Ark. Lottery Comm'n v. Alpha Mktg.
| Decision Date | 26 January 2012 |
| Docket Number | No. 11–383.,11–383. |
| Citation | 386 S.W.3d 400,2012 Ark. 23 |
| Parties | ARKANSAS LOTTERY COMMISSION, Ernie Passailaigue, Director, Appellant v. ALPHA MARKETING, Appellee. |
| Court | Arkansas Supreme Court |
OPINION TEXT STARTS HERE
Dustin McDaniel, Atty. Gen., by: Mark N. Ohrenberger, Asst. Atty. Gen., Little Rock, for appellant.
Davidson Law Firm, by: Charles Darwin “Skip” Davidson, Little Rock, for appellee.
Appellant Arkansas Lottery Commission (Commission) purports to bring this interlocutory appeal from an order entered by the Pulaski County Circuit Court addressing its motion to dismiss the amended complaint of appellee Alpha Marketing. For reversal, the Commission asserts that the circuit court erred by failing to grant its motion to dismiss Alpha Marketing's claims for damages and injunctive relief because those claims are barred by the doctrine of sovereign immunity. We dismiss the appeal because the circuit court did not rule on the sovereign-immunity issue.
The record discloses that on March 18, 2010, Alpha Marketing filed a complaint for declaratory judgment naming the Commission as the defendant and seeking a determination that its trademarks, “ARKANSAS LOTTERY,” “ARKANSAS LOTTO,” and “LOTTERY ARKANSAS,” are valid and that it was entitled to the exclusive use of those marks. In its complaint, Alpha Marketing asserted that it is engaged in the business of advertising, promotion, and the sale of goods via radio, internet, and print media throughout Arkansas. It alleged that it had used the trademarks in the ordinary course of trade and that the Arkansas Secretary of State had recorded and issued to it Certificates of Trademark Registration for each of the marks. Further, Alpha Marketing alleged that, in May 2009, a Senior Assistant Attorney General had sent it a cease-and-desist letter threatening legal action if it did not immediately cease all marketing efforts involving the trademarks. The complaint detailed a series of correspondence between Alpha Marketing or its counsel and the Attorney General's Office, culminating in a letter from the Senior Assistant Attorney General dated August 21, 2009, informing Alpha Marketing that the Attorney General's Office was taking no further action “at this time” and that the matter would be referred to the Commission. The Commission answered the complaint, and pleading as an affirmative defense, it asserted that Alpha Marketing's registration of the trademarks was contrary to law and that the registrations of the marks should be cancelled.
Thereafter, Alpha Marketing filed an amended complaint on August 30, 2010. In it, Alpha Marketing reasserted its request for declaratory judgment and added a claim for trademark infringement against the Commission. As its claim for trademark infringement, Alpha Marketing alleged that the Commission had used, without its consent, colorable imitations of its registered trademarks in connection with the sale, distribution, and advertising of the Commission's goods and services. As relief, Alpha Marketing sought damages for lost profits and an injunction to prohibit the Commission from manufacturing, using, displaying, or selling any imitations of its registered marks.
On September 21, 2010, the Commission filed a motion to dismiss the amended complaint on both Alpha Marketing's request for declaratory judgment and its claim of trademark infringement. In its motion and accompanying brief, the Commission asserted that Alpha Marketing's claim for declaratory judgment should be dismissed because Alpha Marketing's trademark registrations were improperly granted and because the marks were not entitled to trademark protection. Specifically, the Commission argued that the marks were deceptive and implied an illegal purpose because lotteries were not authorized in the State of Arkansas when the registrations were obtained. In support of this proposition, the Commission relied on a decision from the Minnesota Court of Appeals, State by Andersen v. Reward Corp., 482 N.W.2d 815 (Minn.Ct.App.1992). The Commission also argued that the trademarks were improperly granted and invalid because the marks falsely suggest a connection between Alpha Marketing's business and the Arkansas Scholarship Lottery and because the marks were deceptively misdescriptive. Further, the Commission asserted that, even if the trademarks were valid, Alpha Marketing was not entitled to exclusive rights to the marks because the trademarks were merely descriptive without secondary meaning. With regard to the claim for trademark infringement, the Commission asserted that the complaint had failed to state facts upon which relief could be granted because Alpha Marketing had not alleged facts identifying any instance where the Commission had used colorable imitations of Alpha Marketing's trademarks. Finally, the Commission maintained that the doctrine of sovereign immunity barred Alpha Marketing's request for damages and injunctive relief for trademark infringement.
