Originally published in Law 360 on September 6, 2012.

On June 25, 2012, the U.S. Supreme Court granted certiorari in Already, LLC v. Nike, Inc., No. 11-982, on the issue of 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. The issue in Already concerns a tactic commonly used in trademark cases: the holder of a trademark registration signs a covenant not to sue the alleged infringer so as to divest the district court of jurisdiction over the infringer’s declaratory judgment claim or counterclaim for cancellation of the mark.

The same tactic is commonly used in patent cases, where the patentee may covenant not to sue the alleged infringer in order to avoid the infringer’s allegations that the patent in suit is invalid, unenforceable or not infringed. When successfully used, this maneuver allows the plaintiff to live to fight another day, perhaps against an opponent without the funds (or motivation) necessary to mount a successful defense.