This is the third installment of a three-part blog post series about governments fighting with commercial entities over trademarks. At the beginning of 2017, all three were embroiled in litigation in one or more of the U.S. Patent and Trademark Office (PTO), the federal courts, or a state court. As 2017 ends, only one of the legal fights is over.
The first installment described the litigation between the National Park Service and DNC Parks & Resorts at Yosemite over the validity and value of registered trademarks on names of revered landmarks at Yosemite. The parties are now millions of dollars apart in settlement, and litigation in the federal Court of Claims continues with discovery disputes and efforts to amend pleadings.
The second installment described how the federal court litigation was sparked when Baltimore City sought to obtain federal trademark registrations on Light City for itself and attempted to prevent a creative marketing company from opposing the registration applications. In April 2017 the parties agreed to settle, and the federal court claims were dismissed.
This third and final installment involves trademark litigation started in 2013 by the Attorney General of the State of Michigan, William Schuette, who recently announced his candidacy for Governor. The M22 litigation started because the Attorney General intervened in a trademark dispute between private commercial entities. Since 2013, he has litigated whether the PTO should have issued trademark registrations and whether the registrations should be cancelled. It is procedurally very complex.
The Highway M-22 Experience in Northern Michigan
The Northern Michigan and Grand Traverse Bay area is very scenic, “God’s country” to many. Michigan Highway M-22 is about 116 miles, running next to Lake Michigan and near Sleeping Bear Dunes National Lakeshore.
Brothers Matt and Keegan Myers grew up in this part of Michigan. And they love it. As do thousands of residents and vacationers who drive M-22 just for the experience of the road. Part of the M-22 highway is designated as a Michigan Scenic Heritage Route (renamed last year as a “Pure Michigan Byway”) because it is “uniquely endowed by natural aesthetic, ecological, environmental, and cultural amenities.” Michigan Compiled Laws, §247.953.
The M22 Trademark Registrations
Keegan and Matt were local kiteboarding icons in Northern Michigan, and they learned to love Highway M-22 while travelling in pursuit of their beloved sport of kiteboarding. In 2003, T-shirts and bumper stickers were made for local kiteboarders and surfers to wear. In 2006, when Keegan was pictured on the cover of a local magazine in an M-22 T-shirt, everything with M-22 became hot. Matt and Keegan began selling T-shirts, hats, and other merchandise through local retailers. They incorporated M22 LLC under Michigan law in 2006.
In August 2006, they filed an application to register a mark they were using on their merchandise that closely resembled the M-22 highway sign – a square highway sign design with a white border, a black background, and a white diamond in the center containing M 22 in black and “M22online.com” in small black print at the bottom. It is not exactly the Michigan highway sign because of the white border of the square and the small print inside the border at the bottom. (All the M22 trademark applications were filed by “Broneah, Inc.,” a name associated with Matt and Keegan’s kiteboarding. For clarity, this blog refers to M22 LLC as the owner of all the applications and registrations.)
The PTO registered the M22 word/numbers/design mark on December 4, 2007. Registration No.3,348,635 covers the mark that appears below:
M22 LLC’s plan was to use the M22 highway sign design as the logo for expanding business. M22 LLC filed applications in 2008 on other trademarks based on Michigan highway signs, such as “M37” and “M185,” but these applications were subsequently abandoned.
In November 2007, M22 LLC opened its own retail store in Traverse City. M22 LLC began using the exact M-22 highway sign in the marketing and sale of its merchandise.
Three years later, in 2010, M22 LLC applied to the PTO to register “M22” (a) as a standard character word/numbers mark, and (b) as a word/numbers plus design mark. The design mark application was for the exact M-22 highway sign design. In both applications, M22 LLC argued “acquired distinctiveness” based on use of the trademark registered in 2007 to overcome initial rejections by the trademark examiner. Both applications eventually resulted in registrations of the applied-for marks. The highway sign design is covered by Registration No.3,992,159 issued on July 12, 2011, and the trademark appears below:
M22 LLC is now a successful business. Matt and Keegan are good corporate citizens.
Photo from Exhibit A to 5/18/2010 Response to PTO Office Action.
M22 LLC has expanded its business to M22 wine and beer glasses, water bottles, candles, coffee, and even wine tastings. Annual revenues are in the multi-millions, and one percent of all sales revenue goes to support the Leelanau Conservancy along Lake Michigan.
