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Phoenix Entertainment Partners, LLC v. Kwench, LLC

United States District Court, E.D. Missouri, Eastern Division

January 23, 2018

PHOENIX ENTERTAINMENT PARTNERS, LLC, Plaintiff,
v.
KWENCH, LLC, d/b/a/ Just John Nightclub; RJ INTERNATIONAL, INC., d/b/a RJ Entertainment; and ROMAN RAMOS, Defendants.

          MEMORANDUM AND ORDER

          RONNIE L. WHITE UNITED STATES DISTRICT JUDGE.

         Phoenix Entertainment Partners, LLC (“Phoenix”) brings this action RJ International, Inc. (“RJ International”), a mobile entertainment business, and Kwench LLC (“Kwench”), an eating and drinking establishment, alleging the two defendants are liable under §§ 32 and 43(a) of the Lanham Act, 42 U.S.C. §§ 1114(1) and 1125(a), respectively, for violating its trademarks and engaging in unfair competition.[1] Phoenix also alleges the two have violated Missouri's anti-dilution statute, Mo.Rev.Stat. § 417.061, and the common law prohibition against unfair competition.

         RJ International and Kwench separately move to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim.[2]

         Background [3]

         SOUND CHOICE is “a leading brand of karaoke accompaniment tracks . . . particularly well known to commercial karaoke operations.” (Am. Compl. ¶18, ECF No. 11.) These tracks are re-recorded and released on CD (“compact discs plus graphics”) or MP3 (“MPS3 plus graphics”) formats. (Id. ¶20.) “Separately from the communicative content of the karaoke accompaniment tracks (i.e., the sound recording and the synchronized lyric and cueing displays), SOUND CHOICE-branded karaoke accompaniment tracks are marked with an identifying logo that appears at the beginning and end.” (Id. ¶21.) The “tracks are wildly popular among karaoke entertainment providers, patrons, and home consumers.” (Id. ¶23.) “According to some estimates . . . more than half of all accompaniment tracks played at karaoke shows in the United States originated from [Phoenix's] recordings.” (Id.) This popularity is attributed to the tracks usually being “the most faithful to the sound of the original recording artist and as providing the most accurate singing cues as part of the video display.” (Id. ¶24.) Similarly, the association of the SOUND CHOICE brand with a karaoke operator's business or an establishment's karaoke shows “confers on the operator and venue a perception in the marketplace - and among karaoke patrons - of legitimacy and professionalism.” (Id. ¶25.)

         Kwench contracts with RJ International put on karaoke shows at its establishment. (Id. ¶31-32.) These shows are advertised as being, and are held, at specific times. (Id. ¶33.) RJ International provides the sound equipment over which the tracks are played, “control[s] the organization and flow of the performances, ” and encourages the establishments' “patrons to purchase food and/or beverages and tip their servers.” (Id. ¶34.)

         Kwench and RJ International (hereinafter collectively referred to as “Defendants”) cause or permit the Sound Choice marks to be displayed “repeatedly and frequently” during the karaoke shows. (Id. ¶35.) The display of the marks “in connection with the services, regardless of the particular song being played, acts as a general advertisement for the services as well as an indicator of the quality of the services being provided.” (Id. ¶39.) Neither, however, has a “license, permission, authorization, or acquiescence from Phoenix” for playing the Sound Choice tracks. (Id. ¶42.) Moreover, RJ International's karaoke operator, Roman Ramos, copied the tracks “from an illicit source.” (Id. ¶¶9, 36.)

         Phoenix alleges that “the frequent, repeated display of the Sound Choice Marks across numerous instances of widely disparate songs” “likely” causes patrons to “view the display of the Sound Choice Marks as an indicator of the affiliation, connection, or association of the Defendants with Phoenix, or of Phoenix's sponsorship or approval of the services and related commercial activities, rather than merely as indicating Phoenix as the creator of the underlying communicative content of any particular song being performed.” (Id. ¶40.) Thus, the patrons are “likely to be confused regarding the origin or sponsorship of the services being supplied regarding the affiliation or connection of [Defendants] with Phoenix, based on their mistaken belief that the services being provided are provided with Phoenix's knowledge and approval.” (Id. ¶43.) Defendants profit from the display of the Sound Choice marks during karaoke shows, but Phoenix is damaged by it. (Id. ¶44-47.) Defendants also profit from infringing “numerous other producers' intellectual property rights.” (Id. ¶67.)

         For its damage, Phoenix seeks to hold RJ International directly liable and Kwench (hereinafter collectively referred to as the “Venue Defendants”) secondarily liable. Phoenix also seeks equitable and injunctive relief. Defendants seek the dismissal of this action. Because RJ International's memorandum in support of its motion incorporates all but one section of Kwench's supporting memorandum, [4] the Court will address both motions as one.

         Discussion

         Rule 12(b)(6) Standard.

         “To survive a 12(b)(6) motion to dismiss, ‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” McShane Constr. Co. v. Gotham Ins. Co., 867 F.3d 923, 927 (8th Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). This plausibility standard “'asks for more than a sheer possibility that a defendant has acted unlawfully.'” In re Pre-Filled Propane Tank Antitrust Litig., 860 F.3d 1059, 1063 (8th Cir. 2017) (quoting Iqbal, 556 U.S. at 678). Rather, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” McShane Constr. Co., 867 F.3d at 927 (quoting Iqbal, 556 U.S. at 678). “'[D]etermining whether a complaint states a plausible claim for relief … [is] a context-specific task that requires [this] [C]ourt to draw on its judicial experience and common sense.'” Id. (quoting Iqbal, 556 U.S. at 678-79) (second and third alterations in original).

