Source: https://www.scribd.com/document/144193984/Slep-Tone-Entertainment-Shea-Complaint
Timestamp: 2016-07-28 10:04:41
Document Index: 32543690

Matched Legal Cases: ['§ 32', '§ 1114', '§ 1331', '§ 1338', '§ 1338', '§ 1367', '§ 1391', '§ 1125', '§ 20', '§ 20', '§ 647', '§ 1125', '§ 20']

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UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION SLEP-TONE ENTERTAINMENT CORPORATION Plaintiff, v. SHEA FAMILY CORP., d/b/a HAVANA WEST, JURY TRIAL REQUESTED Defendant. Case No.: 3:13-cv-00862
COMPLAINT TRADEMARK INFRINGEMENT UNFAIR COMPETITION 15 U.S.C. 1125 COMMON LAW PASSING OFF
Slep-Tone Entertainment Corporation (“Slep-Tone”) complains and alleges as follows: INTRODUCTION Prior Case 1. Plaintiff first brought this matter against several defendants in the case of Slep-Tone v.
Denny's #7835, et. al., USDC OR 6:13-cv-00051-TC, filed January, 11, 2013. After an appearance, extensions and delays, defendant Shea Family Corp. d/b/a Havana West
Case 6:13-cv-00862-TC
(“defendant”) through counsel, requested they be severed and claims against them be pursued individually. Plaintiff agreed to defendant’s request to avoid motions practice on this issue. 2. On May 20, 2013, pursuant to a stipulation, an order was entered severing defendant to
permit the parties to proceed in a separate proceeding and maintaining discovery from the original proceeding, the order attached as Exhibit 1. Plaintiff files the instant complaint pursuant to that order. Exhibit 1, Doc. 47, 6:13-cv-00051-TC. Background 3. Slep-Tone is the manufacturer and distributor of karaoke accompaniment tracks sold
under the name “Sound Choice®.” Slep-Tone was founded 27 years ago by Kurt and Derek Slep, two brothers with a vision to nurture the development of karaoke in America as a participatory entertainment phenomenon. During that time, Sound Choice® came to be recognized as one of the leading producers of high-quality karaoke accompaniment tracks. The company invested over $18 million to license, re-record and replicate the authentic sound of popular music across different eras and genres of music. 4. The Slep brothers’ dedication to producing music of the highest quality and the most
authentic character led its music to become the staple of almost every karaoke show in the country. As karaoke grew in popularity, Sound Choice® became the brand that nearly every karaoke fan wanted to sing and that nearly every karaoke jockey (“KJ”) wanted in his or her library. 5. KJs play karaoke songs using compact discs containing files written in one of two special
encoded formats, either “CD+G” (“compact disc plus graphics”) or “MP3G” (“MP3 plus graphics”), in which the disc contains the music and the lyrics, which will display on a screen. A
principal value of a KJ’s service to patrons is the catalog (number and quality of songs) they are able to present or make available to customers. 6. In recent years, computer technology, cheap file memory devices, and the internet have
made it possible for karaoke discs to be decoded and copied or “ripped” to a user’s hard drive and easily copied and distributed between KJs. This technology has proven irresistible to KJs, many of whom have used this opportunity to copy a single purchased disc to several different computer based systems, copy a singer’s personal discs if they use them during a show, “swap” song files among each other, download them from illegal file-sharing sites and build libraries of tens of thousands of karaoke songs without paying for them. Whereas in the past a KJ would buy multiple copies of an original disc if he or she desired to operate multiple systems, now they simply “clone” their songs for multiple commercial systems or even their entire karaoke song libraries to start a new operation. Additionally, many KJs or operators simply buy computer drives pre-loaded with thousands of illegally copied songs. 7. These practices have become so widespread that Slep-Tone has been driven nearly out of
business. At its peak, the Sound Choice® family of companies employed over 75 individuals and produced as many as 5 new karaoke discs per month. 8. Today, the enterprise employs fewer than 7 individuals. Sound Choice Studios, which
was responsible for production of new material, ceased making new recordings in 2009 as every new disc produced was quickly illegally copied and distributed among KJs. The most recent new disc sold only a handful of copies and did not produce enough revenue to even cover the production and licensing costs associated with it – yet the songs from that disc can be found on thousands of commercial karaoke systems around the United States.
