Plaintiff Slep-Tone Entertainment Corporation produces karaoke music tracks. The tracks are marketed under the trademark \u201cSound Choice.\u201d Plaintiff releases them on compact discs encoded in a format known as \u201cCD-G,\u201d which accompanies karaoke music with graphics, lyrics, and singing cues when played on compatible equipment.<\/p>\n
<\/p>\n
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 \u201cmedia-shifting,\u201d but it is also popularly known as \u201cripping.\u201d Plaintiff acknowledges 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, \u201cnearly drove [the company] out of business.\u201d<\/p>\n
In the past, Plaintiff \u201copposed all commercial media-shifting.\u201d Today, it allows the practice within the confines of a four-point \u201cmedia-shifting policy\u201d requiring that users make only one digital copy per source CD-G; that the physical media used to create the digital files are kept \u201con the shelf\u201d unused; that users notify Plaintiff if they intend to create media-shifted copies; and that users submit to auditing for compliance with these conditions.<\/p>\n
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\u2019s Sound Choice tracks. In 2009, Plaintiff learned that Defendants were using unauthorized media-shifted files instead of Plaintiff\u2019s original CD-Gs. Plaintiff filed a federal action against Defendants, alleging trademark infringement.<\/p>\n
Plaintiff claimed 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\u2019 motion to dismiss as to the claims for trademark infringement and unfair competition, holding that \u201cthis attempt to stuff copyright claims into a trademark container fails.\u201d<\/p>\n
Plaintiff argued that, by \u201cmedia-shifting\u201d Plaintiff\u2019s 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. The Act creates a federal civil cause of action for unauthorized use of a registered trademark.<\/p>\n
Plaintiff\u2019s theory is that, because the media-shifted files display Plaintiff\u2019s trademarks and trade dress when performed, consumers will be confused about their origin \u2013 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 \u201cgood,\u201d as that concept has been defined by the Supreme Court. Instead, it alleges possible confusion over the source of content.<\/p>\n
Supreme Court has held that the statutory phrase \u201corigin of goods\u201d must \u201crefer 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.\u201d The concept of origin is \u201cincapable of connoting the person or entity that originated the ideas or communications that \u2018goods\u2019 embody or contain.\u201d<\/p>\n
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\u2019s CD-Gs as the goods about which consumers may be confused. But, although\u00a0Defendants may, in some sense, have created a new good by copying Plaintiff\u2019s CD-Gs to hard drives, it is still not a relevant good under the Lanham Act.<\/p>\n
Karaoke patrons who see Defendants\u2019 performances of Plaintiff\u2019s karaoke tracks will not be confused about \u201cthe source of the tangible good sold in the marketplace.\u201d Consumers are not aware of the new, media-shifted digital files about which Plaintiff asserts confusion.<\/p>\n
Defendants do not use the Sound Choice marks \u201cin connection with the sale, offering for sale, distribution, or advertising\u201d of the files under 15 U.S.C. \u00a7 1114(1)(a) or \u201cin connection with\u201d the files under \u00a7 1125(a)(1). Instead, Defendants make allegedly unauthorized use of the content of Plaintiff\u2019s karaoke tracks. As the Supreme Court explained, \u201cthe words of the Lanham Act should not be stretched to cover matters that are typically of no consequence to purchasers.\u201d<\/p>\n