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Thursday, April 15, 2010

The Unfair Sound Choice "Audit Agreement"

Sound Choice is suing karaoke jocks who use computers for their shows, without knowing one way, or another if they actually own legal copies of CDG's. This is well documented. If you are named in a suit, you are given the opportunity to prove your innocence to Sound Choice, by submitted to an "audit". You are required to sign an "Audit Agreement" prior to the actual audit. The audit agreement puts all of the power in Sound Choice's corner. It would be highly recommended that anyone who is considering signing this agreement consult with an attorney PRIOR to signing your rights away.

Here is a copy of the agreement:


INITIALS AUDIT ACKNOWLEDGEMENT – PAGE 1 OF 2
KARAOKE LIBRARY AUDIT
ACKNOWLEDGEMENT OF TERMS
THIS DOCUMENT MAY AFFECT YOUR LEGAL RIGHTS. DO NOT SIGN IT WITHOUT READING IT.
THIS DOCUMENT IS NOT A SETTLEMENT AGREEMENT.
THIS DOCUMENT IS NOT BEING TENDERED AS PART OF SETTLEMENT NEGOTIATIONS.

You have requested that your karaoke library be audited in order to have this information considered as one of the factors in resolving a dispute between you and Sound Choice Studios, Inc., and Slep-Tone Entertainment Corp. (together, “Sound Choice”).

Your signature below indicates your acknowledgement of the following terms for this audit:

1. YOUR REQUEST FOR AUDIT. Your signature below constitutes your request for an audit of your karaoke library. Sound Choice has agreed to conduct this audit at its own expense (except for incidental expenses you may incur in assembling your materials for the audit).
2. EXISTING EVIDENCE. A Sound Choice representative has already visited one or more of your shows and gathered evidence, including photographs, song lists, and other information, that based upon our experience reflects a high probability that you have committed acts of infringement. You have been sued for trademark infringement involving counterfeiting. In
summary, you have been accused of playing karaoke accompaniment tracks that include a display of Sound Choice trademarks, without owning a legal CD+G disc containing that track for each system on which you store that track.

3. REJECTION OF SETTLEMENT OFFER. You acknowledge that Sound Choice has offered to settle this matter on certain conditions. Your request for an audit constitutes a rejection of that settlement offer. Sound Choice’s policy is to increase its settlement demand at the conclusion of an audit, if you are determined to have infringed its intellectual property.

4. SCOPE OF AUDIT. Sound Choice will conduct an audit of your karaoke library to determine whether you have legitimately acquired a legal copy of every Sound Choice karaoke accompaniment track stored in your karaoke library. A Sound Choice track is deemed to have been legitimately acquired only if you own an original CD+G (compact disc plus graphics) disc
containing that track. If you have transferred the track to another format (“media-shifted”), you must own an original CD+G disc containing that track for each such system to which you have transferred that track, in order to be considered in compliance. Sound Choice has also been authorized by other manufacturers of karaoke accompaniment tracks, including Chartbuster, Stellar, Pocket Songs, Priddis Music, and others, to perform a simultaneous audit on their behalf; your audit may include those manufacturers. Sound Choice will provide the results to those manufacturers, who may begin their own lawsuits against you if you are not in compliance. These other manufacturers will be identified on the day of the audit.

5. RIGHT TO TERMINATE. You have the right to terminate the audit at any time; however, you should be aware that Sound Choice may use all available legal process, including obtaining a court order, to obtain the information it is collecting through this audit. Destruction of evidence, whether performed before or after the audit, may constitute “spoliation” and may subject you to sanctions from the court.

6. AUDIT PROCEDURES. The following procedures will be used to conduct the audit:


A. A Sound Choice representative will contact you to arrange for a mutually acceptable time and place for the audit.

B. If at any time during the audit process you fail to cooperate fully with the representative’s requests, the audit may terminate and Sound Choice will consider you to have failed the audit.