For KJs and affiliated establishments, karaoke is a commercial enterprise. Karaoke is
often a central element of a bar or venue to bring in customers and keep customers entertained and purchasing drinks or food for profit. The costs for a venue to host a KJ who legitimately acquired all of their music at great cost is far greater than the costs for a venue to host a KJ that has acquired their library through illegal copying or other unauthorized methods. 10. Illegitimate competitors offer customers libraries of tens of thousands of songs, which
would have cost $50,000 to $100,000 or more to acquire legally, and are able to undercut legitimate KJ services which must purchase legal songs. The result is significant financial pressure on once-legitimate establishments to skirt or ignore the law and become pirates, simply to stay in business and stay competitive. 11. Slep-Tone has been forced to undertake this litigation in order to ensure that it survives
and is able to produce the high-quality karaoke music its fans demand and to level the playing field for the legitimate establishments that wish to offer legal karaoke services. JURISDICTION AND VENUE 12. This is an action for trademark infringement and unfair competition arising under §§ 32
and 43 of the Trademark Act of 1946, 15 U.S.C. §§ 1114 and 1125. 13. This court has exclusive jurisdiction over the subject matter of this action pursuant to 28
U.S.C. § 1331, in that this is a civil action arising under the laws of the United States. 14. This court further has jurisdiction pursuant to 28 U.S.C § 1338(a), in that this civil action
arises under an Act of Congress relating to trademarks, and, as to the plaintiff’s Lanham Act unfair competition claim, pursuant to 28 U.S.C. § 1338(b), in that the claim is joined with a substantial and related claim under the trademark laws of the United States.
This court has supplemental jurisdiction over the subject matter of the plaintiff’s common
law and state law claims pursuant to 28 U.S.C. § 1367(a), in that those claims are so related to the plaintiff’s federal claims that they form part of the same case or controversy. 16. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b), because the
defendant place of business is in Multnomah County, which is in this judicial district. PARTIES 17. Plaintiff Slep-Tone is a North Carolina corporation having its principal place of business
at 14100 South Lakes Drive, Charlotte, North Carolina, doing business nationwide. 18. Defendant Shea Family Corp. an Oregon corporation doing business as Havana West,
formerly located at 1308 SE Morrison, Portland, Oregon and was a restaurant and bar that provides karaoke entertainment. FACTS COMMON TO ALL CLAIMS 19. The term “karaoke” means “empty orchestra” in Japanese. Karaoke entertainment has
arrangements of popular songs for use as “accompaniment tracks.” 21. Typically, the lead vocal tracks in an accompaniment track are omitted so that a karaoke
participant can sing along, as though he or she were the lead singer. In other situations, the lead vocal track by a sound-alike artist might be included, and some formats allow the lead vocal to be selectively muted upon playback so that the accompaniment track may be listened to either with or without the lead vocals.
The “graphics” portion of a karaoke recording refers to the encoding of the recording
with data to provide a contemporaneous video display of the lyrics to the song, in order to aid the performer. 23. This graphics data is also utilized to mark the accompaniment tracks with the Sound
Choice trademarks and to cause the Sound Choice trademarks to be displayed upon playback. 24. This graphics data also causes the plaintiff’s distinctive trade dress comprising the non-
known as karaoke jockeys (“KJs”), karaoke hosts, or karaoke operators. 28. Karaoke entertainment services typically include providing a KJ for entertaining the
software such as the plaintiff’s product and equipment for storing the software and playback.
