The Arizona Republic
An East Coast karaoke-disc producer has filed a federal lawsuit
against 15 Phoenix-area karaoke jockeys and bars for alleged trademark infringement and unfair competition.
Charlotte, N.C.-based Sound Choice Studios Inc. could potentially seek millions of dollars in statutory damages, lost profits and attorneys fees, but has not served the defendants yet because it is seeking a deal where they would buy legal copies of the discs.
Sound Choice claims the businesses infringed on its trademarked logos that appear on its media by using pirated copies of its discs or computer hard drives preloaded with illegal copies of Sound Choice karaoke music.
The alleged piracy has nearly forced Sound Choice, other disc manufacturers and some karaoke jockeys in the Phoenix area out of business, according to the lawsuit filed July 14 in U.S. District Court in Phoenix.
Kurt Slep, chief executive officer of Sound Choice, said his company became aware of the defendants' alleged activity through tips from karaoke businesses and by sending "investigators" to karaoke venues in the Phoenix area.
Statutory damages for willful copyright infringement can cost up to $150,000 per act and up to $2 million for willful trademark infringement.
Slep said the number of alleged violations depends on how many karaoke systems each defendant uses. He estimates there is about $1 billion of pirated Sound Choice karaoke music in use across the industry.
Music industry executives have complained for several years that digital downloads and online file-sharing programs have made it easier to violate trademarks and copyrights. Karaoke business executives say they have been affected, too.
Slep and others say such hard-drives loaded with thousands of songs are readily available for sale on eBay, Craigslist and other Web sites. He estimates 90 percent of karaoke jockeys and venues are using some pirated music.
Some business owners disagree with methods used by Sound Choice and other disc manufacturers.
Sound Choice in the past has sent threatening letters to bars saying they could face hefty fines and lose their liquor license for allowing karaoke jockeys using pirated music to operate in their establishments, said Ernest McCullar, a Valley karaoke disc jockey.
McCullar's business, Wired for Sound, has lost clients as result of Sound Choice's "scare tactics," he said.
McCullar is one of the defendants named in Sound Choice's lawsuit, which alleges the manufacturer observed his business infringing on its trademarks in March at the Purple Turtle Sports Bar & Grill in west Phoenix. The bar is not named as a defendant in the lawsuit.
McCullar disputes the claim.
Debora Verdier, an attorney with Sanders & Parks P.C. in Phoenix who specializes in music copyright and trademark law, said venues that host karaoke jockeys using pirated content can be found liable for infringement.
Under federal law, a business can be found guilty of "contributory" infringement if it provides a forum in which infringement is allowed to take place and if it has control over the equipment or discs a karaoke jockey uses at its site, she said.
Verdier added that determining such liability requires a "highly fact-intensive analysis" of a venue's knowledge and typically is decided on a case-by-case basis.
The bars and restaurants Sound Choice names in the suit are ones that allegedly were operating their own karaoke systems as opposed to venues that were hosting karaoke shows put on by other businesses.
Sound Choice's suit alleges only trademark infringement, but Slep said the company also is considering pursuing copyright infringement of the actual music it produces.
Eric Godfrey, owner of Starz Karaoke, which puts on karaoke shows at mostly East Valley establishments, said he hopes Sound Choice's lawsuit will raise awareness about infringement, which has hurt his business.
"I am hoping that the impact will be that some of the companies who are doing business illegally will go out of business," said Godfrey, who helped start the Mesa-based United States Karaoke Alliance in 2007 to combat piracy, among other things.
Godfrey, who is not named in the suit, said it is hard for legally operating karaoke shows to compete with disc jockeys using pirated music.