Supreme Court Looks to Take Trademark Standing Case Following Covenant-not-to-Sue

by Dennis Crouch

Already (YUMS) v. Nike (SCT 2012)

Nike sued YUMS back in 2009 alleging trademark infringement, unfair competition, and dilution under both federal and NY state law.  The complaint included the image below comparing YUMS brand shoes with Nike’s federal trademark registration number 3,451,905.  The design is related to Nike’s Air Force 1 shoe that was first released in 1982. The Yums intentionally retro look is apparently fashionable for skaters and freestyle BMX riders. [Buy the shoes here] (The image does not show the shoes’ creative soles.)

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After being sued, YUMS counterclaimed — seeking to cancel the registration.  However, before the court could reach a decision on the merits, Nike’s attorneys at Banner & Witcoff provided YUMS with a covenant-not-to-sue on the AF1 design rights. In the document, Nike wrote that YUMS brand “no longer infringe or dilute the Nike Mark at a level sufficient to warrant the substantial time and expense of continued litigation."

The covenant was limited to YUMS current shoes as well as ‘colorable imitations’ of current lines. In particular, Nike promised to:

refrain from making any claim(s) or demand(s), or from commencing, causing, or permitting to be prosecuted any action in law or equity, against [Yums] or any of its [successors or customers], on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law in the United States relating to the [Nike eAir Force 1 Mark] based on the appearance of any of [Yums]’s current and/or previous footwear product designs, and any colorable imitations thereof, regardless of whether that footwear is produced, distributed, offered for sale, advertised, sold, or otherwise used in commerce before or after the Effective Date of this Covenant.

YUMS was apparently happy with the document, but not fully satiated.  Rather, YUMS maintained its declaratory judgment lawsuit — arguing that the Nike Mark continued to improperly chill its innovative marketing efforts.  However, the district court dismissed the case — finding that it lacked subject matter jurisdiction because there was no ongoing case or controversy.  Important for its ruling, YUMS had not taken any “meaninful steps” toward developing a new potentially infringing product not covered by the covenant-not-to-sue.

On appeal, the Second Circuit affirmed, holding specifically that the cancelation power under 15 U.S.C. § 1119 does not provide federal courts with an independent basis for jurisdiction absent an actual case-or-controversy between the parties.

Supreme Court: Now, YUMS has appealed to the US Supreme Court — relying upon the expertise of Jim Dabney and Prof John Duffy (of KSR fame) to bring their case. They raise the simple question: “Whether a federal district court is divested of Article III jurisdiction over a party's challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party's then-existing commercial activities.”  The complaint raises a circuit split between the Second Circuit here and the Ninth Circuit, which is much more friendly to DJ trademark actions in this type of situation. In addition, the petition highlights Supreme Court precedent that suggest broad jurisdiction should be available to challenge the validity of suspect intellectual property rights. See Lear, Inc. v. Adkins, 395 U.S. 653 (1969), MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83 (1993), and Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249 (1945).

The Supreme Court has now asked Nike to respond to the petition – due May 4.  This move greatly increases the odds that the petition will eventually be granted.

Of interest, a key element of the Myriad gene patent case is whether the ACLU and AMP have standing to sue.  This case may shed further light on that outcome.

42 thoughts on “Supreme Court Looks to Take Trademark Standing Case Following Covenant-not-to-Sue

  1. Maybe you are trying too hard to see criticality where there is none.

    I am struck by the apparent fact that you do not seem to understand how government works. You raise a “constitutionality” issue where there is none.

  2. Same boring Ned with the royal We advocating that those who dare make fun of him (and for which it is evidently and abundantly well deserved) be “taken care of,” and yet with his persistent lies (of which many have been clearly documented in many shapes and forms) burnishes his own falsely high opinion of himself.

    The truly despised be those who post in such haughty and plainly ill-deserved manner that invites, nay commands, detractors to rise up and smite the ones dwelling in fantasies masquerading as legal “studied” opinions, while in reality, misquoting and twisting real and actual law to serve their own twisted and misguided agendas.

    The lack of your “interest in discussing patent law” is well known. Your interest is in your opinions and your opinions only. The sheer volume of your nonsense is evident from the number of multi hundred post threads wherein you are decimated repeatedly. Your reputation speaks far louder than your complaints about others.

    If you really wanted to improve things, you would not post in such inanities as to invite the disruptions, and in truth, it is the disruptions that advance the truth of legality as those disruptions destroy your ill-founded fantasies that would, if left unattended poison the minds of casual and uninformed readers.

