5th Circuit Shoots Down Creative Attempt to Remove a State Law Trademark Case

The Fifth Circuit recently shot down a creative attempt to remove a state court case claiming trademark infringement under Texas law (not under the Lanham Act) to federal court. In In re Hot-Hed Inc., No. 06-20893 (5th Cir. Jan. 30, 2007), the plaintiff sued in Texas state court, alleging trademark dilution under the Texas Business & Commerce Code, and trademark infringement and unfair competition under Texas common law. In its prayer for relief, the plaintiff demanded “attorneys’ fees as allowed by law.” The defendant removed to federal court, alleging that the claim raised a “federal question.”

The plaintiff moved to remand, saying that its complaint didn’t say a word about federal law. The defendant convinced the district court, however, that the phrase “attorneys’ fees as allowed by law,” which appeared in the prayer, must have meant federal law (i.e., the Lanham Act), since none of the three asserted Texas law claims permit the recovery of attorneys’ fees.

On mandamus, the Fifth Circuit disagreed. It said that Texas case law indicates that the plaintiff might have been able to ask for a declaratory judgment under the Texas Declaratory Judgment Act, even though the complaint didn’t mention the Texas D.J. Act or demand declaratory relief. And under Tex. Civ. Prac. & Rem. Code § 37.009, attorneys’ fees are available for a D.J. under the Texas D.J. Act. Applying the principle that “any doubt about the propriety of removal must be resolved in favor of a remand,” the Fifth Circuit ordered the district court to check out if diversity jurisdiction existed, and, if not, to remand. The Fifth Circuit also seemed swayed by the principle that removal of a trademark case is improper if the plaintiff doesn’t clearly state he’s seeking relief under the Lanham Act.