Arkansas Lottery Commission v. Alpha Marketing

2013 Ark. 232, 428 S.W.3d 415, 2013 WL 2361013, 2013 Ark. LEXIS 264
CourtSupreme Court of Arkansas
DecidedMay 30, 2013
DocketNo. CV-12-510
StatusPublished
Cited by14 cases

This text of 2013 Ark. 232 (Arkansas Lottery Commission v. Alpha Marketing) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arkansas Lottery Commission v. Alpha Marketing, 2013 Ark. 232, 428 S.W.3d 415, 2013 WL 2361013, 2013 Ark. LEXIS 264 (Ark. 2013).

Opinions

JOSEPHINE LINKER HART, Justice.

| Appellee, Alpha Marketing (“Alpha”), brought this cause of action in the Pulaski County Circuit Court against appellant, Arkansas Lottery Commission (“the Commission”), seeking, in its second amended complaint, declaratory relief that Alpha’s registered trademarks of “Arkansas Lottery,” “Arkansas Lotto,” and “Lottery Arkansas” are valid and that it holds exclusive rights to use them; injunctive relief enjoining the Commission’s alleged acts of trademark infringement; and monetary damages in the form of lost profits stemming from the alleged trademark infringement. Alpha also asserted that the alleged acts of trademark infringement constitute an illegal taking of private property in derogation of the Arkansas Constitution, entitling it to an injunction until the Commission deposits adequate funds with the circuit court to compensate Alpha for its damages.

The Commission brings this second interlocutory appeal from the circuit court’s denial of the Commission’s motion to dismiss Alpha’s lawsuit on the basis that the Commission has sovereign immunity, the first having been dismissed without prejudice for lack of a specific | ¡ruling on the issue of sovereign immunity. Ark. Lottery Comm’n v. Alpha Mktg., 2012 Ark. 23, 386 S.W.3d 400. In this appeal, the Commission asserts that Alpha failed to plead facts sufficient to state a claim under the recognized exceptions to sovereign immunity. We reverse the circuit court’s order and dismiss the lawsuit.

A discussion of the pleadings filed in this case is necessary for its disposition. Alpha filed a complaint for declaratory judgment against the Commission. In its complaint, Alpha described its business as a sole proprietorship based in Arkansas that is engaged in “advertising, promotion, and sales of goods via radio, internet, and print media throughout the state of Arkansas.” It further asserted that it began using “Arkansas Lottery” and “Arkansas Lotto” in its business activities in 1994, registering both as trademarks with the Secretary of State in 2007, and that it registered “Lottery Arkansas” in 2009, claiming use of the mark since 2007.

According to the complaint, Alpha received a cease-and-desist letter from then Senior Assistant Attorney General Bradford Phelps in 2009 “threatening legal action against Alpha Marketing if it did not immediately cease all marketing efforts” using the trademarks. A series of exchanges between the Attorney General’s Office and Alpha’s owner, Mr. Ed Dozier, then ensued, in which Mr. Dozier sought to resolve the matter and maintain his company’s rights to the marks. After hiring the Davidson law firm, it also contacted the Attorney General’s Office on Alpha’s behalf seeking a statement of intent as to the threat of litigation. Mr. Phelps replied that his office would take “no further action ‘at this time,’ ” and referred the issue to the Commission. Alpha asserted that its certificates of trademark registration entitled it to exclusive use of the trademarks; that the Commission and the Arkansas Attorney General’s | ^Office challenged its rights to exclusive use; and that litigation would likely ensue if the court did not make a declaration, regarding ownership and usage of the rights in the trademarks.

The Commission filed its answer in which it generally denied the allegations. Furthermore, it asserted under the heading “Affirmative Defenses” that Alpha “is legally ineligible” to use the trademarks because registration of the marks “is contrary to law, and the registrations should be canceled.” The Commission requested that the court deny Alpha relief and “enter a declaratory judgment canceling Alpha Marketing’s registration of the trademarks ... and for all other just and proper relief.”

Alpha filed an amended complaint in which it repleaded the factual allegations and its request for declaratory judgment. Alpha also added a claim for trademark infringement alleging that the Commission continually marketed its goods and services under the names “My Arkansas Lottery” and “Arkansas Scholarship Lottery,” during which time Alpha held its registered trademarks. Its claim for trademark infringement asserted that the Commission had used, without the consent of Alpha, colorable imitations of the marks registered by Alpha in connection with the sale, distribution, offering for sale, and advertising of the Commission’s goods and services; that such use is likely to cause confusion or mistake or to deceive as to the source of origin of such goods or services; and that the Commission has color-ably imitated the marks registered by Alpha and applied the colorable imitations to signs, prints, and advertisements intended to be used on or in connection with the sale of other distribution in this state of its goods or services. Alpha requested that the court enjoin the Commission from using the marks and award it lost-profit damages caused by such wrongful use.

l4The Commission filed a motion to dismiss the amended complaint and a supporting brief. In its motion, it asserted in part that the Arkansas Constitution entitled it to sovereign immunity from the trademark-infringement claims, as Alpha sought both monetary damages and in-junctive relief. The circuit court issued an order in which it denied the Commission’s motion to dismiss the amended complaint. The Commission then filed its answer to the amended complaint. In its answer, the Commission stated that it was “entitled to sovereign immunity under [ajrticle V, [sjection 20, of the Arkansas Constitution and that the Court therefore lacks jurisdiction over this action.”

The Commission made its first interlocutory appeal of the circuit court’s denial of the motion to dismiss the amended complaint. On review of the interlocutory appeal from the circuit court’s denial of the motion to dismiss, this court concluded that the Commission had failed to obtain an express ruling on the sovereign-immunity issue. Thus, this court held that an appeal based on that issue had to be dismissed, but it dismissed without prejudice “so that the Commission may return to circuit court to obtain a ruling for this court to review on an interlocutory basis.” Ark. Lottery Comrn’n v. Alpha Mktg., 2012 Ark. 23, at 9, 386 S.W.3d 400, 405.

Based on this court’s holding, the Commission then sought, and the circuit court subsequently issued, a supplemental order expressly denying the Commission’s motion to dismiss on the grounds of sovereign immunity. At that juncture, Alpha filed a second amended complaint specifically incorporating its previous allegations. It further asserted that the Commission “repeatedly took and damaged [Alpha’s] intellectual property with each act of | ginfringement and is continuing to do so with each act of infringement.” Additionally, it argued that the Commission acted in bad faith and in an ultra vires manner because it “failed to follow [the] proper statutory procedure setforth in [Arkansas Code Annotated section] 4-71-209(3)(c) and (4) to invalidate the trademarks referenced in the original and amended complaint, and rather, [the Commission] acted in bad faith and in [an] ultra vires manner by simply sending a cease[-]and[-]desist letter by and through the Attorney General’s office.” With respect to the takings claim, Alpha requested an injunction until the Commission first deposited an amount sufficient to cover its damages with the court and declaratory relief regarding the validity of and the exclusive right to use the trademarks, as well as any other just and proper relief.

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Bluebook (online)
2013 Ark. 232, 428 S.W.3d 415, 2013 WL 2361013, 2013 Ark. LEXIS 264, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arkansas-lottery-commission-v-alpha-marketing-ark-2013.