Typically a karaoke entertainment service will maintain a printed catalog of songs
available for performance in order to aid participants in selecting a song to sing. 32. Legitimate karaoke entertainment services purchase equipment and purchase or license
to computer hard drives or other media, an activity known as “media-shifting.” In many cases, media-shifting also involves converting the compact disc files to a different format, such as from CD+G format to MP3G format or WAV+G format; this is referred to as “format-shifting.” Both media-shifting and format-shifting involve the creation of duplicates of the original materials stored on the compact discs. 34. Whether the bar or other venue directly provides the karaoke service or allows a third
party to provide the service, the net benefit to the bar or venue is the same, namely they profit by having the entertainment provided to their customers, attracting more customers who stay longer and increasing sales. 35. Upon information and belief, and based upon investigation of their activities within a
year of filing the initial complaint, the defendant is in possession of or regularly utilized unauthorized media-shifted and format-shifted duplicates of karaoke accompaniment tracks which have been falsely marked with Slep-Tone’s federally registered trademarks, or which carry Slep-Tone’s distinctive trade dress, or both. 36. Slep-Tone authorizes media-shifting and format-shifting with respect to those elements
which it does own or control, and otherwise tolerates media-shifting and format-shifting
(together, a status Slep-Tone refers to as “tolerance of media-shifting in a one-to-one correspondence”), only under very specific conditions. 37. Slep-Tone’s conditions for tolerance of media-shifting (and format shifting) include: a. that each media-shifted or format shifted track must have originated from an original, authentic compact disc; b. that the tracks from the original, authentic compact disc be shifted to one, and only one alternative medium at a time; c. that the karaoke entertainment service provider maintain ownership and possession of the original, authentic compact disc for the entire time that the media-shifted or format-shifted tracks are in existence; d. that the original, authentic compact disc not be used for any commercial purpose while its content has been shifted; and e. that the karaoke entertainment service provider notify Slep-Tone that he or she intends to conduct or has conducted a media-shift or format-shift, and submits to a verification of adherence to Slep-Tone’s policy. 38. Media-shifting or format-shifting that occurs outside the conditions of tolerance
described above is entirely without authorization or tolerance. Specifically, if the karaoke entertainment service does not maintain the strict 1:1 correspondence of all media-shifted songs matching to an original Slep-Tone disc in their possession at all times, then the authorization to shift any of the other tracks, even if there are some media shifted tracks and original discs that are in 1:1 correspondence, is denied. 39. Defendant has used or benefited from media-shifted and/or format-shifted karaoke
accompaniment tracks marked with the plaintiff’s registered trademarks and/or distinctive trade
dress for commercial purposes – to wit, to provide karaoke entertainment services to or for the benefit of their customers. 40. Defendant’s media-shifting activities have been undertaken outside the conditions of
above and that has been marked with Slep-Tone’s federally registered trademarks or distinctive trade dress is a counterfeit. 42. Neither Slep-Tone nor any of its associated companies has ever authorized the
digitization of its songs for commercial use in producing karaoke shows by or on behalf of defendant. 43. Slep-Tone and its affiliated companies have spent millions of dollars building and
by the payment of any royalty to Slep-Tone, nor authorized by any license agreement. 46. Those persons, including defendant, who use, profit from, illegitimately obtain, copy,
share, distribute, and/or sell media-shifted copies of the plaintiff’s accompaniment tracks do not pay royalties to the owners of copyright in the underlying musical works.
The widespread creation and use of counterfeit copies of Slep-Tone’s karaoke discs and
software has denied Slep-Tone the benefit of its investments. 48. These counterfeits include Slep-Tone’s registered trademarks, such that to the consumers
Slep-Tone’s accompaniment tracks, an irreducible overhead cost that must be recovered over a significant number of engagements. 53. Illegitimate karaoke entertainment service providers who acquire the songs in their
libraries illegally, have an unfair advantage over legitimate karaoke entertainment service providers because the illegitimate karaoke entertainment service providers are able to provide karaoke services with a considerably lower overhead cost and significantly more songs through the pirating of Slep-Tone’s tracks.
