Defendants are in the ostensible business of creating, manufacturing,
distributing, and selling karaoke products, which allow customers to sing along to
popular music. Karaoke, which is a Japanese term meaning "empty orchestra," is a
significant and valuable licensing market for musical compositions in the United
Defendants manufacture, distribute and sell two different types of
"all-in-one microphone player" karaoke machines. The first type encompasses the
"LS 2000" and "LS 3000" series "Portable Video Karaoke Systems" (the "First
Generation System"). The second type is the "LS-MVK-2" "Portable Video
Karaoke System" (the "Second Generation System"). All systems include a
microphone player with audio and video outlets which plug into the user's
television. The First Generation System utilizes and includes removable media
cartridges know as "MUSIKARTRIDGES." The Second Generation System
utilizes and includes removable media cartridges known as SD Cards.
30. Defendants' First Generation System operated as follows. Defendants
selected popular musical compositions for which they believed a karaoke market
exists and created or arranged for the creation of sound recordings embodying such
compositions by imitating the sound and performance of the recording that
popularized the composition. Defendants then encoded on MUSIKARTRIDGES
both the audio rendition of the sound recording they created (in versions with
arid/or without vocals), and a contemporaneous video display of the lyrics to the
musical composition. These MUSIKARTRIDGES were intended for use in
Defendant's First Generation System microphone players, which allowed users to
display the song's lyrics on a video screen in "real time" as the songs are playing,
so-that users could follow and.,sirg the lyrics along with the recording.
Defendants' MUSIKARTRIDGES remain available for sale to consumers. These
MUSIKARTRIDGES contain many unauthorized copies of Plaintiffs' Copyrighted
Compositions, and cause the unauthorized display of the lyrics of Plaintiffs'
Defendants' Second Generation System further expands the scope of
their infringing conduct. While continuing to operate under the guise of being in
the karaoke business, Defendants now engage in flagrant, base music piracy.
Instead of MUSIKARTRIDGES, Defendants now market SD Cards at prominent
retail outlets, which Defendants pre-load with MP3 and MP4 files of the
Copyrighted Recordings (including UMG's videos embodying such Copyrighted
Recordings) and Copyrighted Compositions, all without Plaintiffs' permission and
without compensation to Plaintiffs. True and correct copies of photographs of the
Second Generation System and accompanying SD Cards are attached to this
Complaint as Exhibit 1. These SD Cards are not limited to use with Defendants'
Second Generation System, but also are compatible with almost any computer or
digital media player, and may be utilized as independent media storage devices for
download and play wholly independent of any of Defendants' karaoke devices, or
any karaoke device. A USB adapter is included with purchase of Defendants'
Second Generation System, which enables the user to connect the SD Cards with
and thereby upload the MP-3 and MP-4 on the SD Cards to any computer.
Defendants also maintain and operate the websites
www.leadsing e r.com and www.es2entertainment.com, where Defendants sell
additional MP3 and MP4 files of the Copyrighted Recordings and Copyrighted
Compositions, for digital download and performance not only to Defendants' SD
Card, but also to a user's computer hard drive. This website also offers
Defendants' proprietary "Power CD+G to Video Karaoke Converter" software for
free download, which enables users to download the lyrics of Copyrighted
Compositions from infringing third party websites. Defendants advertise the music
files available on their website as "Play anywhere, DRM-free Music Downloads,"
and, after download, these unrestricted files may be utilized by the purchaser
without limitation, including for further, viral distribution, with or without
Defendants' karaoke devices. True and correct copies of portions of Defendants'
website. are attached to this Complaint as Exhibit 2.
Defendants' products are offered for sale across the United States at