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American Intellectual Property Law Association
Licensing and Management of IP Assets Seminar
A MYRIAD COVENANT NOT TO SUE:
LESSONS FROM ALREADY V. NIKE
Harold C. Wegner
Foley & Lardner LLC
AIPLA Spring Stated Meeting
Seattle, Washington, May 2, 2013
[email protected]
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The Myriad Case
Already v. Nike – The Factual Setting
Already v. Nike – The Law
Nike Covenant Not to Sue
Public Patent Foundation
The Already Concurrence
Federal Circuit Case Law
Thank you and Acknowledgment
About the Author
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The Myriad Case
• The Myriad case, Association for Molecular
Pathology v. Myriad Genetics, Inc., Supreme
Court No. 12-398, argued April 15, 2013,
challenges the patent-eligibility of claims to
“human genes”, and more fundamentally
threatens to distinguish the leading case on
patent-eligibility of living inventions,
Diamond v. Chakrabarty, 447 U.S. 303 (1980).
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The Myriad Case
• In the proceedings below the Federal Circuit
made it clear that the continued existence of a
justiciable controversy was solely between
Myriad and Dr. Harry Ostrer.
• The patentee in its petition for rehearing
below made it abundantly clear that Dr. Ostrer
posed no commercial threat to the business
interests of Myriad.
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The Myriad Case
The question is raised:
• Why didn’t Myriad provide Dr. Ostrer with a
covenant not to sue that under the “voluntary
cessation” doctrine would have been basis for
the Federal Circuit (and now the Supreme
Court) to dismiss the case for want of a
justiciable controversy?
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The Myriad Case
• “Voluntary cessation of challenged conduct
moots a case ... only if it is absolutely clear
that the allegedly wrongful behavior could not
reasonably be expected to recur.”
Military Order of Purple Heart of USA v. Secretary of Veterans Affairs,
580 F.3d 1293, 1295 (Fed. Cir. 2009)(Newman, J.)(quoting Adarand
Constrs., Inc. v. Slater, 528 U.S. 216, 222 (2000)( original emphasis)
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Already v. Nike – The Factual Setting
The Supreme Court in Already, LLC v. Nike, Inc.,
133 S.Ct. 721 (2013)(Roberts, C.J.), confirmed
that a broad covenant not to sue is basis to
dismiss a case for want of a justiciable
controversy.
“[V]oluntary compliance moots a case bears the
formidable burden of showing that it is absolutely
clear the allegedly wrongful behavior could not
reasonably be expected to recur.”
Already v. Nike , 133 S.Ct. at 727 (quoting Friends of the Earth, Inc. v. Laidlaw
Environmental Services (TOC), Inc., 528 U.S. 167, 190 (2000))(emphasis added).
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Already v. Nike – The Factual Setting
• However, the covenant cannot leave open the
possibility of future litigation on the same
matter.
• This point is underscored in a concurring
opinion for four members of the Court:
See Already v. Nike, 133 S.Ct. at 733 (Kennedy,
J., joined by Thomas, Alito, Sotomayor, JJ.,
concurring)(herein: “Already Concurrence”).
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Already v. Nike – The Factual Setting
• Nike sells shoes known as “Air Force 1”
• Already sells shoes including “Sugars” and “Soulja
Boys.”
• Nike sued Already for trademark infringement
keyed to sales of “Sugars” and “Soulja Boys”,
whilst Already counterclaimed for invalidity of the
trademark
• Following Already’s counterclaim, Nike issued a
“Covenant Not to Sue” and moved to dismiss the
lawsuit.
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Already v. Nike – The Factual Setting
• Already answered that “Already had plans to
introduce new versions of its shoe lines into
the market; affidavits from three potential
investors, asserting that they would not
consider investing in Already until Nike's
trademark was invalidated; and an affidavit
from one of Already's executives, stating that
Nike had intimidated retailers into refusing to
carry Already's shoes.”
Already v. Nike , 133 S.Ct. at 725-26 (emphasis added)
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Already v. Nike – The Factual Setting
• The District Court granted the Nike motion to
dismiss: “Finding no evidence that Already
sought to develop any shoes not covered by
the covenant, the Court held there was no
longer ‘a substantial controversy ... of
sufficient immediacy and reality to warrant
the issuance of a declaratory judgment.’”
Already v. Nike , 133 S.Ct. at 726 (quoting trial court opinion quoting
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)).
