IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

SLEP-TONE ENTERTAINMENT
CORPORATION,
Plaintiff,
v.
ASTORIA BAKER, LIMITED LIABILITY
COMPANY, an Oregon Limited Liability
Company, d/b/a THE ASTORIA BAR, and
KAREN BAKER, an individual,
Defendants.
AIKEN, Chief Judge:
No. 6:13-cv-2021-TC
ORDER
Plaintiffbrings this action alleging trademark infringement under state and federal law, unfair
competition, and common law passing off. Plaintiff initiated this action on November 13, 2013.
Plaintiff alleges that defendants regularly commercially benefitted from use of counterfeit karaoke
accompaniment tracks marked with plaintiffs registered trademarks and trade dress while providing
karaoke entertainment services to defendant's customers. Plaintiff further alleges that defendants
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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 1 of 8
willfully promoted and engaged in such services without authorization, tolerance or license from,
or notice to plaintiff. Plaintiff alleges it has suffered at least $10,000 in damages as a result.
The clerk issued an entry of default on February 26, 2014. Plaintiff now seeks a default
judgment. By virtue of the default, all allegations, with the exception of damages, are taken as true.
Accordingly, plaintiff seeks: (1) an "extrapolated" amount of $15,000 in lost profits or statutory
damages of$10,000; (2) attorney's fees; and (3) an injunction.
Any person who, on or in connection with any goods or services, or any
container for goods, uses in commerce any word, term, name, symbol, or device, or
any combination thereof, or any false designation of origin, false or misleading
description of fact, or false or misleading representation of fact, which-
(A) is likely to cause confusion, or to cause mistake, or to deceive as
to the affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval of his or
her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature,
characteristics, qualities, or geographic origin of his or her or another
person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is
likely to be damaged by such act.
15 U.S.C. 1125(a)(l).
To demonstrate trademark infringement, plaintiff must show that the it holds a protectible
mark, and that defendants' imitating mark is similar enough to cause confusion or to deceive.
Surfvivor Media. Inc. v. Survivor Prod., 406 F.3d 625, 630 (9th Cir. 2005). The critical
determination is whether an defendants' use of a mark creates a likelihood that the consuming public
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will be confused as to who makes what product. Jada Toys, Inc. v. Mattei, Inc., 518 F.3d 628,632
(9th Cir. 2008).
1
The accepted allegations in the complaint establish that plaintiffhas protectible marks, that
defendants used unauthorized karaoke tracks displaying identical, counterfeit, marks that deceived
defendant's customer's into believing the tracks were authorized sound choice products?
Accordingly, the complaint establishes liability as to plaintiffs federal trademark infringement
claims.
Plaintiff does not discuss the elements of its state trademark and common law passing off
claims. Presumably, plaintiff seeks a judgment on these claims in order to apply the easier standard
for recovery of attorney's fees under ORS 20.080. The court cannot determine from the
allegations in the complaint alone whether a passing off claim has been established as it is not clearly
alleged that defendants' passed off their product as that of plaintiff as opposed to simply using
plaintiffs product, or an identical copy of defendant's product, without authorization to display its
trademark. In addition, plaintiff does not identify what portion of Oregon's statutory trademark law
defendant's violated, although ORS 647.095 does prohibit use, without consent, of a counterfeit
of a mark registered to another if it is likely to cause confusion. Therefore, establishing a federal
trademark claim probably establishes a state law claim. Nonetheless, because plaintiffs mark is
1
An eight factor test is used to determine likelihood of confusion: ( 1) strength of the mark;
(2) proximity or relatedness of the goods; (3) similarity of sight, sound and meaning; ( 4) evidence
of actual confusion; ( 5) marketing channels; ( 6) type of goods and purchaser care; (7) intent; and (8)
likelihood of expansion. Jada Toys, 518 F.3d at 632.
2
Although, as noted in footnote 1, likelihood of confusion is generally measured using an
eight-factor test, use of counterfeit marks is inherently confusing. Phillip Morris USA Inc. v. Shalab,
352 F.Supp.2d 1067, 1073 (C.D.Cal. 2004).
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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 3 of 8
protected by the Lanham Act, the state trademark claim could be preempted. See Classic
Instruments, Inc. v. VDO-Argo Instruments, Inc., 73 Or.App. 732, 745 (1985) (State trademark
infringement claim preempted where asserted design was protected by federal law, citing Litton
Systems, Inc. v. Whirlpool Corp., 728 F.2d 1423, 1448 (Fed. Cir. 1984)(overruled on other grounds
by Two Pesos Inc. v. Taco Cabana, 505 U.S. 763 (1992).