  3. Not MM, you and your fellow sock puppets are utterly despised by most if not all posters here.  As was noted recently by an observer of Patently-O, what you do is consistently disrupt conversations among those posters who are genuinely interested in discussing patent law.  You do so with a specific intent to disrupt.  You are malicious.  

    It is high time that Dennis does something about you.

  4. Frankly, I am going to terminate this discussion at this point in time because you are not a serious poster.

    Of course he’s not a serious poster, he’s attempting to talk with the great Ned “The Liar” Heller, something no serious poster would ever do.

  5. Making things UP?  What are you smoking?

    I have many times referred to the en banc case of Lockwood where the Federal Circuit held that there was a Seventh Amendment right to a jury trial with respect patent validity – the underlying facts.  I have also told you that the right to a jury trial perspective disputed facts was preserved in England at the time of the Seventh Amendment.  Now you say that I am making things up when I say there's a right to a jury trial with respect to patent validity.

    Frankly, I am going to terminate this discussion at this point in time because you are not a serious poster.

  6. Not for patents.

    At least not in the case of the specific rules in question.

    Please stop making things up.

  7. Nordberg clearly holds that when the 7th Amendment is implicated, Congress has no power to remove a right to a jury try by assigning the matter to an Art. I court.  This is why I suggested  in a prior thread that the patent owner should request a jury trial.  This thread suggests that standing is also required.  I believe it is your contention that standing is not required and that there is no right to a a jury trial with respect the patent validity.  Your positions are, to put it mildly, way out there, given that the Supreme Court has consistently said that standing is not waiveable, and further given that the Federal Circuit has previously held that there is a seventh amendment right to a jury trial regarding patent validity.

  8. Location, have you even read the new law?  It doesn't even suggest that the new proceedings are reexamaninations.  Now you are really grasping for straws.

  9. And which consitutional guarantee do you think is being overriden in the patent case (since you still are merely assuming the point that needs proven with the trial by jury, I can only assume you are speaking to some other matter)?

  10. I did read Nordberg, you might try reading it too (since it is not as conclusive as you allude, and further doesn’t talk about patents, or the patent clause, you might try reading Golan as well).

  11. Does anyone else take from the way Professor Crouch’s article above is written, that he’d be happy to see Nike’s mark canceled?

    This one is amongst the universe of what are (IMHO) marks improperly granted registration.

  12. These are private actions between members of the public concerning patent validity

    This is an assertion that must be proven. Clearly, the Congress thinks otherwise and has equated the new post-grant protocols with the same underlying basis as re-exam.

    Please stop citing to a vacted decision. That is not acceptable.

  13. Ned,

    I understand what you are merely suggesting, and in point, you have no basis for suggesting it. Your opinion is mere opinion and I find it simply not persuasive. Lot’s of “musts” and “shoulds” that are all too easily dismissed by the simple matter that Congress sets the rules of the game. Period.

    I did review the article (and the actual case that the pincite references) and I find NO support for your view when it comes to patent matters. Your claim to “essential rights guaranteed in the Constitution” is a false argument, or at least one easily overcom eby Golan and the fact tha tthe power rests in Congress to set the rules for the patent game.

    That’s why you are chasing your tail. IF Congress wants to change the rules, Congress CAN change the rules.

  14. Location, I apparently replied to your points in my previous post.  Lockwood is "authority" wrt the Seventh Amendment right to a jury trial.  As well, as I have posted in these threads numbers of times, in England, the right to a jury trial for patent validity was maintained at the time of the Seventh Amendment.

    The Federal Circuit held in a case in re-examinations that there was no right to a jury trial because the government was a party thereby invoking the public rights exception.
    Justice Scalia agrees that there is a public rights exception and that it is necessary for the exception that the government be a party.  In the new inter partes reviews, the government is not a party.  These are private actions between members of the public concerning patent validity.  At common law there was a right to a jury trial.  The en banc Federal Circuit has also held that there is a right to a jury trial, albeit, that decision was vacated on other grounds by the Supreme Court. 
     

     

  15. Location, and until you realize that you are making distinctions without a difference, we can make no progress as well.  "In the office" simply means that what we're dealing with here is an Article I court, not an Article III court.  Essentially what you're saying is that if Congress moves the issue from the Article III courts to an Article I court, that Congress can constitutionally dispense with standing, due process, the right to a jury trial, and a review by an Article III  judge.  I'm merely suggesting that Congress has not that power.

