Phx. Entm't Partners, LLC v. J-V Successors, Inc.
Phx. Entm't Partners, LLC v. J-V Successors, Inc.
Opinion of the Court
Sore throats. Ringing ears. Embarrassed friends. The longest version of Bohemian Rhapsody, ever. These perils of karaoke are widely known. Keats Bar on Second Avenue is facing a lesser known peril of the industry: a trademark infringement and unfair competition lawsuit in federal court. Plaintiff alleges that the use of copied versions of its karaoke accompaniment tracks violates its trademarks and service marks, and is pursuing these claims as trademark rather than copyright claims because it does not own the relevant copyrights. Defendant has moved to dismiss Plaintiff's complaint in its entirety. Because the use of a goods trademark to protect against copying the tracks raises the spectre of the "species of mutant copyright law" about which the Supreme Court cautioned in Dastar Corp. v. Twentieth Century Fox Film Corp., Plaintiff's Lanham Act claims based on its goods marks are dismissed. The same rationale does not apply to the service mark claims, but Plaintiff has failed to plausibly allege that the copied tracks at issue here are of diminished quality, so its claims based on service marks are also dismissed.
I. BACKGROUND
Karaoke as it is known today is made possible by "karaoke accompaniment tracks," which are re-recorded versions of popular songs without the corresponding vocals and with a corresponding visual component displaying the lyrics to the songs and visual cues for the performer. Dkt. No. 1, Complaint ("Compl.") ¶ 11. Plaintiff Phoenix Entertainment Partners, LLC's predecessor in interest, Slep-Tone Entertainment Corporation, produced more than 16,500 such tracks "on special compact discs known as CD+G ('compact *544disc plus graphics') discs and, more recently, a subset of that catalog in another common karaoke format, MP3+G ('MP3 plus graphics') on compact discs." Id. ¶ 17. These tracks are all branded under the trademark "Sound Choice," a mark for which Plaintiff owns several trademarks and service marks. Id. ¶¶ 16-17. According to Plaintiff, Sound Choice-branded karaoke tracks are "wildly popular" and may make up more than half of all karaoke tracks played across the United States. Id. ¶ 18. The reason for Sound Choice tracks' popularity, Plaintiff alleges, is that they are "usually the most faithful to the sound of the original recording" and because they provide accurate visual cues during the performances. Id. ¶¶ 19-20.
Sound Choice tracks are only released on compact discs, and not through any other format like hard drives or internet downloads. Id. ¶ 21. At some point, users of Sound Choice tracks began transferring the tracks from CD+Gs to "alternative media, such as computer hard drives." Id. ¶ 22. This process is referred to as "media-shifting" or "format-shifting."
Plaintiff alleges that consumers will view the display of the Sound Choice mark in connection with karaoke shows "as an indicator of the affiliation, connection, or association of the Defendant with [Plaintiff], or of [Plaintiff's] sponsorship or approval of the services and related commercial activities, rather than merely as indicating [Plaintiff] as the creator of the underlying communicative content of any particular song being performed." Compl. ¶ 45. Similarly, Plaintiff alleges that consumers are "likely to be confused regarding the origin or sponsorship of the goods being supplied and regarding the affiliation or connection of the Defendant with [Plaintiff], based on their mistaken belief that the goods being supplied were made by [Plaintiff] and that the services being provided are provided with [Plaintiff's] knowledge and approval."Id. ¶ 47. In sum, Plaintiff alleges that consumers are likely to be confused when media-shifted karaoke accompaniment tracks bearing Sound Choice marks are played at Defendant's karaoke shows.
