The Northern District of Illinois recently held that the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), did not protect a karaoke bar from claims of trademark infringement and unfair competition based on the bar’s knowing use of unauthorized recreations of karaoke tracks. In Slep-Tone Entertainment Corp. v. Sellis Enterprises, the district court denied the defendant bar’s motion to dismiss the complaint of the plaintiff music company, which produces karaoke accompaniment tracks for about 18,000 popular songs, and which strives to produce the highest quality and most authentic karaoke tracks.  The plaintiff’s tracks are encoded on CDs in a format known as CD+G, which simultaneously plays the audio track and visual lyrical cues.  The complaint alleges that the bar hosts karaoke shows using unauthorized “media-shifted” copies of the plaintiff’s karaoke tracks (i.e., pirated tracks converted from CD+G to MP3+G form and degraded from their original quality).

The Slep-Tone court rejected the karaoke bar’s argument that, under Dastar, the music company only could bring a copyright law claim for the authorized performances of its karaoke tracks.  The bar asserted that trademark relief was not available because Dastar held that the Lanham Act does not “creat[e] a cause of action for, in effect, plagiarism—the use of otherwise unprotected works and inventions without attribution.”  The court disagreed.  In Dastar, the Supreme Court evaluated whether the Lanham Act prevents unaccredited copying of a work.  The defendant in that case had copied a television series on World War II, labeled it with a different name, and marketed it without attribution to the plaintiff company that owned the exclusive television rights to the copyrighted work.  The Court held that a Lanham Act claim for “reverse passing off” was not viable because the defendant was the producer of the physical good (the World War II video series) and the defendant’s own marks were applied to those goods.

 The district court in Slep-Tone reasoned that Dastar “highlights the crucial distinction between the producer of goods and the holder of the associated mark . . . [needed in order for there to] be a potential Lanham Act claim.”  In Slep-Tone, “[b]ecause the producer of the new good (karaoke jockeys) and the mark-holder of the mark on the goods ([plaintiff] Slep-Tone) do not match, the alleged use of Slep-Tone’s mark on the copied tracks is a false designation of origin covered by the Lanham Act.”  In contrast, in Dastar, “[b]ecause the producer and the mark-holder matched, [the plaintiff] could not bring a Lanham Act claim.”  In addition, the Slep-Tone court rejected the karaoke bar’s argument that, under Dastar, a Lanham Act claim is not available because the music company’s only claim for damages results from the public performance of an audiovisual work, which is protected under copyright law.  The court found that the bar’s argument misunderstood the complaint, which details allegedly infringing conduct beyond that.  Rather, the plaintiff “is alleging that a producer of a good—the media-shifted karaoke track—applied [plaintiff’s registered mark] to that track without authorization.”

Following this denial of the karaoke bar’s motion to dismiss, it remains to be seen if the karaoke bar will “sing another tune.”  For example, one possible option, as referenced in the complaint, is entering into plaintiff’s “Safe Harbor Program” that protects karaoke venues from liability in exchange for requiring their karaoke contractors to provide information about their karaoke systems.  Another possible option is a certification program that allows a karaoke venue to determine whether a particular karaoke operator who puts on the show is using authentic materials.  The complaint, however, notes that the bar never entered into these programs or stopped using the services of the allegedly infringing karaoke contractors.