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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

EXPRESSWAY MUSIC, INC., CIVIL ACTION FILE NUMBER: Plaintiff, 1:12-CV-00834-ALC-MHD v. SLEP-TONE ENTERTAINMENT CORPORATION, Defendant. ORAL ARGUMENT REQUESTED MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS MOTION FOR SANCTIONS PURSUANT TO FED. R. CIV. P. 11

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TABLE OF CONTENTS Page I. INTRODUCTION.....................................................................................................................1 II. STATEMENT OF FACTS.........................................................................................................2 A. Slep-Tones Accusations of Trademark Infringement..........................................................2 1. The Karaoke Moa Litigation..........................................................................................2 2. Counterclaims in the Present Action..............................................................................3 B. Slep-Tones Offers to Settle.................................................................................................5 1. The August 2010 Letter.................................................................................................5 2. The July 2011 Letter......................................................................................................6 C. Expressway is Only One of Many Targets in Slep-Tones Litigation Strategy................7 D. Slep-Tones Admissions to This Court that its Counterclaims are Not Based in Fact.........8 E. Slep-Tones Notice of Non-Compliance with Rule 11........................................................9 III. ARGUMENT.............................................................................................................................9 A. Rule 11 Sanctions Should Be Granted To Deter Baseless Actions......................................9 B. Rule 11 Sanctions are Appropriate Because Slep-Tones Counterclaim of Trademark Infringement is Frivolous............................................................................10 1. Slep-Tones Counterclaim of Trademark Infringement Was Made Without a Reasonable and Competent Inquiry............................................................10 2. Slep-Tones Counterclaim of Trademark Infringement is Baseless.............................11 C. Rule 11 Sanctions Should Be Awarded in the Form of Dismissal of This Action With Prejudice and Monetary Sanctions................................................................13 IV. CONCLUSION........................................................................................................................15

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TABLE OF AUTHORITIES Case Page(s)

ATSI Commcns., Inc. v. Shaar Fund, Ltd., 579 F.3d 143 (2d Cir. 2009)......................................10 Cooter & Gel v. Hartmax Corp., 496 U.S. 384 (1990)............................................................10, 13 E. Gluck Corp. v. Rothenhaus, 252 F.R.D. 175 (S.D.N.Y. 2008)..................................................10 Eastway Const. Corp. v. City of New York, 762 F.2d 243 (2d Cir. 1985)......................................10 Edmonds v. Seavey, No. 08 Civ. 5646 (HB), 2009 WL 4404815 (S.D.N.Y. Dec. 2, 2009) affd, 379 Fed.Appx. 62 (2d. Cir. 2010)........................................................................................14 In re Initial Public Offering Securities Lit., 241 F. Supp. 2d 281 (S.D.N.Y. 2003).................11, 14 Judin v. U.S., 110 F.3d 780 (Fed. Cir. 1997)............................................................................13, 14 OMalley v. New York City Transit Auth., 896 F.2d 704 (2d Cir. 1990)........................................10 Slep-Tone Entmt Corp. v. Backstage Bar and Grill, 2:11-cv-8305 (N.D. Cal.) (complaint filed Oct. 6, 2011)..............................................................................................3, 13, 14 Ted Lapidus, S.A. v. Vann, 112 F.3d 91 (2d Cir. 1997)...................................................................10

Statutes and Rules

Page(s)

Fed. R. Civ. P. 11........................................................................................................1, 9, 10, 11, 13

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I.

INTRODUCTION Slep-Tone Entertainment Corporation (Slep-Tone) has long been known for producing

