Opinion ID: 181828
Heading Depth: 1
Heading Rank: 6

Heading: Did Wisconsin waive its immunity from suit?

Text: One problem Congress identified when enacting the TRCA (and its sister patent statute) was the uneven playing field created by a trademark regime without remedies against states. In the patent context, it explained: A public school such as UCLA can sue a private school for patent infringement, yet USC cannot sue UCLA for the same act. The status of an infringing party should have no relation to the amount of investment made in a product. State universities should not have an unjustified advantage in the commercial arena over private universities for funding because of the potential for immunity from patent infringement actions. S.Rep. No. 102-280, at 9 (1992) reprinted in 1992 U.S.C.C.A.N. 3568, 3095. The level-playing-field issue is particularly pertinent in the context of scientific research and patents, but this case exemplifies that similar concerns arise in the trademark arena. Phoenix contends that we can fix this problem by finding that Wisconsin waived its sovereign immunity by choosing to participate in the federally regulated trademark process. After all, Wisconsin could have chosen to use the CONDOR mark without registering it, and without concern for damages because of its sovereign immunity guarantee. Wisconsin, however, chose to register the mark, and actively participated in the system by which it gained benefits (i.e., clearing the field of other CONDOR marks). Wisconsin's gain of benefits from its participation in the system should, Phoenix argues, subject it to responsibilities arising from its participationnamely a suit for damages if it infringes on other marks in the system. Unfortunately for Phoenix, the Supreme Court rejected a similar argument in the TRCA case, College Savings Bank, where it found that a state's decision to engage in the interstate marketing and administration of its program, 527 U.S. at 671, 119 S.Ct. 2219, is not a constructive waiver of immunity, id. at 687, 119 S.Ct. 2219. Wisconsin is in a bit of a different situation than was the state of Florida: it formally registered its mark with the PTO. It entered the federal trademark system not by simply possessing a trademark that it marketed in commerce, as Florida did, but by actively availing itself of the benefits of federal trademark registration. But College Savings Bank sweeps more broadly than merely rejecting a market-entry waiver of sovereign immunity. College Savings Bank rejected the entire notion of a constructive waiver of sovereign immunity, id. at 680, 119 S.Ct. 2219, and limited the inquiry of waiver to whether  the State made an altogether voluntary decision to waive its immunity, id. at 681, 119 S.Ct. 2219 (quotation omitted). A law that merely alerts the state to the federal government's intention to abrogate the state's immunity is insufficient to create a waiver if the state is engaging in otherwise lawful activity. Id. at 687, 119 S.Ct. 2219. The state's choice to register its mark was otherwise lawful activity, and Phoenix does not and cannot suggest that the receipt of trademark registration is specifically conditioned on a waiver of immunity. In fact, Phoenix's counterclaims do not depend at all on whether Wisconsin registered its mark; the statutory infringement and false designation of origin claims are ordinarily available against any actor who infringes a registered mark. After College Savings Bank, the doctrine of constructive waiver is no longer available. Wisconsin is entitled to assert its immunity from suit notwithstanding its voluntary participation in the federal trademark registration system. But Wisconsin's participation in the trademark system is not the only conduct that Phoenix identifies as triggering a waiver of Wisconsin's Eleventh Amendment privileges. Phoenix also argues that Wisconsin waived its sovereign immunity the moment it invoked the jurisdiction of the district court pursuant to 15 U.S.C. § 1071(b). Phoenix cites Lapides v. Board of Regents of the University System of Georgia, 535 U.S. 613, 619, 122 S.Ct. 1640, 152 L.Ed.2d 806 (2002), in support of this proposition. There, the state of Georgia was subject to state law claims against it in state court. It removed the case to federal court, and then argued that the Eleventh Amendment barred the federal court from hearing the state law claims against it. In rejecting Georgia's immunity argument, the Supreme Court focus[ed] on the litigation act Georgia performed and concluded that removal was an insufficiently special act, Lapides, 535 U.S. at 620, 122 S.Ct. 1640, to warrant departure from the longstanding general principle that where a State voluntarily becomes a party to a cause and submits its rights for judicial determination, it will be bound thereby and cannot escape the result of its own voluntary act by invoking the prohibitions of the Eleventh Amendment. Id. at 619, 122 S.Ct. 1640 (quoting Gunter v. Atl. Coast Line R.R., 200 U.S. 273, 284, 26 S.Ct. 252, 50 L.Ed. 477 (1906)). It also necessarily implied that by removing the case to federal court, Georgia affirmatively changed the character of its participation in the litigation, for the Supreme Court recognized that Georgia had been brought involuntarily into the case as a defendant in the original state court proceedings. Id. at 620, 122 S.Ct. 1640. Phoenix contends that Wisconsin's litigation status was similarly changedand its sovereign immunity similarly waivedwhen it made the decision to file an action in district court pursuant to 15 U.S.C. § 1071(b) rather than appealing the TTAB's decision to the Federal Circuit pursuant to § 1071(a). In choosing to proceed under § 1071(b) rather than § 1071(a), Phoenix asserts, Wisconsin gained the benefit of additional evidence and so should face the cost of Phoenix's infringement and false designation of origin counterclaims. But the simple cost-benefit analysis Phoenix proposes overlooks the true nature of the proceedings