Legal Updates for June 29, 2012

A compromise gone wild

The shoe war is about to get bloody. The hunter now becomes the hunted. Never trust your enemy. Ok, enough of the clichés. The United States Supreme Court has created a twist in the manner how trademark infringement lawsuits can prosper.

In the original case of Nike v. Already (U.S. Supreme Court Order 11-982 June 25, 2012), the former filed trademark infringement claims against the latter for the dilution of a registered trademark. Before the case went any further, or before it actually got to a “full-blown” trial, Nike gave a “Covenant Not to Sue” and asked the District Court (Federal Court) to dismiss the lawsuit. Nike, in short filed an “affidavit of desistance” and proclaimed that they were longer interested in suing Already. Nike filed a Motion to Dismiss for its own lawsuit. Seems open and shut, right? Well, the proceedings did not end here.

As a matter of defense, an alleged infringer through a compulsory counterclaim may opt to attack the validity of the plaintiff’s registered trademark. This is to bank on the idea that the trademark that is alleged to have been infringed wasn’t valid from the beginning. Crushing the leg it was standing on, so to speak. Already claimed (through smart lawyering or actually using a parallel court’s jurisprudence) that a plaintiff’s motion to dismiss its own infringement claims against an alleged trademark infringer does not take away the power of the court to hear the defendant’s counterclaim of (in)validity of the trademark.

Hard to swallow? Well here is the spoonful of sugar. A claim of infringement presupposes a registered trademark. If that trademark is rendered invalid, the claim of infringement is rendered moot. Here, Nike sort of said, “Ok, we won’t sue you anymore, water under the bridge, eh?”. Already  replied, “Well, thank you. But we still think your trademark is wrong”.

Already wanted its counterclaim (dressed as a defense) to prosper despite Nike’s decision to drop its lawsuit. Without going to legalese, the United States Supreme Court agreed with Already and Nike has gone from attacking to defending. The tables were turned. (You thought no more clichés, right?).

This could prove to be an interesting development in the intellectual property litigation paradigm. Could it be a slippery slope? Obviously, legal strategies have to be more fine tuned now as any back up plans for an alleged infringer are strengthened because of this decision. The moment of filing a lawsuit is actually the new “point of no return” (I promise, that is the last cliché).

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The material in this online newsletter has been drafted and edited by Atty. Roderick Vera and is for informational purposes only. The material above does not constitute nor become legal advice. Please consult with an attorney for legal advice before relying on any information found on this newsletter. For any questions, inquiries or comments, please see the contact information above.