But some believed there was also a hard side to M22 LLC.
M22 LLC — Trademark Bully?
This chain of success hit a bump in the road after M22 LLC sent cease and desist letters to some small business owners who also used “M” highway signs to promote sales. In those letters, M22 LLC threatened trademark infringement suits against other users of the following Michigan highway signs in their businesses: M-25, M-26, M-28, M-37, and M-119. M22 LLC never actually filed a suit for trademark infringement, but the other merchants felt the pressure nevertheless. Plus, another Michigan company was making similar demands. Route Scouts, LLC, had federally registered “M 119” as a trademark in 2009 and was also demanding that other businesses stop using M 119 to promote their goods and services.
Turning a right into a sword can alter the legal landscape, and this is why the M-22 trademark litigation began.
One reported recipient of pressure from M22 LLC is Carolyn Sutherland of Good Hart Michigan, about 70 miles from Traverse City where M22 is located. Ms. Sutherland used an M-119 logo on a private-label wine sold in her souvenir shop. M22 LLC warned Sutherland’s wine supplier that the use of a Michigan highway sign design on a product belonged to M22 LLC. As a result, Sutherland’s supplier pressured her to change the label on her wine, but the wine did not sell with the new label. Sutherland complained about the pressure from M22 LLC, and a representative in the state legislature asked the Michigan Attorney General whether a private entity can have exclusive control over a Michigan highway sign design.
Schuette responded to the constituent complaint. He more than responded, he took up the cause.
In 2012, he issued a formal opinion that the M-22 highway sign design is in the public domain and that a Michigan highway sign cannot be federally registered as a trademark. Further, he stated that M22 LLC does not have the exclusive right to use the M-22 Highway sign design in commerce. Michigan created the highway sign design and placed it in the public domain, beyond copyright protection. M22 LLC should not be able to circumvent Michigan’s relinquishment of copyright into the public domain by using trademark registration to obtain infinitely renewable trademark rights to the highway sign design. He concluded that use of the M-22 highway sign should be available to all Michigan merchants. (“Any other individual or company is also free to use the design to promote commercial goods and services.”)
After issuing the opinion, Schuette sent a letter to M22 LLC asking for cooperation in having the PTO cancel the registrations. M22 LLC refused.
Litigation Begins in 2013
Schuette began the litigation on December 3, 2013, by filing a Petition for Cancellation with the Trademark Trial and Appeal Board (TTAB). He asked the TTAB to cancel two M22 trademark registrations: (1) No. 3,992,159 issued in 2011 for the exact image of the M22 route sign, and (2) No. 3,348,635 issued in 2007 for the near-identical, bordered image of the M22 highway sign. Both trademarks are shown above.
As grounds for cancellation of the registrations, the Attorney General contends:
- (1) Michigan has continually used the M-22 Highway sign design in interstate commerce for 50 years;
- (2) the Trademark Manual of Examining Procedure (TMEP) states that certain words and marks under various federal statutes and regulations are reserved for the specific use prescribed;
- (3) the Manual on Uniform Traffic Control Devices (MUTCD) sets national standards for traffic control devices that are promulgated by the Federal Highway Administration and these standards are incorporated into Michigan law;
- (4) MUTCD provides that traffic control devices shall not be protected by trademark;
- (5); under Michigan law “traffic control devices” means all signs; and
- (6) the M-22 highway sign is a traffic control device that cannot be a trademark and cannot be federally registered as a trademark.
This is a substantial argument for cancellation.
Schuette raises other grounds for cancellation: deceptiveness, false suggestion of an association with the State of Michigan, and registration of state insignia is prohibited. Notably, Schuette argues that Michigan highway signs cannot be trademarks because their use is unlawful under MUTCD and, therefore, they cannot be registered by the PTO. He is no longer using the populist rhetoric that any individual or company is free to use the Michigan highway sign design in commerce.
M22 LLC opposes the Petition and contends that the State of Michigan cannot show that it has or will suffer damage as a result of the registration of the M22 marks. M22 LLC never threatened to sue the State of Michigan for trademark infringement. In other words, Michigan has no damages and, therefore, no standing to seek cancellation of the M22 trademark registrations.
Matters move slowly in the TTAB at times. After sparring over discovery, Michigan and M22 LLC filed cross-motions for partial summary judgment in 2015. The TTAB denied both motions in 2016 because neither party demonstrated the absence of a genuine dispute of material fact. To resolve disputed facts, a trial is required. The quick resolution Schuette wanted evaporated or, as he put it in one filing, “securing resolution by the TTAB has proven elusive.”
