By Jonathan Stempel
WASHINGTON, Jan 9 (Reuters) - Nike Inc won a victory at the
U.S. Supreme Court barring a smaller rival from suing to void
the company's trademark for its top-selling Air Force 1
Chief Justice John Roberts wrote for a unanimous court on
Wednesday that Nike's promise not to pursue an infringement
lawsuit against Already LLC, maker of Yums sneakers, meant that
the Texas company could not pursue its own trademark challenge.
"Already's arguments boil down to a basic policy objection
that dismissing this case allows Nike to bully small innovators
lawfully operating in the public domain," Roberts wrote. But the
argument did not justify letting its lawsuit proceed, he wrote.
Wednesday's decision upheld a November 2011 ruling by the
2nd U.S. Circuit Court of Appeals in New York.
James Dabney, a lawyer for Already, did not immediately
respond to requests for comment. Nor did Nike.
Wednesday's decision may help companies such as Nike rival
Adidas SE and luxury goods makers Coach Inc
and LVMH Moet Hennessy Louis Vuitton SA, which often
sue to prevent alleged imitators from interfering with their
revenue streams and customer goodwill.
The case began in 2009, when Nike claimed in a lawsuit that
Already's Sugar and Soulja Boy shoes infringed Nike's trademark
on the stitching, eyelet panels and other features of Air Force
1. Nike, based in Beaverton, Oregon, launched the low-cut Air
Force 1 sneaker in 1982 and sells millions of them each year.
After Already countersued to void the trademark, Nike
dropped its lawsuit, believing Yums was not a commercial threat,
and gave a promise in the form of a covenant not to sue Already.
But Already, based in Arlington, Texas, refused to drop its
own case and accused Nike of dropping the original lawsuit to
deprive courts of jurisdiction.
DOROTHY'S RUBY SLIPPERS
Roberts, however, said that allowing Already's lawsuit to
continue would encourage large and small companies to use
litigation as a "weapon" rather than as a last resort to settle
disputes, which could discourage innovation.
"Accepting Already's theory may benefit the small competitor
in this case," he said. "But lowering the gates for one party
lowers the gates for all. As a result, larger companies with
more resources will have standing to challenge the intellectual
property portfolios of their more humble rivals - not because
they are threatened by any particular patent or trademark, but
simply because they are competitors in the same market."
Roberts also agreed with Nike that Already was unlikely to
produce any shoe that would not be protected.
"If such a shoe exists, the parties have not pointed to it,
there is no evidence that Already has dreamt of it, and we
cannot conceive of it," Roberts wrote. "It sits, as far as we
can tell, on a shelf between Dorothy's ruby slippers and
Perseus' winged sandals."
Justice Anthony Kennedy concurred in the decision, saying
that other companies should not assume they can automatically
end rivals' trademark cases with covenants similar to Nike's.
Justices Clarence Thomas, Samuel Alito and Sonia Sotomayor
joined Kennedy's concurrence.
Two companies with well-known trademarks, clothing maker
Levi Strauss & Co and automaker Volkswagen AG, filed
briefs supporting Nike.
The case is Already LLC v. Nike Inc, U.S. Supreme Court, No.
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