Slep-Tone Entertainment Corp. v. Sellis Enterprises, Inc.
87 F. Supp. 3d 897
N.D. Ill.2015Background
- Slep-Tone produces karaoke accompaniment tracks (CD+G) and owns registered trademarks/servicemarks (including SOUND CHOICE) used to identify its tracks and karaoke exhibitions.
- Karaoke operators allegedly copy Slep-Tone CDs onto new media or convert formats (media-/format-shifting) to use in venues; some copies are degraded and not authorized by Slep-Tone.
- Sellis, a bar owner, contracted with karaoke operators who used tracks bearing Slep-Tone marks; Slep-Tone alleges Sellis knew of the unauthorized use and declined opportunities to certify compliance.
- Slep-Tone claims the unauthorized use of its marks caused lost sales and allowed operators to undercut legitimate providers; it seeks injunctive relief and damages under the Lanham Act and Illinois deceptive trade practices law.
- Sellis moved to dismiss under Rule 12(b)(6), principally arguing that Dastar bars Lanham Act claims that effectively allege plagiarism/copyright-type grievances and that Slep-Tone failed to plead use in commerce and likelihood of confusion.
- The court evaluated the complaint for plausibility, accepting allegations as true and drawing inferences for Slep-Tone.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dastar bars Slep-Tone's Lanham Act claim | Slep-Tone alleges copied tracks on new media bear its mark without authorization, constituting false designation of origin | Dastar forbids Lanham Act claims that are really plagiarism/copyright claims; Slep-Tone's complaint is such a claim | Denied: Dastar does not bar claim because media-/format-shifting can create a new tangible good whose producer (copier) is not the markholder, so a false designation theory is viable |
| Whether Slep-Tone pleaded "use in commerce" | Use alleged through venue's commercial karaoke shows, sales of concessions, and economic benefit from below-market operator fees | No direct sale of tracks by Sellis; therefore no use in commerce | Denied: Allegations of adverse effect on commerce and use/display of mark in providing services plausibly plead use in commerce |
| Whether Slep-Tone pleaded likelihood of confusion | Identical marks used on copied (often indistinguishable) tracks; knowledge of unauthorized use; degraded copies may cause consumer confusion | Copies originate from Slep-Tone so no confusion; insufficient allegations of actual confusion | Denied: Complaint alleges facts (identical marks on competing goods, similarity of products, defendant's knowledge) sufficient to plausibly support likelihood of confusion at pleading stage |
| Whether state-law deceptive trade practices claim is distinct | Slep-Tone relies on same conduct as Lanham Act claim | Sellis argues federal preclusion/insufficiency of Lanham claim defeats state claim | Denied: State claim subject to same analysis and remains viable because Lanham claim survives |
Key Cases Cited
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (Sup. Ct. 2003) (Lanham Act § 43(a) "origin" refers to producer of tangible goods, limiting reverse-passing-off claims that would effectively create copyright-like protection)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (plausibility pleading standard under Rule 8)
- Ashcroft v. al-Kidd, 563 U.S. 731 (Sup. Ct. 2011) (at pleading stage courts accept factual allegations as true and draw reasonable inferences for plaintiff)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (legal conclusions not entitled to assumption of truth; pleadings must state plausible claim)
- CAE, Inc. v. Clean Air Eng'g, Inc., 267 F.3d 660 (7th Cir. 2001) (seven-factor likelihood-of-confusion framework for Lanham Act claims)
- Packman v. Chicago Tribune Co., 267 F.3d 628 (7th Cir. 2001) (similarity and intent factors relevant to confusion analysis)