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Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443 Exercise 18
FACTS Nike, Inc., designs, makes, and sells athletic footwear, including a line of shoes known as "Air Force 1." Already, LLC, also designs and markets athletic footwear, including shoe lines known as "Sugar" and "Soulja Boy." Nike filed a suit in a federal district court against Already, alleging that the Sugar and Soulja Boys footwear infringed its Air Force 1 trademark. Already filed a counterclaim, contending that the Air Force 1 trademark was invalid.
While the suit was pending, Nike issued a covenant not to sue, promising not to raise any trademark claims against Already or any affiliated entity based on Already's existing footwear designs, or any future Already designs similar to Already's current products. Nike then filed a motion to dismiss its own claims and to dismiss Already's counterclaim. Already opposed the dismissal of its counterclaim, but the court granted Nike's motion. The U.S. Court of Appeals for the Second Circuit affirmed. Already appealed to the United States Supreme Court.
ISSUE Did Nike's covenant not to sue Already over the Air Force 1 trademark prevent Already from suing to establish that Nike's trademark was invalid?
DECISION Yes. The United States Supreme Court affirmed the judgment of the lower courts. Under the covenant not to sue, Nike could not file a trademark infringement claim against Already, and Already could not assert that Nike's trademark was invalid.
REASON The Supreme Court looked at the wording of the covenant not to sue to determine whether Already's counterclaim was moot. (A matter is moot if it involves no actual controversy for the court to decide, and federal courts will dismiss moot cases.) Nike had unconditionally and irrevocably promised not to assert any trademark infringement claims against Already relating to the mark used on any of Already's current footwear products and similar future designs. Under the covenant's broad language, the Court noted, "It is hard to imagine a scenario that would potentially infringe Nike's trademark and yet not fall under the covenant." Therefore, further litigation of the trademark dispute was unnecessary and dismissal was proper.
For critical Analysis-Economic Consideration Why would any party agree to a covenant not to sue?
While the suit was pending, Nike issued a covenant not to sue, promising not to raise any trademark claims against Already or any affiliated entity based on Already's existing footwear designs, or any future Already designs similar to Already's current products. Nike then filed a motion to dismiss its own claims and to dismiss Already's counterclaim. Already opposed the dismissal of its counterclaim, but the court granted Nike's motion. The U.S. Court of Appeals for the Second Circuit affirmed. Already appealed to the United States Supreme Court.
ISSUE Did Nike's covenant not to sue Already over the Air Force 1 trademark prevent Already from suing to establish that Nike's trademark was invalid?
DECISION Yes. The United States Supreme Court affirmed the judgment of the lower courts. Under the covenant not to sue, Nike could not file a trademark infringement claim against Already, and Already could not assert that Nike's trademark was invalid.
REASON The Supreme Court looked at the wording of the covenant not to sue to determine whether Already's counterclaim was moot. (A matter is moot if it involves no actual controversy for the court to decide, and federal courts will dismiss moot cases.) Nike had unconditionally and irrevocably promised not to assert any trademark infringement claims against Already relating to the mark used on any of Already's current footwear products and similar future designs. Under the covenant's broad language, the Court noted, "It is hard to imagine a scenario that would potentially infringe Nike's trademark and yet not fall under the covenant." Therefore, further litigation of the trademark dispute was unnecessary and dismissal was proper.
For critical Analysis-Economic Consideration Why would any party agree to a covenant not to sue?
Explanation
Verified
Verified
Convent not to sue :
Convent not to sue ...
Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
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