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Slep-Tone Entertainment Corp. v. Wired for Sound Karaoke and DJ Services, LLC

United States Court of Appeals, Ninth Circuit

January 18, 2017

Slep-Tone Entertainment Corporation; Phoenix Entertainment Partners, LLC, Plaintiffs-Appellants,
v.
Wired for Sound Karaoke and DJ Services, LLC; Ernest Z. McCullar, Defendants-Appellees.

          Argued and Submitted December 12, 2016 San Francisco, California

         Appeal from the United States District Court for the District of Arizona, No. 2:12-cv-02631-NVW Neil V. Wake, District Judge, Presiding

          James M. Harrington (argued), Harrington Law P.C., Pineville, North Carolina, for Plaintiff-Appellant.

          Lorraine Morey (argued), Morey Law PLLC, Phoenix, Arizona, for Defendants-Appellees.

          Before: Susan P. Graber and Andrew D. Hurwitz, Circuit Judges, and Richard F. Boulware, [*] District Judge.

         SUMMARY[**]

         Lanham Act

         The panel affirmed the district court's dismissal of claims for trademark infringement and unfair competition brought under the Lanham Act by a producer of karaoke music tracks.

         The plaintiff alleged that the defendants performed karaoke shows using unauthorized "media-shifted" files that had been copied onto computer hard drives from the compact discs released by the plaintiff. Agreeing with the Seventh Circuit, the panel held that the plaintiff did not state a claim under the Lanham Act because there was no likelihood of consumer confusion about the origin of a good properly cognizable in a claim of trademark infringement.

         In a concurrently filed memorandum disposition, the panel reversed the district court's summary judgment on a claim for breach of a settlement agreement. Judge Hurwitz concurred in part and dissented in part from the memorandum disposition.

          OPINION

          PER CURIAM:

         Karaoke is a "form of entertainment, originating in Japan, in which a person sings the vocal line of a popular song to the accompaniment of a pre-recorded backing tape, and the voice is electronically amplified through the loudspeaker system for the audience." OED Online (Dec. 2016), http://www.oed.com/view/Entry/243613. Plaintiff Slep-Tone Entertainment Corporation[1] produces karaoke music tracks. The tracks are marketed under the trademark "Sound Choice." Plaintiff releases them on compact discs encoded in a format known as "CD-G, " which accompanies karaoke music with graphics, lyrics, and singing cues when played on compatible equipment.

         Computer users are capable of copying the content of these CD-Gs onto computer hard drives as digital files; Plaintiff refers to this process as "media-shifting, " but it is also popularly known as "ripping." Plaintiff acknowledges the convenience of digital files for karaoke operators (who need not use numerous CD-Gs during a performance), but also reports that this widespread practice, when combined with unauthorized file-sharing, "nearly drove [the company] out of business." In the past, Plaintiff "opposed all commercial media-shifting." Today, it allows the practice within the confines of a four-point "media-shifting policy" requiring that users make only one digital copy per source CD-G; that the physical media used to create the digital files are kept "on the shelf" unused; that users notify Plaintiff if they intend to create media-shifted copies; and that users submit to auditing for compliance with these conditions.

         Defendants Ernest Z. McCullar and his business, Wired for Sound Karaoke and DJ Services, LLC, operate a karaoke business in the Phoenix area. As alleged in the complaint, Defendants use Plaintiff's Sound Choice tracks. In 2009, Plaintiff learned that Defendants were using unauthorized media-shifted files instead of Plaintiff's original CD-Gs. Plaintiff filed a federal action against Defendants, alleging trademark infringement. See Slep-Tone ...


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