Court Opinion

ID: 4116529
Source: CourtListenerOpinion
Date Created: 2017-01-18 18:01:15.39369+00
Date Added: 2024-06-11T07:46:16.819379
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 SLEP-TONE ENTERTAINMENT                         No. 14-17229
 CORPORATION; PHOENIX
 ENTERTAINMENT PARTNERS,                         D.C. No.
 LLC,                                      2:12-cv-02631-NVW
          Plaintiffs-Appellants,

                   v.                             OPINION

 WIRED FOR SOUND KARAOKE
 AND DJ SERVICES, LLC;
 ERNEST Z. MCCULLAR,
          Defendants-Appellees.

        Appeal from the United States District Court
                 for the District of Arizona
          Neil V. Wake, District Judge, Presiding

          Argued and Submitted December 12, 2016
                  San Francisco, California

                        Filed January 18, 2017

 Before: Susan P. Graber and Andrew D. Hurwitz, Circuit
    Judges, and Richard F. Boulware,* District Judge.

                         Per Curiam Opinion

     *
       The Honorable Richard F. Boulware, United States District Judge
for the District of Nevada, sitting by designation.
2          SLEP-TONE ENTM’T V. WIRED FOR SOUND

                            SUMMARY**

                             Lanham Act

    The panel affirmed the district court’s dismissal of claims
for trademark infringement and unfair competition brought
under the Lanham Act by a producer of karaoke music tracks.

    The plaintiff alleged that the defendants performed
karaoke shows using unauthorized “media-shifted” files
that had been copied onto computer hard drives from the
compact discs released by the plaintiff. Agreeing with the
Seventh Circuit, the panel held that the plaintiff did not state
a claim under the Lanham Act because there was no
likelihood of consumer confusion about the origin of a good
properly cognizable in a claim of trademark infringement.

    In a concurrently filed memorandum disposition, the
panel reversed the district court’s summary judgment on a
claim for breach of a settlement agreement. Judge Hurwitz
concurred in part and dissented in part from the memorandum
disposition.

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          SLEP-TONE ENTM’T V. WIRED FOR SOUND                         3

                            COUNSEL

James M. Harrington (argued), Harrington Law P.C.,
Pineville, North Carolina, for Plaintiff-Appellant.

Lorraine Morey (argued), Morey Law PLLC, Phoenix,
Arizona, for Defendants-Appellees.

                             OPINION

PER CURIAM:

    Karaoke is a “form of entertainment, originating in Japan,
in which a person sings the vocal line of a popular song to
the accompaniment of a pre-recorded backing tape, and the
voice is electronically amplified through the loudspeaker
system for the audience.” OED Online (Dec. 2016),
http://www.oed.com/view/Entry/243613. Plaintiff Slep-Tone
Entertainment Corporation1 produces karaoke music tracks.
The tracks are marketed under the trademark “Sound
Choice.” Plaintiff releases them on compact discs encoded in
a format known as “CD-G,” which accompanies karaoke
music with graphics, lyrics, and singing cues when played on
compatible equipment.

    Computer users are capable of copying the content of
these CD-Gs onto computer hard drives as digital files;
Plaintiff refers to this process as “media-shifting,” but it is
also popularly known as “ripping.” Plaintiff acknowledges

    1
       On appeal, the court has added Phoenix Entertainment Partners,
LLC, Slep-Tone’s successor-in-interest, as an additional party. We refer
to these entities collectively as "Plaintiff."
4        SLEP-TONE ENTM’T V. WIRED FOR SOUND

the convenience of digital files for karaoke operators (who
need not use numerous CD-Gs during a performance), but
also reports that this widespread practice, when combined
with unauthorized file-sharing, “nearly drove [the company]
out of business.” In the past, Plaintiff “opposed all
commercial media-shifting.” Today, it allows the practice
within the confines of a four-point “media-shifting policy”
requiring that users make only one digital copy per source
CD-G; that the physical media used to create the digital files
are kept “on the shelf” unused; that users notify Plaintiff if
they intend to create media-shifted copies; and that users
submit to auditing for compliance with these conditions.

