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Phoenix Entertainment Partners, LLC v. Sullivan

United States District Court, D. Colorado

March 23, 2018

MICHAEL T. SULLIVAN; and MTS PRODUCTIONS INC., a Colorado corporation; Defendants.



         I. Introduction

         THIS MATTER is before the Court on Defendants Michael T. Sullivan's and MTS Productions, Inc.'s Motion to Dismiss Under Federal Rules of Civil Procedure 12(b)(6) (ECF No. 17), filed September 7, 2017. Plaintiff Phoenix Entertainment Partners, LLC filed a Response (ECF No. 20) on September 28, 2017, and Defendants Sullivan and MTS Productions Inc. filed a Reply (ECF No. 23) on October 11, 2017. Since the filing of Defendants' Motion to Dismiss, Plaintiff has filed two Notices of Voluntary Dismissal of Party (ECF Nos. 30 and 33), filed on February 13, 2018 and February 28, 2018, respectively. Thus, Defendants Broadways, Inc., and J.A.C.K. GONSKA INC., have been dismissed from this action. (See Orders of Dismissal, ECF Nos. 31 and 36).

         II. Background

         Plaintiff Phoenix Entertainment Partners, LLC (“Phoenix”), brings claims of trademark infringement, unfair competition, and copyright infringement, against Defendants MTS Productions, Inc. (“MTS”), and Michael T. Sullivan (“Sullivan”), stemming from a regular series of karaoke shows hosted by Defendants MTS Productions and Sullivan. Phoenix alleges that MTS and Sullivan engaged in copyright infringement by making copies of and distributing karaoke accompaniment tracks, which are subject to copyrights owned by Phoenix. Compl. ¶ 1. Additionally, Plaintiff alleges that Defendants engaged in trademark infringement by using Phoenix's federally registered trademarks and service marks without authorization in the course of providing commercial karaoke entertainment services and related ancillary services, all without authorization. Id. Phoenix is a North Carolina limited liability company having its principal place of business in Pineville, North Carolina. See ECF No. 1, Compl. ¶ 7. Defendant MTS Productions Inc., is a Colorado corporation that operates a mobile entertainment business, which provides karaoke-related services. Compl. ¶ 8. Defendant Michael T. Sullivan, a Colorado resident, owns and operates MTS, and personally participates in MTS's mobile entertainment business. Compl. ¶ 9.

         The allegations of the Complaint center on karaoke shows facilitated by Defendants. According to Plaintiff, “[t]he basic premise of a karaoke show is that the venue hosting the show provides patrons with access to a sound system and specially prepared karaoke accompaniment tracks, so that individual patrons may perform for the crowd.” Id. at ¶ 15. A “karaoke accompaniment track” is an audiovisual work comprising a re-recorded version of a popular song without the lead vocals synchronized to a graphical component containing a lyric display, cueing information, and other information. Id. at ¶ 16. Plaintiff provides that “when a karaoke accompaniment track is publicly performed, the graphical component is displayed to both the patron who is performing and may be displayed to the crowd as well.” Id. at ¶ 17. Plaintiff alleges that venues offer karaoke entertainment in exchange for patronage of their establishment and the purchase of food and beverages. Id. at ¶ 18. Mobile entertainment operators, including MTS and Sullivan, are hired by venues to make karaoke tracks available for patrons' use and to provide karaoke entertainment services on the venues' behalf. Id. at ¶ 20.

         Plaintiff Phoenix is the owner of SOUND CHOICE® (“Sound Choice”), a federally registered trademark. Phoenix alleges that it licenses and distributes karaoke tracks and, “primarily through licensees, provides karaoke entertainment services.” Id. at ¶ 21. Similarly, Phoenix owns CHARTBUSTER KARAOKE® (“Chartbuster”), a federally registered trademark, in connection with which Phoenix distributes karaoke tracks. Id. at ¶ 28. Phoenix is also the owner of the Sound Choice federal service mark registration, acquired by from Slep-Tone, Plaintiff's predecessor-in-interest, on February 15, 2015. Id. at ¶ 42; see Annex B. Phoenix is also the owner of the Chartbuster federal service mark, by virtue of an assignment instrument from Piracy Recovery, LLC, dated November 10, 2015. Id. at ¶¶ 52-54; see Annex C.

