In March, Nike, Inc. was among the majority of nearly 8,000 cert respondents each term when it waived its right to file a response to a cert petition in a case dealing with the question of whether a defendant in a trademark case can still challenge the mark’s validity after the plaintiff agrees to a covenant not to sue.
But, the High Court has now specifically requested a response from the shoe giant. This may be a sign that the court is likely to grant the petition. According to a law review article analyzing the issue Supreme Court cases from 2001-2004, the court grants petitions at roughly 16.9 percent of cases for which a response was requested.
The petition, from shoe maker Yums LLC, argues that the Second Circuit’s ruling in its case against Nike conflicts with a Ninth Circuit decision holding that a covenant not to sue is insufficient to divest a district court of jurisdiction to hear a validity challenge to a trademark.
In 2009, Nike sued Already LLC, doing business with Yums, for selling shoes that were confusing similar to its Nike’s Air Force 1 shoe, asserting its trademark registration in the design of the exterior stitching and material panels, the wavy panel on the top of the shoe that holds the eyelets for the shoe laces, and the vertical ridge pattern on the sides of the sole of the shoe.
Yums counterclaimed seeking a declaratory judgment that Nike’s registration was not a valid trademark. However, in March 2010 Nike conveyed a covenant not to sue and subsequently, the district court dismissed Nike’s claims with prejudice and Yum’s counterclaims without prejudice.
On appeal, the Second Circuit ruled that the covenant not to sue divested the court of subject matter jurisdiction over Yums’ counterclaims. Yums now contends in its cert petition that this allows owners of potentially invalid trademarks to evade resistance by competitors and “cost-effective test of the validity of the asserted challenge to a trademark.”