    Defendants Ernest Z. McCullar and his business, Wired
for Sound Karaoke and DJ Services, LLC, operate a karaoke
business in the Phoenix area. As alleged in the complaint,
Defendants use Plaintiff’s Sound Choice tracks. In 2009,
Plaintiff learned that Defendants were using unauthorized
media-shifted files instead of Plaintiff’s original CD-Gs.
Plaintiff filed a federal action against Defendants, alleging
trademark infringement. See Slep-Tone Entm’t Corp. v.
Gorrel, No. 2:09-cv-01462-HRH (D. Ariz. July 14, 2009).
The parties entered a settlement agreement in 2010.

    In the present action, Plaintiff once again claims that
Defendants are performing karaoke shows using unauthorized
media-shifted files. Plaintiff alleges, among other things,
trademark infringement under the Lanham Act. The district
court granted Defendants’ motion to dismiss as to the claims
for trademark infringement and unfair competition, holding
          SLEP-TONE ENTM’T V. WIRED FOR SOUND                        5

that “[t]his attempt to stuff copyright claims into a trademark
container fails.” Plaintiff timely appeals.2

    We “review de novo the grant of a motion to dismiss.”
Schueneman v. Arena Pharm., Inc., 840 F.3d 698, 704 n.5
(9th Cir. 2016). We agree with the district court that Plaintiff
has not stated a claim under the Lanham Act, and we
therefore affirm that holding.

    Plaintiff argues that, by “media-shifting” Plaintiff’s tracks
from physical CD-Gs to digital files and performing them
without authorization, Defendants have committed trademark
infringement and unfair competition under the Lanham Act,
15 U.S.C. §§ 1114, 1125. The Act creates a federal civil
cause of action for unauthorized use of a registered
trademark. The Lanham Act’s provision concerning ordinary
trademark infringement, known as section 32, defines
infringement in relevant part as follows:

               Any person who shall, without the
        consent of the registrant—

            (a) use in commerce any reproduction,
        counterfeit, copy, or colorable imitation of a
        registered mark in connection with the sale,
        offering for sale, distribution, or advertising
        of any goods or services on or in connection
        with which such use is likely to cause

    2
      The district court also granted summary judgment to Defendants on
a claim for breach of the settlement agreement. In a concurrently filed
memorandum disposition, we reverse that decision and remand for further
proceedings.
6       SLEP-TONE ENTM’T V. WIRED FOR SOUND

       confusion, or to cause mistake, or to deceive;
       or

           (b) reproduce, counterfeit, copy, or
       colorably imitate a registered mark and apply
       such reproduction, counterfeit, copy, or
       colorable imitation to labels, signs, prints,
       packages, wrappers, receptacles or
       advertisements intended to be used in
       commerce upon or in connection with the
       sale, offering for sale, distribution, or
       advertising of goods or services on or in
       connection with which such use is likely to
       cause confusion, or to cause mistake, or to
       deceive,

       shall be liable in a civil action by the
       registrant for the remedies hereinafter
       provided.

15 U.S.C. § 1114(1). The Lanham Act’s provision on unfair
competition, section 43, provides:

           Any person who, on or in connection with
       any goods or services, or any container for
       goods, uses in commerce any word, term,
       name, symbol, or device, or any combination
       thereof, or any false designation of origin,
       false or misleading description of fact, or false
       or misleading representation of fact, which—

           (A) is likely to cause confusion, or to
       cause mistake, or to deceive as to the
       affiliation, connection, or association of such
         SLEP-TONE ENTM’T V. WIRED FOR SOUND                 7

       person with another person, or as to the origin,
       sponsorship, or approval of his or her goods,
       services, or commercial activities by another
       person, or

           (B) in commercial advertising or
       promotion, misrepresents the nature,
       characteristics, qualities, or geographic origin
       of his or her or another person’s goods,
       services, or commercial activities,

       shall be liable in a civil action by any person
       who believes that he or she is or is likely to be
       damaged by such act.

15 U.S.C. § 1125(a)(1). Both legal theories share a common
inquiry: “[w]hether we call the violation infringement, unfair
competition or false designation of origin, the test is
identical—is there a ‘likelihood of confusion?’” New W.
Corp. v. NYM Co. of Cal., 595 F.2d 1194, 1201 (9th Cir.
1979). Here, we conclude that there is not.

