Slep-Tone Entertainment Corp. v. Kalamata, Inc.

75 F. Supp. 3d 898, 2014 U.S. Dist. LEXIS 174520, 2014 WL 7235164
CourtDistrict Court, N.D. Illinois
DecidedDecember 18, 2014
DocketNo. 14 C 3577
StatusPublished
Cited by16 cases

This text of 75 F. Supp. 3d 898 (Slep-Tone Entertainment Corp. v. Kalamata, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Slep-Tone Entertainment Corp. v. Kalamata, Inc., 75 F. Supp. 3d 898, 2014 U.S. Dist. LEXIS 174520, 2014 WL 7235164 (N.D. Ill. 2014).

Opinion

Memorandum Opinion and Order

Honorable THOMAS M. DURKIN, United States District Judge

Plaintiff Slep-Tone Entertainment Corp. (“Slep-Tone”) brings an action against Kalamata, Inc. (“Kalamata”) for trademark infringement of four of SlepTone’s trademarks and for unfair competition. R. 1. Kalamata brings a number of counterclaims, principally alleging that Slep-Tone fraudulently procured two of its trademarks. R. 10. In Count I of its counterclaims, Kalamata seeks a declaration of invalidity of the two trademarks it alleges Slep-Tone fraudulently procured; in Counts III and IV, Kalamata asks for the cancellation of the same two trademarks; in Count V, Kalamata seeks damages for the injuries it suffered as a result of the fraudulent procurement of the two trademarks; and in Count VIII, Kalamata brings a common law fraud claim for SlepTone’s alleged false representations of valid trademark ownership to Kalamata. In addition, Kalamata asserts violations of the Sherman and Clayton Acts in Counts VI and abuse of process in Count VIL SlepTone asks the Court to dismiss all but one of the counterclaims1 pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. R. 13. For the reasons set forth below, the Court grants Slep-Tone’s motion to dismiss in part and denies it in part.

I. Background

Kalamata owns and operates a commercial establishment called “Where Else Bar and Grill,” R. 1 at 2 ¶ 9, which offers karaoke shows. R. 10 at 4 ¶¶ 9-10. Karaoke shows are a form of “participatory entertainment, in which individual patrons or groups of patrons,” (“karaoke participants”), “sing popular songs while accompanied by recorded accompaniment music.” R. 1 at 3 ¶ 15. To provide karaoke shows, Kalamata hires karaoke operators, who play karaoke accompaniment tracks (“karaoke tracks”) to guide the karaoke participants to sing along with the music. Id. at 3-4 ¶¶ 14-16; R. 10 at 4 ¶ 10. The karaoke tracks are recorded songs with the vocals faded or omitted and “with graphical displays of the lyrics” of the songs and “other material synchronized to the music.” R. 1 at 4 ¶ 17. Slep-Tone is a manufacturer of karaoke tracks. Id. at 6 ¶ 39. According to Slep-Tone, it has spent “tens of millions of dollars ... to build a world-class recording studio, to hire musicians, to acquire appropriate licenses, ... to pay ongoing royalties, and to advertise” its karaoke products, among them the karaoke tracks. Id. at 6-7 II40.

In its complaint, Slep-Tone alleges that it owns Trademark Registration Nos. 1,923,448 and 4,099,045, for the trademark SOUND CHOICE, which consists of the words “Sound Choice” written across the backdrop of five lines of a music staff: [902]*902and Trademark Registration Nos. 2,000,-725 and 4,099,052, for the display of the trademark. R. 1 at 3 ¶¶ 11-13. A trademark is “a distinctive mark of authenticity, through which the products of particular manufacturers ... may be distinguished from those of others.” Hoopla Sports & Entm’t, Inc. v. Nike, Inc., 947 F.Supp. 347, 353 (N.D.Ill.1996) (internal quotation marks omitted) (citations omitted). A trademark may consist of any symbol or words. Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir. 1986). According to Slep-Tone, Kalamata hires karaoke operators who use pirated copies of Slep-Tone’s karaoke tracks to produce karaoke shows at Kalamata’s venue. Id. at 1 ¶ 2, 3-5 ¶¶ 14-26. Slep-Tone alleges that it never authorized these operators, or any individual from whom they may have obtained copies, to make or obtain copies of the karaoke tracks or apply the trademark to any product. Id. at 4 ¶¶ 21-23. Slep-Tone also alleges that it did not receive any royalties or fees from the karaoke operators for the duplication of the karaoke tracks and the use and display of the trademark. Id. at 4-5 ¶¶ 24-25. Slep-Tone alleges that Kalama-ta derived significant financial gain from contracting with the karaoke operators, id. at 5 ¶¶ 29-31, and is vicariously liable for trademark infringement and unfair competition. Id. at 9-12 ¶¶ 57-76:

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In its counterclaims, Kalamata alleges that Slep-Tone fraudulently procured Trademark Registration Nos. 4,099,045 and 4,099,052 for the trademark SOUND CHOICE and the display of the trademark.2 R. 10 at 26-27 ¶¶ 11-18. A trademark may be registered with the United States Patent and Trademark Office (“PTO”) if it distinguishes a manufacturer’s goods or services from those of others, see 15 U.S.C. § 1052, and if it has been “used in commerce.” See 15 U.S.C. §§ 1051(a)(1), 1127. A person seeking to register a trademark must file an application with the PTO, stating, inter alia, the date that the applicant first used the mark in commerce and the goods in connection with which the mark is used. 15 U.S.C. § 1051(a)(2). Kalamata alleges that Slep-Tone stated in its application3 to the PTO that it had used the trademark SOUND CHOICE in commerce to conduct entertainment exhibitions in the nature of karaoke shows beginning on July 21, 2010. R. 10 at 26-27 ¶¶ 12-16. According to Kalamata, however, Slep-Tone has never been in the entertainment karaoke business and thus, it has never used the trademark in commerce to conduct karaoke shows. Id. at 27 ¶¶ 16-18. Kalamata further alleges that Slep-Tone is engaged in a nationwide litigation scheme to force venue owners, including Kalamata, to buy Slep-Tone’s products or contract exclusively with karaoke operators who are licensed [903]*903through Slep-Tone. Id. at 25-28 ¶¶ 6-25. Kalamata alleges that since obtaining the trademarks, Slep-Tone has threatened and filed numerous lawsuits against karaoke operators and venue owners who refuse to buy its products or hire its licensed karaoke operators. Id. at 26 ¶¶ 9-10, 27-28 ¶¶ 20-23.

II. Legal Standard

A Rule 12(b)(6) motion challenges the sufficiency of the complaint. See, e.g., Hallman v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.2009). A complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with “fair notice” of the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

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75 F. Supp. 3d 898, 2014 U.S. Dist. LEXIS 174520, 2014 WL 7235164, Counsel Stack Legal Research, https://law.counselstack.com/opinion/slep-tone-entertainment-corp-v-kalamata-inc-ilnd-2014.