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Already v. Nike – The Factual Setting
• “The Second Circuit affirmed. It held that in
determining whether a covenant not to sue
‘eliminates a justiciable case or controversy,’
courts should look to the totality of the
circumstances, including ‘(1) the language of the
covenant, (2) whether the covenant covers
future, as well as past, activity and products, and
(3) evidence of intention ... on the part of the
party asserting jurisdiction’ to engage in conduct
not covered by the covenant.
Already v. Nike , 133 S.Ct. at 726 (citing Second Circuit
Opinion, 663 F.3d 89, 96 (2011)).
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Already v. Nike – The Factual Setting
• “Noting that the covenant covers ‘both past
sales and future sales of both existing
products and colorable imitations,’ the Second
Circuit found it hard to conceive of a shoe that
would infringe the Air Force 1 trademark yet
not fall within the covenant.”
Id. (citation omitted).
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Already v. Nike – The Law
• “[A]n ‘actual controversy’ must exist
not only ‘at the time the complaint is
filed,’ but through ‘all stages’ of the
litigation.”
Already v. Nike , 133 S.Ct. at 726 (quoting
Alvarez v. Smith, 558 U.S. 87, 92 (2009))
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Already v. Nike – The Law
• “A case becomes moot—and therefore
no longer a ‘Case’ or ‘Controversy’ for
purposes of Article III—’when the issues
presented are no longer ‘live’ or the
parties lack a legally cognizable interest
in the outcome.’”
Already v. Nike , 133 S.Ct. at 726-27 (quoting Murphy v. Hunt,
455 U.S. 478, 481 (1982) (per curiam))
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Already v. Nike – The Law
• “[A declaratory judgment] defendant claiming
that its voluntary compliance moots a case
bears the formidable burden of showing that
it is absolutely clear the allegedly wrongful
behavior could not reasonably be expected to
recur.”
Already v. Nike , 133 S.Ct. at 727 (quoting Friends of the Earth, Inc. v. Laidlaw
Environmental Services (TOC), Inc., 528 U.S. 167, 190 (2000))
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Nike Covenant Not to Sue
• “[Nike] unconditionally and irrevocably
covenants to refrain from making any claim(s)
or demand(s) ... against Already or any of its ...
related business entities ... [including]
distributors ... and employees of such entities
and all customers ... on account of any
possible cause of action based on or involving
trademark infringement, 
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Nike Covenant Not to Sue
 unfair competition, or dilution, under state or
federal law ... relating to the NIKE Mark based
on the appearance of any of Already's current
and/or previous footwear product designs,
and any colorable imitations thereof,
regardless of whether that footwear is
produced ... or otherwise used in commerce
before or after the Effective Date of this
Covenant.”
Already v. Nike , 133 S.Ct. at 728 (original emphasis by the Court)
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Nike Covenant Not to Sue
• “The breadth of [Nike’s] covenant suffices to
meet the burden imposed by the voluntary
cessation test. The covenant is unconditional and
irrevocable. Beyond simply prohibiting Nike from
filing suit, it prohibits Nike from making any claim
or any demand. It reaches beyond Already to
protect Already's distributors and customers. And
it covers not just current or previous designs, but
any colorable imitations.”
Already v. Nike , 133 S.Ct. at 728 (original emphasis)
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Nike Covenant Not to Sue
• “Already … argues that so long as Nike remains
free to assert its trademark, investors will be
apprehensive about investing in Already.
Second, it argues that given Nike's decision to
sue in the first place, Nike's trademarks will
now hang over Already's operations like a
Damoclean sword.”
•
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Already v. Nike , 133 S.Ct. at 729
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Nike Covenant Not to Sue
• “Already argues that, as one of Nike's
competitors, it inherently has
standing to challenge Nike's
intellectual property.”
Already v. Nike , 133 S.Ct. at 729-30
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Nike Covenant Not to Sue
• [O]nce it is ‘absolutely clear’ that challenged
conduct cannot “reasonably be expected to
recur,” Friends of the Earth[, Inc. v. Laidlaw
Environmental Services (TOC), Inc., 528 U.S. 167,
190 (2000)], the fact that some individuals may
base decisions on ‘conjectural or hypothetical’
speculation does not give rise to the sort of
‘concrete’ and ‘actual’ injury necessary to
establish Article III standing, Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560 (1992).”
Already v. Nike , 133 S.Ct. at 730 (emphasis added)
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Nike Covenant Not to Sue
“ In [Village of Euclid v. Ambler Realty Co., 272
U.S. 365, 386 (1926)], we reasoned that,
assuming the merits of plaintiff's claim, “the
ordinance, in effect, constitutes a present
invasion of [plaintiff's] property rights.” Here
there is no such present invasion; in fact there
is a covenant promising no invasion.”
