Phx. Entm't Partners LLC v. Boyte

• Decision Date: 28 March 2017
• Docket Number: CIVIL ACTION NO. H–16–2911
• Parties: PHOENIX ENTERTAINMENT PARTNERS LLC, Plaintiff, v. Herbert J. BOYTE, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

247 F.Supp.3d 791

PHOENIX ENTERTAINMENT PARTNERS LLC, Plaintiff,

v.Herbert J. BOYTE, et al., Defendants.

CIVIL ACTION NO. H–16–2911

United States District Court, S.D. Texas, Houston Division.

Signed March 28, 2017

Keith Alvin Vogt, Attorney at Law, Oak Park, IL, for Plaintiff.

Jonathan Lucas Allen Phillips, Shay Phillips, Ltd., Peoria, IL, Gina Viccinelli, Hermes Sargent Bates LLP, John McFerrin Barcus, Hermes Law, P.C., Dallas, TX, for Defendants.

Laras LPA, LLC, Sugarland, TX, pro se.

MEMORANDUM AND OPINION

Lee H. Rosenthal, Chief United States District Judge

This case brings with it an education on karaoke. The word apparently comes from combining two Japanese words, "kara," which means empty, and "okesutora," or orchestra. Karaoke, or "empty orchestra," is a type of interactive entertainment in which amateur singers, here, customers of bars, restaurants, or clubs, sing along with recorded music and video displays, using a microphone and a public address system. A "karaoke jockey" manages and plays the music and shows the displays, announces the songs, and identifies whose turn it is at the microphone. As this case and other similar lawsuits demonstrate, karaoke is a highly competitive business. This suit is one of hundreds that the plaintiff and its predecessor, a producer and distributor of karaoke accompaniment tracks, has brought around the country invoking the Lanham Act, 15 U.S.C. § 1051 et seq. , to challenge the unauthorized copying and performance of its commercial karaoke files as a form of trademark infringement.

In this case, Phoenix Entertainment Partners sued Houston-area bars and two karaoke jockeys, alleging trademark and copyright infringement of karoake tracks created under the Sound Choice brand. (Docket Entry No. 26). Some defendants have moved to dismiss. (Docket Entries No. 10, 28). Based on the briefs, the complaint, and the applicable law, the motions to dismiss are granted in part and denied in part.

Phoenix alleges that the defendants infringe its goods marks when they illicitly download and play Sound Choice-branded karaoke tracks. That is trademark lipstick on a copyright pig. Recognizing as much, both the Seventh and Ninth Circuits affirmed dismissals of Slep–Tone or Phoenix suits alleging substantially the same goods-mark infringement theories. Phoenix Entertainment Partners v. Rumsey , 829 F.3d 817 (7th Cir. 2016) ; Slep–Tone Entm't Corp. v. Wired for Sound Karaoke & DJ Servs., LLC , 845 F.3d 1246 (9th Cir. 2017). These well-reasoned opinions are on point and persuasive. The claims based on copying and performing tracks with the Sound Choice goods marks are dismissed with prejudice and without leave to amend, because amendment would be futile.

These cases apply only to the goods marks. The claims based on the Sound Choice service marks and copyrights may proceed.

The reasons for these rulings are explained in detail below.

I. Background

The complaint allegations, taken as true on this motion to dismiss, are as follows. Phoenix Entertainment Partners is the successor in interest to Slep–Tone Entertainment Corporation. Slep–Tone created karaoke tracks under the popular Sound Choice brand. Compl. ¶¶ 30–31. Sound Choice karaoke tracks were sold on special compact discs in a "CD+G" or "MP3+G" format. Id. ¶ 31. The tracks contain both a re-recorded version of a popular song and graphics (the "+G"). Id. The graphics include song lyrics and visual cues for display to the karaoke performer, and an image of the Sound Choice trademark logo.

Sound Choice karaoke tracks are "wildly popular," accounting for more than half of the karaoke tracks played at shows in the United States, including shows at bars like those sued in this case. Their popularity is at least in part due to the high quality of the recordings and the accuracy of the singing cues. Id. ¶ 33–35. Phoenix sells, and its predecessor sold, karaoke tracks exclusively in compact disc format, bearing the Sound Choice name and logo. Tracks from the CDs can be remotely "ripped," or downloaded and saved, into a computer hard drive. Id. ¶ 36–37. The digital compression required to rip the tracks onto a computer hard drive often results in lower-quality audio and graphics. Id. ¶ 38. The ripped tracks still display the Sound Choice trademark when played. Id. ¶ 41. This easy electronic duplication has "resulted in the widespread copying and distribution of Sound Choice-branded karaoke tracks," without payment to or permission from Phoenix. Id. ¶¶ 42–43.

