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Contracting Away a Controversy: Nike v. Already LLC

By Aaron Johnson

In a case that could have important ramifications for trademark owners, as well as owners of other intellectual property and infringing defendants, the U.S. Supreme Court on Nov. 7, 2012, heard oral argument in the case of Already LLC v. Nike, Inc. The case revolves around under what circumstances a covenant not to sue can defeat jurisdiction.

The facts of the case involve the not-uncommon situation of a large trademark owner (in this case, Nike) suing a much smaller rival (in this case, Already LLC) for trademark infringement based on allegedly tenuous trademark rights. Once Already indicated that it was willing to challenge not just the alleged infringement but also Nike's rights in the mark, Nike attempted to remove the court's ability to hear the case by executing a covenant not to sue. The question for the Supreme Court is whether Nike's covenant removed the court's jurisdiction by eliminating any actual controversy between the parties.

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