Try Some Home Court Advantage
State Court Suit. With nothing to show after two years before the TTAB, Schuette opened a new front on his home turf. On August 23, 2016, Michigan filed a Complaint for Declaratory Judgment in the Circuit Court in Ingham County, Michigan. The Complaint sought a declaratory judgment that (1) the MUTCD applies to M22 LLC and to its use and registration of trademarks that copy the M-22 highway sign design, one copies exactly and the other very similarly, and 2) the use of the M-22 highway sign as a trademark is unlawful under both state and federal law.
M22 LLC Removes Suit to Federal Court. On August 31, 2016, M22 LLC removed the suit to the U.S. District Court for the Western District of Michigan on the basis that the alleged coercive effect of the federal trademark registrations raises a federal question under the Lanham Act, 15 U.S.C. § 1051 et seq.
The state court, now federal court, Complaint produced a flurry of filings by both sides. To avoid the effects of removal, the Attorney General moved to carve out the state law claim that M22 LLC’s use and registration of Michigan highway sign design as trademarks violates Michigan law. Schuette contends this is a novel state law issue and that under 28 U.S.C. §1367(c) the federal court should decline to exercise jurisdiction over this claim.
M22 LCC’s motion to dismiss or for summary judgment argued that the MUTCD does not apply to M22 LLC and its registrations and that Michigan has no evidence to support its claims that registration is unlawful. M22 LLC also opposed Michigan’s motion, arguing that there is only one issue under MUTCD and the issue is the same whether governed by state law or federal law.
District Judge Gordon Quist, however, was focusing on another issue. He asked for briefing on whether Michigan had standing to seek a declaratory judgment. His answer came on April 21, 2017, when he issued an Opinion Finding Lack of Jurisdiction. The Judge rejected all of Michigan’s claims of injury and harm, namely (a) that Michigan risks losing federal highway funding, or (b) is prevented from enforcing state and federal law precluding trademark rights in its highway markers, or (c) faces a threat of lawsuit by M22. The Judge held Michigan lacked standing to seek a declaratory judgment in federal court. The case was remanded back to the Circuit Court in Ingham County to allow it to decide whether to entertain Michigan’s complaint.
Back in State Court. The parties each filed motions intended to end the case, a good thing. Michigan argued that the MUTCD was the controlling law that rendered M22 LLC’s use of the highway sign design unlawful which, in turn, rendered the trademark registrations invalid. M22 LLC argued that Michigan has no standing. Judge Clinton Canady III of the Circuit Court for Ingham County decided the motions with an unusually short Order ruling:
- (1)Michigan has standing;
- the MUTCD has the force and effect of Michigan law;
- M22 LLC is subject to Michigan law;
- the M-22 highway sign is a traffic control devise;
- this Order ends this litigation;
- the TTAB may lift its stay;
- the Circuit Court for Ingham County declines to determine whether M22 LLC trademark registrations and use are unlawful.
Could Judge Canady have been any clearer that he does not want the case!
Back to the TTAB Where It Started
When Schuette returned to the TTAB, he made one more effort to have the matter sent back to state court. He filed a motion asking the TTAB to continue the suspension of proceedings and to remand the case back to state court. The TTAB refused in a decision on October 13, 2017, noting that the federal TTAB has no authority to “remand” a case back to a state court. (States right affirmed.)
As it stands now, all issues are on the table for consideration, trial, and decision by the TTAB. The proceedings will follow a schedule that sets a final hearing date for October 21, 2018. Right before the 2018 election — probably not the timeline the Attorney General had in mind.
Final Comments
Michigan’s experience in trademark litigation is a classic example of the unintended consequences and expenses that can result when governments become embroiled in trademark litigation. Usually, the commercial entities that have direct interests in the trademarks litigate the disputes.
Governments are better off to observe trademark disputes from a distance, although this is not always possible. The National Park Service had no choice but to litigate in federal court after being sued by Delaware North. Baltimore City and the State of Michigan, however, began the trademark litigation, and likely are not better off for having done so.
We’ll be following the TTAB proceedings in 2018 over the M22 trademark registrations, and provide an update on this site when it’s over. Hopefully.
Follow @HeadsUpTRmarks on Twitter for periodic updates on trademarks.