Supreme Court Rules For Nike in TM Dispute

Nike, Inc. sued Already LLC, a competing shoe manufacturer for trademark infringement of its Airforce 1 shoe design and Already filed a counterclaim for cancellation of Nike’s trademark. Nike subsequently executed a covenant not to sue Already, and affiliates, for its existing shoe designs and those planned for the future based upon any “colorable imitation” of Already’s current products. Asserting that the “covenant not to sue” failed to protect its standing with those investors and retailers allegedly spooked by Nike’s trademark, Already sought to continue with its trademark cancellation counterclaim.

However, the Federal District Court dismissed the case, including the claim of Already, which decision was upheld on appeal by the 2nd Circuit. The United States Supreme Court affirmed finding that all matters in controversy had been rendered moot with Nike’s “covenant not to sue” and subsequent dismissal of its trademark infringement lawsuit. ALREADY, LLC, DBA YUMS v. NIKE, INC. And that Already’s claim of being damaged by the Nike trademark with regard to potential investors and retailers was speculative and not justiciable as a case or controversy for federal jurisdiction purposes.

So file this matter in the “Be careful what you wish for” category. Although the Trademark owner should be vigilant in protecting its mark, sometimes the risk of cancellation mitigates against infringement proceedings where the brand is strong but the strength of the trademark questionable. And while Nike preserved its mark by grant of the covenant in this instance, the long-term implication of such a grant does not bode well for fending off any future challenge.