3
Under the Lanham Act, Congress
directed that fees only be awarded in exceptional cases with respect to violation of a right associated
with a trademark. See 15 U.S.C. 1117(a). However, ORS 20.080 requires taxing of fees merely
upon prevailing in a tort action for a limited amount ($10,000 or less) so long as demand is made
pre-filing. It is apparent in this action that plaintiff has engaged in artful pleading in an attempt to
sidestep Congressional intent on fees. See, e.g., Motion for Default Judgment ( # 14) at p. 2 (seeking
statutory damages under the Lanham Act "in the amount of $10,000, notably less than actual
economic damages); Complaint (#1) at ,-r 106 ("while the prayed for relief is specific [$10,000],
plaintiff hereby provides notice of the potential damages available under ... federal laws, such as 15
U.S.C. 1117 and 1118, which include ... profits ... full damages ... Trebled damages ... Statutory
damages ... of up to $2,000,000.00 per counterfeit mark ... Punitive damages .... "). Plaintiff appears
3
But See, Golden Door. Inc. v. Odisho, 646 F.2d 347, 352 (9th Cir. 1980) (court found that
the 15 U.S.C. 1115(b) defense does not preempt rights under California trademark infringement
statute because it extends, without compromising the federal system, greater protections to
trademarks than is available under the Lanham Act, and rejected previous dicta in Mister Donut of
America, Inc. v. Mr. Donut Inc., 418 F.2d 838, 844 (9th Cir, 1969) where the court then stated the
Lanham Act preempted, apparently entirely, the field of trademark law). Nonetheless, the federal
purpose must not be undermined by state trademark law. See Mariniello v. Shell Oil Co., 511 F.2d
853, 858 (3d Cir. 1975). Congress has expressed its intent to require exceptional circumstances to
justify fees and use of a nearly identical state trademark statute to bootstrap a state law simple fee
shifting statute would undermine Congressional intent in the Lanham Act, even though it is possible
that ORS 647.095, by itself, may not.
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to want to have its cake and eat it too wherein it pleads "it may move to elect the full scope of relief
available .... " Complaint ( # 1) at , 107. The fact that plaintiff fails to discuss which portion of the
state statute defendants have violated or the elements of a common law claim for passing off, further
demonstrates an intent to simply sidestep Congress's desire to require exceptional circumstances
prior to a court awarding fees under the Lanham Act. Therefore, the court declines to enter judgment
on plaintiffs fourth claim for relief(state trademark law "pursuant to ORS 647.005 et seq."), fifth
claim for relief(common law passing off); and sixth claim for relief(ORS 20.080 and 20.082).
4
Under 15 U.S.C. 1117(a) plaintiff is entitled to recover (1) defendant's profits, (2) any
damages sustained by the plaintiff, and (3) the costs of the action. Plaintiff asserts that although it
has been denied the opportunity to fully investigate and prove damages, it is confident enough to
contend that based on "a sampling that indicates 75% of all of defendants tracks are infringing
counterfeits, and a minimum estimated number oftracks of20,000, it is reasonable to extrapolate
that defendants profited from not less than 15,000 counterfeit tracks." Motion (#14) at p. 11.
Plaintiff then asserts lost profits of $15,000 as a result. However, the sampling of 11 out of 14
observed tracks is insufficient to establish a 75% rate of infringement. See Declaration of Kurt
Slep(# 15) at, 12. In addition, simply because Mr. slep believes most karaoke jockeys operate with
at least 20,000 tracks (id. at, 15), does not establish that defendants had 20,000 tracks with 15,000
infringing tracks. Nonetheless, plaintiff also requests statutory damages in the amount of $10,000.
Pursuant to 15 U.S.C. 1117(c)(1) and (2), a plaintiff may electto recover, instead of actual
damages and profits, an award of statutory damages in the amount of:
4
0RS 20.082 relates to an award of fees for small contract claims and the complaint fails
to allege the existence of such a claim).