Many of the unusual elements of Plaintiff's claims in this case may be best understood as trademark claims brought in the absence of a copyright to protect against the unauthorized copying of Plaintiff's karaoke accompaniment tracks. As the Seventh Circuit observed in a nearly identical case brought by the same Plaintiff, "there is no doubt that, on the facts alleged, *545[Plaintiff] would have a perfectly viable claim for copyright infringement against the defendants, if [Plaintiff] owned the copyright on these tracks. We are told it does not. [Plaintiff] does own the Sound Choice trademarks and associated trade dress, which explains why [Plaintiff] has cast its lot with trademark rather than copyright law." Phoenix Entertainment Partners v. Rumsey,
II. PROCEDURAL HISTORY
On December 7, 2016, Plaintiff brought this action against Defendant J-V Successors, Inc., a corporation that operates a bar and restaurant called Keats Bar in New York City. Compl. ¶ 8. Plaintiff asserts federal claims for trademark infringement and unfair competition under the Lanham Act, and several state law claims. As relief, Plaintiff seeks a permanent injunction barring Defendant from further unauthorized use or copying of Sound Choice tracks, as well as compensatory and punitive damages. Id. at 16-17. On February 8, 2017, Defendant moved to dismiss the complaint. Dkt. No. 25, Mot. To Dismiss; Dkt. No. 26, Mem. of Law in Supp. Of Mot. To Dismiss ("Def.'s Mem."). Plaintiff filed an opposition brief on March 1, 2017, Pl.'s Mem., and Defendant filed a reply brief on March 13, 2017, Dkt. No. 27, Reply Mem. of Law in Supp. Of Mot. to Dismiss ("Def.'s Reply Mem.").
III. LEGAL STANDARDS
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 8"does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal,
Determining whether a complaint states a plausible claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal,
*546Iqbal,
IV. DISCUSSION
Plaintiff's claims against Defendant arise out of its four federally registered trademarks and service marks. A trademark is "any word, name, symbol, or device ... used by a person ... to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods ...."
"The Lanham Act was intended to make 'actionable the deceptive and misleading use of marks,' and 'to protect persons engaged in ... commerce against unfair competition.' " Dastar Corp. v. Twentieth Century Fox Film Corp.,
[a]ny person ... use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive."
[a]ny person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person ....
The infringement analysis under the trademark infringement and unfair competition provisions of the Lanham Act is the same. See Starbucks Corp. v. Wolfe's Borough Coffee, Inc.,
To determine likelihood of confusion, courts in this Circuit consider the factors established in Polaroid Corp. v. Polarad Elec. Corp.,
At the outset, the Court notes that the first element-the marks' validity and entitlement to protection-is not in dispute here. "A certificate of registration with the [Patent and Trademark Office] is prima facie evidence that the mark is registered and valid (i.e. , protectable), that the registrant owns the mark, and that the registrant has the exclusive right to use the mark in commerce." Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc.,
A. The Goods Marks
Plaintiff cannot plead infringement with respect to its marks for goods because there is no confusion about the source of the relevant goods. Given the nature of the relevant goods-CD+Gs containing the karaoke accompaniment tracks at issue-this claim cannot survive.
In Dastar Corp. v. Twentieth Century Fox Film Corp., the Supreme Court analyzed the phrase "origin of goods" in the Lanham Act.
In Phoenix Entertainment Partners v. Rumsey, the Seventh Circuit applied the reasoning of Dastar to media-shifting claims brought by Phoenix (and its predecessor Slep-Tone).See generally
*548If there is any confusion, it does not concern the source of the goods, as the Lanham Act requires. Consumers never see the digital files and Defendants neither sell them nor make representations about their source medium. Accordingly, Defendants do not use the Sound Choice marks "in connection with the sale, offering for sale, distribution, or advertising" of the files under15 U.S.C. § 1114 (1)(a) or "in connection with" the files under § 1125(a)(1). Instead, Defendants make allegedly unauthorized use of the content of Plaintiff's karaoke tracks, which Dastar precludes as a trademark claim. As the Supreme Court explained, "[t]he words of the Lanham Act should not be stretched to cover matters that are typically of no consequence to purchasers."
Slep-Tone Entm't Corp. v. Wired for Sound Karaoke & DJ Servs., LLC,
In the absence of binding precedent from the Second Circuit on this issue, the Court adopts the reasoning of the Seventh and Ninth Circuits, which is persuasive. Accordingly, for the reasons described in Rumsey and Wired for Sound, Defendant's motion to dismiss is granted as to Plaintiff's claims arising out of its goods marks. Plaintiff's claims based on its service marks, however, require a separate analysis.
B. The Service Marks
As described above, the Lanham Act provides a cause of action for claims relating to the provision of "goods or services ."
As discussed above, likelihood of confusion is not limited to confusion about the source of goods or services; "[t]he public's belief that the mark's owner sponsored or otherwise approved the use of the trademark satisfies the confusion requirement."