karaoke music for purchase by individuals and karaoke jockeys. More recently, Slep-Tone and its counsel have been in the business of filing baseless trademark infringement complaints. Their money-making scheme operates as follows: Slep-Tone files complaints alleging infringement of Slep-Tones trademarks by individuals, karaoke jockeys, and establishments such as restaurants that offer karaoke services. Each complaint substantially mirrors a prior-filed complaint as if a form complaint is maintained by Slep-Tone for its various counsel. These complaints assume that any person or entity providing karaoke services is infringing their trademarks. Periodically, they select a number of targets within a federal jurisdiction against which to file the form complaint. In some cases, before filing a complaint, Slep-Tone, via its counsel or its authorized agent, distributes form settlement letters offering to settle the lawsuit for a minimal amount. In other cases, substantially identical letters are distributed after the complaint is filed. Although the infringement claims are baseless and the illicit scheme transparent (and well documented),1 defendants choose to settle rather than expend a much greater sum to defend the suit. Rule 11 exists precisely to discourage this sort of conduct. Slep-Tone and its counsel conduct NO investigations prior to filing their form infringement complaints. Indeed, if they had conducted the most minimal investigation in this case, they would have found that Expressway has legally purchased its karaoke tracks and does not maintain a single counterfeit track, barring any possibility of success on the merits. Slep-Tone and its counsel should not be permitted to use the legal system to extort settlement fees based on mere guesses as to who could be infringing a particular trademark. Rule 11 sanctions should be imposed.
1 See, e.g., http://soundchoicelasvegaslawsuit.com/

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II.

STATEMENT OF FACTS A. Slep-Tones Accusations of Trademark Infringement 1. The Karaoke Moa Litigation

On July 6, 2011, Slep-Tone filed a Complaint (the 2011 Complaint, attached hereto as Exhibit A) alleging trademark infringement and federal unfair competition against twenty-three defendants, including Expressway Music (Expressway). With respect to Expressway, the 2011 Complaint alleged only: Defendant EXPRESSWAY MUSIC has its principal business address in New York, New York. Defendant EXPRESSWAY MUSIC is engaged in the business of providing karaoke entertainment, and they conduct their business activities at multiple venues in this State. Ex. A at 11. Defendant EXPRESSWAY MUSIC was observed operating, through an employee known as DJ MIKE, a karaoke system to produce a karaoke show in which counterfeit copies of SLEP-TONEs accompaniment tracks were being used. Ex. A at 81. In connection with that show, Defendant EXPRESSWAY MUSIC repeatedly displayed [Slep-Tones trademarks] without right or license. Ex. A at 82. Upon information and belief, Defendant EXPRESSWAY MUSIC performs regular karaoke shows in multiple venues in this State using its karaoke system. Ex. A at 83. Upon information and belief, Defendant EXPRESSWAY MUSIC operates multiple karaoke systems to produce karaoke shows at venues in this State. Ex. A at 84. The 2011 Complaint then put forth the legal conclusion that each of the twenty three

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defendants willfully infringed Slep-Tones trademarks: Each of the Defendants used, or authorized or directly benefited from the use of, a reproduction, counterfeit, or copy of [Slep-Tones trademarks] in connection with the provision of services including karaoke services, by manufacturing or acquiring the reproduction, counterfeit or copy of [Slep-Tones trademarks] and by displaying the reproduction, counterfeit or copy of [Slep-Tones trademarks] during the provision of those services. Ex. A at 106. The Defendants use of [Slep-Tones trademarks] is likely to cause confusion, or to cause mistake, or to deceive the Defendants customers and patrons into believing that the Defendants services are being provided with the authorization of the Plaintiff and that the Defendants music libraries contain bona fide [SlepTone] accompaniment tracks. Ex. A at 109. The acts of each of the Defendants were willful. Ex. A at 110. None of the relevant allegations of the Complaint are made upon information and belief. The signature of Arlen L. Olsen, Esq. of Schmeiser, Olsen & Watts, LLP,2 attorney for SlepTone, appeared on the last page of the Complaint. Id. at 21. After allowing more than 120 days to lapse without filing an affidavit of service with the Court, Slep-Tone filed Notice of Voluntary Dismissal without prejudice on November 30, 2011. 2. Counterclaims in the Present Action

Following dismissal of the 2011 Complaint, faced with the prospect of continued threats, Expressway filed a declaratory judgment action for non-infringement relating to its actions. In response, Slep-Tone filed counterclaims alleging Expressways activities to comprise: [Expressway (abbreviated as EM in the counterclaims)] has possessed, used,
2 Slep-Tone has made a habit of switching counsel in order to cause unnecessary delay in litigating its claims. See, e.g., Slep-Tone Entmt Corp. v. Backstage Bar and Grill, Case No. 2:11-cv-8305 (N.D. Cal., Jan. 15, 2013).

