U.S.Sup.Ct.
11-982
Nike filed this suit, alleging that two of Alreadys athletic shoes violated Nikes Air Force 1 trademark. Already denied the allegations and filed a counterclaim challenging the validity of Nikes Air Force 1 trademark. While the suit was pending, Nike issued a Covenant Not to Sue, promising not to raise any trademark or unfair competition claims against Already or any affiliated entity based on Alreadys existing footwear designs, or any future Already designs that constituted a colorable imitation of Alreadys current products. Nike then moved to dismiss its claims with prejudice, and to dismiss Alreadys counterclaim without prejudice on the ground that the covenant had extinguished the case or controversy. Already opposed dismissal of its counterclaim, contending that Nike had not established that its covenant had mooted the case. In support, Already presented an affidavit from its president, stating that Already planned to introduce new versions of its lines into the market; affidavits from three potential investors, asserting that they would not consider investing in Already until Nikes trademark was invalidated; and an affidavit from an Already executive, stating that Nike had intimidated retailers into refusing to carry Alreadys shoes. The District Court dismissed Alreadys counterclaim, concluding that there was no longer a justiciable controversy. The Second Circuit affirmed. It explained that the covenant was broadly drafted; that the court could not conceive of a shoe that would infringe Nikes trademark yet not fall within the covenant; and that Already had not asserted any intent to market such a shoe.