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State v. M22 LLC

United States District Court, W.D. Michigan, Southern Division

April 21, 2017

STATE OF MICHIGAN, Plaintiff,
v.
M22 LLC, Defendant.

          OPINION FINDING LACK OF JURISDICTION

          GORDON J. QUIST UNITED STATES DISTRICT JUDGE

         Plaintiff, State of Michigan, filed a complaint in the Ingham County Circuit Court seeking declaratory relief in connection with a pending proceeding that the State filed against Defendant, M22, LLC (M22), before the United States Patent and Trademark Office's Trademark Trial and Appeal Board (TTAB). In the TTAB proceeding, the State sought cancellation of certain registered trademarks owned by M22 that depict the State's M-22 trunkline marker. In its state-court complaint, the State sought a declaratory judgment that the Manual on Uniform Traffic Control Devices (MUTCD) applies to M22 and its use and registration of the State's M-22 trunkline route marker as a trademark, and that the use of the M-22 trunkline route marker as a trademark is unlawful under both state and federal law. (ECF No. 1-1 at PageID.15, 28.) M22 removed the case to this Court pursuant to 28 U.S.C. § 1441(a), on the ground that the assumed coercive action that M22 would bring against the State would be a claim under the Lanham Act. M22 thus alleged that this Court has jurisdiction pursuant to 28 U.S.C. § 1338(a). (ECF No. 1 at PageID.2, 7.)

         Following removal, the Court issued an Order directing the parties to address the Court's jurisdictional concerns. (ECF No. 12.) The parties have filed briefs as directed. Having reviewed the briefs, the Court concludes that it lacks declaratory judgment jurisdiction under both Article III and the Declaratory Judgment Act because an actual controversy does not exist.[1] Accordingly, because the Court lacks jurisdiction to entertain the State's declaratory judgment action, the Court will remand this matter to the state court.

         I. Background

         Pursuant to the Michigan Vehicle Code and federal law, the State has adopted the MUTCD as a uniform system of traffic-control devices. (ECF no. 1-1 at PageID.13-14.) The MUTCD embodies regulations adopted by the Federal Highway Administration and is the national standard for all traffic-control devices, e.g., road signs, traffic signals, etc., installed on pubic streets, highways, and private roads open to public travel. (Id. at PageID.2-3.) To qualify for federal funding on road projects, recipient states must adopt the MUTCD, or a state manual in substantial conformance with the MUTCD, and supplement the MUTCD or state manual as required by law and with approval by the Federal Highway Administration. (Id. at PageID.20.) The State first included its M-22 trunkline highway sign, with its distinctive white diamond design, in its 1971 version of the MUTCD.

         M22 is a limited liability company located in Traverse City, Michigan. M22 produces and sells clothing and other retail merchandise that feature a depiction of the M-22 trunkline marker. M22 also uses the M-22 trunkline marker to advertise events that originate near highway M-22. (Id. at PageID.277.) M22 owns several registered trademarks that incorporate the State's M-22 marker, including Reg. No. 3348635, for use in association with apparel, and Reg. No. 3992159, for use in association with retail store services (collectively “the Marks”). (ECF Nos. 5-2, 5-3.)

         In May 2012, the State's Attorney General determined that no entity can lawfully claim exclusive control over use of the State's trunkline route marker design. (ECF No. 1-1 at PageID.26.) Thereafter, the State sent a letter to M22 seeking M22's cooperation in canceling the Marks, but M22 refused. (Id.) M22 has threatened to sue other users of the State's trunkline markers with M-22, M-25, M-26, M-28, M-37, and M-119 in the diamond design for trademark infringement, but it apparently has never threatened to sue the State for trademark infringement. (Id. at PageID.26-27.)

         In December 2013, the State filed a proceeding before the TTAB seeking cancellation of the Marks. The State alleged that M22's use of the Marks was in violation of the law, based on the following provision from the MUTCD:

Traffic control devices shall be defined as all signs, signals, markings, and other devices used to regulate, warn, or guide traffic, placed on, over, or adjacent to a street, highway, pedestrian facility, or bikeway by authority of any public agency having jurisdiction.
. . . .
Any traffic control device design or application provision contained in this Manual shall be considered to be in the public domain. Traffic control devices contained in this Manual shall not be protected by a patent, trademark, or copyright, except for the Interstate Shield and any other items owned by the [Federal Highway Administration].

(Id. at PageID.18-19.) In August 2015, the TTAB issued an order denying the State's motion for summary judgment on its unlawful use in commerce claim, stating:

At a minimum, genuine disputes of material fact remain as to the legal effect, if any, of the Manual on Uniform Traffic Control Devices (MUTCD), as supplemented, whether the provisions of the MUTCD apply to [M22], whether there has been a violation of the supplemented MUTCD, and, if so, whether such violation can be considered unlawful so as to warrant the cancellation of [M22's] registrations.

(Id. at PageID.27, 34.) Thereafter, the State filed its instant complaint in state court, seeking a judicial declaration that M22's use and ...


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