May 30, 2013 – In a 4-3 ruling handed down by the Arkansas Supreme Court Thursday, the Arkansas Lottery was determined immune to a trademark lawsuit brought against it.
The Alpha Marketing Group brought the suit against the Arkansas Lottery Commission in 2010, claiming that it owned the trademarks for the terms “Arkansas Lottery”, “Arkansas Lotto”, and “Lottery Arkansas”.
Alpha Marketing claimed that it has used the terms “Arkansas Lottery” and “Arkansas Lotto” since 1994, and registered the trademarks with the Secretary of State in 2007, according to the Supreme Court summary and opinion.
The Marketing company said that the state’s Lottery Commission had stolen its intellectual property after a state-wide vote approved the creation of the Lottery Commission in 2009.
The decision to dismiss the lawsuit rests on the 11th Amendment to the U.S. Constitution, which protects states’ immunity from being sued in state courts.
The immunity clause in the Arkansas State Constitution reads “the state of Arkansas shall never be made defendant in any of her courts.”
As the Lottery Commission is a state entity, it is protected under that clause, according to the Court’s opinion, but Alpha Marketing claimed that the State had waived its immunity by illegally using trademarked property, and by using state entities to carry out the alleged illegal uses.
The Supreme Court’s decision overturned a lower court’s decision in favor of Alpha Marketing, which found that the State and the Arkansas Lottery had indeed waived rights to sovereign immunity when cease-and-desist letters were sent to the marketing group.
Those letters, from 2009, demanded that Alpha Marketing immediately stop using the Lottery-related terms it had trademarked, and threatened legal action if the company failed to do so, according to an Arkansas News report.
However, the threats of legal action were later retracted. The Arkansas News reported that an attorney for the marketing group likened the Lottery Commission’s letters to a “schoolyard bully” in his oral arguments in court.
The Supreme Court decision found that the Lottery Commission had retained protection under sovereign immunity when it retracted its threat of legal action against Alpha Marketing.
The lower court found that Alpha Marketing had presented sufficient evidence to show the grounds for its lawsuit against the Commission under exceptions to sovereign immunity.
However, the lower circuit court never actually made a ruling as to the validity of Alpha’s claims of infringement, or the Commission’s claims to immunity.
A dissenting opinion from Justice Paul Danielson said “it was ‘abundantly clear’ that the Lottery Commission had waived immunity by asking the circuit judge to rule Alpha Marketing’s trademarks invalid,” said John Lyon, the reporter for Arkansas News.
Alpha Marketing was suing for damages and loss-of-profit that resulted from the Lottery Commission’s use of its trademarks.
According to David Gershner, Alpha’s attorney, the company may decide to pursue the issue further.
“Right now the only other options we’re considering are possibly the Arkansas Claims Commission or potentially federal court,” Gershner told the Arkansas News.