Please plead me

Everyone knows about copyright preemption.  How about trademarks?  Pamela Chestak has a great post that explains why yes one, and no the other.

First, a refresher on preemption in copyright.  Preemption, of course, refers to that status wherein a given legal subject matter — or more specifically, a category of legal claim — is preempted by the federal government, which is said to “occupy the field” entirely.  

That means you can’t prosecute a copyright claim, strictly speaking, in state court.  It has to be done in federal court, as explained by the Government:

The federal preemption provision, codified at 17 U.S.C. §  301(a), states that: On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. . . . “

Section 301 in effect establishes a two-pronged test to be applied in preemption cases.” Crow v. Wainwright, 720 F.2d 1224, 1225 (11th Cir. 1983), cert. denied, 469 U.S. 819 (1984). Under this preemption test, the states are precluded from enforcing penalties for copyright violations if the intellectual property at issue falls within the “subject matter of copyright” as defined by federal law and if the claimed property rights are “equivalent to” the exclusive rights provided by federal copyright law. Id. at 1225-26. Adopting this standard, the Eleventh Circuit has held that section 301 now precludes state criminal prosecutions for acts of copyright infringement. Id.

That’s a lot of preemption. That’s not to say, however, that a defendant can take advantage of preemption to remove any claim to federal court where the underlying subject matter could be the subject of a copyright but where the claim is not.  For example, while the right of publicity may be implicated by the unauthorized use of a photograph, if the actual claim is not for copyright infringement but for infringing the plaintiff’s right of publicity, it stays in federal court.  And there’s always the notorious “hot news exception” of New York, which is beyond the scope of this post, and even of this one.

Still and all, it is a lot of preemption — but, in terms of intellectual property, preemption is pretty much for copyrights and patents.   So a person could look at this scheme and figure, okay, I get it:  There’s a federal copyright statute, and there’s preemption.  Patent?  Statute, check; preemption, check.  Right of publicity?  No statute, no preemption!   This is simple! No. It’s not like that.  Trademark is different: There is a statute.  But there is not necessarily preemption.   Not at all!   Pam explains the case in which this lesson gets learned hard:

The Lanham Act provides a federal cause of action for trademark registration and infringement, including for infringement of unregistered (so-called “common law”) trademarks. It is well-accepted, though, that the Lanham Act doesn’t preempt state law on the subject; all states have laws providing for registration at the state level and an infringement cause of action. State courts have concurrent jurisdiction with federal courts for Lanham Act claims, 3-11 Gilson on Trademarks § 11.03, but since it is a federal cause of action the defendant may elect to remove the case to the federal district court for that state rather than have it remain in state court. All of this means that most trademark infringement cases end up in federal court, the “overwhelming majority,” according to 3-11 Gilson on Trademarks § 11.01.

As Pamela explains however, all a plaintiff has to do to avoid ending up in federal court is plead state law-only claims — which is exactly what, in the case she writes about, plaintiff SSG Baseball, LLC did.  It worked:  

The theory is the “well-pleaded complaint,” that is, “removal is not possible unless the plaintiff’s ‘well pleaded complaint’ raises issues of federal law sufficient to support federal question jurisdiction.” It makes the plaintiff “master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law. Therefore, even if federal claims are available, a plaintiff may remain in state court by relying exclusively on state law.” However, under the “artful pleading doctrine,” even though a plaintiff may have strategically omitted federal law claims, if it is in an area where federal law completely preempts the purported state law claim, the case can be removed.  Rivet v. Regions Bank, 522 U.S. 470, 118 S.Ct. 921 (1998). As noted above trademark infringement can be a state law claim, so what part of the SSG LLC claim was exclusively federal?

Answer:  None.  And it gets worse:

Indeed, ownership of a trademark (patents and copyrights too) is very often a matter of state law, whether it be contract, divorce or estate law. This is the right outcome. Something the court didn’t much doubt, awarding SSG LLC its attorneys’ fees because “Select did not have an objectively reasonable basis to remove this case.”

Ouch.  I bet someone wishes he could remove that.

That “well-pleaded complaint” and “plaintiff is the master of the claim” language also points to a related point:  A defendant can’t use the existence of a defense based in a federal statute as grounds for removal either — or as a jurisdictional, federal-question basis for federal jurisdiction in a declaratory judgment action.

What do I mean?  Section 230 of the CDA, of course.  The case?  Your client, an Internet service provider — a gripe site, let’s say — is threatened with a lawsuit if it doesn’t remove from its website certain content the threat-maker deems defamatory.  As a state-based claim, an action in defamation would be barred by Section 230, and your client would like to pop that pimple now instead of operating under the dangling sword of litigation threats.

As a litigator, and perhaps especially as an IP litigator, you’d rather have that conversation in federal court than state court.  Problem:  Both your client and the saber-rattler reside in the same state.  So you have no diversity jurisdiction, and only a state-law claim — the bad guys have gotten the message and aren’t claiming federal trademark or copyright infringement, just plain defamation.

Does your Section 230 defense — or, say, any other defense provided by federal statute, such as the DMCA — cast as a cause of action in a declaratory judgment action, get you federal question jurisdiction?

Fair question. After all, Congress enacted Section 230.  It’s a federal solution to a problem.  Wouldn’t Congress want me to have recourse to the federal courts to utilize that shield?

Nope.  Congress loves you, but not that much. Absent a specific statutory grant of jurisdiction — and Section 230 doesn’t come with one of those — there will be no federal court for you.  Plaintiff is the master of the claim.  And a declaratory judgment action based solely on your client’s anticipation of being a defendant doesn’t turn it into a plaintiff for purposes of that rule.

Some other time, though, you can be reasonably confident… if you’ve got clients such as that.

Originally posted 2015-09-01 16:00:09. Republished by Blog Post Promoter