Already, LLC, d/b/a Yums v. Nike.Inc.

Court

U.S. Supreme Court

Our Position

The Court should affirm the Second Circuit’s decision that an unconditional, broad covenant not to sue divests a federal court of Article III jurisdiction over a trademark cancellation claim because (1) such a covenant renders moot the original trademark infringement action, thereby removing the necessary “case or controversy” before the court, (2) the trademark cancellation claim does not provide an independent basis for jurisdiction, (3) the claimant has recourse to request cancellation from the USPTO Trademark and Trial Appeal Board, which is a more appropriate forum for resolution of cancellation claims, and (4) the Second Circuit’s decision promotes the important public policy of favoring amicable resolution of disputes without resort to the courts.

Outcome

Following the reasoning in INTA’s amicus brief, the Court held that Nike’s broad covenant not to sue divested the district court of subject matter jurisdiction to hear the defendant’s counterclaims against Nike for non-infringement and for cancellation of Nike’s registration underlying the dispute. The Court held that Nike bore a heavy burden under the “voluntary cessation” doctrine to show that its covenant was so broad that it “could not reasonably be expected” to sue the defendant again in the future over the disputed shoe designs, and found that Nike had met burden. Moreover, because the defendant had not produced evidence of plans to make or sell a shoe that would fall outside of Nike’s broad covenant not to sue, the counterclaims were moot, and the district court no longer had jurisdiction to hear them.

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