Ark. SC dismisses state lottery appeal over trademarks

Jessica M. Karmasek Jan. 27, 2012, 1:15pm


LITTLE ROCK, Ark. (Legal Newsline) - The Arkansas Supreme Court on Thursday dismissed an appeal by the state's Lottery Commission in a lawsuit over certain trademarked phrases.

The Court's majority said in its nine-page opinion that it dismissed the appeal because the Pulaski County Circuit Court did not rule on the case's sovereign-immunity issue.

At issue are trademarks -- "Arkansas Lottery," "Arkansas Lotto" and "Lottery Arkansas" -- and whether Little Rock-based Alpha Marketing should have rights to use the marks it says it copyrighted before there was a state lottery.

Alpha says some of the phrases have been trademarked since 1994. A state lottery didn't exist until 2009.

However, in 2009, the Attorney General's Office warned Alpha that if it continued to use the trademarks, it would take legal action.

Alpha argues it had used the trademarks "in the ordinary course of trade" and that the Arkansas Secretary of State's Office had recorded and issued to it Certificates of Trademark Registration for each of the marks.

In March 2010, the marketing firm filed a complaint for declaratory judgment, naming the commission as the defendant. It sought a determination that its trademarks are valid and that it is entitled to "exclusive" use of the marks.

In turn, the commission asserted that Alpha's registration of the trademarks was contrary to the law and that the registrations of the marks should be cancelled.

In August 2010, Alpha filed an amended complaint, adding a claim for trademark infringement against the commission.

It alleged that the commission had used -- without its consent -- "colorable imitations" of its registered trademarks.

It sought damages for lost profits and an injunction to prohibit the commission from manufacturing, using, displaying or selling any imitations of its registered marks.

The commission filed a motion to dismiss the amended complaint.

The commission argues that as a state agency, it has sovereign immunity. Alpha contends that does not apply because the lottery is run like a for-profit business.

In March 2011, the circuit court denied the commission's motion to dismiss. However, it did not address the issue of sovereign immunity in its order.

The absence of an express ruling is "fatal" to the commission's appeal, the state's high court said.

"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 must have in place an order denying a motion to dismiss on that basis. In this case, the Commission moved for dismissal on multiple grounds, only one of which was based on the defense of sovereign immunity," Justice Courtney Hudson Goodson wrote for the majority.

"In its order, the circuit court noted that the Commission had raised the issue of sovereign immunity in defense of the claims for monetary and injunctive relief. However, the circuit court ruled only on the Commission's separate claim that Alpha Marketing had not stated a cause of action for trademark infringement. The court did not pass judgment on the Commission's argument that the relief sought by Alpha Marketing was barred by sovereign immunity.

"It is axiomatic that, without a ruling on the sovereign-immunity issue, there can be no interlocutory appeal."

The Court said it could not "presume a ruling from the circuit court's silence."

"For some undisclosed reason, the circuit court neglected to rule on the issue of sovereign immunity, leaving the question to be decided on another day," Goodson wrote. "Where no final or otherwise appealable order is entered, this court lacks jurisdiction to hear the appeal.

"Because we have not acquired jurisdiction, we dismiss the appeal without prejudice, so that the Commission may return to circuit court to obtain a ruling for this court to review on an interlocutory basis."

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