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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 5 of 8
(1) not less than $1,000 or more than $200,000 per counterfeit mark per type of
goods or services sold, offered for sale, or distributed, as the court considers just; or
(2) if the court finds that the use of the counterfeit mark was willful, not more than
$2,000,000 per counterfeit mark per type of goods or services sold, offered for sale,
or distributed, as the court considers just.
As noted above, plaintiff has established that defendants played 11 unauthorized karaoke
tracks. Accordingly, statutory damages in the amount of $10,000 is appropriate.
Plaintiff also requests attorney's fees and costs. As noted above, the court declines to award
fees under state law. Accordingly, there are two potential provisions under which the court can
award attorney's fees for the prosecution of these claims. First, under 15 U.S.C. 1117(a), "[t]he
court in exceptional cases may award reasonable attorney fees to the prevailing party." A trademark
infringement is viewed as "exceptional" under 1117(a) "when the infringement is malicious,
fraudulent, deliberate or willful." Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1409 (9th Cir.
1993)(citing Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1384 (9th Cir. 1984)). Second, under
IS U.S.C. 1117(b), in cases in which the violation of 15 U.S.C. 1114(1)(a) consists of
"intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark,"
the court shall grant the prevailing party a reasonable attorney's fee, unless it finds "extenuating
circumstances." "In counterfeiting cases, 'unless the court finds extenuating circumstances,' treble
damages and reasonable attorney's fees are available." Intel Corp. v. Terabyte Int'l, Inc., 6 F.3d 614,
620 (9th Cir. 1993) (quoting 15 U.S.C. 1117(b)). Under both sections 1117(a) and 1117(b),
awards are "never automatic and may be limited by equitable considerations." Intel Corp., 6 F.3d at
620 (quoting Lindy Pen Co., 982 F.2d at 1405, 1409).
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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 6 of 8
The court cannot determine from the complaint alone that the infringement was malicious,
fraudulent, deliberate or willful despite the conclusory allegation of willfulness. The court simply
does not know the circumstances under which defendants obtained the offending tracks and whether
they were aware of the lack of a license or if they themselves copied the offending tracks outside of
the tolerance permitted by plaintiff. In addition, the court declines to find exceptional circumstances
simply due to defendants' failure to appear. Also, because attorneys' fees are considered here as a
part of damages, the court need not accept the conclusion that defendant's conduct was willful for
purposes of section 1117(a) or intentional for purposes of section 1117(b ). Furthermore, the manner
in which plaintiff has pleaded this case (as well as many other similar cases against similarly situated
defendants), i.e., asserting millions in statutory damages which could be trebled while at the same
time seeking a lowball amount, suggests an attempt to extract a settlement short oflitigation based
on the sanction alone as opposed to intentionally infringing conduct. Of course the various statutes
at issue provide such liability, but this combined with the artful pleading as noted above provide
sufficient extenuating circumstances in the eyes of the court to decline an award of attorney's fees
in this case.
5
Plaintiff is, nonetheless, entitled to costs of $510.00.
In addition, plaintiff seeks an injunction. To prevent the violation of any right of the
registrant of a mark registered in the Patent and Trademark Office or to prevent a violation under 15
U.S.C. 1125, the court has the authority to grant injunctions. Although the degree of culpability
for purposes of damages cannot be adequately determined in this case, the allegations in the
5
Plaintiff all but admits this is merely a small claims case when it argues that fees are
appropriate under ORS 20.080 because the legislature enacted the statute to encourage settlement
of small claims. Motion (# 14) at p. 13.
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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 7 of 8
complaint do sufficiently suggest infringement and the means to continue such conduct unless
enjoined. Accordingly, defendants are hereby permanently enjoined from using plaintiffs marks
absent appropriate licensing.
CONCLUSION
For the reasons stated above, plaintiffs motion for a default judgment ( # 14) is granted and
judgment is awarded in favor of plaintiff and against defendant as follows: ( 1) statutory damages in
the amount of $10,000 and costs in the amount of $51 0; and (2) a permanent injunction enjoining
defendants from infringing plaintiffs registered trademarks, without license, including allowing
others to provide karaoke services with unlicensed tracks. Defendants shall destroy all unauthorized
and counterfeit karaoke tracks in their possession or control.
DATED this 15 day of May, 2014.
r k ~ ~
..
Ann Aiken
United States District Judge
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