Intellectual Property

States entitled to sovereign immunity on Lanham Act claims for trademark infringement and false designation of origin - Univ. of Wis. v. Phoenix Int'l Software (7th Cir., Dec. 28, 2010)

Recently, the Seventh Circuit answered the following question in the negative: Is the Trademark Remedy Clarification Act (TRCA) a valid exercise of Congress's Fourteenth Amendment power to regulate state behavior?

In Bd. of Regents of the Univ. of Wis. Sys. v. Phoenix Int'l Software, Inc., 2010 U.S. App. LEXIS 26269 (7th Cir. Wis. Dec. 28, 2010) [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law], the University of Wisconsin (Wisconsin) sought to overturn the Trademark Trial and Appeal Board's (TTAB) cancellation of Wisconsin's registration of the mark CONDOR. Phoenix International Software counterclaimed, seeking damages from Wisconsin for trademark infringement and false designation of origin under the Lanham Act (15 U.S.C. §§ 1114 and 1125). In answering the aforementioned question, the Seventh Circuit relied on Fla. Prepaid Postsecondary Educ. Expense Bd. v. College Sav. Bank, 527 U.S. 627 (U.S. 1999) [enhanced version / unenhanced version], which found the TRCA's sister statute, the Patent and Plant Variety Protection Remedy Clarification Act, unconstitutional in establishing state liability for patent infringement. Specifically, the Seventh Circuit stated:

As for whether trademarks are different than patents, Phoenix argues that trademarks are of permanent duration and that the creation of trademarks protects the public from confusion and thus they must be analyzed under a separate rubric than patents. We agree that the two rights are different, but the Supreme Court in Florida Prepaid treated patents as a serious property right and its holding in that case did not turn on the nature of the property right, but on the insufficiently narrow tailoring of Congress's remedy to the harms it sought to remedy and the insufficient findings that a national remedy was necessary. Given the similarity between the laws here, we are compelled to find that Florida Prepaid controls the outcome of this issue. Unless Wisconsin waived its immunity from suit, it is protected from Phoenix's counterclaims.

The Seventh Circuit went on to reject Phoenix's contentions that Wisconsin had waived its sovereign immunity by: (1) choosing to participate in the federally regulated trademark process; and (2) invoking the jurisdiction of the district court pursuant to 15 USCS § 1071(b) rather than appealing the TTAB's decision to the Federal Circuit pursuant to § 1071(a).