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and displayed unauthorized counterfeit goods bearing the Sound Choice Marks and the Sound Choice Trade Dress during the performance of karaoke entertainment services. EM has knowingly benefitted [sic] from the possession, use and display of unauthorized counterfeit goods bearing the Sound Choice Marks and the Sound Choice Trade Dress during the performance of karaoke entertainment services. EM has provided karaoke entertainment services in connection with the Sound Choice Mark and the Sound Choice Trade Dress without authorization or tolerance from Slep-Tone and has advertised EMs provision of or availability to provide karaoke services in connection with which unauthorized counterfeit tracks bearing the Sound Choice Marks and the Sound Choice Trade Dress would be used or have been used. EMs activities are not isolated or sporadic occurrences, but are instead regular activities undertaken over a period of years and repeated on each occasion on which EM provided karaoke entertainment services. EMs activities are of a commercial nature, in that they engaged in the activities with the transfer of money or other things of value from one party to another as a significant motivation for providing the services. EM has been offered the opportunity to submit to an audit of its karaoke systems for the purposes of verifying its compliance with Slep-Tones media-shifting policy, a necessary condition for compliance with that policy, which opportunity EM declined. EMs piracy of accompaniment tracks is not limited to Slep-Tones tracks but extends additionally to the piracy of other manufacturers accompaniment tracks, utilizing the words, names, symbols, and other devices associated with those manufacturers without authorization. EM knew, or should have known under the circumstances, that it was obtaining and using counterfeit tracks. Dkt. 8, 61-68. None of the aforementioned allegations are made upon information and belief, and the factual basis for filing the June 2011 Complaint, namely that Expressway was observed using counterfeit copies of Slep-Tone accompaniment tracks, is conspicuously omitted from Slep-

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Tones claims in the present action. The electronic signature of James M. Harrington of Harrington Law, P.C., attorney for Slep-Tone, appears on the last page of the Answer and Counterclaims. Id. at 25. B. Slep-Tones Offers to Settle 1. The August 2010 Letter

Approximately one year prior to filing the Complaint, Slep-Tone sent a letter to Expressway identifying Expressway as having been reported as [a] possible violator[] of trademarks.... Ex. B at 1 (Aug. 25, 2010 letter from Slep-Tone representative APS & Associates to Expressway (the August 2010 letter)). The August 2010 letter indicates that Slep-Tone was in possession of evidence of trademark infringement: APS on behalf of Sound Choice has conducted an investigation/audit of your operations resulting in overwhelming evidence that substantiates the before mentioned claims of trademark violations. Id. The August 2010 letter sets a deadline of 10 business days for Expressway to contact APS,3 and threatens a lawsuit if Expressway does not settle quickly: [I]f you do not contact our firm to discuss this matter, we will file in Federal Court and have the complaint served upon you. Any and all communication with you, your legal representative and or staff/employees past and present will be documented and recorded and may be used against you in a court of law. Id. The August 2010 letter further warns that contesting Slep-Tones allegations will only serve to increase the cost of settlement: [t]he more work we have to do and the more expenses we incur to prosecute this lawsuit, the more it will cost you to settle. Stated another way, it will never be as inexpensive to settle this matter and to get legal as it is right now. Your competitors are being offered the same deal, so it is important that you act
3 Use of the name APS & Associates, and referring to it as a firm, was an unethical attempt to convince the reader that a law firm was threatening suit on Slep-Tones behalf, even though APS & Associates did not employ a single attorney.

