Court hears new arguments in lawsuit over lottery’s name

LITTLE ROCK — A lawsuit accusing the Arkansas Lottery Commission of trademark infringement should be dismissed because the commission is immune from civil suits, a lawyer for the state attorney general’s office argued Thursday before the state Supreme Court.

A lawyer for the North Little Rock company that filed the lawsuit argued that the Lottery Commission’s actions have precluded it from claiming sovereign immunity.

The state’s highest court heard oral arguments but did not immediately issue a ruling in the case, which is before the court for the second time.

The Arkansas Scholarship Lottery launched in 2009. Alpha Marketing sued the Lottery Commission in Pulaski County Circuit Court in March 2010, requesting a ruling that it has exclusive rights to the terms “Arkansas Lottery,” “Arkansas Lotto” and “Lottery Arkansas” because it has owned trademarks for them since before 2009 — and as far back as 1994 for two of them.

Alpha Marketing filed the suit after the attorney general’s office warned owner Ed Dozier in a letter that his company would be subject to legal action if it continued using the terms.

In March 2011, Pulaski County Circuit Judge Wendell Griffen denied a motion by the state to dismissed the suit, and the state appealed that ruling. After hearing oral arguments in December 2011, the Supreme Court sent the case back to circuit court, saying the question of whether the Lottery Commission was entitled to sovereign immunity had not been fully addressed in the lower court.

Griffen ruled in May 2012 that the Lottery Commission was not entitled to immunity, and the state again appealed.

Assistant Attorney General David Curran told the justices Thursday that Alpha Marketing is seeking an injunction “that would apparently bar the Lottery Commission or the Scholarship Lottery from ever describing itself or explaining what it does to the Arkansas public.”

“We contend that Alpha’s claims are barred by Article 5, Section 20 of the Arkansas Constitution, which says that the state of Arkansas shall never be made a defendant in any of her courts,” Curran said.

David Gershner, attorney for Alpha Marketing, argued that “ordinarily the Lottery Commission, an agency of the state, would be entitled to sovereign immunity, but due to three specific exceptions, in this case it is not.”

Gershner said that in its original answer to the lawsuit, the Lottery Commission asked the court to declare Alpha Marketing’s trademarks invalid. He argued that in doing so it conceded that the circuit court has jurisdiction in the matter and therefore waived its right to claim immunity.

Curran told the court that the Lottery Commission later withdrew that request. Gershner argued that once made, the waiver could not be rescinded. He also said the commission has continued to argue in its pleadings that Alpha Marketing’s trademarks are invalid.

Gershner also said the Lottery Commission is not entitled to immunity because it acted in bad faith by knowingly infringing on Alpha Marketing’s trademarks and because it exceeded its authority by demanding, through the attorney general’s office, that Alpha Marketing stop using the trademarked terms.

Curran said the Lottery Commission has not acted in bad faith. He said the letter from the attorney general’s office was merely a statement that “we believe that your conduct is deceptive and that it should stop” and was followed by a second letter stating that the attorney general’s office would take no action at that time.

Gershner said the letters were “equivalent to a schoolyard bully saying, ‘If you give me your lunch money I won’t beat you up today.’ That still leaves tomorrow.”

Gershner also argued that the Lottery Commission is not entitled to immunity because its use of the terms trademarked by Alpha Marketing amounts to an unconstitutional taking of intellectual property.

Curran said there is no court precedent to support that argument.

The court did not indicate when it would rule.