United States: Federal Court Holds Highway Sign Does Not Harm State

Facts

In State of Michigan v M22 LLC, 1:16-CV-1084 (WD MI April 21 2017), Michigan retail company M22 LLC registered the road signs of a well-known Michigan highway, M-22, for use on apparel for sale. The trademarks contained imitations of the road signs, which bear the name M-22 in a diamond symbol.

Initially, the State of Michigan filed a petition with the US Patent and Trademark Office Trial and Appeal Board (TTAB) seeking to cancel M22's registered trademarks. The state moved for summary judgment, arguing that M22's use of the marks violated state and federal laws because it was contrary to certain provisions under the Manual on Uniform Traffic Control Devices ‒ a federal manual promulgated by the Federal Highway Administration and adopted by the State of Michigan that sets standards for the use of traffic control devices installed on state roads, including road signs. To receive federal highway funding, states must comply with the manual or their equivalent state manual. The State of Michigan Manual on Uniform Traffic Control Devices provides that:

Since the manual includes the M-22 road sign, the state argued that, under the manual, M22 could not register the road sign and thus the marks should be cancelled. The TTAB disagreed and denied summary judgment on the basis that there were genuine disputes of fact as to whether the manual applies to a private party's actions and, if so, whether M22's use of the marks violated state and federal law.

The state filed an action in Michigan state court seeking declaratory judgment that:

• the Manual on Uniform Traffic Control Devices applied to M22; and
• M22's marks violated state and federal law.

M22 then removed the case to the US District Court for the Western District of Michigan.

Decision

Lack of declaratory judgment jurisdiction – no actual controversy

The question before the district court was whether it had subject-matter jurisdiction to hear the state's declaratory relief action. Under the US Declaratory Judgment Act of 1934, an action for declaratory judgment will not constitute an impermissible advisory opinion such that a federal court may grant declaratory relief if the case at issue presents an "actual controversy". Whether an actual controversy exists depends on whether the constitutional 'case or controversy' requirement under Article III is met. As the district court noted, under the Supreme Court's decision in MedImmune, Inc v Genentech, Inc (549 US 118 (2007)), the decisive question is:

The state argued that this case presented an actual controversy under MedImmune, because without a declaratory judgment that registering its M-22 road sign violated state and federal law, the state was at risk of being sued by M22 for trademark infringement under the Lanham Act. In addition, the state argued that the district court had jurisdiction because such a declaratory judgment would prevent the state from being irreparably harmed by the loss of federal highway funding, which it claimed would necessarily result from M22's alleged violation of the provisions of the Manual on Uniform Traffic Control Devices.

The district court disagreed. First, it noted that the state failed to put forth any allegations or evidence showing that:

• M22 had threatened to sue the state for trademark infringement; or
• the state was planning to do anything that would subject it to an infringement suit by M22 (eg, selling t-shirts with the M-22 road sign).

Therefore, the district court held that the state's alleged harm was only theoretical and no actual controversy existed.

Lack of constitutional standing – no concrete injury

In addition to the lack of declaratory judgment jurisdiction, the district court held that it could not hear the case because the state lacked constitutional standing to sue under Article III. Article III standing requires that the plaintiff show:

• an injury in fact;
• a causal relationship between the injury and the defendant's actions; and
• the likelihood that a favourable decision by the court will redress the injury.

According to the district court, the state's alleged injury was speculative at best. The court noted that the state had failed to allege any facts showing that it was facing real threats of losing federal funding or of being sued for its use of the M-22 road signs. Specifically, the state had not:

• alleged any facts showing how M22's marks would prevent the State from complying with the Manual on Uniform Traffic Control Devices such that it would be subject to losing federal highway funds; or
• cited any legislation granting it the power to enforce the Manual on Uniform Traffic Control Devices against private third parties.

Therefore, the district court held that the state had failed to allege a concrete injury and thus lacked Article III standing to bring suit.

Without an actual controversy or constitutional standing, the district court held that it lacked jurisdiction over the state's claim for declaratory relief. However, since state courts are not limited by the requirements of Article III, the district court remanded the case back to Michigan state court to decide whether to hear the case.

Comment

Although the district court's decision in M22 turned mainly on the justiciability issues, the case shows that without the concrete threat of an infringement suit or other imminent harm, trademarks of state-owned signs are not harmful to the state. This case will support the position of any private party seeking to register public state signs as trademarks for commercial purposes.

This article was first published on World Trademark Review Daily. For further information please go to: www.WorldTrademarkReview.com.

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