and patrons who viewed an unauthorized copy, or would deceive those customers by leading them to believe that the defendants’ karaoke tracks were bona fide SOUND CHOICE tracks that were manufactured by Slep-Tone and sold or licensed to the defendants. Slep-Tone further argued that viewers could mistakenly believe that Slep-Tone had approved or sponsored the defendants’ services and commercial activities.

The district court dismissed Slep-Tone’s claims because the plaintiffs’ "real complaint" was for theft, piracy, and violations of Slep-Tone’s media policy, not trademark infringement. The appellate court agreed.

Analysis. The appellate court noted that Slep-Tone did not own the copyrights to its karaoke tracks; it merely owned the SOUND CHOICE marks and associated trade dress, which explained why Slep-Tone had asserted trademark and unfair competition claims rather than copyright claims. The court further noted that the authorization to copy was the only thing that distinguished legitimate copies of Slep-Tone’s karaoke tracks from illegitimate copies.

Significantly, pub patrons saw and heard performances of the creative works that were contained on illegitimate copies of the digital files (i.e., they heard the musical accompaniment and they saw the corresponding lyrics and graphics). Although patrons of the pub would see the Sound Choice trademark and trade dress whenever the graphical component of the karaoke tracks was displayed—and might even assume that the associated products were genuine and authorized by Slep-Tone—the relevant consumer confusion for the purpose of trademark infringement was confusion regarding the source of the "tangible good" that was sold in the marketplace.

In this case, however, patrons of The Basket Case Pub never saw a disc that was wrapped in Slep-Tone or SOUND CHOICE packaging, and they never saw a website that offered downloads of SOUND CHOICE karaoke tracks. Consequently, any confusion that might have occurred would not have been confusion about the source of the tangible goods that were sold in the marketplace, as required by the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003).

According to the court, the fact that the SOUND CHOICE mark was embedded in the creative content of the karaoke track, and was visible to the public whenever the track was played, did not falsely suggest that Slep-Tone was endorsing the pub’s karaoke performance, as the plaintiffs had alleged. As long as Slep-Tone’s mark was not overtly used to market the pub’s performance, there was no risk that a patron might think that Slep-Tone was sponsoring or endorsing the performance.

Because the creative content of Slep-Tone’s karaoke tracks presumably remained subject to copyright protection, the unauthorized display and performance of those tracks might present an actionable copyright claim. However, the routine display of Slep-Tone’s trademark during a performance of the copied tracks did not, without more, support a trademark infringement or unfair competition claim. Because patrons saw only the creative content of the tracks rather than the particular medium from which the tracks were played, there was no reason to think that they believed that the digital file, wherever it resided, was itself produced or approved by Slep-Tone.

Finally, Slep-Tone never affirmatively alleged that the defendants’ copies of its karaoke tracks were noticeably inferior to the originals. Moreover, the defendants did not pass off a "tangible" marketplace good as a Slep-Tone good. Significantly, the defendants were not selling compact discs with karaoke tracks on them and then touting those discs as genuine Slep-Tone tracks.

Because Slep-Tone did not allege that the defendants had "held out a tangible good" that was sold in the marketplace "as a Slep-Tone product," the alleged conduct was not actionable as trademark infringement.

The case is No. 15-2844.

Attorneys: James Michael Harrington (Harrington Law, PC) and Vivek Jayaram (Jayaram Law Group, Ltd.) for Phoenix Entertainment Partners LLC and Slep-Tone Entertainment Corp. Jonathan LA Phillips (Shay Phillips Ltd.) for Dannette Rumsey and Basket Case Pub, Inc.

Companies: Phoenix Entertainment Partners, LLC; Slep-Tone Entertainment Corp.; Basket Case Pub, Inc.

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