By Cynthia Troy
Select Sports Group LLC, previously Select Sports Group, Ltd. and the defendant and counter claimant in this case, owns the mark SELECT SPORTS GROUP for use with sports agent services for professional athletes.
In 2007, a majority of Select’s owners formed SSG Baseball, L.P, which later changed its name to SSG Baseball, LLC, the plaintiff and counter defendant in this case. SSG LP was permitted to use the SELECT SPORTS GROUP mark because Select had a partial ownership interest in SSG LP. However, the relationship between Select and SSG LP came to an end in 2012, before SSG LP’s name change, and Select informed SSG LLC that they no longer were permitted to use the SELECT SPORTS GROUP mark or Select’s logo. Select filed a trademark application with the Patent and Trademark Office (PTO) for the SELECT SPORTS GROUP mark, in addition to their logo, in June 2014. A month later, SSG filed a trademark application with the PTO for SELECT SPORTS GROUP BASEBALL but the PTO examiner indicated that Select’s application would pose a potential bar to SSG’s registration.
Movant Argues that Declaratory Judgment Action is a State Law Claim that Doesn’t Arise under Federal Law
SSG Baseball, LLC brought this suit in Texas state court against Select seeking a declaratory judgment (a) confirming SSG’s ownership and/or right to use two common law trademarks, SSG BASEBALL and SELECT SPORTS GROUP BASEBALL, and (b) confirming that SSG has not infringed on any of Select’s common law trademark rights in connection with the marks. Select removed the case to federal court, contending that the US District Court for the Northern District of Texas, Dallas Division has federal question jurisdiction. Select claims the case is removable because the claim is completely preempted by federal trademark law and invokes the doctrine of estoppel against SSG. SSG moves to remand the case to state court on the ground that the US District Court lacks federal question jurisdiction because the declaratory judgment action is a state-law claim that doesn’t arise under federal law. SSG also seeks an award of attorney’s fees and expenses, claiming the removal of the lawsuit was objectively unreasonable.
Select failed to overcome the initial presumption against jurisdiction, ultimately failing to establish that removal was proper. The first burden Select has is to establish that the court has federal question jurisdiction. Federal question jurisdiction exists only when a federal question is presented on the face of the plaintiff’s pleaded complaint. Select maintains that the case was properly removed under the artful pleading doctrine because SSG’s claim is completely preempted. Select claims that registration of trademarks with the PTO and opposition to those trademarks is governed exclusively by federal law, covered by 15 U.S.C. §1051. While Federal Courts do not have exclusive jurisdiction over all Lanham Act claims, federal law completely preempts state law. SSG, despite Select’s contention, did not seek in this lawsuit to determine federal trademark registration rights. Ultimately, Select did not demonstrate that Congress had completely preempted the entire area of trademark law such that any claim asserting ownership of, and the right to use, a state common law trademark is necessarily federal in character. Select must be able to point to a federal cause of action that replaces SSG’s claim but it was unsuccessful. Therefore, SSG’s declaratory judgment action was not completely preempted.
The second claim that Select asserts is that SSG is judicially estopped from arguing that its claim does not arise under federal law based on positions it took before the PTO. Select contends that based on SSG’s representations, the Trademark Trial and Appeal Board’s suspended their Opposition, concluding the case involves a dispute over the parties’ respective rights in the mark. Before the TTAB, SSG asserted that this lawsuit could affect the trademark proceedings pending in the PTO. SSG represented that this lawsuit would likely have a direct bearing on the rights of the parties to register their respective trademarks and did not represent that anything about this lawsuit arose under federal law. The TTAB’s conclusion that this case involves a dispute over the parties’ respective rights in their marks says nothing about the nature of the dispute and therefore, Select also failed to establish that judicial estoppel applies.
SSG was only asserting a Texas common law trademark right, despite the elements of common law trademark infringement under Texas law are the same as those under federal trademark law. Under Texas common law, trademark infringement actions do not require the trademark be registered. Accordingly, although the outcome of this lawsuit could impact the federal trademark proceedings, it does not transform SSG’s state common law trademark declaratory judgment action into a claim that arises under federal law. In addition, finding that Select’s removal was objectively unreasonable, SSG was also awarded attorney’s fees and expenses.
The court granted SSG’s motion to remand, concluding the court lacked subject matter jurisdiction.
SSG Baseball, LLC v. Select Sports Grp., LLC, 2015 U.S. Dist. LEXIS 106475 (N.D. Tex. Aug. 13, 2015)
Troy is a 3L at the University of Texas School of Law and the current Editor in Chief of the Texas Review of Entertainment and Sports Law and was a summer intern in the legal office of the Texas Stars AHL Team.
