Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Phoenix Entertainment Partners LLC v. Boyte
Citations: 247 F. Supp. 3d 791; 2017 WL 1153969; 2017 U.S. Dist. LEXIS 44904Docket: CIVIL ACTION NO. H-16-2911
Court: District Court, S.D. Texas; March 28, 2017; Federal District Court
Karaoke, derived from the Japanese words for "empty orchestra," is an interactive entertainment form where amateur singers perform alongside recorded music and video displays. In this case, Phoenix Entertainment Partners, a producer and distributor of karaoke tracks, is suing several Houston-area bars and karaoke jockeys for trademark and copyright infringement regarding unauthorized use of their Sound Choice brand karaoke tracks. The lawsuit is part of a broader trend, with Phoenix and its predecessor having filed numerous similar lawsuits under the Lanham Act for trademark infringement due to illicit downloading and performance of their karaoke files. The court addressed motions to dismiss from some defendants, granting them in part and denying them in part. Claims regarding unauthorized copying and performance of Sound Choice-branded tracks were dismissed with prejudice, citing precedents from the Seventh and Ninth Circuits that similarly dismissed claims of goods-mark infringement. However, claims based on Sound Choice service marks and copyrights were allowed to proceed. Phoenix Entertainment Partners, as the successor to Slep-Tone Entertainment Corporation, alleges ownership of copyrights for 24 specific audiovisual karaoke tracks and four federally registered trademarks associated with Sound Choice. Sound Choice tracks, known for their high quality, are sold exclusively in compact disc formats, and the easy electronic duplication of these tracks has led to widespread unauthorized distribution. Two trademarks protect the Sound Choice name and logo for goods related to pre-recorded compact discs of musical compositions and videos, while two additional trademarks cover services associated with karaoke entertainment exhibitions. Phoenix licenses these marks for karaoke accompaniment tracks and entertainment services to commercial operators, requiring karaoke jockeys to spend significant amounts for licensing and to undergo quality audits for digital copies. Phoenix owns Sound Choice Entertainment, LLC, which competes in the karaoke market. Herbert and Jodie Boyte, karaoke jockeys operating Karaoke Houston, are accused of using Sound Choice-branded tracks without purchasing licenses, primarily sourcing them from unauthorized sites. Their shows frequently display the Sound Choice marks, leading to potential consumer confusion about affiliation with Phoenix. Koert William Knights, operating 'Mr. Karaoke,' faces similar allegations for playing unlicensed Sound Choice tracks. Phoenix notified the bars hiring the Boytes and Knights about the use of unlicensed tracks. The claims against all defendants include trademark infringement under 15 U.S.C. § 1114(1), unfair competition under 15 U.S.C. § 1125(a), and copyright infringement against the Boytes under 17 U.S.C. § 501. Rule 12(b)(6) permits dismissal of a case if the plaintiff fails to state a claim upon which relief can be granted. The Supreme Court in *Bell Atlantic Corp. v. Twombly* clarified that under Rule 12(b)(6), the complaint must provide enough factual content to make a claim plausible. Rule 8(a) requires a "short and plain statement" indicating entitlement to relief, not detailed factual allegations. In *Ashcroft v. Iqbal*, the Court further explained that a claim is plausible when the plaintiff pleads facts allowing for a reasonable inference of the defendant's liability. Courts assessing a motion to dismiss focus on the complaint's facts and documents integral to it, including those that are referenced or central to the claim. In securities cases, courts can take judicial notice of public documents filed with government agencies without converting the motion into a summary judgment request. The Lanham Act establishes civil liability for using any term or symbol in commerce that may confuse consumers regarding the origin or approval of goods or services. To succeed in trademark infringement and unfair competition claims under this Act, a plaintiff must prove ownership of a protectable mark and that its use by another party is likely to cause confusion. If a mark is counterfeit, likelihood of confusion is presumed. In *Petro Franchise Sys. LLC v. All Am. Props. Inc.*, 607 F. Supp. 2d 781, 788 (W.D. Tex. 2009), a district court can limit its analysis of confusion to whether the marks used by the alleged infringer are identical to those owned by the plaintiff, establishing a likelihood of confusion if they are. The likelihood of confusion is especially evident with counterfeit marks. The Lanham Act recognizes two forms of secondary liability for trademark infringement: vicarious liability and contributory infringement. Vicarious liability requires a high threshold, necessitating proof of an apparent or actual partnership, authority to bind each other in transactions, or joint ownership/control over the infringing product. Courts apply stringent agency principles, rejecting the combination of supervisory ability and financial interest as sufficient for vicarious liability. Contributory infringement involves intentionally causing or knowingly facilitating another's infringement of a plaintiff's mark, necessitating proof of underlying direct infringement by a third party. The Supreme Court case *Dastar Corp. v. Twentieth Century Fox Film Corp.