         Count I: Trademark Infringement. “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 prerecorded backing tape, and the voice is electronically amplified through the loudspeaker system for the audience.” Slep-Tone Entm't Corp. v. Wired for Sound Karaoke and DJ Servs. LLC, 845 F.3d 1246, 1247 (9th Cir. 2017) (per curiam) (internal quotations omitted). A “karaoke jockey manages and plays the music and shows the displays, announces the songs, and identifies whose turn it is at the microphone.” Phoenix Entm't Corp. v. Boyte, 247 F.Supp.3d 791, 793 (S.D. Tex. 2017).

         At issue in Count I, titled “Trademark Infringement under 15 U.S.C. § 1114(1), ” is Phoenix's claim that its two Sound Choice service marks were infringed when displayed by RJ International during karaoke shows at Kwench's venue and in advertising such shows. Phoenix alleges that this display is likely to cause confusion among the establishments' patrons as to (a) the origin or sponsorship of the services being supplied and (b) the affiliation of, or connection between, Defendants and Phoenix.

         “A ‘trademark' is any word, name, symbol, or device, or any combination thereof - used by a person … to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods ….” Lovely Skin, Inc. v. Ishtar Skin Prods., LLC, 745 F.3d 877, 882 (8th Cir. 2014) (quoting 15 U.S.C. § 1127) (first alteration in original). “The term ‘service mark' means any word, name, symbol, or device or any combination thereof . . . [used] to identify and distinguish the services of one person, including a unique service, from the services of others and to indicate the source of the services . . . “ 15 U.S.C. § 1127. The same criteria govern whether a registered mark for goods or services is infringed. See 15 U.S.C. § 1114(1).[5]

         Defendants argue the infringement claims should be dismissed because Phoenix is presenting a copyright claim in trademark infringement clothing and such a tactic is foreclosed by the Supreme Court's holding in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). Phoenix counters that their Dastar reliance is misplaced because Phoenix's marks are separate from the communicative or creative content of the karaoke accompaniment tracks and because RJ International intentionally copies Phoenix's marks. Phoenix's reading of the reach of Dastar is too narrow.

         A Dastar argument is not unfamiliar to courts resolving Phoenix's claims of infringement of its registered Sound Choice marks. See e.g. Wired for Sound, 845 F.3d at 1249-50; Phoenix Entm't Partners, LLC v. Rumsey, 829 F.3d 817, 822, 828 (7th Cir. 2016); Phoenix Entm't Partners, LLC v. Star Music, Inc., 2017 WL 3498645, *2 (D. Minn. Aug. 15, 2017); Phoenix Entm't Partners, LLC v. Burke, 2017 WL 2634953, *2 (M.D. Fla. June19, 2017); Boyte, 247 F.Supp.3d at 797-99. At issue in Dastar was the claim of Fox Film Corporation that Dastar Corporation was liable for trademark infringement under 15 U.S.C. § 1125(a) when releasing a videotape set about World War II that included portions of a television series produced by Fox on the same subject, but did not include any credit to Fox. 539 U.S. at 27. At the relevant time, Fox had allowed its copyright in its series to expire. Id. The Court concluded that the phrase “origin of goods” in § 1125 “refers to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods.” Id. at 37. “To hold otherwise would be akin to finding that § 43(a)[6] created a species of perpetual patent and copyright, which Congress may not do.” Id. (footnote added).

         Citing Dastar, courts have concluded that claims of an unauthorized use of the content of Phoenix's karaoke accompaniment tracks are essentially of unauthorized copying and are not cognizable under the Lanham Act. See Wired for Sound, 845 F.3d at 1250; Rumsey, 829 F.3d at 831; Star Music, 2017 WL 3498645, *3; Boyte, 247 F.Supp.3d at 799. But cf. Phoenix Entm't Partners, LLC v. Aguayo, 2016 WL 952665, *3-4 (M.D. Fla. Oct. 24, 2016) (declining to apply Dastar to Phoenix's claims of trademark infringement).[7]

         Absent the word “services” and explicit reliance on its two registered service marks, Phoenix has presented similar allegations regarding unauthorized copying by karaoke jockeys of its tracks, a resulting deterioration in quality, and the use of the inferior copies in karaoke shows in the context of claims of infringement of its registered marks for goods. See e.g. Rumsey, 829 F.3d at 820-21 (describing Slep-Tone's business model for selling its karaoke accompaniment tracks and its Lanham Act claims of trademark infringement and unfair competition for the unauthorized copying of such, and then noting that “Slep-Tone characterizes the unauthorized copy of its track as a distinct good which the defendants are improperly ‘passing off' as a genuine Slep-Tone tracks”) (emphasis added); Phoenix Entm't Partners, LLC v. George and Wendy's Tropical Grill, LLC, 2017 WL 881826, *1-2 (M.D. Fla. March 6, 2017) (discussing Phoenix's similar background allegations in the context of its claims of trade dress ...


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