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On April 21, 2017, Western District of Michigan Judge Gordon J. Quist ruled the State of Michigan lacks standing in a declaratory judgment action to declare the use and registration of federally registered marks are unlawful.
TTAB Proceedings
On December 3, 2013, the State of Michigan filed a cancellation proceeding in the TTAB seeking to cancel two of M22, LLC’s registered marks. M22, LLC sells apparel, wine, and other items using its M22 marks. However, M22 is also a state truckline highway that travels a scenic route in northwestern Michigan. The M22 marks look substantially similar to the M22 state truckline highway signs.
The State contends, in part, that M22, LLC’s use of the M22 marks is unlawful. And the state basis this position on the Manual on Uniform Traffic Control Devices (“MUTCD”), a federal manual promulgated by the Department of Transportation that sets standards for the use of traffic control devices, i.e. road signs, traffic signals, etc. States must comply with the federal manual, or an equivalent state substitute, to qualify for federal funding. The State argued that M22, LLC’s use of the Marks violated the following provision of the MUTCD:
Any traffic control device design or application provision contained in this Manual shall be considered to be in the public domain. Traffic control devices contained in this Manual shall not be protected by a patent, trademark, or copyright, except for the Interstate Shield and any other items owned by the [Federal Highway Administration].
The TTAB denied the State’s motion for summary judgment on its unlawful use claim finding that genuine issues of material fact remain as to the MUTCD’s legal effect (if any), whether it applies to M22, LLC, whether there has been a violation, and if so, whether such violations can be considered unlawful so as to warrant cancellation of the M22 registrations.
As a result of this order, the State filed a declaratory judgment action in Michigan state courts seeking to declare M22, LLC’s use of its federally registered trademarks unlawful. M22, LLC removed the proceedings to the Western District of Michigan.
The State Lacks Standing
Because the State sought a declaratory judgment, the Court must “look[] through the declaratory judgment” to determine the “controversy in [the] case.” Marel v LKS Acquisitions, Inc., 585 F.3d 279, 280 (6th Cir. 2009). Here, the Court found the “coercive action” would be a claim for trademark infringement under the Lanham Act. But, the Court found this threat of a lawsuit were nothing more than speculation.
The State also argued that it faced a cognizable injury because: 1) it risked losing federal highway funding and 2) it would suffer irreparable harm if it is prevented from enforcing state and federal law precluding a trademark in its highway markers. The Court rejected these arguments largely because the State failed to allege any facts showing it was facing a real threat to federal highway funding. And the Court noted that if the State wants to enforce its laws, surely there is a more direct manner of enforcement other than seeking what amounts to an advisory opinion on a matter pending before the TTAB. Finally, the Court also found the mere existence of the pending TTAB matter, in which the TTAB found the State had standing, had no bearing on the standing analysis for an Article III court.
Ultimately, the Court remanded the matter back to Ingham County Circuit Court “to allow it to decide [whether] to entertain the State’s complaint.”
The full ruling can be found here.
Disclosure: Revision Legal represents M22, LLC in this matter.
The State of Michigan’s loss in the M22 case was not a ruling on the merits of whether M22, LLC’s marks should be cancelled. It was a ruling that the State had no business being in federal court at all—at least in the way it structured its case. Understanding why the standing analysis played out the way it did illuminates important principles about the limits of declaratory judgment jurisdiction and the interplay between federal courts and administrative tribunals.
The Declaratory Judgment Act, 28 U.S.C. § 2201, authorizes federal courts to declare the rights and legal relations of interested parties “in a case of actual controversy.” But the Act does not expand the constitutional limits of federal jurisdiction—a declaratory judgment action still requires an Article III “case or controversy.” The party seeking a declaratory judgment must establish standing under the same three-part framework applicable to any federal lawsuit: (1) a concrete and particularized injury in fact; (2) a causal connection between the injury and the challenged conduct; and (3) redressability through a favorable decision.
In declaratory judgment cases, the Supreme Court’s “coercive action” doctrine requires looking through the declaratory judgment to identify the underlying coercive claim that could have been brought. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). Here, Judge Quist correctly identified that the natural coercive action would be a trademark infringement claim by M22, LLC against the State—and then found that M22, LLC had never threatened such a lawsuit and had no plausible basis to do so against a sovereign state entity for regulatory highway sign use.
The State’s core argument was that M22, LLC’s trademark registrations violated the Manual on Uniform Traffic Control Devices’ public domain provision, rendering the marks unlawful—and therefore subject to cancellation under Section 14(3) of the Lanham Act, which authorizes cancellation of marks whose use in commerce is unlawful.
The “unlawful use” doctrine under the Lanham Act, as applied through decisions like CreAgri, Inc. v. USANA Health Sciences, Inc., 474 F.3d 626 (9th Cir. 2007), requires that the unlawful use be directly related to the trademark use in commerce—not simply that the trademark owner happens to violate some other law. The State’s argument required accepting that the MUTCD’s public domain provision constituted a federal law whose violation by a private commercial enterprise could support trademark cancellation. The TTAB’s denial of summary judgment—finding genuine issues of material fact as to the MUTCD’s legal effect and applicability to M22, LLC—reflected the doctrinal novelty of this theory.
The case raises but does not directly address another significant legal issue: sovereign immunity. The Eleventh Amendment generally bars federal court suits against state governments without their consent. M22, LLC, in any theoretical trademark infringement or TTAB counterclaim posture, would face significant sovereign immunity obstacles in pursuing claims against the State of Michigan. Congress has abrogated state sovereign immunity for Lanham Act trademark claims under the Intellectual Property Clause, but this abrogation has been contested in some circuits.
The State’s attempt to bring suit as a plaintiff in federal court—rather than waiting to be sued—may have been motivated in part by a desire to choose the forum and procedural posture before M22, LLC could use available administrative proceedings or federal court options. By forcing the proceedings back to state court and ultimately back to the TTAB, the federal court ruling limited the State’s ability to prosecute its theory in a forum of its choosing.
As noted in the original post, Revision Legal represents M22, LLC in this matter. This case illustrates the kind of complex trademark litigation that arises at the intersection of federal trademark law, administrative proceedings before the TTAB, and constitutional standing doctrine. If your business is involved in a trademark dispute—whether involving government entities, private competitors, or administrative cancellation proceedings—experienced trademark counsel is essential. Contact Revision Legal today.
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