7th Cir. decision on likelihood of confusion and 11th amendment immunity where state appeals TTAB cancellation order to district court

The Seventh Circuit recently issued an interesting decision in the appeal of a district court decision that reversed a TTAB-ordered cancellation. While long (85 pages, including a dissent), the opinion in Board of Regents of Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Dec. 28, 2010), addressed two core issues:

(1) is actual use (rather than the description of goods and services in the registration) relevant to likelihood of confusion in the context of a district court proceeding challenging a TTAB-ordered cancellation? (yes); and

(2) by going the district court route rather than appealing the TTAB decision cancelling its registration directly to the Federal Circuit, did Wisconsin waive its sovereign immunity for 11th amendment purposes, thereby rendering itself vulnerable to Phoenix’s infringement counterclaims? (no).

The TTAB had granted Phoenix Int’l's petition to cancel Wisconsin’s registration. Rather than appeal to the Federal Circuit, Wisconsin challenged the decision in a district court. Phoenix counterclaimed for trademark infringement and sought damages. The district court gave Wisconsin a win/win: it granted summary judgment reversing the TTAB and reinstating Wisconsin’s registration, and held that the 11th amendment barred Phoenix’s counterclaims. The Seventh Circuit reversed and remanded for a likelihood of confusion trial, but affirmed Wisconsin’s immunity to the infringement counterclaims under the 11th amendment.

On the actual use vs. description-of-goods-and-services-in-the-registration issue, the Seventh Circuit noted first that this sub-issue, in the context of a likelihood of confusion analysis, is not a rote comparison of the parties’ goods, but whether the parties’ products are the kind that consumers would believe to come from the same source. The court further noted that the actual goods the parties’ marks are used on may inform the meaning of the terms used in the registration.

As to the 11th amendment issue, the majority held that the mere fact that Wisconsin chose to challenge the TTAB’s cancellation via a district court proceeding in which it could submit new evidence was not enough to constitute a waiver of 11th amendment immunity. The majority felt that, at bottom, for purposes of 11th amendment immunity, such a challenge is simply a continuation of the TTAB proceeding in which Wisconsin was effectively a defendant. The dissent believed that, for 11th amendment purposes, there was a material difference between a straight appeal to the Federal Circuit and the institution of a de novo proceeding at the district court, primarily because, by choosing to file a proceeding in the district court, the challenger could present new evidence.

Happy New Year!