Lanham Act Trademark Claims in Minnesota State Court

What Does 15 U.S.C. § 1121 Say About Where Lanham Act Claims Are Heard?

Section 1121(a) gives federal courts original jurisdiction over every Lanham Act claim, but it does not say that jurisdiction is exclusive. The companion statute, 28 U.S.C. § 1338(a), bars state courts from patent, plant variety protection, and copyright claims and leaves trademarks off that list.

Under 15 U.S.C. § 1121(a), “The district and territorial courts of the United States shall have original jurisdiction and the courts of appeal of the United States (other than the United States Court of Appeals for the Federal Circuit) shall have appellate jurisdiction, of all actions arising under this chapter, without regard to the amount in controversy or to diversity or lack of diversity of the citizenship of the parties.” So a trademark owner can file a Lanham Act claim in federal court without regard to the amount in controversy or to diversity or lack of diversity of the citizenship of the parties.

The general intellectual property jurisdiction statute draws the line between shared and exclusive jurisdiction. 28 U.S.C. § 1338(a) provides: “The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights.” Trademarks appear in the first sentence and are missing from the second.

That covers the two main Lanham Act causes of action. The first is infringement of a federally registered mark by a person acting “without the consent of the registrant,” one of the Section 32 claims for registered marks under 15 U.S.C. § 1114(1). The second is one of the Section 43(a) claims for unregistered marks and false designation of origin under 15 U.S.C. § 1125(a).

Why Do State Courts Share Jurisdiction Over Trademark Claims?

State courts share jurisdiction because the Supreme Court presumes that state courts can hear federal claims unless Congress takes that power away. Section 1121(a) does not say that federal jurisdiction is exclusive, and the state-court bar in § 1338(a) names only “patents, plant variety protection, or copyrights.”

In Tafflin v. Levitt, 493 U.S. 455 (1990), the Supreme Court held that state courts may hear civil claims under the federal racketeering statute (RICO). The Court explained that “we have consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.” It added that “This deeply rooted presumption in favor of concurrent state court jurisdiction is, of course, rebutted if Congress affirmatively ousts the state courts of jurisdiction over a particular federal claim.”

The Court drew its test from Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473 (1981), a case about claims under the Outer Continental Shelf Lands Act. There, the Court said that “the presumption of concurrent jurisdiction can be rebutted by an explicit statutory directive, by unmistakable implication from legislative history, or by a clear incompatibility between state-court jurisdiction and federal interests.” It also said: “It is black letter law, however, that the mere grant of jurisdiction to a federal court does not operate to oust a state court from concurrent jurisdiction over the cause of action.”

That framework favors state-court jurisdiction over trademark claims: § 1121(a) is a grant of federal jurisdiction, and the explicit exclusion in § 1338(a) names patents, plant variety protection, and copyrights only.

How Does a Trademark Lawsuit Start in a Minnesota District Court?

A trademark lawsuit in Minnesota state court is an ordinary civil action in the district court for the county where venue lies. Under Minnesota’s rules, it begins when the summons is served on the defendant, and filing with the court can come later.

Minnesota’s district courts are the state’s trial courts of general jurisdiction. Under Minn. Stat. § 484.01 subd. 1, “The district courts shall have original jurisdiction” over a list of cases that begins with “all civil actions within their respective districts.” Venue for a trademark case falls under the general rule in Minn. Stat. § 542.09: “All actions not enumerated in sections 542.02 to 542.08 and 542.095 shall be tried in a county in which one or more of the defendants reside when the action is begun or in which the cause of action or some part thereof arose.” A corporation “shall be considered as residing in any county wherein it has an office, resident agent, or business place.”

A Minnesota Supreme Court decision shows the path. In Minneapple Co. v. Normandin, 338 N.W.2d 18 (Minn. 1983), a company sued a T-shirt and button seller for infringing its registered design under Minnesota’s trademark statute. After a preliminary injunction and a trial, the Hennepin County District Court entered judgment that awarded the company “damages for trademark infringement plus attorney fees and which enjoined Normandin from all use of the infringing design.” The Minnesota Supreme Court reversed that judgment, holding that the seller’s design “does not rise to the level of similarity required to constitute either trademark infringement under Minn.Stat. § 333.28 (1982) or common-law unfair competition.”

The start of the case follows Minnesota’s commencement rule. Under Minn. R. Civ. P. 3.01, a civil action is commenced against each defendant “when the summons is served upon that defendant” or by the other methods the rule lists. Filing comes later, and Minn. R. Civ. P. 5.04(a) sets the outer limit: “Any action that is not filed with the court within one year of commencement against any party is deemed dismissed with prejudice against all parties unless the parties within that year sign a stipulation to extend the filing period.” I suggest checking the rule’s current text before relying on that period, because a missed filing ends the case with prejudice.

Before suing, a trademark owner can send a trademark cease and desist letter to try to resolve the dispute without a lawsuit.

When Can a Defendant Remove a Lanham Act Case to Federal Court?

