Addressing the "tangible good" requirement of trademark infringement, the US Court of Appeals for the Seventh Circuit upheld the district court's decision to dismiss a case because defendants' playing of unauthorized copies of music tracks was not likely to confuse consumers as to the physical source of the medium on which the tracks were played. Phoenix Entertainment Partners v. Dannette Rumsey and Basket Case Pub, Inc., Case No. 15-2844 (7th Cir., July 21, 2016) (Rovner, J).

Phoenix Entertainment Partners, formerly known as Slep-Tone, sells karaoke tracks under the trademark SOUND CHOICE to different establishments, such as restaurants and bars. Slep-Tone's SOUND CHOICE trademark appeared at the beginning and end of the video displaying the words to the songs being played. Slep-Tone filed suit against Basket Case and its owner Dannette Rumsey (together, the defendants) claiming that they infringed its SOUND CHOICE trademark (and certain trade dress) by playing unauthorized digital copies of Slep-Tone's karaoke files. According to Slep-Tone, when the defendants play unauthorized copies of Slep-Tone karaoke tracks at the pub, customers see Slep-Tone's Sound Choice mark and trade dress and believe they are seeing and hearing a legitimate, authentic Slep-Tone track, when in fact they are seeing an unauthorized copy.

Trademark infringement under §§ 32 and 43 of the Lanham Act requires a likelihood of consumer confusion as to the source of any tangible good sold by the defendant. The district court dismissed the case, explaining that the defendants do not sell any tangible good—they only play unauthorized copies of Slep-Tone's karaoke tracks for their customers. What pub patrons see and hear is the intangible content of the karaoke tracks. Thus, to the extent there is any confusion, it is about the source of that intangible content, not about the physical medium (the tangible good) from which the karaoke tracks are played. Slep-Tone appealed.

The Seventh Circuit agreed with the district court's dismissal, explaining that "the defendants are not selling compact discs with karaoke tracks and billing them as genuine Slep-Tone tracks, in the way that a street vendor might hawk knock-off Yves Saint Laurent bags or Rolex watches to passers-by. Whatever wrong the defendants may have committed by making (or causing to be made) unauthorized copies of Slep-Tone's tracks, they are not alleged to have held out a tangible good sold in the marketplace as a Slep-Tone product. Consequently, the defendant's alleged conduct is not actionable as trademark infringement."

Practice Note: If Slep-Tone had owned the copyright to the content on the tracks, it would have had a claim for copyright infringement against the defendants.

Music Played By Karaoke Machine Is Not "Tangible Good" For Purpose Of Trademark Infringement

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