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quickly. Id. at 2. While the letter makes several references to trademark infringement and threatens the filing of a federal lawsuit, the letter fails to identify any accused tracks, fails to identify any shows operated by Expressway, and fails to describe anything that allegedly infringes SlepTones trademarks, despite its claim to have overwhelming evidence that substantiates the before mentioned trademark violations. Id. at 1. Instead, the letter recites several possible ways that Slep-Tone believes one can infringe its trademarks and assumes that because Expressway is in the business of providing karaoke services it must get legal and stay legal by paying SlepTone. Id. at 2. 2. The July 2011 Letter

Two weeks following the filing of the Complaint, Slep-Tone made Expressway a settlement offer. Ex. C (July 20, 2011 letter from Slep-Tone representative APS & Associates to Expressway (the July 2011 letter)). The July 2011 letter again asserts that an investigation was conducted and evidence procured with respect to infringing activities: Having been reported to APS & Associates as a possible violator of the Sound Choice trademark, APS, on behalf of Slep-Tone, has conducted an investigation of your operations resulting in evidence that Slep-Tone believes overwhelmingly substantiates trademark violations through the illegal or unauthorized copying of their content. You may choose to contact a representative of APS & Associates to resolve this matter prior to moving forward with litigation if you wish to bring this to a full resolution in the fastest and least expensive manner. You have 5 business days from the date of service to respond. Ex. C at 1 (emphasis in original). While the letter makes several references to the pending federal lawsuit and trademark 6

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infringement, the letter fails to identify any accused tracks, fails to identify any karaoke show operated by Expressway, and fails to describe anything that allegedly infringes Slep-Tones trademarks, despite its claim to have evidence that Slep-Tone believes overwhelmingly substantiates trademark violations. Id. C. Expressway is Only One of Many Targets in Slep-Tones Litigation Strategy

Expressway is not the only entity that received letters threatening suit, a Complaint, and a post-filing letter demanding quick settlement. Although Slep-Tone once produced karaoke music, it has morphed into a company that is in the business of bringing trademark infringement actions with the hope that defendants will quickly settle in order to avoid the expense of litigation. To date, Slep-Tone has initiated more than 70 substantively identical lawsuits against over 800 different defendants alleging, in identical terms, infringement of its trademarks. Ex. D at 4:14-16 (Transcript of Jan. 22, 2013) (this complaint is based on a complaint that has been brought in dozens of courts throughout this country). Slep-Tones practice is to extort payment by first sending a form letter threatening a lawsuit, then filing a complaint, and immediately following the filing of the complaint with another form letter identical to the one received by Expressway. See id. Indeed, Slep-Tones contract with APS required APS, in order to retain exclusivity, to file against at least 200 defendants within three months, 700 within 8 months and 2000 within 18 months.4 Ex. E at 2. Slep-Tones attempts to settle numerous cases immediately and for nominal amounts is clearly indicative of Slep-Tones business strategy -- namely to quickly profit by betting that
4 It should be noted that the contract assumes that APS could investigate and uncover sufficient evidence of trademark infringement against at least 200 defendants in 3 months, essentially assuming every karaoke jockey is committing infringement prior to execution of the contract. That APSs contingency fee would change after the first 4000 defendants have been filed against or notified of a pending lawsuit demonstrates that Slep-Tones premeditated strategy was to file litigations in order to extract settlements. Id. at 1.

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individual defendants will choose settlement over the more expensive option of defending a meritless and factually baseless lawsuit. Expressway is not willing to acquiesce to this tactic. D. Slep-Tones Admissions to This Court that its Counterclaims are Not Based in Fact

On January 22, 2013, Slep-Tone, by its counsel James M. Harrington, Esq., admitted to this Court that Slep-Tone had no factual basis for asserting trademark infringement against Expressway. Ex. D at 3:21-22. Specifically, Slep-Tone admitted that the July 2011 Complaint was based on the findings of an unreliable investigator an investigator that Slep-Tone is now unwilling to rely on. Id. at 3:22-4:2. Slep-Tone further admitted that it considers observation of infringement irrelevant because its allegations comprise a statement upon which relief can be granted whether we actually observed it or not. Aside from that, the issue of observation, which I will readily agree, if you compare the complaints in the two cases or the complaint and the counterclaim in this case, I readily agree that allegation was dropped. But its superfluous. We dont need to observe infringement in order for infringement to occur and be actionable. The fact that in the prior suit thats what was alleged, it was alleged based on an investigator, the work of an investigator that is no longer in the employ of Slep-Tone, and we dont have anything other than his word at that time, and were not willing to rely on that to make that allegation. So, therefore, were not going to make that allegation. But I think if you carefully scrutinize the declaratory judgment complaint, there are statements of fact in there that certainly point to counterfeiting of our materials and use of them in commerce, and, on those facts alone, we think this action can be maintained. So the fact of observation, to us, is irrelevant. Id. at 3:17-4:8 (emphasis added). In short, Slep-Tones counterclaims assert that because Expressway is in the business of providing karaoke services it necessarily infringes Slep-Tones trademarks. Slep-Tone admits it is making that assertion without having any evidence in support, going as far as to allege that a factual basis for its allegations is irrelevant.