Piracy therefore unfairly increases the profits of illegitimate karaoke entertainment
service providers and unfairly decreases the profits of legitimate karaoke entertainment service providers, a condition that pressures legitimate karaoke entertainment service providers to either commit piracy instead of doing business with Slep-Tone and other karaoke music producers or lose their shows or their patrons to illegitimate karaoke entertainment service providers offering more songs at cheaper prices to the same venues. 55. Because of piracy, it is nearly impossible for legitimate karaoke entertainment service
counterfeit duplicates of the plaintiff’s tracks, the pirate KJs often continue to engage in unfair competition using pirated materials belonging to other manufacturers. 57. This unfair competition harms the plaintiff, despite the elimination of counterfeit
duplicates of the plaintiff’s tracks, because the continuing piracy of other manufacturers’ tracks exerts continuing pressure upon the plaintiff’s customers and potential customers to commit piracy of the plaintiff’s tracks. THE RIGHTS OF THE PLAINTIFF 58. Plaintiff Slep-Tone is the owner of U.S. Trademark Registration No. 1,923,448 and No.
Plaintiff Slep-Tone has, for the entire time its marks (“the Sound Choice marks”) have
been federally registered, provided the public, including the defendant, with notice of its federal registrations through the consistent display of the symbol ® with its marks as used. 61. Slep-Tone is the owner of distinctive and protectable trade dress associated with its
graphical displays (“the trade dress”). This distinctive and protectable trade dress includes, at a minimum: a. the use of a particular typeface, style, and visual arrangement in displaying the lyrics; b. the use of particular colors to display lyrics, namely white lyrics changing to violet lyrics, set against a black background; and c. the use of a particular style in displaying entry cues for singers, namely a series of vanishing rectangles to indicate the cue. 62. The trade dress has been in use continuously and substantially exclusively by Slep-Tone
meaning as an indicator of Slep-Tone as a source, effectively functioning as a visual trademark. 64. The trade dress serves to distinguish Slep-Tone’s tracks from the tracks of its
competitors, such that persons who are even minimally frequent consumers of karaoke entertainment services such as those provided by defendant are capable of identifying a particular karaoke track as originating with Slep-Tone simply by examining the trade dress, whether or not the Sound Choice marks are also displayed. 65. The elements of the trade dress represent specific design choices by Slep-Tone; they are
but one of many ways to convey the information necessary to permit a karaoke singer to be cued or appropriately supported in his or her performance.
Slep-Tone’s many competitors are not required to use any element of the trade dress to
accomplish the cueing function, and indeed all of Slep-Tone’s known competitors are known to use other trade dress in accomplishing the cueing function. ACTIVITIES OF DEFENDANT 67. Defendant has possessed, used, or authorized or benefited from the use and display of
unauthorized and counterfeit goods bearing the Sound Choice marks, the trade dress, or both, without authorization, tolerance from, or notice to the plaintiff, or has provided, advertised, or authorized or benefited from the provision of services in connection with the Sound Choice marks, the trade dress, or both. 68. Defendant or its providers of karaoke entertainment services have provided services in
connection with the Sound Choice marks, the trade dress, or both, without authorization or tolerance from, or notice to the plaintiff, and has advertised the provision of or availability to provide karaoke services in connection with the Sound Choice marks, the trade dress, or both. 69. The activities of defendant were not isolated or sporadic occurrences, but were instead
regular activities undertaken over a long period of time. 70. Defendant or its providers of karaoke entertainment services acts of infringement are of a
commercial nature, in that they engaged in the acts with the transfer of money or other things of value from one party to another as the principal motivation for providing the services. 71. Defendant or its providers of karaoke entertainment services employ a library of karaoke
music that contains unauthorized counterfeit goods bearing the Sound Choice marks, trade dress, or both, and specifically includes media-shifted karaoke tracks.