*, 539 U.S. 23 (2003), clarifies that the term "origin of goods" in the Lanham Act pertains to the producer of tangible goods rather than the creator of ideas or concepts. In *Dastar*, the Court ruled against Fox's claim after Dastar repackaged public domain materials, holding that Fox’s expired copyright barred its trademark claim regarding origin misrepresentation, as Dastar had legitimately produced the film from public domain content. To establish copyright infringement, a party must prove ownership of a valid copyright and that the defendant copied original elements of the plaintiff's work. A timely obtained certificate of registration serves as prima facie evidence of validity and ownership. Determining substantial similarity requires a side-by-side comparison of the original and the alleged copy. Not every instance of copying is actionable; substantial similarity to the protected aspects is required. In the analysis of goods marks, courts have consistently ruled that there is no consumer confusion regarding the display of goods marks in the karaoke context, as patrons only experience the performance of the digital files and do not interact with the source. The tangible goods in question are illicitly obtained digital files, not the files themselves. Patrons may recognize the content as created by Sound Choice, but this does not indicate confusion about the source of the tangible goods, especially since the display of goods marks during performances does not constitute trademark infringement. Phoenix's arguments against the rulings of the Seventh and Ninth Circuits lack merit. It claims that differences in karaoke system ownership affect the applicability of these precedents but fails to substantiate this. Additionally, Phoenix misinterprets the Supreme Court's Dastar ruling, which clarifies that leaving original trademarks in a repackaged work would not necessarily lead to liability, as it would create an untenable situation for users of uncopyrighted materials. Phoenix's attempt to establish trademark claims, instead of copyright claims, is unsuccessful. It argues that its quality-control measures and the impact of copying on karaoke track quality indicate a trademark focus. However, the Seventh Circuit has rejected similar arguments, noting that playing karaoke tracks in nightclubs does not equate to selling tangible goods, such as counterfeit luxury items. The core of Phoenix's complaint is that defendants copied Sound Choice-branded karaoke tracks, which has been dismissed by the Supreme Court and appellate courts in previous cases as failing to establish direct infringement, leading to the dismissal of secondary infringement claims. Phoenix's claims regarding these goods marks are dismissed with prejudice, as any amendment would be futile. In contrast, the analysis of service marks presents a different scenario. Phoenix claims its subsidiary, Sound Choice Entertainment, LLC, provides karaoke-jockey services across the U.S., using Sound Choice branding. It argues that displaying the Sound Choice logo during karaoke shows could confuse patrons about the affiliation of the jockeys with Sound Choice. This claim is not subject to the same legal precedents governing trademark goods, as those cases dealt solely with physical products, not services. Phoenix plausibly argues that Sound Choice Entertainment competes in the karaoke-jockey market and uses its branding to advertise shows. While displaying the logo in a digital file may not confuse patrons, showing it throughout an event could lead to misunderstandings about the jockey's affiliation with Sound Choice Entertainment, risking the brand's goodwill. The defendants' dismissal arguments based on prior cases like Rumsey are unconvincing, as those did not involve a competing karaoke-jockey service. Thus, the potential for confusion regarding the service marks remains valid. Factual allegations concerning service marks claims highlight that Sound Choice competes directly with karaoke jockey defendants in Texas, leading to potential consumer confusion regarding the ownership of karaoke shows featuring the Sound Choice logo. The defendants' analogy to Disney's movie releases is rebutted; unlike Disney's unrelated theater operations, if a theater misuses the Disney logo without permission, confusion could arise, similar to the plaintiff's claims. Defendants assert that confusion is irrelevant among the actual consumers, claiming Phoenix's primary customers are the karaoke jockeys, while Sound Choice's customers are the venues hiring those jockeys. Although this argument initially seems valid, it falters upon analysis. A comparison to pub trivia illustrates that confusion among bar patrons—who might mistake one trivia operator for another due to misleading branding—can harm the brand's reputation, even if the bar owner, who hired the quizmaster, is not confused. Consequently, the law recognizes that the relevant consumer group for assessing confusion extends beyond immediate purchasers, allowing trademark actions to proceed based on broader consumer confusion. Confusion among those influencing consumer purchasing decisions is actionable in trademark cases. In this context, confusion among bar patrons regarding karaoke shows is significant, as bars choose karaoke jockeys based on patrons' preferences. The unauthorized use of Sound Choice's service marks in these shows could confuse patrons and harm Sound Choice's brand identity. Phoenix has sufficiently alleged facts supporting this confusion and potential damages due to unfair competition, despite the defendants' claims to the contrary. The complaint details direct infringement by karaoke jockeys who displayed the Sound Choice logo without authorization. It also supports claims of contributory infringement against venue defendants, who allegedly induced the infringing shows and were aware of the infringement since receiving a demand letter in July 2016. Although the trademark claim related to goods has been dismissed, the service mark claims can proceed, limited to damages from when the defendants became aware of the infringement. Regarding copyright claims, the defendants' argument for dismissal was unpersuasive. The complaint adequately alleges that Phoenix owns copyrights that the Boytes copied and displayed without permission. As a result, the copyright claims are allowed to proceed. The plaintiff may file an amended complaint with more detailed allegations regarding service marks by April 28, 2017.