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E.

Slep-Tones Notice of Non-Compliance with Rule 11

On December 11, 2012, counsel for Expressway notified Mr. Harrington of his noncompliance with Rule 11 and requested that Slep-Tones baseless counterclaims be withdrawn. Ex. F. Mr. Harrington was informed that Slep-Tones proven strategy to file, delay, extort, and ultimately dismiss or settle its unfounded claims was sanctionable conduct under Rule 11. Id. at 1. Counsel for Expressway engaged Mr. Harrington immediately following the January 22, 2013 pre-motion conference and explicitly reiterated that Mr. Harrington was in violation of Rule 11 and requested that Mr. Harrington withdraw his baseless counterclaims. Declaration of Noam J. Kritzer, Esq. at 3. Counsel for Expressway further cautioned Mr. Harrington that Slep-Tones routine of sending identical warning letters, filing identical complaints, sending identical followup letters demanding immediate settlement and attempting to settle each case for a minimal amount suggests that Mr. Harrington does not perform investigations into the individual facts underlying each allegation of trademark infringement prior to filing each complaint. Id. at 4. Mr. Harrington stated his refusal to withdraw the Counterclaims. Id. at 5. Accordingly, Expressway prepared this motion to be served on Slep-Tone 21 days prior to filing. Expressways counsel served a copy of this brief on Mr. Harrington via electronic mail on February 27, 2013. III. ARGUMENT A. Rule 11 Sanctions Should Be Granted To Deter Baseless Actions

The Supreme Court has held that the central purpose of Rule 115 is to deter baseless
5 Fed. R. Civ. P. 11(b) provides in relevant part that an attorney signing a pleading is certifying that to the best of the persons knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;

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filings by imposing a duty on attorneys to certify that they have conducted a reasonable inquiry and have determined that any papers filed with the court are well grounded in fact and legally tenable. Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 393 (1990). Similarly, the Second Circuit has held that Rule 11 imposes an affirmative duty on each attorney to conduct a reasonable inquiry into the viability of a pleading before actually signing it. OMalley v. New York City Transit Auth., 896 F.2d 704, 706 (2d Cir. 1990) (quoting Eastway Const. Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir. 1985)). [L]iability for Rule 11 violations requires only a showing of objective unreasonableness on the part of the attorney or client signing the papers. ATSI Commcns, Inc. v. Shaar Fund, Ltd., 579 F.3d 143, 150 (2d Cir. 2009) (quoting Ted Lapidus, S.A. v. Vann, 112 F.3d 91, 96 (2d Cir. 1997)) (emphasis omitted in original). B. Rule 11 Sanctions are Appropriate Because Slep-Tones Counterclaim of Trademark Infringement Is Frivolous 1. Slep-Tones Counterclaim of Trademark Infringement Was Made Without a Reasonable and Competent Inquiry

It is clear that Slep-Tones claim that Expressway willfully infringed its trademarks was made without a reasonable pre-filing inquiry into the evidentiary and factual support for the claim. E. Gluck Corp. v. Rothenhaus, 252 F.R.D. 175, 179 (S.D.N.Y. 2008). The evidence is conclusive that neither Slep-Tone nor Mr. Harrington identified any alleged counterfeit accompaniment track prior to filing the Counterclaims. In addition, Mr. Harrington admitted that any factual knowledge relating to infringement would be irrelevant. Ex. D at 4:8. Instead of performing the necessary pre-filing inquiry, Slep-Tone simply asserted the allegations of trademark infringement that it has asserted against over 800 defendants nationwide. Id. The
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery. Rule 11(c) provides that sanctions may be imposed for violations of Rule 11(b).