A defendant can remove a state-court case to federal court when the federal court could have heard it originally, and a complaint pleading a Lanham Act claim meets that test. Removal requires a notice filed in federal court within a short statutory window and, when the case is removed solely under § 1441(a), the consent of every properly joined and served defendant.

The removal statute, 28 U.S.C. § 1441(a), provides: “Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” A Lanham Act claim is within that original jurisdiction under § 1338(a) and under 28 U.S.C. § 1331, which covers “all civil actions arising under the Constitution, laws, or treaties of the United States.”

The procedure is in 28 U.S.C. § 1446:

1. Timing. Under § 1446(b)(1), “The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.” I suggest that a served defendant calendar this window the day the papers arrive and check the statute’s current text, because a late notice gives the plaintiff a ground to send the case back.
2. Consent. Under § 1446(b)(2)(A), “When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.”
3. Notice to the state court. Under § 1446(d), the defendant “shall file a copy of the notice with the clerk of such State court, which shall effect the removal and the State court shall proceed no further unless and until the case is remanded.”

The case then continues in the federal district court for the district where the state case was pending, as § 1441(a) says.

What Happens After Removal if the Plaintiff Wants to Return to State Court?

A plaintiff can ask the federal court to send a removed case back to state court through a motion to remand. When the complaint pleads a Lanham Act claim, the federal court has jurisdiction, so a plaintiff seeking to send the whole case back has to rely on a defect in how it was removed. Separately, under 28 U.S.C. § 1367(c)(3), the court may decline supplemental jurisdiction over the Minnesota claims once it “has dismissed all claims over which it has original jurisdiction.”

Under 28 U.S.C. § 1447(c), “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” Procedural defects, such as a missing consent or a late notice, have their own deadline: “A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a).” I suggest checking that subsection’s current text the day a notice of removal arrives, because the objection is lost if the motion comes too late.

A remand order generally cannot be appealed. Under § 1447(d), “An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,” and that subsection names its own exceptions. In Carlsbad Technology, Inc. v. HIF Bio, Inc., 556 U.S. 635 (2009), the Supreme Court read § 1447(d) together with § 1447(c), limiting “the remands barred from appellate review by §1447(d) to those that are based on a ground specified in §1447(c),” and held: “When a district court remands claims to a state court after declining to exercise supplemental jurisdiction, the remand order is not based on a lack of subject-matter jurisdiction for purposes of §§1447(c) and (d).”

The Minnesota claims in a removed case generally travel with the Lanham Act claim. Under 28 U.S.C. § 1367(a), “the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” Section 1338(b) adds that federal courts have original jurisdiction over “any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws.” Section 1367(c) lets a federal court decline supplemental jurisdiction in listed circumstances, and when it does, the state claims do not stay in federal court.

How Can a Trademark Owner Keep the Case in State Court?

A trademark owner who wants to stay in state court can plead only Minnesota claims, because a case without a federal claim is generally not removable unless the parties are diverse. That choice gives up the Lanham Act’s remedies and relies on the remedies Minnesota law provides.

The Supreme Court described this choice in Caterpillar Inc. v. Williams, 482 U.S. 386 (1987), a labor case: “The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.” The Court also recognized a narrow exception, complete preemption, which it said “is applied primarily in cases raising claims preempted by § 301 of the LMRA” (the federal labor statute).

Minnesota offers two statutory claims a trademark owner can plead instead of the Lanham Act:

1. Infringement of a Minnesota-registered mark. Minn. Stat. § 333.28 reaches a person who uses, without the registrant’s consent, a mark “identical to or so similar to the registered mark as to be likely to cause confusion or mistake on the part of a purchaser of the goods or services or to deceive such a purchaser as to the source or origin of the goods or services.” This claim requires registering the mark with the Minnesota Secretary of State. Section 333.28 is subject to Minn. Stat. § 333.30, which provides: “Nothing herein shall adversely affect a person’s rights or the enforcement of the rights in a mark acquired in good faith at any time at common law, except that the rights as against the registrant of the same or confusingly similar mark are limited to the areas of the person’s use established prior to the registration date and areas in which the person’s mark has become known prior to the registration date.” Under Minn. Stat. § 333.29 subd. 1, “The court, in its discretion, may enter judgment for an amount not to exceed three times the profits and damages and reasonable attorneys’ fees of the prevailing party if the court finds the other party committed the wrongful acts with knowledge or in bad faith or otherwise as according to the circumstances of the case.”
2. Deceptive trade practices. Minnesota’s Deceptive Trade Practices Act offers a second claim. Under Minn. Stat. § 325D.44 subd. 1, a business engages in a deceptive trade practice when, in the course of business, it “causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services.” Section 325D.45 provides for an injunction. Under Minn. Stat. § 325D.45 subd. 1, “A person likely to be damaged by a deceptive trade practice of another may be granted an injunction against it under the principles of equity and on terms that the court considers reasonable. Proof of monetary damage, loss of profits, or intent to deceive is not required.” Under subdivision 2, “The court may award attorneys’ fees to the prevailing party if (1) the party complaining of a deceptive trade practice has brought an action knowing it to be groundless, or (2) the party charged with a deceptive trade practice has willfully engaged in the trade practice knowing it to be deceptive.”

