11th Cir. Seeks Clarity on VirtualSchool Mark That Florida Agency Claims Was Infringed

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By Tamlin H. Bason  

Oct. 11 --The U.S. Court of Appeals for the Eleventh Circuit asked the Florida Supreme Court Oct. 10 to clarify whether the Florida VirtualSchool, a state institution created by statute, has standing to assert trademark infringement claims against a private entity using “Virtual” marks (Fla. VirtualSchool v. K12, Inc., 11th Cir., No. 12-14271, 10/10/13)

A district court in 2012 dismissed the claims after determining that the agency lacked standing to bring an infringement claim under the Lanham Act because the statute that created the agency retained for the state the ownership rights to the marks. 2012 BL 17827, 103 U.S.P.Q.2d 1853 (M.D. Fla. 2012) .

The Eleventh Circuit noted that the state's retention of the IP rights--by statute--seemingly conflicts with another statute that seemingly vests IP rights with state agencies. The appeals court thus asked Florida's highest court to reconcile the two statutes.

State Creates Online Educational System

In 1997, Florida On-Line High School was founded to offer online educational training to students.

In 2000, the entity became an agency of the state of Florida pursuant to Section 228.082 of the Florida Statutes. That statute was amended and renumbered in 2002 to Section 1002.37. At that time, the entity's name was changed to “Florida VirtualSchool.”

The agency in 2010 registered as federal trademarks both “Florida VirtualSchool” and “FLVS.”

FLVS was the only entity providing online education courses in Florida until 2003. At that time, the state implemented a pilot program permitting private educational providers to operate online courses on a limited basis. K12 Inc. was one of the private entities that began operating under that program. K12 adopted the name “Florida Virtual Academy,” and filed that name with the Florida Department of Education.

FLVS filed a lawsuit alleging trademark and service mark infringement under the Lanham Act. K12 moved to dismiss, arguing that FLVS lacked standing.

District Court Dismisses Suit

Judge Gregory A. Presnell dismissed the complaint after determining that FLVS had no standing under the Lanham Act because it was neither the owner nor the exclusive licensee of the trademark.

Looking to relevant case law, the court said a state agency has only the authority that has been granted to it pursuant to enabling legislation. The court then quoted the relevant provisions of Section 1002.37. That provision states that FLVS:

may acquire, enjoy, use and dispose of patents, copyrights, and trademarks and any licenses and other rights or interests thereunder or therein. Ownership of all such patents, copyrights, trademarks, licenses, and rights or interests thereunder or therein shall vest in the state, with the board having full right of use and full right to retain the revenues derived therefrom.  

 

FLVS argued that it owned the marks pursuant to the statute giving it the power to “acquire, enjoy, use and dispose of” the marks. The district court disagreed.

“FLVS's argument concerning the scope of the right granted by the 'acquire, enjoy, use and dispose of' language does not overcome the plain language of the statute which clearly vests 'ownership' of the marks with the State of Florida,” the court said.

The district court also rejected the argument that FLVS was the exclusive licensee of the marks. That argument was based on the fact that the statute gave FLVS “full right of use” of the marks, which FLVS argued operated as an assignment since it restricts other parties from using the marks.

The court, however, noted a distinction between “full rights of use” and “exclusive rights of use.” While the former entitles the licensee to all of the benefits of use of the mark, it is only the latter that gives the licensee the exclusive right to use the mark, the court said. In this case, “The statute does not provide FLVS the right to use the marks to the exclusion of others, including the State of Florida, which owns the mark,” the court said. Accordingly, FLVS is not the an exclusive licensee and therefore it has not standing to assert a claim for trademark infringement, the district court held.

Appeals Court Notes 'Tension' Between Statutes

Section 1002.37's retention of rights seems to conflict with Fla. Stat. §286.021, Judge Adalberto Jordan noted.

Quoting that statute, the court said:

[Section 286.021] generally provides that the Department of State is vested with “legal title and every right, interest, claim or demand of any kind in and to any patent, trademark or copyright, or application for the same, now owned or held, or as may hereafter be acquired, owned and held by the state, or any of its boards, commissions or agencies.”  

 

The Eleventh Circuit said that the two statutes are “in tension with one another,” and it noted that no Florida state court has ever interpreted the statutes in a manner that would resolve that tension. It thus certified the following question to the Florida Supreme Court:

Does Florida VirtualSchool's statutory authority to “acquire, enjoy, use, and dispose of … trademarks and any licenses and other rights or interests thereunder or therein” necessarily include the authority to bring suit to protect those trademarks, or is that authority vested only in the Department of State.  

Judge Joel F. Dubina of the Eleventh Circuit and Judge Bobby R. Baldock of Tenth Circuit, sitting by designation, joined the opinion.

FLVS was represented by Stephen H. Luther of Allen Dyer Doppelt Milbrath & Gilchrist, P.A., Orlando, Fla. K12 was represented by Stephanie Leigh Carman of Hogan Lovells, LLP, Miami.

 

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com


Text is available at http://www.bloomberglaw.com/public/document/Florida_Virtualschool_v_K12_Inc_et_al_Docket_No_1214271_11th_Cir_/2.