November 7, 2012
Nike, Inc., sued Already, LLC d/b/a Yums, for selling shoes that allegedly infringed on Nike’s trademark covering the Air Force 1 shoe line. Yums counterclaimed to cancel Nike’s trademark. Shortly after Yums’s counterclaim, Nike dropped its claim and promised Yums that Nike would not assert its trademark against any of Yums’s current or previous products. The district court dismissed Yums’s counterclaim and the court of appeals affirmed the dismissal. Yums argues that a controversy remains after Nike’s promise not to sue because Nike’s trademark continues to hinder Yums’s ability to compete in the athletic footwear business. Nike argues that a court cannot hear a trademark claim without a controversy, and that Nike’s promise not to sue eliminated any controversy involving the Air Force 1 trademark. The Supreme Court’s decision here may determine whether intellectual property owners can drop infringement actions without having to defend counterclaims challenging their intellectual property rights. This decision may have a significant impact on intellectual property litigation and on the risks associated with commencing an infringement action.
Whether a federal district court is divested of Article III jurisdiction over a party's challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party's then-existing commercial activities?
Does a federal district court lose jurisdiction over a trademark cancellation claim after the trademark holder terminates any infringement actions and promises not to assert its trademark against the party seeking the trademark’s cancellation?