Leadsinger v. BMG

Citation: Leadsinger, Inc. v. BMG Music Publishing, 2008 U.S. App. LEXIS 7 (9th Cir. January 2, 2008).

Factual Background
Leadsinger manufactures and sells a karaoke system enclosed in a microphone. This unit can be plugged into a television and the user can sing while the lyrics to songs are reproduced on the TV screen, sometimes along with still images from the CD. Leadsinger has a compulsory license for BMG's music and brought this case for declaratory judgment to determine if additional fees were required for the reproduction and synchronization of the song lyrics, or if they were permitted to use them through the fair use doctrine.

District Court Decision
The District Court dismissed Leadsinger's case without leave to amend the complaint for failure to state a claim for which relief could be granted and held that Leadsinger's karaoke device was outside the definition of a phonorecord because "the device contains more than sounds".

Appellate Court Decision
The Appellate Court upheld the District Court's determination of the karaoke device as an audiovisual work and therefore not a phonorecord and so excluded from the compulsory licensing scheme.

The court also rejected Leadsinger's fair use argument for reproducing the song lyrics. Despite the stated benefits of teaching users to sing and allowing parents to better determine if material was appropriate for their children, the Appellate Court determined that Leadsinger's use was only commercial, that the nature of the originally copyrighted material was creative, and that Leadsinger had used essentially all of the original work making them unable to benefit from a fair use defense.

The dismissal of Leadsinger's complaint without leave to amend was affirmed.