Updated 1/15/2013 On January 9, 2013 the US Supreme Court agreed with NIKE, Inc. holding a covenant not to sue rendered the ongoing litigation moot.
The US Supreme Court is hearing oral arguments today.
Arlington, Texas based Already LLC dba YUM is in a trademark legal tangle with NIKE over the similarity of the YUM brand “Soulja Boy” and “Sugar” shoes and the NIKE brand "Air Force 1."
NIKE filed suit against YUM in 2009 arguing a likelihood of consumer confusion between NIKE brand registered trademark for the Air Force 1 shoe and the YUM brand shoes. YUM responded with a trademark cancellation proceeding against NIKE. Risking cancellation of the "Air Force 1" mark, after a year in the court system, NIKE agreed to withdraw the suit and provided a "covenant not to sue" to YUM. YUM appealed the case to the Supreme Court. The Supreme Court is not that interested in sneakers, but more interested in a split of the circuits regarding the use and implication of "covenants not to sue."
Already, LLC phrased its "Question Presented" to the Supreme Court as:
"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."
Nike Inc. styled its question a bit differently:
"Whether respondent’s covenant not to sue petitioner was worded in a fashion that resolved the 'actual controversy' in this declaratory judgment suit."