Already, LLC v. Nike, Inc.
June 25, 2012
Case #: 11-982
Court Below: 663 F.3d 89 (2d Cir. 2011)
Full Text Opinion: http://www.ca2.uscourts.gov/decisions/isysquery/01c4feaa-8db9-493e-9f0a-f5841f44409f/3/doc/11-314_opn.pdf
Constitutional Law: Whether a covenant not to sue deprives a defendant of a counterclaim due to loss of Article III subject matter jurisdiction since there is no case or controversy for the court to rule on.
In 2009 Respondent filed a complaint for trademark infringement on a shoe design. Petitioner counterclaimed that the registration was not a trademark and sought to cancel the registration under the Lanham Act (15 U.S.C. § 1119), and in the alternative alleged that there was "actual controversy" over whether Petitioner had infringed on Respondent’s trademark. In 2010 Respondent sent Petitioner a covenant obligating itself to refrain from making "any claim(s) or demand(s)" against Petitioner for its continuing use of the shoe design "before or after the Effective date of the covenant." Respondent then filed a Rule 12(b)(1) motion to dismiss all claims, including Petitioner’s counterclaim, for lack of subject matter jurisdiction, due to no case and controversy. The trial court issued the dismissal with prejudice toward Petitioner and without prejudice towards the counterclaim.
The Petitioner filed an appeal arguing that there was a case in controversy because Respondent’s covenant was not absolutely clear regarding future legal issues pertaining to the claims and because the loss of investors due to the original filing was a "continuing libel" against them. The Court of Appeals for the Second Circuit affirmed.
The petitioner is arguing for the "soundness" of the "Absolutely Clear" doctrine that is formulated in the ninth circuit, and that the second district ruling is not sound. The Supreme Court granted Certiorari in order to determine whether the issuance of a covenant does divest federal court of subject matter jurisdiction by eliminating the actual case and controversy.