    Plaintiff’s theory is that, because the media-shifted files
display Plaintiff’s trademarks and trade dress when
performed, consumers will be confused about their
origin—believing that the tracks originated with Plaintiff,
rather than with Defendants. But this theory does not involve
consumer confusion about the source of an appropriate
“good,” as that concept has been defined by the Supreme
Court. Instead, it alleges possible confusion over the source
of content. Analyzing the Lanham Act’s unfair competition
provision, 15 U.S.C. § 1125, the Supreme Court has held that
the statutory phrase “origin of goods” must “refer[] to the
producer of the tangible goods that are offered for sale, and
8        SLEP-TONE ENTM’T V. WIRED FOR SOUND

not to the author of any idea, concept, or communication
embodied in those goods.” Dastar Corp. v. Twentieth
Century Fox Film Corp., 539 U.S. 23, 37 (2003). The
concept of origin is “incapable of connoting the person or
entity that originated the ideas or communications that
‘goods’ embody or contain.” Id. at 31–32. And, although the
Supreme Court was interpreting the “unfair competition”
provision in section 43 of the Lanham Act, “‘the same
standard’ applies to both registered and unregistered
trademarks.” See, e.g., GoTo.com, Inc. v. Walt Disney Co.,
202 F.3d 1199, 1204 n.3 (9th Cir. 2000) (explaining that
section 32 “covers only registered marks,” whereas section 43
“protects against infringement of unregistered marks and
trade dress as well as registered marks”).

    Perhaps in view of this limitation, Plaintiff frames the
dispute as concerning a new tangible good bearing its
trademark, describing the new digital files that Defendants
allegedly created from Plaintiff’s CD-Gs as the goods about
which consumers may be confused.               But, although
Defendants may, in some sense, have created a new good by
copying Plaintiff’s CD-Gs to hard drives, it is still not a
relevant good under the Lanham Act. We agree with the
Seventh Circuit, which held, in addressing a similar claim by
this very Plaintiff against another karaoke operator, that “the
‘good’ whose ‘origin’ is material for purposes of a trademark
infringement claim is the ‘tangible product sold in the
marketplace’ rather than the creative content of that product.”
Phx. Entm’t Partners v. Rumsey, 829 F.3d 817, 828 (7th Cir.
2016) (quoting Dastar, 539 U.S. at 31). Karaoke patrons who
see Defendants’ performances of Plaintiff’s karaoke tracks
will not be confused about “the source of the tangible good
sold in the marketplace.” Id. at 829. Consumers are not
         SLEP-TONE ENTM’T V. WIRED FOR SOUND                 9

aware of the new, media-shifted digital files about which
Plaintiff asserts confusion.

    When the claim is more accurately conceived of as
attacking unauthorized copying, Dastar requires us to avoid
recognizing a “species of mutant copyright law” by making
such claims cognizable under the Lanham Act. 539 U.S. at
34. Thus, the Seventh Circuit held that “the good that Slep-
Tone alleges the defendants are improperly passing off as a
Slep-Tone product is the unauthorized digital copy of the . . .
track.” Rumsey, 829 F.3d at 828. But “[i]t [was] not alleged,
nor [did] the briefing suggest, that the patrons see the
physical good in question—the digital file that presumably
resides on the hard drive of the bar’s karaoke system.” Id. If
there is any confusion, it does not concern the source of the
goods, as the Lanham Act requires. Consumers never see the
digital files and Defendants neither sell them nor make
representations about their source medium. Accordingly,
Defendants do not use the Sound Choice marks “in
connection with the sale, offering for sale, distribution, or
advertising” of the files under 15 U.S.C. § 1114(1)(a) or “in
connection with” the files under § 1125(a)(1). Instead,
Defendants make allegedly unauthorized use of the content of
Plaintiff’s karaoke tracks, which Dastar precludes as a
trademark claim. As the Supreme Court explained, “[t]he
words of the Lanham Act should not be stretched to cover
matters that are typically of no consequence to purchasers.”
Dastar, 539 U.S. at 32–33.
10      SLEP-TONE ENTM’T V. WIRED FOR SOUND

    Plaintiff does not plausibly allege consumer confusion
over the origin of a good properly cognizable in a claim of
trademark infringement. We affirm the district court’s
dismissal of Plaintiff’s trademark claims.

   AFFIRMED in part; REVERSED in part and
REMANDED. The parties shall bear their own costs on
appeal.