Phoenix alleges that it owns the copyright to, among others, 24 specific audiovisual karaoke tracks—separate from the copyrights for the underlying songs—set out in the complaint, as well as four federally registered Sound Choice trademarks. Id. ¶¶ 46–50; id. at Appendixes A and B. Two of the marks cover goods. These goods marks protect the Sound Choice name and logo as a mark appearing on "[p]re-recorded ... compact discs containing musical compositions and compact discs containing video related to musical compositions." The other two marks cover services. These marks protect the Sound Choice name and logo in connection with "[c]onducting entertainment exhibitions in the nature of karaoke shows." Compl. Appendix B.

Part of Phoenix's business is "licensing ... the Sound Choice Marks for karaoke accompaniment tracks, ... licensing the Sound Choice Marks for karaoke entertainment services provided to patrons of commercial customers, and ... licensing sets of Sound Choice karaoke accompaniment tracks, all to commercial karaoke operators." Id. ¶ 53. Karaoke jockeys must spend "significant sums of money" to receive a license. Id. ¶ 54. As part of the license agreement, karaoke jockeys who use digital copies of Sound Choice tracks must submit to quality audits to ensure that their copied tracks meet Sound Choice's standards. Id. ¶ 55.

Phoenix is also the sole owner of Sound Choice Entertainment, LLC, a Texas company that provides karaoke-entertainment services to venues throughout the United States, including in Texas. Id. ¶ 57. Sound Choice Entertainment directly competes with other karaoke-entertainment service providers in the karaoke jockey market.

The defendants are karaoke jockeys and bars that hire jockeys to provide entertainment for their patrons. Herbert and Jodie Boyte are karaoke jockeys who own and operate Karaoke Houston, a business that provides karaoke entertainment at bars and restaurants around Houston. The Boyte karaoke system uses computer software to access and play karaoke tracks ripped from CDs and copied to a hard drive. A "substantial number" of the tracks that the Boytes or their employees play at the venues where they perform bear the Sound Choice logo and brand. The Boytes's karaoke shows also included renditions of the 24 works for which Phoenix owns the copyright. Id. ¶ 77. The Boytes did not purchase any Sound Choice disks or license. "[M]any, if not most" of the Sound Choice-branded tracks they played were created by downloading the tracks from illicit filesharing sites or other unauthorized copying. Id. ¶¶ 58–64. The Boytes display the Sound Choice marks "dozens of times over the course of a typical four-hour karaoke show." Id. ¶ 71. Phoenix alleges that this "frequent, repeated display" of the Sound Choice trademark is likely to cause karaoke consumers to assume that the Boytes's karaoke operation is affiliated with Phoenix, or that Phoenix sponsors or approves of their services. Id. ¶ 72–76.

Koert William Knights operates "Mr. Karaoke," a business similar to the Boyte business, "Karaoke Houston." Phoenix alleges that Knights, like the Boytes, regularly plays Sound Choice-branded karaoke tracks at his shows, without purchasing or licensing those tracks. Knights is also alleged to have ripped the tracks, without paying or securing permission from Phoenix. Id. ¶¶ 83–89. Phoenix alleges that Knights's shows are likely to confuse customers about the origin of the karaoke tracks and about Knights's relationship with Phoenix. Id. ¶¶ 96–100.

The rest of the defendants are venues that hire either the Boytes or Knights as karaoke jockeys, providing karaoke services to entice patrons to come to the bar and purchase food and, even better, drinks. Id. ¶¶ 103–132. Phoenix notified each bar in a letter dated July 15, 2016 that the karaoke jockeys it hired were playing unlicensed, infringing karaoke tracks at all the bars where they played. Id. ¶ 124.

Phoenix asserts claims against all the defendants under 15 U.S.C. § 1114(1) for infringing its registered trademarks, and under 15 U.S.C. § 1125(a) for unfair competition. Phoenix also asserts a copyright-infringement claim against the Boytes under 17 U.S.C. § 501.

II. The Applicable Legal Standards

A. Rule 12(b)(6)

Rule 12(b)(6) allows dismissal if a plaintiff fails "to state a claim upon which relief can be granted." In Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Supreme Court confirmed that Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires "a short and plain statement of the claim showing that the pleader is entitled to relief," FED. R. CIV. P. 8(a)(2). To withstand a Rule 12(b)(6) motion, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955 ; see also Elsensohn v. St. Tammany Parish Sheriff's Office , 530 F.3d 368, 372 (5th Cir. 2008). In Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme Court elaborated on the pleading standards discussed in Twombly . The Court explained that "the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Iqbal explained that "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the...