Supreme Court Decision Alert - January 9, 2013

Keywords: Article III, mootness, trademark-invalidation claims, trademark dispute

On January 9, 2013 the Supreme Court issued one decision, described below, of interest to the business community.

Article III—Mootness

Already, LLC v. Nike, Inc., No. 11-982

Article III of the United States Constitution confers jurisdiction on the federal courts to adjudicate "Cases" and "Controversies." A case or controversy becomes moot when the dispute "is no longer embedded in any actual controversy about the plaintiffs' particular legal rights." Alvarez v. Smith, 558 U.S. 87, 93 (2009). In 2000, the Supreme Court held that when a defendant voluntarily ceases the conduct alleged to be unlawful, the dispute does not automatically become moot; rather, the defendant "bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190 (2000). Today, in Already, LLC v. Nike, Inc., No. 11-982, the Court held that the defendant in a trademark dispute had met that burden.

The Court's opinion is of general interest to all businesses that face claims based on hypothetical future conduct, and is of particular interest to businesses that face trademark-invalidation claims premised on nothing more than the plaintiff's status as a competitor.

Both petitioner Already and respondent Nike design and market athletic footwear. Nike holds the registered trademark "Air Force 1" for one of its product lines; Already offers a product line that Nike contended violated that trademark. Nike filed suit, claiming that Already infringed and diluted its Air Force 1 trademark, and Already filed a counterclaim challenging the trademark's validity. Nike then issued an unconditional and irrevocable "Covenant Not to Sue," promising that it would not "raise against Already or any affiliated entity any trademark or unfair competition claim[s] based on any of Already's existing footwear designs, or any future Already designs that constituted a 'colorable imitation' of Already's current products." Slip op. 2. Nike moved to dismiss its own claims with prejudice, and to dismiss Already's counterclaim without prejudice as moot. The district court granted Nike's motion to dismiss because Already had not offered any evidence that it intended to offer a product line not covered by Nike's covenant. The Second Circuit affirmed, agreeing that...