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contract between APS & Associates and Slep-Tone is sufficient evidence that Slep-Tones original allegations of trademark infringement against Expressway, like the allegations present in the Counterclaims, were part of a premeditated litigation strategy designed to systematically extort money from karaoke jockeys without regard to factual basis.6 Ex. E at 2 (expressly granting exclusivity to APS by Slep-Tone provided that [APS] files against at least 200 defendants within three months, 700 within 8 months and 2000 within 18 months.). Accordingly, Mr. Harrington could not have satisfied his obligations to determine that the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery as required by Fed. R. Civ. P. 11(b)(3). In contrast, Mr. Harrington has already admitted he did not conduct a pre-filing investigation because [w]e dont need to observe infringement in order for infringement to occur and be actionable and ...the fact of observation, to us, is irrelevant. Ex. D at 3:21-22, 4:8. Slep-Tones form letters and Complaints in which the name of any individual or business operating a karaoke machine can be -- and has been -- inserted falls far short of satisfying Rule 11. 2. Slep-Tones Counterclaim of Trademark Infringement is Baseless

As described in detail in Expressways Motion to Dismiss, Slep-Tones trademark infringement counterclaim is baseless. Because Slep-Tone has admitted it has not observed any infringement by Expressway,7 the alleged infringing activities asserted in the Counterclaims can be either legal conclusions without factual support or blatant falsification -either way sanctionable conduct.
6 This Court has acknowledged the need to deter such strike suits--that is, attempts by plaintiffs to extract settlements from defendants who would rather pay the plaintiff than face the cost of discovery and trial. In re Initial Public Offering Securities Lit., 241 F. Supp. 2d 281, 326 (S.D.N.Y. 2003). 7 So the fact of observation, to us, is irrelevant. Ex. D at 4:8.

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For example, Slep-Tone alleges8 that EM has possessed, used, and displayed unauthorized counterfeit goods bearing the Sound Choice Marks and the Sound Choice Trade Dress during the performance of karaoke entertainment services. Dkt. 8, 61. Similarly, paragraphs 62, 63, 67 and 689 are anchored by the assertion that Expressway utilized unauthorized counterfeit accompaniment tracks. However, Slep-Tone has admitted that it has not observed any infringement by Expressway, and the Counterclaims do not provide any alternative factual support for these allegations. By virtue of Mr. Harringtons own admissions during the January 22, 2013 pre-motion conference, the allegations put forth by Slep-Tone in the Counterclaims are baseless. Ex. D at 3:21-22, 4:8 (We dont need to observe infringement in order for infringement to occur and be actionable. [T]he fact of observation, to us, is irrelevant.). Slep-Tones Counterclaims only allege that piracy is rampant in the karaoke industry and that Expressway is in the business of providing karaoke services. Dkt. 8. If true, those allegations would support a lawsuit for trademark infringement against any provider of karaoke services. Indeed, Slep-Tone has filed over 70 virtually identical lawsuits against over 800 defendants -- an unacceptable business practice designed to extort settlements from karaoke jockeys who are unable to fund a trademark litigation.10 Slep-Tones litigation strategy
8 It should be noted that these allegations are not made upon information and belief. 9 Perhaps most egregious is paragraph 64 which alleges EMs activities are not isolated or sporadic occurrences, but are instead regular activities undertaken over a period of years and repeated on each occasion on which EM provided karaoke entertainment services -- a difficult allegation to substantiate when your attorney has admitted to having no knowledge of any single instance of infringement. 10 Slep-Tones extortion strategy was premeditated as the contract between it and APS & Associates provided (1) exclusivity if APS files against at least 200 defendants within three months, 700 within 8 months and 2000 within 18 months. Ex. E at 2. Assuming one could observe trademark infringement (an impossible task considering a counterfeit track would look and sound identical to an authorized track) at 2 shows per weekend (when karaoke jockeys primarily perform), APS would need to employ 28 investigators to meet the 18 month quota. Clearly there was never an intent to procure factual basis to support allegations of trademark infringement -- rather only to file lawsuits.

