Nike AirForce 1 Threatened, Nike Chooses Moot over Suit
On January 9, 2013 the Supreme Court decided Already, LLC v. Nike, Inc., whichdeclared the suit between shoemakers Nike and Already moot. Already challenged the validity of Nike’s AirForce 1 trademark, which makes the decision somewhat controversial. The Court heard arguments on November 7, 2012 and seemed torn as to whether Already had future claims in developing sneaker lines that would challenge the AirForce 1 trademark; however the Court delivered a 9-0 opinion in favor of mooting the case.
Issues arose in August 2008 when Nike discovered that Already hired two of Nike’s shoe designers while developing lines similar to the AirForce 1 designs. After reaching out to Already and receiving an insufficient response, Nike sued for trademark infringement. Already countered with a lawsuit of their own, alleging that Nike’s AirForce 1 trademark was invalid and asking a federal judge to cancel it. Four months later Nike sent Already a covenant “not to sue” stating that Already’s products were not a threat to Nike’s markets. The covenant asserted that Already would not be sued for any past, present, or future sales of shoes, or for any AirForce 1 imitation products that would be made in the future.
The District Court mooted the case, finding that, with the covenant in place, the court lacked Article III jurisdiction. Already appealed the decision on the grounds that Nike’s trademark was invalid and it was hurting their business because certain investors would only invest if Already got the AirForce 1 trademark invalidated. The Second Circuit affirmed the decision, finding no foreseeable situations where Nike could sue Already, since the covenant protected not only Already but their customers and distributors as well.
Although Nike’s covenant claims that Already was not interfering in their market, Nike’s actions seem to suggest fear of the mighty AirForce 1 mark being invalidated. An imitation shoe by a small company seems a small price to pay for the protection of a thirty-year old mark. Ultimately, Already was unable to convince the Justices that there would be a situation where Nike’s covenant not to sue would not “protect” them. However, it seems that the harm is Nike’s use of an invalid mark to dominate the market. While the Court issued a 9-0 decision in favor of Nike they also issued a warning to lower courts. Justice Kennedy wrote that the burden a trademark owner needs to meet must include “a substantial showing that the business of the competitor and its supply network will not be disrupted or weakened by satellite litigation over mootness or by any threat latent in the terms of the covenant itself.”