In response to the motion to dismiss, Alpha Marketing disputed the Commission's contention that its request for declaratory judgment should be dismissed. It maintained that its trademarks were not deceptive or deceptively misdescriptive. It also argued that the decision from Minnesota relied upon by the Commission was inapposite. In addition, Alpha Marketing asserted that its trademarks do not suggest a connection between it and the Arkansas Scholarship Lottery and that it had established a secondary meaning for the marks. Alpha Marketing further argued that its claim of trademark infringement withstood the motion to dismiss. It asserted that it had alleged sufficient facts upon which relief could be granted. Alpha Marketing also contended that the claim was not barred by sovereign immunity because the cease-and-desist letter sent from the Attorney General's Office was an act of inverse condemnation of its intellectual property.
After a hearing, the circuit court entered an order announcing its decision on March 11, 2011. After reciting the procedural history of the case and briefly outlining the parties' various contentions, including those surrounding the issue of sovereign immunity, the circuit court ruled as follows:
On August 23, 2002, the Arkansas Secretary of State issued Alpha Marketing a certificate of trademark registration for the terms “Arkansas Lottery” and “Arkansas Lotto.” On February 10, 2009, the Secretary of State issued Alpha Marketing a certificate of trademark registration for the term “Lottery Arkansas.” The Lottery Commission's motion challenges the trademarks by questioning whether any entity other than the Commission is entitled to use the terms “lottery” and “Arkansas Lottery.” First, the court is unpersuaded that Alpha Marketing's complaint has not asserted a claim for trademark infringement. This is not a question about whether infringement has occurred. Rather, the Court simply recognizes that Alpha Marketing's complaint is legally sufficient to assert a claim for trademark infringement. The complaint refers to the existence of trademarks, the fact that the marks are held by Alpha Marketing by valid authority of the Arkansas Secretary of State, and makes the claim that the Lottery Commission is infringing on the marks. Those allegations certainly are sufficient to state a claim for trademark infringement.
The State of Arkansas, acting through the Secretary of State, issued the trademarks that Alpha Marketing holds and claims are being infringed upon by the Lottery Commission. Those marks were sought and issued openly. The Secretary of State issued them with full knowledge what they were. By challenging the marks as unlawfully held, misleading, or deceptive, the Lottery Commission's dismissal motion amounts to an accusation that the Arkansas Secretary of State was complicit in unlawful, misleading, or deceptive conduct. The court finds that argument unpersuasive.
It necessarily follows, therefore, that Defendant's motion to dismiss Plaintiff's amended complaint must be denied. Alpha Marketing's complaint alleges that Alpha Marketing holds trademarks that are being infringed upon by the Lottery Commission. Mere use of the words “lottery” and “Arkansas Lottery” and “Arkansas Lotto” is not unlawful in Arkansas. Counsel for the Lottery Commission identified no court opinion in Arkansas to the contrary. As this case must be decided based on Arkansas law, the Court found the Commission's reliance on court opinions from other jurisdictions unpersuasive.
The motion to dismiss for failure to state a claim upon which relief can be granted is denied.
The Commission filed a timely notice of appeal from this order from which it brings this interlocutory appeal.
On appeal, the Commission contends that the circuit court erred in denying its motion to dismiss Alpha Marketing's claims for damages and injunctive relief because those claims are barred by sovereign immunity. However, the circuit court did not address the issue of sovereign immunity in its order, and the absence of an express ruling is fatal to this interlocutory appeal.
Ordinarily, an appeal must be taken from a final judgment or decree entered by the circuit court. Carter v. Cline, 2011 Ark. 474, 385 S.W.3d 745;Ark. R.App. P.–Civ. 2(a)(1). This rule is not without exception. As pertinent here, Rule 2(a)(10) of the Arkansas Rules of Appellate Procedure—Civil permits an appeal from an interlocutory “order denying a motion to dismiss or for summary judgment based on the defense of sovereign immunity or the immunity of a government official.” The rationale for this exception is sound, because the right to immunity from suit is effectively lost if the case is permitted to go to trial. See Simons v. Marshall, 369 Ark. 447, 255 S.W.3d 838 (2007); State v. Goss, 344 Ark. 523, 42 S.W.3d 440 (2001).
Logic dictates that, before an interlocutory appeal may be pursued from the denial of a motion to dismiss on the ground of sovereign immunity, we...
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