Diversity of citizenship is the second removal route, and it applies even to a state-law-only complaint. Under 28 U.S.C. § 1332(a), federal courts hear cases “where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,” between citizens of different states, among other combinations. The forum-defendant rule in 28 U.S.C. § 1441(b)(2) limits removal of a case that rests on diversity alone: “A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”

The tradeoff is the remedies. A complaint that omits the Lanham Act gives up the monetary remedies in 15 U.S.C. § 1117(a), which apply to a violation established “in any civil action arising under this chapter,” and relies on the Minnesota remedies above. For a Minnesota-registered mark, those include profits and damages: under § 333.29 subd. 1, “The court may require the defendants to pay to the owner either or both of the following: (1) all profits derived from the wrongful manufacture, use, display, or sale; or (2) all damages suffered by reason of the wrongful manufacture, use, display, or sale.” Under Minn. Stat. § 325D.45 subd. 3, “The relief provided in this section is in addition to remedies otherwise available against the same conduct under the common law or other statutes of this state.” For an owner whose mark is not registered, Minnesota also recognizes common-law unfair competition: “Likelihood of purchaser confusion also is an element of common-law unfair competition,” Minneapple Co. v. Normandin, 338 N.W.2d 18 (Minn. 1983).

Why Does a Lanham Act Counterclaim Not Move a State Case to Federal Court?

A defendant sued in state court on Minnesota claims cannot remove the case by answering with a Lanham Act counterclaim. Federal jurisdiction over a removed case turns on the plaintiff’s complaint, and Congress created a counterclaim exception only for patent, plant variety protection, and copyright claims.

In Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002), the question was which federal appeals court could hear a patent counterclaim in a trade-dress dispute. The Supreme Court explained that “a counterclaim . . . cannot serve as the basis for “arising under” jurisdiction,” because a counterclaim “appears as part of the defendant’s answer, not as part of the plaintiff’s complaint.” The Court reasoned that the contrary rule would let a defendant “remove a case brought in state court under state law, thereby defeating a plaintiff’s choice of forum, simply by raising a federal counterclaim.” The Court restated that rule in Vaden v. Discover Bank, 556 U.S. 49 (2009), referring to “the established rule that federal-court jurisdiction cannot be invoked on the basis of a defense or counterclaim.”

Congress changed that result in 2011 for some intellectual property, but not for trademarks. Under 28 U.S.C. § 1454(a), “A civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights may be removed to the district court of the United States for the district and division embracing the place where the action is pending,” and under § 1454(b)(1), “the action may be removed by any party.” Trademarks are not on that list.

A Lanham Act counterclaim still has value in state court: it is a claim for relief the state court can decide. The counterclaims a trademark defendant can raise are the same whichever court hears the case.

How Do Lanham Act Injunctions and Damages Work in a State Court Case?

The Lanham Act’s injunction and money provisions speak of the “several courts vested with jurisdiction” and “any civil action arising under this chapter,” not federal courts alone. In a Minnesota district court, an early injunction request also follows Minnesota’s Rule 65, which requires security and, for a temporary injunction, notice.

Under 15 U.S.C. § 1116(a), “The several courts vested with jurisdiction of civil actions arising under this chapter shall have power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable.” The same subsection adds: “A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.” One sentence of § 1116(a) is limited by its terms to federal courts: it allows nationwide service of an injunction “granted upon hearing, after notice to the defendant, by any district court of the United States.”

Money remedies follow the same pattern. Under 15 U.S.C. § 1117(a), “When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” The subsection also provides that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

Minnesota procedure governs how a state court takes up an early injunction request. Under Minn. R. Civ. P. 65.02, “(a) No temporary injunction shall be granted without notice of motion or an order to show cause to the adverse party.” Under Rule 65.03, “(a) No temporary restraining order or temporary injunction shall be granted except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained.” A business seeking a quick order should be prepared to post that security, because the rule makes it a condition of the order.

What the plaintiff must prove to win does not change with the court. The elements of what a Minnesota trademark infringement claim requires, a protectable mark and a likelihood of confusion, apply in state and federal court alike.

Next Steps

Before filing, I suggest deciding which court you want and drafting the complaint to fit, because the claims pleaded largely decide whether the case can be removed. A Lanham Act claim brings federal remedies and a likely move to federal court. A complaint limited to Minnesota claims can stay in state court when the parties are not diverse, outside the narrow complete-preemption exception. A defendant served with a state-court Lanham Act complaint has a short removal window from service, so that decision should come first. If you would like me to tell you which courts can hear your trademark dispute and whether the other side could move it to federal court, email [email protected] with a short description of the dispute and where each business is located. I will run a conflict check before you send any confidential documents. More on how I handle disputes is on my business litigation page and my trademark practice page.