    I think if you review the law review article I posted you will see that a significant number of constitutional scholars agree with my view.  See e.g., Pfander, James E, "Article I Tribunals, Article III Courts, and the Judicial Power of the United States," Harvard Law Review, Vol.  118:643 (2004).  Indeed the Supreme Court appears to agree with my view, now drawing the line against new Article I courts, especially to the extent that they deny essential rights guaranteed in the Constitution, for example, standing or the right to a jury trial.  Granfinanciera, SA v. Nordberg, 492 US 33 – Supreme Court 1989 ("The sole issue before us is whether the Seventh Amendment confers on petitioners a right to a jury trial in the face of Congress' decision to allow a non-Article III tribunal to adjudicate the claims against them.  … Congress cannot eliminate a party's Seventh Amendment right to a jury trial merely by relabeling the cause of action to which it attaches and placing exclusive jurisdiction in an administrative agency or a specialized court of equity." )  Scalia in concurrence also had this to say about the public rights exception:
     "I join all but Part IV of the Court's opinion. I make that exception because I do not agree with the premise of its discussion: that "the Federal Government need not be a party for a case to revolve around `public rights.' " Ante, at 54, quoting Thomas v.Union Carbide Agricultural Products Co., 473 U. S. 568, 586 (1985). In my view a matter of "public rights," whose adjudication Congress may assign to tribunals lacking the essential characteristics of Article III courts, "must at a minimum arise `between the government and others.' " Northern Pipeline Construction Co. v.Marathon Pipe Line Co., 458 U. S. 50, 69 (1982) (plurality opinion), quoting Ex parte Bakelite Corp., 279 U. S. 438, 451 (1929). Until quite recently this has also been the consistent view of the Court. See 458 U. S., at 69, n. 23 ("[T]he presence of the United States as a proper party . . . is a necessary but not sufficient means of distinguishing `private rights' from `public rights' ").
     
    The Federal Circuit, en banc, held in Lockwood that there was a Seventh Amendment right to a jury trial with respect to patent validity.  While that en banc decision was vacated by the Supreme Court on different grounds, the Federal Circuit continues to operate as if Lockwood is the law.  I think the Supreme Court would also agree that there is a seventh amendment right to a jury trial regarding patent validity because patents clearly aren't legal right and because at common law in England at the time of the Seventh Amendment there was a right to a jury trial respect to patent validity.

  16. Do you mean the part that starts: “The most recent addition to the Court’s confusing jurisprudence, Granfinanciera, S.A. v. Nordberg,?”

    Furthermore, I think something other than bankruptcy, which has its own distinct judicial history may (or should) be brought to bear to support your point.

    But if you insist, the actual case includes “Provided that Congress has not permissibly assigned resolution of the claim to a non-Article III adjudicative body that does not use a jury as factfinder” which I think speaks to the opposite point you want to make. I just don’t see how you can make a patent a private right matter. You have not yet shown patent validity to be a common law cause of action requiring a jury trial. You are assuming the very point you need to make. At 54: In our most recent discussion of the “public rights” doctrine as it bears on Congress’ power to commit adjudication of a statutory cause of action to a non-Article III tribunal, we rejected the view that “a matter of public rights must at a minimum arise between the government and others.

    The legal/equity alchemy you desire is not to be found there.

    My point is still very much key: for patents, it is up to Congress.

  17. I think the better phrase is “as set by Congress

    And yes, the “forum” is in the Office. For all its other flavor (your continued reference to “trial”), the proceedings are not in an article III court.

    Until you realize this, and realize what this entails, you will continue to chase your tail.

  18. "Proceeding in the office"

    You seem to think the government is a party in the new inter parted proceedings.   It is not.  The new proceedings are trials.

    Sent from iPhone

  19. I agree that the cases are distinguishable. And, a ruling in favor of DJ jurisdiction here does not compel a win for the patent challengers in the Myriad case. However, there is a potential that this case will impact Myriad and certainly the Federal Circuit will be deciding Myriad in the shadow of this pending decision.

  20. Ned — case or controversy clause only applied to Article III courts. It’s really just that simple. Look at the Constitution.

    The PTO’s not an article III court, so case closed. The case or controversy clause has nothing to do with protecting property holders, etc. It’s a limitation on the power of the
    Judiciary.

  21. If you have any Supreme Court cases on point, please cite one.

    Since you are the one wanting something different, the onus is on you to supply a case on point.

    As to the ability of Congress to set the rules as it sees fit, I think Golan is sufficient.

