The US Supreme Court [official website] ruled [opinion, PDF] Wednesday in Already, LLC v. Nike, Inc. that Nike's covenant not to enforce a trademark against Already's existing products and any future "colorable imitations" moots Already's action to have the trademark declared invalid. In this case, the court considered whether Nike's promise not to sue was broad enough to assure that it would not assert a future claim against Already if it infringed on the same trademark in a different way, and whether Nike had the ability to avoid an attack on its trademark validity by making a promise like this. Delivering the opinion for the unanimous court, Chief Justice John Roberts wrote:
Once Nike demonstrated that the covenant encompasses all of Already's allegedly unlawful conduct, it became incumbent on Already to indicate that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike's trademark yet not be covered by the covenant. But Already failed to do so in the courts below or in this Court. The case is thus moot because the challenged conduct cannot reasonably be expected to recur.Justice Anthony Kennedy filed a concurring opinion in which Justices Clarence Thomas, Samuel Alito and Sonia Sotomayor joined. Overall, the court affirmed the ruling [opinion] of the US Court of Appeals for the Second Circuit [official website] that Nike's delivery of a covenant not to sue eliminated a justiciable case or controversy in a trademark action where Already asserted counterclaims for a declaratory judgment of invalidity and noninfringement of Nike's trademark for the "Air Force One" athletic shoe. In essence, the court found that Nike's covenant not to sue Already was unconditional and irrevocable.
The court heard oral arguments in this case in November after granting certiorari [JURIST reports] in June. The case examined the issue of whether a federal court has Article III [text] jurisdiction over a party's challenge to the validity of a trademark if the owner of the trademark has agreed not to sue the party over alleged infringement. The dispute arose when Nike alleged that several shoes manufactured by Already has infringed upon patented techniques of Nike's "Air Force One" sneaker. When Already filed a counterclaim challenging the validity of Nike's patent, Nike petitioned the court to dismiss its suit against Already as well as Already's counterclaim. Nike then issued a promise to Already that it would not pursue any further action because, as Nike's lawyer explained to the Supreme Court, "Nike concluded that [Already's] activities were no longer significant enough to warrant the cost of litigation." Already still wished to pursue its claim challenging Nike's patent, but Nike argued that since it vowed not to pursue litigation, there was no longer any "case or controversy" as required under Article III of the US Constitution. The district court agreed with Nike, and its decision was subsequently affirmed by the Second Circuit.