Slep-Tone Entm’t Corp. v. Coyne

By: Julie Shursky

Plaintiff, Slep-Tone, is the owner of trademarked karaoke accompaniment tracks and its tracks guide karaoke users to the lyrics of songs as they sang along. In this action, Slep-Tone filed suit against karaoke jockeys, claiming that they engaged in unauthorized media-shifting and format-shifting of copies of Slep-Tone’s trademarked discs for commercial sale, which violations both the Lanham Act and Illinos Deceptive Trade Practices Act (“IDTPA”). Defendants moved to dismiss.

Slep-Tone has been manufacturing karaoke accompaniment tracks under the brand name “Sound Choice” for about thirty years.[1] Slep-Tone produces karaoke accompaniment tracks by “re-recording popular songs, omitting or fading out the lead vocals, and adding lyrics and visual cues that allow the karaoke participant to know when and what to sing.”[2] In addition to producing tracks, Slep-Tone also produces a professional karaoke host called the “Gem Series.”[3]  Accordingly, Slep-Tone’s target market includes both karaoke hosts and karaoke venues.[4]  Even though Slep-Tone does not currently sell karaoke services, it manufactures karaoke tracks and karaoke jockeys (“KJs”) for sale to the general public.[5]

Coyne operates the companies Extreme Karaoke and Ultimate Disc Jockeys, which provide karaoke entertainment throughout the Chicago area. For the purpose of providing the same songs at multiple locations at the same time, Coyne has “copied or uploaded approximately 279 Sound Choice discs to five different laptop computers.”[6]  Every track that Coyne copied contains a Sound Choice mark, which is affixed to the accompaniment track.[7]  Coyne, along with the other defendants, played these copied tracks at their karaoke entertainment venues.[8]

Slept-Tone has several registered trademarks with the United States Patent and Trademark Office (“USPTO”) in relation to the Sound Choice brand.[9]  The registered marks appear in two places: on Slep-Tone’s products (discs and packaging) and on the video files, which are visible when the discs are played or performed.[10] To use the Sound Choice brand accompaniment tracks, professional KJs are required to license the products and comply with Slep-Tone’s media-shifting policy, meaning “every Sound Choice branded track copied portable media must be traceable to an original Sound Choice disc on a one-to-one basis.”[11]  After Slep-Tone registered the marks, it sent letters to various KJs, claiming that they were infringing on Slep-Tone’s trademark.[12]  Coyne and other defendants filed ten counterclaims, including allegations that Slep-Tone violates federal antitrust laws.[13]

To register a mark with the USPTO, the applicant must show that the mark is being used in commerce or that there is a good faith intention to use the mark in commerce.[14] The Lanham Act provides that “a mark is used in commerce on services only ‘when it is used or displayed in the sale or advertising of services and the services are rendered in commerce.’”[15]  Given that Slep-Tone did not host karaoke to advertise its services, but rather advertised its products, the Sound Choice tracks, the Court found that Slep-Tone did not perform any services at its tradeshow performances or contests, which “a servicemark might be said to identify.”[16]

Arguing in the alternative, Slep-Tone asserted that it claimed use in commerce of its Sound Choice mark through its licenses with KJs.[17] Id. The Court used the Seventh Circuit’s analysis in Eva’s Bridal Ltd. v. Halanick Enters., Inc., which “asserts that indirect use in commerce turns on ‘whether the control retained by the licensor is sufficient under the circumstances to insure that the licensee’s goods or services would meet the expectation created by the presence of the trademark.’”[18] The Court noted that Slep-Tone’s restrictions on copying and its reliance on its licensee’s good faith might be enough to show control.[19] If karaoke customers were concerned with other factors such as the KJs uniform, track listings, and so forth, then Slep-Tone arguably did not exercise the requisite control of its licenses.[20] Id. Since neither party presented enough evidence to warrant summary judgment on the issue, the Court denied defendant’s counterclaims on the issue.

Slep-Tone brought infringement and unfair competition claims under the Lanham Act.[21]  To succeed on such a claim, Slep-Tone had to satisfy two elements: (1) that its mark is protectable under the Lanham Act, and (2) that the defendant’s unauthorized use of the mark would likely to confuse consumers.[22]  The Court finds that Slep-Tone has satisfied the first element “because Slep-Tone [was] correct that the 1995 Sound Choice trademarks are valid and protected.”[23]  In assessing the second element, the Court used the seven-factor test that governs the likelihood of confusion.[24]  The Court found that the only factor clearly in Slep-Tone’s favor is the mark’s distinctiveness, and that factor alone could not carry a large weight in the analysis. Id. at *11. Therefore, the Court held that Slep-Tone’s infringement claims must go to the jury. Id.

Moreover, the Court denied defendants’ motion for summary judgment.[25] The Court found that the defendants did not explain why the timing of the motions prevented them from obtaining an affidavit from Coyne to support their counterclaims.[26]  Nevertheless, the Court granted Slep-Tone’s motion for summary judgment on defendants’ counterclaims with respect to antitrust and tortuous interference because defendants were on notice of such claims since 2014, yet elected not to act.[27] The Court found that when Slep-tone “moved under Rule 12(b)(6) motion to dismiss the counterclaim, “Slep-Tone made this same argument” that its karaoke venues are privileged because they relate to its interests in protecting its trademark.[28] Accordingly, Defendants failed to respond to the argument to Slep-Tone’s original tortious interference counterclaim and they “cannot plausibly maintain that the defense is waived.”[29]

The Judge does not stray from established law and heavily relied on previous cases in determining whether Slep-Tone was entitled to a summary judgment. Particularly, the Judge wants the jury to decide and weigh the seven factors for likelihood of confusion, which is consistent with case law. This means that summary judgment on the likelihood of confusion factor can only be resolved if the record explicitly demonstrates that it is one-sided. Otherwise, it is a fact-intensive factor that requires a jury. Moreover, the Judge stresses the importance of not placing too much weight on any single factor of trademark infringement, noting that although three factors are deemed to be particularly important – the similarity of the marks, the defendant’s intent, and actual confusion – the jury should be the ultimate decider of the weight each factor deserves. This is consistent with trademark law.

[1] Slep-Tone, 2015 WL 5821695 at *2.

[2] Id. at *3.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id. at *4.

[9] Id.

[10] Id.

[11] Id. at *3.

[12] Id. at *5.

[13] Id.

[14] Id. at *6 (citing to 15 U.S.C. § 1051(a)(3)(C), (b)(3)(B) and 37 C.F.R. § 2.34(a)(1), (2)).

[15] Id. at *6.

[16] Id. at *7.

[17] Id.

[18] 639 F.3d 788, 790 (7th Cir. 2011).

[19] Id. at *8.

[20] Id.

[21] Id. at *9.

[22] Id.

[23] Id.

[24] Id.

[25] Id. at *15.

[26] Id.

[27] Id. at *15-17.

[28] Id. at 16.

[29] Id. at 17.

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