Opinion ID: 181828
Heading Depth: 1
Heading Rank: 5

Heading: Was the Trademark Remedy Clarification Act a valid exercise of Congress's Fourteenth Amendment power?

Text: The Trademark Remedy Clarification Act (TRCA), Pub.L. 102-542, 106 Stat. 3567, established state liability for trademark violations. A portion of the TRCA has already been deemed unconstitutional by the Supreme Court. Coll. Sav. Bank, 527 U.S. at 691, 119 S.Ct. 2219. This portion provided for state liability for false advertising, which is one form a 15 U.S.C. § 1125(a) claim can take; the false designation of origin claim at issue here is another. We'll assume for purposes of our discussion that the claim we are considering is different from the provision at issue in College Savings Bank; in any event, the Supreme Court has not spoken clearly on the other counterclaim: trademark infringement under 15 U.S.C. § 1114. The TRCA's sister statute, the Patent and Plant Variety Protection Remedy Clarification Act (Patent Remedy Act), established state liability for patent infringement and was similarly found unconstitutional. See Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627, 647-48, 119 S.Ct. 2199, 144 L.Ed.2d 575 (1999). Phoenix's argument that it should be able to pursue a trademark infringement remedy against Wisconsin depends largely on its ability to convince us that its claims are different from patent enforcement and false advertising claims. The Supreme Court found that states were protected by the Eleventh Amendment against claims for money damages under either of those causes of action. Id.; Coll. Sav. Bank, 527 U.S. at 691, 119 S.Ct. 2219. To preserve its claims against Wisconsin, Phoenix needs to show that Congress expressly intended to abrogate state sovereign immunity, that it did so under Section 5 of the Fourteenth Amendment, that the trademark in question was a property interest cognizable under the Fourteenth Amendment, and that the abrogation of state immunity was an appropriate exercise of Congress's Section 5 power. See Fla. Prepaid, 527 U.S. at 635, 119 S.Ct. 2199. It is undisputed that Phoenix can clear the first two hurdles (Congress expressly intended to abrogate state sovereign immunity and it acted under Section 5). Wisconsin contends that the Fourteenth Amendment does not protect trademarks, but Supreme Court dictum indicates the opposite. The Lanham Act may well contain provisions that protect constitutionally cognizable property interestsnotably, its provisions dealing with infringement of trademarks, which are the `property' of the owner because he can exclude others from using them. Coll. Sav. Bank, 527 U.S. at 673, 119 S.Ct. 2219. Wisconsin gives us no reason to doubt that this would be the Court's current position. So the question is whether the TRCA is an appropriate law as the term is used in Section 5 of the Fourteenth Amendment. (The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.). In City of Boerne v. Flores, 521 U.S. 507, 519, 117 S.Ct. 2157, 138 L.Ed.2d 624 (1997), the Supreme Court held that Congress's Section 5 power is inherently limited to remedial and preventive laws. When legislating under Section 5, Congress must achieve a congruence between the means used and the ends to be achieved. Id. at 530, 117 S.Ct. 2157. Furthermore, the law must be a proportional response to the problem Congress seeks to solve through legislation. Id. at 532, 117 S.Ct. 2157; see also Fla. Prepaid, 527 U.S. at 639, 119 S.Ct. 2199 (discussing Boerne). Thus, for Congress to invoke Section 5, it must identify conduct transgressing the Fourteenth Amendment's substantive provisions, and must tailor its legislative scheme to remedying or preventing such conduct. As we've noted, the Supreme Court found that the Patent Remedy Act, which is to patents what the TRCA is to trademarks, was not a proportional or congruent exercise of Congress's Section 5 powers. That act was designed to remedy patent infringement by a state, just as the TRCA is designed to remedy trademark infringement, by providing for money damages against a state. In Florida Prepaid, the Supreme Court found that Congress identified little evidence of pervasive state infringement of patents. Instead, the harm Congress identified was speculative. Id. at 641, 119 S.Ct. 2199. College Savings' alternative argument, joined by the United States, was that when a state infringes a patent without paying a fee, the state has denied the patent-holder of a property interest without due process of law. But, the Supreme Court rejected this argument because Congress barely considered the availability of state remedies for patent infringement and thus did not sufficiently consider whether existing state remedies might already provide constitutionally sufficient due process for patent infringement. Id. at 643, 119 S.Ct. 2199. The Court also noted that states are not liable for constitutional violations when they negligently cause injuries and that Congress made no distinction between negligent infringement (which would not be a proper subject of Congress's Section 5 power) and reckless and intentional infringement which would trigger the Fourteenth Amendment's protection. Id. at 645, 119 S.Ct. 2199. For all these reasons, the Court found that the Patent Remedy Act did not abrogate a state's Eleventh Amendment immunity. Wisconsin argues, and the district court found, that the same reasons support a decision to preserve state immunity against damages under the TRCA. We agree that the TRCA is not materially different from the Patent Remedy Act found unconstitutional in Florida Prepaid. Both acts, for instance, share the same Senate Report (S.Rep. No. 102-280) which identifies only one case of state trademark infringement where the state was protected from federal suit, and suffers from all the infirmities identified by the Supreme Court in Florida Prepaid, 527 U.S. at 643-45, 119 S.Ct. 2199 (rejecting the idea that the legislative history of the Patent Remedy Act satisfies requirements for Congress's action under Section 5 of the Fourteenth Amendment). 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.