Phx. Entm't Partners, LLC v. Orlando Beer Garden, Inc.

• Decision Date: 16 September 2016
• Docket Number: Case No: 6:16-cv-80-Orl-31DAB
• Parties: PHOENIX ENTERTAINMENT PARTNERS, LLC, Plaintiff, v. ORLANDO BEER GARDEN, INC., Defendant.
• Court: U.S. District Court — Middle District of Florida

PHOENIX ENTERTAINMENT PARTNERS, LLC, Plaintiff, v. ORLANDO BEER GARDEN, INC., Defendant.

Case No: 6:16-cv-80-Orl-31DAB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

September 16, 2016

REPORT AND RECOMMENDATION

TO THE UNITED STATES DISTRICT COURT:

This cause came on for consideration with evidentiary hearing on the following motion filed herein:

MOTION: Motion for Default Judgment (Doc. No. 24)

FILED: June 2, 2016

THEREON it is RECOMMENDED that the motion be DENIED.

I. Background

The case presents with pertinent history. On January 19, 2016, Plaintiff filed a Complaint against Defendant Orlando Beer Garden, Inc. ("Beer Garden") and Diane M. Calo ("Calo"), alleging trademark infringement, common law unfair competition, and violations of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla.Stat. §501.211 (Doc. 1). The Complaint alleged that Plaintiff is the owner of certain trademarks and purported to plead injury predicated solely on alleged activities of Calo. The Complaint alleged, in pertinent part:

54. Calo provides karaoke services to various venues in Florida, including St. Matthews Tavern at Orlando Beer Garden in Orlando, Florida, operated by Defendant Orlando Beer Garden.

55. On information and belief, in order to provide services, rather than using original karaoke discs that she possesses (if she indeed possesses such discs), Calo relies upon one or more computer hard drives that stores files representing karaoke accompaniment tracks.

56. On information and believe [sic], Calo relies upon at least one such computer hard drive described in paragraph 55 herein.

57. On information and belief, Calo created, or directed another to create, or otherwise acquired from a third party the files that are stored on Calo's computer hard drive(s).

58. Calo did not pay any royalties or fees to PEP for the privilege of displaying the Sound Choice Marks during karaoke shows.

59. On information and belief, Calo does not maintain a 1:1 correspondence relationship between her hard drives and original discs she has lawfully acquired, if she indeed has any original discs.

60. PEP did not authorize, cause, control, or know about the creation of the files stored on the Calo's computer hard drives at the time those files were so stored.

61. Rather, on information and belief, the files were created by or at the behest of Calo, or by a third party unknown to PEP. The party who created the files is the "origin" of the files for purposes of the Trademark Act.

62. On information and belief, many of the files stored on Calo's computer hard drive are representative of karaoke tracks originally created by PEP and its predecessor and are marked with the Sound Choice Marks.

63. When played as intended using appropriate software, those files cause the Sound Choice Marks and the Trade Dress to be displayed as part of the associated video component of the karaoke tracks they represent.

64. PEP did not authorize Calo to create or use karaoke accompaniment tracks or computer files representative of karaoke accompaniment tracks that bear the Sound Choice Marks or the Trade Dress.

65. As such, the placement of the Sound Choice Marks and the Trade Dress upon Calo's self-created computer files is a false designation of the origin of those computer files.

66. At all times relevant to the causes of action stated herein, Calo has known that the creation and use of karaoke accompaniment tracks or computer files representative of karaoke accompaniment tracks that bear the Sound Choice Marks and/or the Trade Dress is not authorized.

67. Cato's files, which function as karaoke accompaniment tracks, are also counterfeits of genuine Sound Choice-branded tracks.

68. A patron or unwitting customer of the Orlando Beer Garden, when confronted with the display of the Sound Choice Marks and the Trade Dress at one of Calo's shows, is likely to be confused into believing, falsely, that PEP created the tracks in use or authorized their creation.

69. On information and belief, Calo's activities are not isolated or sporadic occurrences, but are instead activities which have been undertaken regularly for several years.

70. Calo's use of the computer files representative of karaoke accompaniment tracks is commercial in nature because she is paid to provide access to and play those computer files and tracks at karaoke shows.

71. Additionally, even if a particular counterfeit track is not played at a given show, the act of making that track available for play at a show are commercialacts for which Calo is compensated and which inure to her benefit.

72. On information and belief, Calo's piracy of accompaniment tracks is not limited to PEP's tracks, but extends to the piracy of numerous other manufacturers' tracks as well, on the same terms as above.

73. PEP's marks were displayed on video monitors during various songs played by Calo.

74. Calo's uses of PEP's marks were not authorized.

(Doc. 1, ¶¶ 54-74, emphasis added).

