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ANALYSIS OF THE NIKE V. ALREADY LLC DISPUTE

Citation 568 US 85 (2013)

 The instant case, decided at the United States District Court for the Southern District of New York, is a case of infringement on the trademark of Nike’s Airforce 1, a basketball brand.

A Very Brief Background of Nike Air Force 1

Nike Airforce 1 is a pair of athletic shoes designed by Bruce Kilgore for Nike Inc, and is considered the first basketball shoe to use the Nike Air Technology. In 1982, like much of its designs, Nike registered and protected the “Air Force 1” by trademark.  In that same year, Nike, based in Beaverton, Oregon, launched the low-cut Air Force 1 sneaker, and began to sell millions of them each year ever since.

cc: International Trademark Association

Facts of the Case

In 2009, in a bid to protect its trademark, Nike filed an infringement lawsuit against Already LLC. Nike’s contention was that Already’s Sugar and Soulja Boy shoes infringed its trademark on the stitching, eyelet panels and other features of Nike Air Force 1.

But, as it turns out, Nike did not see what was coming.

It is often mused that in the contentious world of trademark litigation, a case can “boomerang” on a plaintiff. In other words, a plaintiff may sue an alleged infringer, and be met with a defense or countersuit that unexpectedly endangers the plaintiff’s mark. Such was the situation in the instant case.

In response to Nike’s trademark infringement suit, Already countersued Nike, arguing that Nike’s trademark was invalid. To Nike, the countersuit posed the possibility of losing a valuable asset in the ensuing litigation. Hence, Nike instead opted for an unequivocal surrender, dubbed ‘Covenant Not to Sue’, to Already.

This surrender was in form of a written promise not to make any claim or demand on Already – including its customers and distributors – regarding current or previous shoe designs, or the imitations. The Supreme Court agreed that indeed, the covenant was broad enough to cover all of Already’s allegedly unlawful conducts that had brought the parties to court in the first instance. Rightly guessed – Nike ticked all the boxes that give Already free hand to what was originally considered an infringement.

However, Already was not ready to back down; not especially as it was, perhaps, optimistic about its chances of invalidating Nike’s trademark. Hence, despite Nike’s surrender, Already went ahead with the lawsuit. In countering this move, Nike successfully argued that the “Covenant Not to Sue” had rendered the litigation “moot,” thus, requiring that the litigation be dismissed.

The Lower courts agreed, and Already appealed. Ultimately, the Supreme Court agreed to hear the case.

 What Does It Mean to Render A Case Moot?

The Supreme Court in the instant case explained that, a case is moot when, “The issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the outcome.”  One way to meet this standard is for a defendant to voluntarily cease its unlawful conduct – or the act which gave rise to the claim – once sued. Here, Nike is considered to be the defendant with respect to Already’s counterclaims.

It must be stressed that the onus of proving that a case has been rendered moot is heavy. The concerns are reasonable. If defendants were able to moot disputes by desisting from their conduct until litigation was dismissed, and then resuming it afterwards, the civil judicial system would be easy to sidestep. To assuage these concerns, courts require that defendants demonstrate that they “could not be reasonably expected to resume” the conduct that started the dispute.

Recall that the court opined that Nike’s Covenant Not to Sue was held to be sufficiently broad to cover all possible litigation against Already or related parties in connection with the Air Force 1 trademark, and as such, there was nothing left for any court to decide with respect to Already’s challenge to the mark.

It must be reiterated that Nike’s conduct that led to the challenge – suing Already for trademark infringement – had been completely and irrevocably terminated by the covenant, so much that Nike could not reasonably be expected to repeat the behavior in the future. Consequently, the case was held to be moot, and the lower court’s dismissals were affirmed accordingly.

Conclusion

The instant case, in effect, exposes a legal “escape hatch” for trademark holders as well as owners of other protected IP assets. Thus, where a trademark infringement case is filed but there is a huge threat from the other camp that is being sued, the claimant may simply withdraw the threat with a promise to not litigate on that case anymore, rendering it moot. However, to successfully prove that a case has become moot, the claimant must also prove that they could not reasonably be expected to go back on their promise, or resume the conduct that led to litigation. This will go a long way in stemming the tides of boomerang litigation which may discourage the enforcement of IP rights by both minnows and big players. 

Olanrewaju Moses.

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