Reviewing Already, LLC v. Nike, Inc. and other select 2012 trademark cases of interest Garrett Parks Davis Wright Tremaine LLP Presented to the Alaska Bar Association Intellectual Property Group January 22, 2012

Covenants Not To Sue To Protect Your Mark Already, LLC v. NIKE, Inc., Slip Op. No , 568 U.S. __ (Jan. 9, 2013) Question: Whether a covenant not to enforce a trademark against a competitor’s existing products and future “colorable imitations” moots the competitor’s action to have the trademark declared invalid because there is no longer a live case or controversy? Held: Yes. The action is moot under the doctrine of voluntary cessation.

The Marks NIKE Air Force 1 Already SOULJA BOY

The Facts Nike sued Already alleging trademark infringement and dilution of mark Air Force 1. Already counter-claimed that the mark was registered but invalid. Nike issues covenant not to sue and moves to dismiss its claims and Already’s counter-claim Already argues it should be allowed to continue prosecuting its claim

The Arguments Nike – Case is moot on grounds no “actual controversy” exists because the covenant covers all possible claims it could bring against Already for infringement Already – Injuries suffered include investors being unwilling to contribute, intimidation of distributors, suffers Nike benefits from use of invalid mark – Competitor Standing

The Opinion Under doctrine of voluntary cessation, a defendant claiming that its voluntary compliance moots a case requires the defendant to show that “it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.” Nike’s covenant not to sue meets standard because it is: – Unconditional and irrevocable – Prohibits Nike from making any demand against Already – Applies to Already, its distributors and its customers – Covers not just past and current designs, but future designs and any colorable imitations Burden shifts to Already to show, which it failed to do, “that it has sufficiently concrete plans to engage in activities not covered by the covenant.”

Already’s Inherent Standing Argument Already argues that as a competitor of Nike, it “inherently has standing to challenge Nike’s intellectual property” and Nike should not be allowed to benefit from an invalid mark The Court says “no” and that: – Lanham Act provides for attorneys’ fees to prevent abusive litigation by trademark holders – Allowing inherent competitor standing cuts against smaller companies as much as helps them – Injuries alleged as competitor are speculative and theoretical

Outcome Promises are Promises – The Court takes Nike at its word but cautions lower courts not to rubber stamp motions to dismiss as moot cases where one party promises not to sue That said, the covenant must be broad, unambiguous, and clearly cover all plausible claims. Trademark Holders have a new method to avoid potential disputes over the validity of their marks – Mark holders must be careful, however, not to allow “uncontrolled and naked” licensing of their marks which could result in loss of significance of mark and result in cancellation.

Camouflauge Covered In Re Navy Exchange Serv. Command, 2012 WL (TTAB, Sept. 29, 2012) Question: Is the Navy’s pixilated camouflage pattern functional and not protectable? Held: The camouflage design may be trademarked because, under the four factor test for functionality, the camouflage was not a focus of the advertising (incidental), protecting it would not hinder competitors (40 other alternatives), the camouflage did not affect the price or quality of the goods. Impact: Limited, as the mark is limited to use by “authorized patrons of military exchanges.”

Speaking of Color Christian Louboutin, S.A. v. Yves St. Laurent Am. Holding, Co., 696 F.3d 206 (2d Cir. Sept. 2012) Question: Whether the red color on the sole of a Louboutin high-heel was protectable? Held: Yes; but only when the color contrasts the rest of the shoe. The Circuit also confirmed that the defense of “aesthetic functionality” may apply where granting trademark protection would put “competitors at a significant non-reputation-related disadvantage.” Impact: A single-color may be trademarked provided it is distinct, contrasts another color and serves no utilitarian purpose.

Crackberry: to be, or not to be, confused with Blackberry? Research in Motion, Ltd. v. Defining Presence Mktg. Grp., Inc., 102 USPQ2d 1187 (TTAB 2012) Question: Does Crackberry create a likelihood of confusion, does it dilute Blackberry’s mark and, even if it does, is it protected by the fair use parody defense? Held: TTAB found that Blackberry is a famous mark for purposes of both infringement and dilution claims, the similarity of the marks and fact that terms had “developed similar connotations” created likelihood of confusion. TTAB found no fair use because the parody defense applies “only if the parody is not a designation of source for the person’s own goods.” Impact: Minimal, except to a potential buyer of Blackberry.