The actions of Orlando Beer Garden were alleged to be as follows:

75. Orlando Beer Garden hired Calo to provide commercial karaoke services at its bar.

76. Orlando Beer Garden has the right and ability to control whether its contractors use authentic or counterfeit materials to provide services.

77. PEP informed Orlando Beer Garden of the infringing and counterfeit character of Orlando Beer Garden's contractor's karaoke accompaniment tracks.

78. PEP offered Orlando Beer Garden the opportunity to enter into its Verified Compliance Safe Harbor Program, which is a free program that protected venues from liability for the acts of its contractors in exchange for requiring its contractors to provide information about their karaoke systems to enable PEP to assess whether those contracts are operating legally.

79. PEP also provides a certification program to karaoke operators as a means by which venues can determine, without significant injury, whether the karaoke operator they wish to hire is using authentic materials.

80. As a result of PEP's efforts, Orlando Beer Garden has actual knowledge of the infringing and counterfeit nature of Calo's karaoke materials.

81. Despite that knowledge, Orlando Beer Garden refused to terminate Calo's services.

82. Despite that knowledge, Orlando Beer Garden continued to receive financial benefit from the provision of infringing karaoke services at its establishment by Calo, through the attraction of paying patrols [sic] to its establishment.

83. As such, Orlando Beer Garden operated in actual or apparent partnership with Calo, in a symbiotic relationship from which both benefit.

84. Orland [sic] Beer Garden has also advertised its karaoke services, which services include the unlawful use of the Sound Choice Marks.

85. Orlando Beer Garden is liable for the acts of trademark infringement directly engaged in by Calo on its respective premises or for its benefit.

(Doc. 1, ¶¶ 75-85).

Plaintiff alleged that "Calo's illicit activities" have damaged it "in an amount of at least $100,000.00" (Doc. 1, ¶¶ 86-92) and "[o]n information and belief," the acts of Calo and Orlando Beer Garden were "willful, knowing, and intentional" (¶¶ 98, 135-emphasis added).

Following service, neither Defendant filed an Answer or otherwise appeared. On Plaintiff's motion, the Clerk entered a default against Beer Garden on February 19, 2016 (Docs. 11, 12). OnMarch 8, 2016, Plaintiff moved for entry of default judgment of damages and entry of a permanent injunction against Beer Garden (Doc. 13). On March 9, 2016, Plaintiff filed a Notice of Voluntary Dismissal with prejudice, as to Calo (Doc. 14). The District Judge ordered Plaintiff's claims against Calo dismissed with prejudice, each party to bear its own fees and costs (Doc. 15).

On March 30, 2016, the undersigned issued a Report and Recommendation that the motion for entry of default judgment against Beer Garden be denied, without prejudice (Doc. 16). As detailed in the Report, there was no basis for a finding of direct infringement by Beer Garden and the showing of vicarious liability, based largely on unsupported allegations of unspecified "information and belief," was insufficient as a matter of law. Id. The undersigned further found some of the assertions made by Plaintiff to be contradicted by the exhibits tendered in support of the motion. Id. It was therefore recommended that the motion be denied, "without prejudice to prompt renewal, upon a full and appropriate evidentiary showing supporting the conclusions made and relief sought." Id. No objections were filed and the District Judge adopted the Report (Doc. 18).

On April 13, 2016, Plaintiff filed an Amended Complaint solely against Beer Garden (Doc. 17). In this pleading, Plaintiff reiterates that it is the owner of certain marks, and re-asserts its allegations, without the "upon information and belief" preface. Plaintiff alleges, in pertinent part:

55. Diane M. Calo ("Calo") provided karaoke services to various venues in Florida, including St. Matthews Tavern at Orlando Beer Garden in Orlando, Florida, operated by Defendant Orlando Beer Garden.

56. At the times complained of herein, Calo relied upon one or more computer hard drives that stored files representing Sound Choice-branded karaoke accompaniment tracks.

57. At the times complained of herein, Calo did not own original Sound Choice discs corresponding to the Sound Choice-branded karaoke accompaniment tracks stored on her hard drive or drives and did not have permission from PEP to make, possess, or make commercial use of the Sound Choice-branded karaoke accompaniment tracks.

58. At the times complained of herein, Calo played unauthorized karaoke tracks at Orlando Beer Garden.

59. At the times complained of herein, Calo was engaged in a scheme of infringement of the Sound Choice Marks and the Trade Dress.

60. At all times at which Calo provided services in Orlando Beer Garden, Defendant had the ability to control Calo's karaoke activities.

61. When Calo provided karaoke services in

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