The United States Supreme Court, which rarely gets involved in trademark cases, has ruled that when a Defendant in a Trademark infringement case countersues to cancel the Plaintiff’s registration, the Plaintiff can divest a court of jurisdiction over the cancellation by granting the Defendant a broad covenant not to sue.
In Already LLC, d/b/a/ YUMS, v. Nike, Inc., 568 U.S. ____(2013), Nike sued Already over an alleged violation of a trade dress registration for a shoe.
Already counterclaimed to cancel the registration. In response, Nike granted Already a very broad promise not to sue, dismissed its complaint, and then moved to dismiss the counterclaim as moot (i.e., unnecessary). Under Article III of the U.S. Constitution, federal courts do not have jurisdiction to hear a case where there is no real case or controversy. Hence, the trial court dismissed the counterclaim because the court could not envision any scenario under which the defendant could ever be sued for infringement given the broad covenant not to sue. In other words, there was no jurisdiction to ask the lower court to cancel the registration because there was no longer a controversy. In affirming the decision, the Supreme Court drew an analogy to, and applied, cases in which the defendant voluntarily ceases the conduct alleged in the complaint, with no reasonable chance of it recurring, which deprives the courts of further jurisdiction.
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