C. You should assemble for inspection all of your karaoke discs, CAVS machines, computers (including laptops), and any other apparatus containing karaoke media, whether being used for active or backup purposes, in the designated location at the designated time. If any additional equipment is necessary to access the media (including but not limited to keyboard/mouse, monitor, or the like), you should bring that equipment as well. Failure to present all materials for inspection will constitute failure of the audit.

D. You should also assemble for inspection all of your song lists and receipts from disc purchases made within the last five years. Receipts for disc purchases may be verified against seller records to prevent falsification. Discs acquired after Sound Choice’s initial investigation will be matched against load dates on your system to determine whether infringement occurred prior to acquisition of the disc. An indication of a track loaded before purchase will be considered an indication of infringement and will constitute failure of the audit.


AUDIT ACKNOWLEDGEMENT – PAGE 2 OF 2


E. During the audit, each disc will be marked using an indelible method. This marking will not interfere with your ability to play the disc but will prevent that disc from being re-used in an audit of another company.

F. Sound Choice may employ software designed to examine any hard drives in your possession to determine whether songs have been deleted from the system after Sound Choice’s investigation began. A deleted track file may indicate an attempt at spoliation and constitute evidence of willful infringement, as well as an audit failure.

G. You should be prepared to demonstrate that you, or one of your employees, loaded every song stored other than on a CD+G onto the machine where it is stored. If you purchased a pre-loaded hard drive or CAVS machine, you should be aware that Sound Choice has never authorized a transfer of that type. Possession of a pre-loaded system will be considered failure of the audit.

7. SUCCESSFUL AUDIT. You will be deemed to have successfully completed the audit if you comply fully with these terms in all respects and if the audit shows that for every audited track, you own one legitimately acquired original disc containing that track for every individual machine (CAVS machine, laptop, or other device you use for media storage for a karaoke show)
that contains that track. This is known as “1:1 correspondence.”

8. DISMISSAL OF SUIT. If you successfully complete the audit, Sound Choice will be willing to dismiss the suit against you provided that you agree to adhere to all applicable copyright and trademark laws with regard to the use of Sound Choice accompaniment tracks and to submit to future audits at Sound Choice’s reasonable request.

9. USE OF AUDIT RESULTS. You acknowledge that Sound Choice may use the results of the audit it conducts in any way it deems appropriate, including as evidence against you in the pending suit.

10. FAILED AUDIT. At the conclusion of a failed audit, Sound Choice will tender you a new settlement offer that is at least $2,000 per system higher than the most recent settlement offer made. If that settlement offer is not accepted within 14 days of being tendered, it will be withdrawn, and Sound Choice will be committed to seeing the lawsuit to its conclusion. In
that event, you should be aware that statutory damages for trademark counterfeiting can be as high as $2,000,000 per mark (there are two federally registered trademarks at issue here, for a total of $4,000,000). You should also be aware that in a recent case involving non-commercial file-sharing, Capitol Records v. Thomas, a jury awarded almost $2 million to the
record labels who sued an individual. Because your use is commercial, Sound Choice believes it can obtain a significant verdict against you.

11. ADVICE OF COUNSEL. You acknowledge that you have had the opportunity to review this document and to obtain an opinion of counsel regarding it prior to signing it.
Your signature below constitutes a rejection of any and all outstanding settlement offers from Sound Choice and an acknowledgement of the terms of audit.


IF YOU ARE UNCOMFORTABLE WITH ANY OF THE TERMS ABOVE, DO NOT SIGN THIS DOCUMENT.


SIGNATURE PRINTED NAME
COMPANY NAME TITLE
DATE E-MAIL ADDRESS TELEPHONE NUMBER
THIS DOCUMENT MAY AFFECT YOUR LEGAL RIGHTS. DO NOT SIGN IT WITHOUT READING IT.
THIS DOCUMENT IS NOT A SETTLEMENT AGREEMENT.
THIS DOCUMENT IS NOT BEING TENDERED AS PART OF SETTLEMENT NEGOTIATIONS.

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