here. Wisconsin, like Georgia in Lapides, was originally haled into litigation with Phoenix involuntarily. Its status was that of a defendant. See 37 C.F.R. § 2.116(b). Wisconsin's election to pursue an appeal in the district court rather than the appellate courtwhich it, like private parties to cancellation proceedings, was statutorily entitled to dogave it the official title of plaintiff, but title is not what matters for sovereign immunity purposes. If the character of the litigation act turned on title, Georgia would have been able to assert its sovereign immunity claims in Lapides. The technically voluntary nature of Wisconsin's appeal is not determinative either. Our dissenting colleague makes a thoughtful presentation on this front, but the mere fact that Wisconsin exercised its option to challenge an adverse decision against it does not necessarily result in a waiver of its sovereign immunity. Indeed, our colleague concedes that Wisconsin could have appealed in the Federal Circuitanother federal forum reached wholly voluntarilyand still retained its ability to mount a sovereign immunity defense to the very claims Phoenix brings here. See Dissent at 58. What is crucial is the nature of Wisconsin's litigation act. Unlike Georgia's removal in Lapides, Wisconsin's pursuit of judicial review in the wake of the adverse agency decision it did not initiate is special. Despite its formal characterization as a standalone civil action, see 15 U.S.C. § 1071(b); 37 C.F.R. § 2.145, at its heart Wisconsin's pursuit of redress in the district court is simply a continuation of Phoenix's original cancellation action. Cf. Vas-Cath, Inc. v. Curators of the Univ. of Mo., 473 F.3d 1376, 1382 (Fed.Cir.2007) (stating that an appeal brought in the district court pursuant to 35 U.S.C. § 146, which is roughly analogous to 15 U.S.C. § 1071(b), is not a new claim, but an authorized phase of the interference proceeding that is conducted by the PTO and is subject to judicial review). [T]he mere seeking of judicial review of an agency decision . . . by a state that was a defendant before the agency [is] insufficient alone to infer a waiver of immunity, Taylor v. U.S. Dep't of Labor, 440 F.3d 1, 5 (1st Cir.2005) (quotation omitted), and Phoenix has not identified for our consideration any other relevant affirmative litigation acts undertaken by Wisconsin. We are mindful of the concerns about unfair litigation gameplay that animated the Court's holding in Lapides, 535 U.S. at 620-22, 122 S.Ct. 1640; we recognize that while the Eleventh Amendment gives states an upper hand, it cannot be massaged to create unfair litigation advantages. Attempts to assert sovereign immunity under circumstances that create inconsistency, anomaly, and unfairness in the litigation context, id. at 620, 122 S.Ct. 1640, implicate those concerns and cannot be permitted to go forward. But there is no indication that Wisconsin usedor even could use, for the potential exploitation of the sovereign immunity privilege is an imperative consideration as well, see Lapides, 535 U.S. at 621, 122 S.Ct. 1640its district court action as an opportunity to gain any sort of unfair or inconsistent litigation advantage over Phoenix here. See Taylor, 440 F.3d at 8 (The Lapides -[ New Hampshire v. ] Ramsey [366 F.3d 1 (1st Cir.2004)] line of cases does not prevent a litigant from obtaining any sort of advantage relating to immunity in pursuing his case. They only condemn those litigation advantages that are `inconsistent' or `unfair.' (quoting Lapides, 535 U.S. at 622, 122 S.Ct. 1640)). To the contrary, Wisconsin did not employ the hybrid appellate vehicle to raise any new claims; it simply appealed the adverse TTAB ruling. Had it brought new claims against Phoenix, the nature of its litigation act, and the outcome of our analysis, would plainly be different; the assertion of previously unlitigated claims in a federal forum is undoubtedly a form of voluntary invocation of a federal court's jurisdiction sufficient to waive the State's otherwise valid objection to litigation of a matter . . . in a federal forum. Lapides, 535 U.S. at 624, 122 S.Ct. 1640. Wisconsin made a choice to proceed in the district court, and there were undeniably some litigation advantages to be had as a result of that decision. But these advantages are equally available to all participants in trademark cancellation proceedings; they simply cannot be considered unfair or inconsistent. It would be both unfair and unrealistic to require states to passively acceptor even pre-empt, see Dissent at 61adverse TTAB decisions so as to keep their sovereign immunity privilege intact. It was at Phoenix's behest that Wisconsin was brought involuntarily into the case as a defendant, Lapides, 535 U.S. at 620, 122 S.Ct. 1640, and Wisconsin's election to proceed in district court rather than before the Federal Circuit does nothing to fundamentally alter the nature of the proceedings or its participation in them. Wisconsin's assertion of sovereign immunity in response to claims distinct from those raised in the original administrative action does not implicate the fairness concerns identified by the Supreme Court. Wisconsin immediately and unfalteringly asserted a sovereign immunity defense when the federal counterclaims were filed. Contra Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011, 1021-22 (9th Cir.2010). It was generally entitled to defend against Phoenix's claims in such a manner, see Dissent at 58, and did not use any litigation sleight of hand to invoke the Eleventh Amendment, see, e.g., Lapides, 535 U.S. at 621, 122 S.Ct. 1640; Ind. Prot. & Advocacy Servs. v. Ind. Family & Soc. Servs. Admin., 603 F.3d 365, 373 (7th Cir. 2010) (en banc), petition for cert. filed, 79 U.S.L.W. 3063 (July 21, 2010) (No. 10-131); New Hampshire v. Ramsey, 366 F.3d 1, 16-17 (1st Cir.2004). We therefore conclude that Wisconsin has not through its appeal from the TTAB's decision waived its sovereign immunity defense to Phoenix's counterclaims.