The US Supreme Court [official website] heard oral arguments [day call, PDF] Wednesday in two cases. The issue in the first case, Already, LLC v. Nike, Inc. [transcript, PDF; JURIST report], was whether a federal court has Article III [text] jurisdiction over a party's challenge to the validity of a trademark if the owner of the trademark has agreed not to sue the party over alleged infringement. This case arose from Nike [corporate website] challenging several shoes manufactured by Already, alleging that the company was using patented design techniques from Nike's "Air Force One" shoes. When Already filed a counterclaim challenging the validity of Nike's patent, Nike petitioned the court to dismiss its suit against Already as well as Already's counterclaim. Nike then issued a promise to Already that it would not pursue any further action because, as Nike's lawyer explained to the Supreme Court, "Nike concluded that [Already's] activities were no longer significant enough to warrant the cost of litigation." Already still wished to pursue its claim challenging Nike's patent, but Nike argued that since it vowed not to pursue litigation, there was no longer any "case or controversy" as required under Article III of the US Constitution. The district court agreed with Nike and dismissed both claims, and the US Court of Appeals for the Second Circuit [official website] affirmed [opinion] that decision last year. The Supreme Court granted certiorari to determine both whether Nike's promise not to sue is broad enough to assure that it will not assert a future claim against Already if it infringes on the same trademark in a different way, and whether Nike has the ability to avoid an attack on its trademark validity by making a promise like this.
The Supreme Court also heard arguments on Wednesday in Marx v. General Revenue Corp. [transcript, PDF; JURIST report]. In this case, the issue was whether a defendant who prevails in a Fair Debt Collection Practices Act (FDCPA) [text, PDF] case is entitled to attorney's fees even if the claim was not brought against them in bad faith. The FDCPA states that "[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees." Federal Rule of Civil Procedure 54(d) [text] establishes what is known as "the American rule," and does not allow attorney's fees to be collected by the prevailing party unless a statute, another federal rule or a court order awards them. In this case, the plaintiff is not alleging that the claim brought against her for collection of payments on her student loan were made in bad faith, but that she received phone calls and visits to her work that amounted to harassment. The district court ruled against the plaintiff and the US Court of Appeals for the Tenth Circuit affirmed that decision last year, ruling that the FDCPA requires bad faith in order for attorney's fees to be awarded, not just harassment. The Supreme Court is expected to rule on both of these issues after it finishes its fall term.