Neither defendant nor its providers of karaoke entertainment services have obtained the
permission of Slep-Tone to conduct media-shifting of Slep-Tone’s music from original discs to an alternative medium, such as a computer hard drive. 73. Neither defendant nor its providers of karaoke entertainment services have notified Slep-
Tone of their intent to conduct media-shifting of Slep-Tone’s music for commercial purposes. 74. Neither defendant nor its providers of karaoke entertainment services have submitted to
and passed an audit of their karaoke systems for the purposes of verifying their compliance with Slep-Tone’s media-shifting policy. 75. On information and belief, the piracy of accompaniment tracks by defendant or its
providers of karaoke entertainment services is not limited to Slep-Tone’s tracks. 76. Defendant or its providers of karaoke entertainment services knew, or should have known
under the circumstances, that they were obtaining and using counterfeit karaoke tracks. 77. Upon information and belief, defendant through an employee or contractor, operated a
karaoke system to produce karaoke shows at its Portland, Oregon location in which counterfeit goods bearing the Sound Choice marks are being used. 78. Defendant was observed on at least one occasion within a year of initially bringing this
action of repeatedly displaying the Sound Choice marks without right or license. DAMAGES 79. The defendant’s conduct and unauthorized use of the Sound Choice marks has damaged
the plaintiff. 80. Defendant has damaged the plaintiff in an amount of at least $10,000 for each karaoke
FIRST CLAIM TRADEMARK INFRINGEMENT 81. 82. Plaintiff re-alleges paragraphs 1 through 80. Defendant used, or authorized or directly benefited from the use of a reproduction,
counterfeit, or copy of the Sound Choice marks in connection with the provision of services including karaoke entertainment services, by manufacturing or acquiring the reproduction, counterfeit, or copy of the Sound Choice marks and by using and displaying the reproduction, counterfeit, or copy of the Sound Choice marks during the provision of those services. 83. Defendant’s use of the Sound Choice marks was “in commerce” within the meaning of
the Trademark Act of 1946 as amended. 84. Plaintiff did not license defendant to manufacture or acquire reproductions, counterfeits,
or copies, or to use the Sound Choice marks in connection with the provision of karaoke entertainment services. 85. Defendant’s use of the Sound Choice marks was likely to cause confusion, or to cause
mistake, or to deceive customers and patrons into believing that the defendant’s services were being provided with the authorization of the plaintiff and that the defendant’s music libraries contain bona fides legal and licensed Sound Choice accompaniment tracks. 86. 87. The acts of defendant were willful. Unless enjoined by the court, the defendant’s infringing activities as described above may
continue unabated and would continue to cause harm to the plaintiff. /// ///
SECOND CLAIM UNFAIR COMPETITION – 15 U.S.C. § 1125(A) 88. 89. Plaintiff re-alleges paragraphs 1 through 80. On multiple occasions when defendant caused a Slep-Tone accompaniment track to be
played during a karaoke show, defendant displayed the Sound Choice marks in connection with the defendant’s karaoke entertainment services. 90. The display of the Sound Choice marks is likely to cause confusion, or to cause mistake,
or to deceive those present during the display, in that those present are likely to be deceived into believing, falsely, that Slep-Tone sponsored or approved the defendant’s services and commercial activities. 91. The display of the Sound Choice marks is also likely to cause confusion, or to cause
mistake, or to deceive those present during the display, in that those present are likely to be deceived into believing, falsely, that the works being performed were sold by Slep-Tone and legally purchased by defendant. 92. Defendant’s use of the Sound Choice marks in this fashion would have inured to the
benefit of the plaintiff if the defendant had legitimately acquired genuine Sound Choice discs instead of counterfeiting them or acquiring counterfeit copies, in that the plaintiff would have received revenue from such sales. 93. Defendant’s use of counterfeit Sound Choice marks has further impaired the ability of
legitimate providers of karaoke entertainment services from providing and producing shows and impaired legitimate customers of plaintiff from being able to compete, profit and purchase plaintiff’s products.
