The United States Supreme Court has ruled in favor of Nike Inc. prohibiting a smaller sneaker manufacturer from suing to void Nike’s Air Force 1 sneaker trademark.
In a unanimous court decision, the Supreme Court ruled that because Nike had promised not to proceed with a patent infringement lawsuit against Texas-based Already LLC, which manufactures the Yums sneakers, Already cannot proceed with its own infringement lawsuit. The decision upheld a ruling by the 2nd US Circuit Court Of Appeals in New York in November 2011.
In 2009, Nike had filed a lawsuit that claimed that two sneakers, Sugar and Soulja Boy manufactured by Already infringed on Nike's trademark. The company claimed that they were infringements on a number of features including stitching, and eyelet panels.
However, Already then filed a lawsuit to void the trademark. Soon after, Nike dropped the lawsuit, and promised under a covenant not to file a lawsuit against Already. But Already refused to drop its lawsuit, accusing the bigger sneaker manufacturer of dropping its lawsuit to avoid jurisdiction.
The Supreme Court has ruled that allowing the Already lawsuit to proceed would encourage other companies to use the threat of lawsuits as a weapon, instead of a final resort for settlement of disputes. In the future, Los Angeles patent infringement lawyers would likely find larger companies filing intellectual property infringement lawsuits against smaller companies, not because of any threat from these companies, but merely because they are competitors.
According to the Supreme Court, it was not possible to rule for Already in this matter, because doing so would mean similar standards for other smaller companies in the future.