         Phoenix is also the sole owner of Sound Choice Entertainment, LLC, a Texas limited liability company (“SCE”), “that is engaged in the business of providing karaoke entertainment services to venues in various locations around the United States, and which is preparing to enter the Colorado market.” Id. at ¶ 51. Phoenix does not allege that they do, or have begun to, provide such karaoke entertainment services in Colorado.

         Phoenix is in the business of licensing the Sound Choice marks for karaoke entertainment services. Id. at ¶ 46. Phoenix further alleges that karaoke operators are required to acquire a license from Phoenix for the right to display the Sound Choice mark in connection with their commercial karaoke shows. Id. at ¶ 47.

         Phoenix alleges that more than 70% of all accompaniment tracks played at commercial karaoke shows in the United States are either Sound Choice or Chartbuster Karaoke branded tracks. Id. at ¶ 30. Phoenix alleges that Sound Choice branded tracks, alone, exceed 50% of the market share. Id. Plaintiff maintains that Sound Choice's popularity derives from the quality of the sound and its highly accurate singing cues. Id. at ¶¶ 31, 32. Thus, Plaintiff's claim that the association of the Sound Choice brand with a mobile entertainment operator's karaoke business provides them a perception of legitimacy and professionalism in the marketplace. Id. at ¶ 33.

         Phoenix claims that Sound Choice and Chartbuster tracks are frequently and illicitly duplicated and shared among karaoke professionals, and that this distribution allows operators to gain the benefits of the Sound Choice and Chartbuster brands without paying for the right to use them. Id. at ¶¶ 34-36.

         Phoenix alleges that Defendants MTS and Sullivan repeatedly display the Sound Choice Marks in connection with supplying their karaoke entertainment services, “often dozens of times over the course of a typical four-hour karaoke show.” Id. at ¶ 57. Phoenix further alleges that because of the “well-known association of the Sound Choice Marks with karaoke entertainment services, the display of the Sound Choice Marks in connection with the services, regardless of the particular song being played, acts as a general advertisement for the services as well as an indicator of the quality of the services being provided.” Id. at ¶ 58. Plaintiff asserts that the frequent, repeated display of the Sound Choice Marks during Defendants' shows is likely to confuse patrons of Phoenix's sponsorship or approval of their services. Id. at ¶¶ 59-64. As a result of Defendants' actions, Phoenix alleges that it has been damaged through the loss of revenues through the sale or licensing of its services, in addition to Phoenix's inability to control the quality of services provided with the Sound Choice Marks. Id. at ¶ 65.

         With respect to Plaintiff's copyright claims, Plaintiff claims that Defendants infringed on its Sound Choice copyright when they copied the audiovisual works. Phoenix is the copyright owner of the audiovisual works listed in Annex A of the Complaint, by virtue of assignment from Piracy Recovery, LLC. Id. at ¶ 38. Annex A shows a copyright registration of the sound recording, “Blue” by artist LeeAnn Rimes, registration number SR0000367547. Phoenix alleges that its ownership of this copyright grants it the exclusive rights to reproduce and distribute the work to the public by sale or other transfer of ownership, i.e., rental or lease. Id. at ¶ 39. This copyright was registered with the United States Copyright Office prior to the commencement of this action, and prior to Defendants' alleged acts of copyright infringement. Id. at ¶ 40. Phoenix notes that “[t]he audiovisual works are the subject of a separate copyright from the copyright in the underlying musical compositions they embody.” Id. at ¶ 41.

         III. Standard of Review

         In considering a motion to dismiss under Rule 12(b)(6), a court must determine whether the plaintiff has stated a claim upon which relief may be granted. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[T]he mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff ...

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