The US Court of Appeals for the Ninth Circuit upheld a district court decision granting summary judgment to a defendant that its use of digital files did not infringe plaintiff’s trademark or trade dress for its CD-Gs (compact discs incorporating graphics, lyrics and music that accompany performances by karaoke singers). Slep-Tone Entertainment Corp. v. Wired for Sound Karaoke & DJ Servs., LLC, Case No. 14-17229 (9th Cir., Jan. 18, 2017) (per curiam).

Slep-Tone Entertainment, a manufacturer of CD-Gs played by karaoke operators in conjunction with performances by karaoke singers, brought suit against Wired for Sound Karaoke & DJ Services for trademark infringement and unfair competition. The district court granted summary judgment to Wired as to the trademark and unfair competition causes of action on the grounds that “ripping” the content of Slep-Tone’s CD-Gs onto Wired’s computer hard drive for ease of playback (i.e., eliminating the need to change discs in between performances) was not likely to confuse consumers as to the source of the tangible goods sold by Slep-Tone. The Ninth Circuit agreed but nevertheless remanded the case back to the district court for consideration of the breach of contract claims, since double recovery was no longer a possibility.

In 2009, Slep-Tone brought suit against Wired for its use of the unauthorized computer files instead of the original CD-Gs. The parties settled the previous suit in 2010, but Slep-Tone again filed suit after learning of continuing use of such files. In its second complaint, Slep-Tone argued that when Wired played the songs that were performed, Slep-Tone’s trademarks and trade dress were displayed, and therefore the consuming public would be confused as to the source of origin of the CD-G goods. The Ninth Circuit agreed with the district court that there was no likelihood of confusion—the appropriate test for both trademark infringement and unfair competition—as the content stored on the CD-Gs does not meet the definition of a relevant “good” as defined by the Supreme Court of the United States and the Lanham Act.

Specifically, the Ninth Circuit cited to the Supreme Court’s 2003 discussion in Dastar Corp. v. Twentieth Century Fox Film Corp. that “origin of goods,” for purposes of Lanham Act claims, must “refer[] to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concepts, or communication embodied in those goods.” Dastar refuted the notion that a “species of mutant copyright law” could be used to prohibit unauthorized copying of content stored on physical goods, when those goods (here, the CD-Gs) are typically never viewed by the public or even noted by them. Relevant consumers in this context never see the digital files on the hard drive of the operator’s karaoke system, nor does Wired sell the files or make representations about them to the performers or audience. Because Wired did not use Slep-Tone’s marks “in connection with the sale, offering for sale, distribution, or advertising” of the ripped files on its hard drive, there was no actionable claim under the Lanham Act for trademark infringement or unfair competition, as both require a likelihood of confusion as to the source of the goods.