Because Slep-Tone has been denied this revenue, it has been damaged by the defendant’s
illegal activity. 95. Unless enjoined by the court, the defendant’s unfair competitive activities as described
above may continue unabated and will continue to cause harm to the plaintiff. THIRD CLAIM COMMON LAW PASSING OFF 96. 97. Plaintiff re-alleges paragraphs 1 through 80 above. Plaintiff is the owner of notable goodwill associated with its karaoke products identified
by specific insignia and marks. 98. Defendant’s use and display karaoke products which include the insignia and marks
specifically identifying them as sourced from plaintiff when they are not in fact legitimately sourced from plaintiff. 99. Defendant economically profited from the illegitimate and illegal use and display of
karaoke products which include the insignia and marks specifically identifying them as sourced from plaintiff. 100. Plaintiff and plaintiff’s goodwill suffered damage due to defendant’s illegitimate and
illegal use and display of karaoke products which include the insignia and marks specifically identifying them as sourced from plaintiff. FOURTH CLAIM FOR RELIEF ORS §§ 20.080 AND 20.082 101. 102. Plaintiff re-alleges paragraphs 1 through 100 above. More than thirty (30) days prior to filing the present complaint, plaintiff made a demand
on defendant for monetary damages of $10,000.00.
Defendant has failed or refused to pay plaintiff’s demand. Pursuant to ORS §§ 20.080 and 20.082, plaintiff shall be awarded all costs and fees in
this matter. NOTICE OF FURTHER CLAIMS 105. While the relief prayed for by plaintiff is specific, plaintiff hereby provides notice of the
potential damages available under various State and Federal Laws, such as 15 U.S.C. 1117 and 1118, which include: a. Defendant’s profits; b. Plaintiff’s full damages; c. Statutory damages of not less than $1,000.00 per counterfeit mark and damages of up to $2,000,000.00 per counterfeit mark should there be a finding of willful conduct; d. Treble damages; e. Punitive damages; f. All costs of this action; g. Pre-judgment interest; h. Attorney fees; and i. Broad equitable relief, including the destruction of all infringing articles; 106. Plaintiff provides further notice that plaintiff’s trademark SOUND CHOICE has been
registered with the State of Oregon, Reg. No. 42,675, and plaintiff has rights and recoveries available to it pursuant to ORS §§ 647.005, et seq. 107. Plaintiff gives notice it may move to elect the full scope of relief available against
PRAYER FOR RELIEF Wherefore, plaintiff Slep-Tone prays for a judgment against defendant that the court: A. Find defendant has committed acts of infringement, including, but not limited to counterfeiting of the federally registered Sound Choice marks; B. Find defendant has engaged in unfair competition against plaintiff Slep-Tone in violation of 15 U.S.C. § 1125(a); C. Find defendant has committed the common law tort of passing off. D. Find defendant’s activities were in all respects conducted willfully and for profit; E. Enter a judgment against defendant and in favor of plaintiff Slep-Tone in the amount of $10,000.00; F. Award plaintiff Slep-Tone its costs of suit and attorney fees pursuant to ORS §§ 20.080 and 20.082, and other relevant statutes; and G. Grant plaintiff Slep-Tone such further relief as justice may require.
DEMAND FOR JURY TRIAL Pursuant to Rule 38 of the Federal Rules of Civil Procedure and LR 38-1, plaintiff SlepTone hereby demands a trial by jury. DATED: May 22, 2013. Respectfully submitted, /s/Carl D. Crowell Carl D. Crowell, OSB No. 982049 email: crowell@kite.com Crowell Law P.O. Box 923 Salem, OR 97308 (503) 581-1240 Of attorneys for the plaintiff
Slep-Tone Entertainment Shea Complaint by Kenan Farrell1.4K viewsEmbedDownloadDescriptionSlep-Tone Entertainment Shea ComplaintSlep-Tone Entertainment Shea ComplaintCategories: Types, Business/LawRead on Scribd mobile: iPhone, iPad and Android.Copyright: Attribution Non-Commercial (BY-NC)Download as PDF, TXT or read online from ScribdFlag for inappropriate contentShow moreShow less
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