Already v. Nike, 133 S. Ct. 721 (2013) (Roberts; Kennedy, concurring). For the Court’s slip opinion, click here.AlreadyNike01092013
Already addresses the rights of parties who have been initially, and allegedly improperly, charged with infringement of an intellectual property right to continue a counterattack seeking a declaratory judgment that the right is invalid even though the rights holder has provided a covenant not to sue.
Already directly involves trademarks, not patent law. However, the Court’s analysis was clearly framed as applicable to intellectual property rights generally, including patents. Indeed, in some respects, the Court’s language is more appropriate to patent litigation than is to trademarks.
The Court began by stating: “The question is whether a covenant not to enforce a trademark against a competitor’s existing products and any future `colorable imitations’ moots the competitor’s action to have the trademark declared invalid.” It held that the answer to the question depends on application of the “voluntary cessation” doctrine. Under that doctrine, a party asserting that its voluntary compliance moots a case bars a “formidable burden.” The burden is to show that ” `it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.’ Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U. S. 167, 190 (2000).”
In this case, an accused infringer asserted a claim for a declaratory judgment that a trademark owner’s mark was invalid. The trademark owner’s “voluntary cessation” by its covenant not to sue made it absolutely clear that its alleged wrongful behavior, that is, an assertion of infringement of an allegedly invalid trademark, could not “reasonably be expected to recur.” The covenant was broad, precluding assertions against the accused infringers’ present products and any future products that “colorably imitated” the present products.
Once the trademark owner demonstrated that the covenant broadly covered the activities giving rise to the controversy, it became incumbent on the accused infringer to indicate that it “engages in or has sufficiently concrete plans to engage in activities not covered by the covenant.” The accused infringer did not identify (or assert that it planned to market) a product that arguably infringed but that was not covered by the covenant not to sue.
SCOPE OF COVENANT NOT TO SUE; DIFFERENCES BETWEEN TRADEMARK AND PATENT CLAIMS.
Already confirms that the burden on a trademark owner (or patent owner) who wishes to “moot” a case that it has brought is to show that an accused infringer has no reasonable fear of a future suit involving a similar product in order to moot the accused infringer’s claim for a declaratory judgment of invalidity.
It would seem doubtful whether a patent owner can meet the burden with anything less than a formal and enforceable covenant not to sue. Thus, Federal Circuit cases such as Streck, Inc. v. Research & Diagnostic Systems, Inc., 665 F.3d 1269 (Fed. Cir. 2012), involving unasserted claims in an asserted patent, may no longer be good law. Streck held that was no jurisdiction over an accused infringer’s counterclaim for invalidity with respect to claims a patent owner has initially asserted but subsequently withdrawn.
Not clearly resolved by the Court is how broad the covenant must be. The covenant in Already encompassed future products that were the same or only “colorable imitation.” The Court could not imagine a product that would infringe but was not protected by the covenant.
In this respect, there is a fundamental difference between trademarks and patents. Unlike trademarks, patents have claims that are not typically limited to a particular embodiment. Patents also typically have multiple claims of varying scope. A claim might cover two products that were quite different. Thus, it can (and will) be argued that, in a patent case, Already requires that the patent owner’s covenant not to sue must include any future product that would infringe a previously asserted claim. The Federal Circuit may (or may not) agree.
In cases predating Already, the Federal Circuit has addressed the mooting effect of a covenant not to sue. In Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294 (Fed. Cir. 2009), it held that a patent owner’s covenant not to sue for past infringements did not eliminate a justiciable controversy when the covenant did not include future sales of products involving the same structure as the past infringements. That result is certainly consistent with Already.
However, in Revolution, the court referred to and distinguished two prior cases. In Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054 (Fed. Cir. 1995), and Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999), the court held that a covenant not to sue eliminated a controversy even though it did not extend to modified products that might be offered by an accused infringer in the future. It was “speculative” whether a future product would infringe. In Revolution, the Federal Circuit noted that, in those cases, unlike the present one, the covenant extended to “products as they existed at the time of the suit, even if the products were made and sold in the future.”
In Revolution, the court also noted that the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), did not overrule Super Sack “to the extent that it established that a covenant not to sue in the future for products made, used, or sold in the past removes actual controversy in the present” and did not change the Federal Circuit’s established rule that an “actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.” MedImmune discarded the Federal Circuit requirement of “a reasonable apprehension of imminent suit” and endorsed a “totality of the circumstances” test.
After Already, the Federal Circuit must assess whether Super Sack and Amana are still good law in their allowance of a covenant not to sue to moot an invalidity counterclaim when the covenant does not extend to future modified products.