Already v. Nike , 133 S.Ct. at 730 (emphasis added)
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Nike Covenant Not to Sue
• “Already also complains that it can no longer ‘just
blithely go about its shoe business as if there
were no risk of being sued again.’ [Already
argued]{ ‘once bitten, twice shy.’ But we have
never held that a plaintiff has standing to
pursue declaratory relief merely on the basis of
being “once bitten.” Quite the opposite. See, e.g.,
Los Angeles v. Lyons, 461 U.S. 95, 109 (1983)
(holding there is no justiciable controversy where
plaintiff had once been subjected to a
chokehold).”
Already v. Nike , 133 S.Ct. at 730 (citations omitted)(emphasis added)
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Public Patent Foundation
The Patent Challenger in Myriad (as amicus in
Already v. Nike) argued in Already v. Nike that:
• “[T]he public has standing to challenge the
validity of any issued patent or registered
trademark in court.”
Already v. Nike , 133 S.Ct. at 731 (quoting Brief for Public
Patent Foundation as Amici Curiae in
Nike v. Already)(emphasis added).
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Public Patent Foundation
• “Under this approach [espoused by Public
Patent Foundation], Nike need not even have
threatened to sue first. … Taken to its logical
conclusion, the theory seems to be that a market
participant is injured for Article III purposes
whenever a competitor benefits from something
allegedly unlawful—whether a trademark, the
awarding of a contract, a landlord-tenant
arrangement, or so on.
Already v. Nike, 133 S.Ct. at 731 (emphasis added)
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Public Patent Foundation
• We have never accepted such a
boundless theory of standing [as
proposed by Public Patent Foundation].
The cases Already cites for this
remarkable proposition stand for no
such thing.”
Already v. Nike, 133 S.Ct. at 731 (emphasis added).
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The Already Concurrence
Four members of the Court concurred in a
separate opinion “to underscore that
covenants like the one Nike filed here ought
not to be taken as an automatic means for
the party who first charged a competitor with
trademark infringement suddenly to abandon
the suit without incurring the risk of an
ensuing adverse adjudication.”
Already v. Nike, 133 S.Ct. at 733 (Kennedy, J., joined by Thomas, Alito,
Sotomayor, JJ., concurring)(herein: “Already Concurrence”).
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The Already Concurrence
• “Courts should be well aware that charges of
trademark infringement can be disruptive to
the good business relations between the
manufacturer alleged to have been an
infringer and its distributors, retailers, and
investors. The mere pendency of litigation
can mean that other actors in the
marketplace may be reluctant to have future
dealings with the alleged infringer.”
Already Concurrence, 133 S.Ct. at 733-34 (emphasis added)
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The Already Concurrence
• “Any demonstrated reluctance by investors,
distributors, and retailers to maintain good
relations with the alleged infringer might, in
an appropriate case, be an indication that the
market itself anticipates that a new line of
products could be outside the covenant not to
sue yet still within a zone of alleged
infringement. 
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The Already Concurrence
…[I]t is the trademark holder who has the
burden to show that this is not the case. It is
not the burden of the alleged infringer to
prove that the covenant not to sue is
inadequate to protect its current and future
products from a trademark enforcement
action.”
Already Concurrence , 133 S.Ct. at 733-34 (emphasis added)
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The Already Concurrence
• “The [intellectual property rights holder’s]
formidable burden to show the case is moot
ought to require the [ ] holder, at the outset,
to make a substantial showing that the
business of the competitor and its supply
network will not be disrupted or weakened by
satellite litigation over mootness or by any
threat latent in the terms of the covenant
itself.”
Already Concurrence , 133 S.Ct. at 734 (emphasis added)
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Federal Circuit Case Law
• “Voluntary cessation of challenged conduct
moots a case ... only if it is absolutely clear
that the allegedly wrongful behavior could not
reasonably be expected to recur.”
Military Order of Purple Heart of USA v. Secretary of Veterans Affairs,
580 F.3d 1293, 1295 (Fed. Cir. 2009)(Newman, J.)(quoting Adarand
Constrs., Inc. v. Slater, 528 U.S. 216, 222 (2000)( original emphasis)
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Federal Circuit Case Law
• “[A] defendant's voluntary cessation of a
challenged practice does not deprive a federal
court of its power to determine the legality of
the practice’ unless ‘subsequent events made
it absolutely clear that the allegedly wrongful
behavior could not reasonably be expected to
recur.”