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appears to consist of threatening suit and filing suit until its targets are forced to pay, even though Slep-Tone has no factual basis to support its claims.11 The countrys federal district court dockets are littered with examples of Slep-Tones methodical implementation of extortion as a tactic to coerce settlement in cases identical to the present action. For example, in an Order dated January 15, 2013 (a copy of which is attached hereto as Exhibit G), the Central District of California dismissed Slep-Tones allegations and awarded attorneys fees to defendants due to Slep-Tones systematic delays, including changing counsel (as Slep-Tone has done in the present matter): Upon consideration of Defendants motion papers, the Court is convinced that this was nothing more than a shakedown suit. This observation is based not only on evidence presented by Defendants, but also on the Courts own interaction (or lack thereof) with Slep-Tone. (See e.g., ECF No. 89 (dismissing case with prejudice for Slep-Tones failure to prosecute).) Overall, the Court finds that Slep-Tone prosecuted this case to maximize settlement recovery for a minimum amount of work. Ordinarily, such behavior is frowned upon but acceptable. But in this case, Slep-Tone takes trolling to the next level and essentially ignored all requests for discovery, explanations of exculpability, and requirements to act in good faith. Slep-Tone Entmt Corp. v. Backstage Bar and Grill, Civ. No. 2:11-cv-8305-ODW (C.D. Cal. Jan. 15, 2013); Ex. G at 2. C. Rule 11 Sanctions Should be Awarded in the Form of Dismissal Of This Action With Prejudice and Monetary Sanctions

The nature of the sanctions imposed for a violation of Rule 11(b) is determined with reference to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. Fed. R. Civ. P. 11(c); Judin v. U.S., 110 F.3d 780, 784 (Fed. Cir. 1997) (The purpose of imposing Rule 11 sanctions is to deter the misconduct addressed by the rule. (citing Cooter, 496 U.S. at 398)). On the basis of this motion and Expressways Motion to

11 [t]his Complaint is based on a complaint that has been brought in dozens of courts throughout this country... Ex. D at 4:14-16.

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Dismiss, Slep-Tones Counterclaims should be dismissed with prejudice. In addition, monetary sanctions should be imposed on Slep-Tones counsel in an amount to be determined following the dismissal of Slep-Tones Counterclaims. A monetary sanction is unquestionably appropriate here. The Court has significant discretion to determine what sanction, if any, is appropriate for a particular violation of Rule 11 and monetary sanctions are the most common form of sanctions.... Edmonds v. Seavey, No. 08 Civ. 5646 (HB), 2009 WL 4404815, at *4 (S.D.N.Y. Dec. 2, 2009), affd, 379 Fed.Appx. 62 (2d Cir. 2010). Similarly, the Federal Circuit has no hesitancy to impose on [defendants counsel] a Rule 11 sanction in the amount of the reasonable expenses incurred because of the filing of the [pleading] including a reasonable attorneys fee. Judin, 110 F.3d at 790 (Defendants have no choice when served with a complaint if they wish to avoid a default. They must undertake a defense, and that necessarily involves costs. Rule 11 prohibits imposing those costs upon a defendant absent a basis, well-grounded in fact, for bringing the suit. (emphasis added)); see also In re Initial Public Offering Securities Lit., 241 F. Supp. 2d 281, 326 n.46 (S.D.N.Y. 2003) (acknowledging that while the victim of a fishing expedition who has not committed any harm is forced to serve as the unwilling fish...a pure fishing expedition is forbidden by Rule 11, which is the law of the land. (emphasis in original)). Moreover, Slep-Tones practice of filing trademark infringement actions without adequate pre-filing inquiry to uncover appropriate facts is evident and wide-spread. [T]he Court finds that Slep-Tones conduct was both vexatious and in bad faith, and awards Defendants reasonable attorneys fees... Slep-Tone Entmt Corp. v. Backstage Bar and Grill, Civ. No. 2:11-cv-8305-ODW (C.D. Cal. January 15, 2013); Ex. G at 2. Only the dismissal of this case and monetary sanctions will deter Slep-Tone and its counsel from

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