  22. and does not condition the forum where it operates

    Once again you are missing the forest for the trees.

    My example is purely hypothetical, as in, what could happen. And what could happen could entirely legally happen.

    Would it need Congress to change a few things? Sure. But that’s not the point. The point is Congress could change those few things.

    You are simply barking up a tree that is empty. You have chased a car that is parked. You strive to apply to the Office requirements that apply to Courts, ignoring the fact that they are different entities. You have no legal basis for your views. Now if you want to offer some legal foundation for the improper importation into a federal agency of the requirements of an article III court, I’m all ears. I will listen, If you want to blindly and nakedly assert such, meh, I am not inclined to stop you from running into traffic. I give your view no weight.

  23. Location, I am not following you.  If Congress provides that an Art. I court has the limited jurisdiction hear and decide disputes concerning validity of a patent, I don't clearly understand why or how it can dispense with all the other constitutional guarantees provided to patent holders in a court.

    Note, the new proceedings are not actions where the government is a party.  These are actions by private parties against the patent owner where full in personam estoppel applies to all parties by statute.  

    If you have any Supreme Court cases on point, please cite one.

  24. Location, the presumption of validity is statutory.  Congress has the power to modify that presumption if it so chooses.  I will agree with this in principle.

    But, if the statute provides a presumption, and does not condition the forum where it operates, it should be presumed to operate in all fora unless Congress indicates some intention to the contrary.  Simply providing an Art. I court to determine validity as opposed to an Art. III court should not operate as a presumptive change in the presumption of validity.  

    There was nothing at all in the creating the new inter partes reviews (Art. I courts) for reviewing the validity of issued patents that clearly indicates that Congress intended to deny the presumption to issue patents.  The burden on the complainant in the Art. I proceedings should be identical to the burden in court, IMHO. 

  25. The security that Congress has the power to decide.

    If I may be so bold to ask, what legal foundation do you see that would prevent Congress from setting up the rules of the patent game just so?

    (Mind you, I am not saying this would be ‘good’ or desired; but it would be perfectly legal.

  26. Then it is your opinion that the constitutional requirement for jurisdiction is a mere formality that Congress might waive by statute?

    Jump to conclusions much?

    If Congress decides that the process is to be done outside of an article III setting (and remember that Congress has fantastic discretion in setting the process), then you simply don’t reach the “violation” you are imagining.

    No one is dismissing a legit constitutional requirement.

    You merely are not in a forum that calls for that requirement.

  27. And, might I conjecture, that it is similarly your position that Congress might provide a presumption of validity for a patent that is effective only in Art. III courts but ineffective in Art. I courts?

    What “kind” of security is that?

  28. If Congress so rewrote the rules on contesting validity (say, for example, that all such contesting be done by the Federal Agency with the operative “expertise”), why not?

  29. Location, is it your basic contention is that if Congress moves validity litigation to an Art. I court, it can dispense with the case and controversy requirement that is necessary to invoke the jurisdiction of Art. III courts?

  30. Today, the Federal Circuit again affirmed that an ANDA drug applicant has standing to bring a DJ action with respect to a non asserted patent for which it has been given a covenant not to sue.

    link to cafc.uscourts.gov

    I think the SC would be interested in the Federal Circuit’s jurisprudence in this area as well.

  31. Think “forum.”

    It’s a critical difference.

    And it’s what Congress (who has the authority) has set as the rules of the game.

  32. Indeed, is anyone struck by the apparent fact that one can now file an “opposition” (within 9 months) without any standing requirement and raise any validity issue under the sun, including the important questions raised in Myriad? If that is constitutionally sufficient, so should be a complaint by anyone, after the 9-month window has expired, in district court raising the very same issues. The criticality of a 9-month limit has on standing escapes me.

  33. I think the issue is whether the mere existence of past enforcement activities is sufficient to provide standing to anyone that has or would like to engage in potentially infringing activities.

    Interesting.

    That would mean that if a patent owner ever made an accuasation of infringement against anyone at any time, anyone argubly in the field could file a DJ action.

    I also wonder whether the mere presence of the new inter partes reviews might bear on the answer to this question? They are arguably just like DJ actions, but do not seem to require standing.

  34. Dennis, are the standing issues in the two cases the same? In Myriad, the question that the CAFC dealt with, after disqualifying all but one DJ plaintiff on standing grounds, was whether the change of institutional affiliation of that one remaining DJ plaintiff divested that plaintiff of standing. The CAFC said no. Here, it’s the actions of the DJ *defendants* that are at issue.

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