Heartland By–Products, Inc. v. U.S., 568 F.3d 1360, 1368 (Fed. Cir. 2009)
(Dyk, J.)(quoting Friends of the Earth, Inc. v. Laidlaw
Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000))
(emphasis added)
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Federal Circuit Case Law
• “[A] patentee's refusal to give assurances
that it will not enforce its patent is relevant to
the determination [of declaratory judgment
standing].”
Arris Group, Inc. v. British Telecommunications PLC, 639 F.3d 1368, 1381
(Fed. Cir. 2011)(Dyk, J.)(quoting Prasco, LLC v. Medicis Pharm. Corp.,
537 F.3d 1329, 1341 (Fed.Cir.2008), quoting
BP Chems. v. Union Carbide Corp.,
4 F.3d 975, 980 (Fed.Cir.1993))
(emphasis added)
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Federal Circuit Case Law
• “[The patentee]’s refusal to grant [the DJ
plaintiff] Arris a covenant not to sue provides
a level of additional support for our finding
that an actual controversy exists between
[the parties] regarding contributory
infringement.”
Arris Group, Inc. v. British Telecommunications PLC,
639 F.3d 1368, 1381 (Fed. Cir. 2011)(Dyk, J.)
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Federal Circuit Case Law
• “[The patentee] has declined to grant [the DJ
plaintiff] Arkema a covenant not to sue on [its
patents], which further suggests that there is
an active and substantial controversy between
the parties regarding their legal rights with
respect to those patents.”
Arkema Inc. v. Honeywell Intern., Inc., 706 F.3d 1351, 1358 (Fed. Cir. 2013)
(Dyk, J.)(citing Arris Group, Inc. v. British Telecommunications PLC,
639 F.3d 1368, 1381 (Fed. Cir. 2011)(Dyk, J.); also citing
Already, LLC v. Nike, Inc., 133 S.Ct. 721, 727–28 (2013))
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Federal Circuit Case Law
• “[A]lthough a patentee's refusal to give
assurances that it will not enforce its
patent is relevant to the determination, it
is not dispositive.”
Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed.Cir.2008)(quoting BP
Chems. v. Union Carbide Corp., 4 F.3d 975, 980 (Fed.Cir.1993))
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Federal Circuit Case Law
• “[A patentee]’s failure to sign a covenant not
to sue is one circumstance to consider in
evaluating the totality of the circumstances, it
is not sufficient to create an actual
controversy – some affirmative actions by the
defendant will also generally be necessary.
Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341
(Fed.Cir.2008)(emphasis added)
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Federal Circuit Case Law
• “A patentee has no obligation to spend the time
and money to test a competitors' product nor to
make a definitive determination [of
infringement], at the time and place of the
competitors' choosing, that it will never bring an
infringement suit. And the patentee's silence
does not alone make an infringement action or
other interference with the plaintiff's business
imminent.”
Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1341 (Fed.Cir.2008)
(emphasis added)
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Federal Circuit Case Law
• “[The patentee’s affidavit that he will not sue
the DJ plaintiff] shows that its words were
carefully chosen and did not negate the
possibility of an infringement action. … [the
patentee] did not say that he would not
terminate the agreement and would not bring an
infringement suit. Thus, under the terms of his
own affidavit [the patentee] was free to
terminate the agreement at a time of his
choosing and institute an infringement action.”
C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 881 (Fed. Cir. 1983)(emphasis added)
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Federal Circuit Case Law
• “The plaintiff … narrowed the scope of the claims at
issue to …nine claims. The Federal Circuit found that
the district court did not have jurisdiction over the
unasserted claims because, before the court ruled on
the parties' summary judgment motions or conducted
trial, ‘both parties were on notice ... that the scope of
claims at issue was only a subset of the full patents-insuit.’”
Morvil Technology, LLC v. Medtronic Ablation Frontiers, LLC.,
2013 WL 1562520 (S.D.Cal. 2013)(quoting
Streck, Inc. v. Research Diagnostic Systems, Inc.,
665 F.3d 1269, 1284 (Fed.Cir.2012)).
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Thank You and Acknowledgment
Thank you for your attention!
Questions?
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The author acknowledges participation in the Supreme
Court proceedings in Myriad as counsel together with
Andrew S. Baluch and Stephen B. Maebius on behalf of the
Nanobusiness Commercialization Association which filed a
brief as Amicus Curiae in Support of Respondents,
March 14, 2013, 2013 WL 1081789.
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About the Author
HAROLD C. WEGNER is a partner in the
international law firm of Foley & Lardner
LLP where he focuses upon patent
appellate and opinion practice.
Prof. Wegner continues his affiliation with
the George Washington University Law
School where he had been Director of the
Intellectual Property Law Program and
Professor of Law.
contact: [email protected]
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