Holding

The U.S. District Court for the Western District of Wisconsin in this case regarding plaintiff's trademark "Condor" dismissed defendant's counterclaims for trademark infringement. Plaintiff Board of Regents of the University of Wisconsin System ("Plaintiff") filed this civil action for a review of the Trademark Trial and Appeal Board's decision ("TTAB") that cancelled its trademark. In response, defendant Phoenix Software International, Inc. ("Defendant") filed counterclaims for trademark infringement, among others. The district court granted plaintiff's motion to dismiss counterclaims on the ground of sovereign immunity. Specifically, the district court held that plaintiff enjoys sovereign immunity as a branch of the state and that its immunity has been neither abrogated by the enactment of the Trademark Remedy Clarification Act ("Act"), nor waived by plaintiff's participation in the federal trademark system. In addition, plaintiff did not waive its immunity by filing the present suit because its appeal could not be construed as a voluntary invocation of federal jurisdiction.

Detailed Summary

Plaintiff filed this civil action seeking review of a decision of the TTAB in which the TTAB cancelled a trademark of plaintiff’s for “CONDOR.” Opinion, pp. 1-2. Defendant filed counterclaims against plaintiff for trademark infringement related to plaintiff’s use of its CONDOR mark. Before the district court was plaintiff’s motion to dismiss defendant’s federal counterclaims on the ground of immunity. Although defendant asserted related state law claims, those claims were dismissed with prejudice pursuant to the parties’ stipulation. Id., citing Dkt. #18.

Plaintiff argued that it is immune from suit under the Eleventh Amendment because it is a branch of the state. On the other hand, defendant contended that plaintiff has no sovereign immunity in this case both because Congress has abrogated the state’s immunity from trademark infringement suits in the Act and because plaintiff waived its immunity by participating in the federal trademark system and by filing the present complaint. Id.

In resolving these contending arguments of both parties, the district court ruled in favor of plaintiff on the ground of sovereign immunity enjoyed by plaintiff.  The district court gave three reasons for such holding.

First, Congress did not abrogate state sovereign immunity for violation of trademark rights by enacting the Act. The relevant provision of this statute states:” Any State, instrumentality of a State or any officer or employee of a State or instrumentality of a State acting in his or her official capacity, shall not be immune, under the eleventh amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person, including any governmental or nongovernmental entity for any violation under this chapter (including violations of 15 U.S.C. §§ 1114 and 1125).  Id., p. 4, citing 15 U.S.C. § 1122(b).

Here, although the Supreme Court has not held that Congress acted unconstitutionally when it tried to abrogate state sovereign immunity with respect to trademark suits, the Supreme Court has found that Congress has no authority to abrogate state sovereign immunity with respect to patent suits. Id., pp. 7-9, citing Florida Prepaid PostSecondary Education Expense Board v. College Savings Bank, 527 U.S. 627 (1999).

It is unlikely the Supreme Court would reach a different conclusion in trademark litigation. “Because defendant has failed to show that the Trademark Remedy Clarification Act is congruent and proportional to any Fourteenth Amendment injury, I conclude that the Act was not passed “pursuant to a valid exercise of power” and that it fails to abrogate state immunity. As a branch of the state, plaintiff enjoys sovereign immunity from trademark infringement suits.” Id.

The second reason cited by the district court was that plaintiff did not waive its sovereign immunity by participating in the federal trademark system because its participation was not conditioned on waiver. Id. at 683-84. “Attempts to force waiver on the sole basis of participation in the market amounts to nothing more than ‘abrogation under another name.’” Id., pp. 9-10, citing College Savings Bank at 683-84.

The third reason cited by the district court in holding that plaintiff did not waive its immunity by filing the present case is that such filing did amount to a voluntary invocation of federal jurisdiction. Specifically, the invocation of federal jurisdiction must be voluntary, and the waiver reaches only so far as necessary to adjudicate the claim raised by the state.  Id., p. 11, citing In re Friendship Medical Center, Ltd., 710 F.2d 1297, 1301 (7th Cir. 1983). Here, plaintiff’s complaint is not “voluntary,” but even if it were, plaintiff would not have waived immunity to defendant’s counterclaims because they are not “necessary” to adjudicating plaintiff’s appeal. Id.

On the basis of the foregoing, the district court ordered the dismissal of defendant’s federal trademark infringement counterclaims.