Intellectual Property Today Guest Article: U.S. Supreme Court Says ''Enough, Already'' -- Nike's Broad Covenant Not To Sue Mooted Its Competitor's Cancellation Counterclaim


Sometimes, litigants are forced to reevaluate their strategy mid-course. Occasionally, a plaintiff in a pending trademark infringement action faces a cancellation counterclaim that poses a real threat to the plaintiff’s trademark. In that situation, to avoid the risk of cancellation or a declaration of invalidity, the plaintiff may want to voluntarily dismiss its claim and grant a covenant not to sue to the alleged infringer. A recent Supreme Court decision makes it clear that this is a viable tactic if the covenant is sufficiently broad.

On January 9, 2013, in Already, LLC dba YUMS v. Nike, Inc., No. 11-982, the U.S. Supreme Court unanimously affirmed a Second Circuit decision holding that Nike’s covenant not to enforce its “Air Force 1” registered trademark covering several of the shoe’s design elements against footwear competitor Already, LLC dba YUMS’ (“YUMS”) existing products and any future “colorable imitations” renders moot YUMS’ counterclaim to have the trademark declared invalid.

The YUMS decision is significant because it clarifies whether and when the voluntary cessation doctrine applies to a trademark owner’s unilateral issuance of covenant not to sue. Under the voluntary cessation doctrine, a defendant claiming that its voluntary compliance moots a case must show that it is absolutely clear the allegedly wrongful conduct could not reasonably be expected to recur.

Excerpted from Intellectual Property Today, April 3, 2013. To view full article, click here (subscription required).

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