*549Star Indus., Inc.,
Here, Plaintiff alleges that consumers' confusion will arise from the Sound Choice mark being associated with a karaoke accompaniment track that is identical to the original except in quality. But Plaintiff makes only the conclusory allegation that consumers will view the display of the Sound Choice mark in connection with karaoke shows "as an indicator of the affiliation, connection, or association of the Defendant with [Plaintiff], or of [Plaintiff's] sponsorship or approval of the services and related commercial activities, rather than merely as indicating [Plaintiff] as the creator of the underlying communicative content of any particular song being performed." Compl. ¶ 45. Plaintiff only alleges that media-shifted tracks in general are "inferior" and of "substantial[ly] reduc[ed]" quality. Id. ¶¶ 23, 25. Critically, however, nowhere does Plaintiff allege anything about the specific quality of the tracks Defendant plays. While recognizing its obligation to draw reasonable inferences in favor of Plaintiff, as the non-moving party, the Court does not believe it reasonable to complete this significant gap in Plaintiff's pleading by inferring that any digital copies used by Defendant are of inferior quality.
Plaintiff also fails to allege any facts to support a quality control claim. "One of the most valuable and important protections afforded by the Lanham Act is the right to control the quality of the goods manufactured and sold under the holder's trademark." El Greco Leather Prod. Co. v. Shoe World, Inc.,
*550Zino Davidoff SA v. CVS Corp.,
Here, Plaintiff has failed to adequately plead a quality control claim. Plaintiff alleges only that is "has been damaged through ... the loss of [its] ability to control the quality of goods marked and services provided in connection with the Sound Choice mark." Compl. ¶ 48. Plaintiff does not allege that it has any quality control procedures in the first place, and as a result there are no allegations that it abides by any such procedures.
C. State Law Claims
Under
Having dismissed all of Plaintiff's claims that were based on a federal question under 28 U. S.C. § 1331, and there being no other basis for federal jurisdiction over this case, the Court declines to exercise its supplemental jurisdiction over the state law claims. See
V. LEAVE TO AMEND
In this Circuit, "[i]t is the usual practice upon granting a motion to dismiss to allow leave to replead." Cortec Indus., Inc. v. Sum Holding L.P.,
VI. CONCLUSION
For the reasons stated above, Defendant's motion to dismiss is granted. All of Plaintiff's claims against Defendant are dismissed without prejudice. Plaintiff is granted leave to replead its claims no later than 30 days following the date of this order. The Clerk of Court is directed to terminate the motion pending at Dkt. No. 25.
SO ORDERED.
For the sake of clarity, this opinion will refer to this practice as "media shifting."
The Court notes that Phoenix and its predecessor Slep-Tone have brought more than 150 lawsuits throughout the country under the Lanham Act alleging conduct similar to what Plaintiff alleges here. See Rumsey,
Defendant's assertion that Rumsey involved service marks, Def.'s Reply Mem. at 3, is misguided. Though the first complaint asserted service marks, Compl. ¶¶ 40, 42, Slep-Tone Entm't Corp. v. The Basket Case Pub, Inc., 15-cv-1009 (C.D. Ill. Jan. 6, 2015) (Dkt. No. 1), the amended complaint did not, see Am. Compl. ¶¶ 42-43, Slep-Tone Entm't Corp. v. The Basket Case Pub, Inc., 15-cv-1009 (C.D. Ill. Jan. 6, 2015) (Dkt. No. 20). Defendant also attempts to cite the district court case associated with Wired for Sound, but the case it cites is an unrelated case, albeit one brought by Slep-Tone. See Def.'s Reply Mem. at 3. Nonetheless, the district court case that is actually associated with Wired for Sound did involve service marks, Second Am. Compl ¶¶ 41-42., Slep-Tone Entm't Corp. v. McCullar, 2:12-cv-2631,
After all, the conduct that Plaintiff alleges in this case did not take place in 1987 with vinyl records copied to cassette tapes; instead, it took place in 2016 and involved the copying of content from CD+Gs to computer hard drives.
The Court notes as dicta that while a bar on copying might be an effective quality control procedure, a trademark claim based on a violation of such a policy in this context might well spawn the "species of mutant copyright law" about which the Supreme Court warned in Dastar. Indeed, proscribing the unauthorized reproduction of creative content is one of the core purposes of copyright law. Cf. Arista Records, LLC v. Doe 3,
Reference
- Full Case Name
- PHOENIX ENTERTAINMENT PARTNERS, LLC v. J-V SUCCESSORS, INC., d/b/a Keats, a/k/a Keats Bar
- Cited By
- 6 cases
- Status
- Published