A software company's trademark infringement claims against the Board of Regents of the University of Wisconsin System ("university") for its use of the company's CONDOR trademark were barred by sovereign immunity under the Eleventh Amendment, the federal district court in Madison, Wisconsin has decided. The university was a branch of the state, and its immunity had not been abrogated or waived.

Congress attempted to abrogate states' sovereign immunity from trademark suits by enacting the Trademark Remedy Clarification Act in 1992, the court noted. This statute added Sec. 40(b) to the Lanham Act, which 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 Act.

According to the court, Congress did not exercise a valid power by enacting the Trademark Remedy Clarification Act.

The U.S. Supreme Court held in College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 527 U.S. 627 (1999) that Congress may not abrogate state immunity from patent suits pursuant to the Commerce Clause or any other of its Article I powers. In Florida Prepaid, the Court considered whether Congress validly abrogated immunity for patent infringement by enacting the Patent and Plant Variety Protection Remedy Clarification Act.

In the legislative history for the Patent and Plant Variety Protection Remedy Clarification Act, Congress asserted that it had power under Sec. 5 of the Fourteenth Amendment to abrogate states' sovereign immunity in order to address state violations of the due process clause that may occur when a state deprives persons of property by infringing their patent rights. The Court determined that patent infringement by a state was not itself a constitutional injury; only state patent infringement that was both without due process of law and intentional or reckless could amount to the sort of injury that Congress could remedy pursuant to Sec. 5. Thus, the Court held, the Patent and Plant Variety Protection Remedy Clarification Act's abrogation of state immunity was disproportionate to the injury identified by Congress, which was merely a "handful of instances of state patent infringement that do not necessarily violate the Constitution."

It was unlikely that the Court would reach a different conclusion with regard to trademark litigation, the district court said, given that the Trademark Remedy Clarification Act was passed pursuant to the same purported Fourteenth Amendment powers as the Plant Variety Protection Remedy Clarification Act.

The university did not waive its immunity by participating in the federal trademark system or by filing a suit to review the Trademark Trial and Appeal Board's cancellation of its own CONDOR mark, in the court's view. A state may constructively waive immunity when Congress conditions a "gift" on the waiver, such as when Congress conditions a grant of funds to the states upon waiver of immunity. The Lanham Act, as amended by the Trademark Remedy Clarification Act, did not condition the receipt by a state of a federal trademark registration on a waiver of sovereign immunity. The Clarification Act instead sought to expose all states to liability for trademark infringement, regardless of their participation in the federal trademark system. An attempt to force waiver on the sole basis of participation in the market would amount to nothing more than "abrogation under another name."

The university's appeal of the TTAB's decision to cancel its mark was not a waiver because it was not "voluntary," according to the court. Rather, it amounted to a branch of the state defending its cause in administrative proceedings brought against it. Even if the appeal constituted a waiver of immunity, the scope of that waiver would not extend to the software company's infringement claims. The issue of infringement was not necessary to adjudicate the administrative cancellation action.

The district court's order dismissing the software company's claims was stayed pending certification of the issue to the U.S. Attorney General, to permit the United States to intervene for presentation of evidence and for argument on the question of the constitutionality of the Trademark Remedy Clarification Act's abrogation of states' immunity to liability under the Lanham Act. Federal Rule of Civil Procedure 5.1(a) requires a party to provide notice to the Attorney General when it challenges the constitutionality of a federal statute. Under Rule 5.1(b) and 28 U.S.C. Sec. 2403, courts have an independent duty to certify constitutional challenges to the Attorney General.

Neither the university nor the court had followed the requirements of Rule 5.1 before the court determined that the abrogation of immunity was unconstitutional. In response to a motion to vacate filed by the software company, the university served notice of the constitutional challenge upon the Attorney General. In addition, the court formally certified the issue to the Attorney General, giving it 60 days to intervene and submit arguments in support of the constitutionality of the Clarification Act.

Board of Regents of the University of Wisconsin System, WD Wis., ¶61,313; ¶61,314