890 F. Supp. 2d 398
S.D.N.Y.2012Background
- VU seeks a declaratory judgment that WF has no copyright in the Banana Design.
- WF covenanted unconditionally not to sue VU or related parties for copyright infringement in the Banana Design.
- SAC outlines the Banana Design as Warhol’s cover art for Velvet Underground & Nico and its subsequent licensing to WF.
- VU claims the Banana Design has acquired secondary meaning as VU’s trademark and alleges past and ongoing licensing by WF.
- WF moves to dismiss under Rule 12(b)(1), arguing the covenant moots any justiciable controversy.
- Court grants dismissal without prejudice, finding no live controversy due to the covenant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the covenant to refrain from sue divest jurisdiction? | VU argues covenant is not broad enough to cover future activity and licensees. | WF contends covenant covers all claims, including future conduct and privity of contract relations. | Yes; covenant divests jurisdiction; no live controversy remains. |
| Is there a live controversy over WF's copyright existence in Banana Design? | VU maintains dispute remains whether WF actually has copyright even if no suit arises. | WF contends the covenant eliminates coercive action and ongoing dispute. | No live controversy; covenant eliminates adverse legal interest. |
| Does WF's alleged copyright vs. VU's trademark claim create a justiciable dispute? | VU asserts interplay could require court decision despite covenant. | Anticipated defenses do not create separable controversy until asserted; advisory opinion viewed as improper. | No; anticipated defense cannot create a separate controversy. |
| Does the potential economic impact or accounting seek a live controversy? | VU seeks an accounting under § 2202 for revenues from WF licensing. | § 2202 provides remedies after judgment, not independent jurisdiction; injury insufficiently concrete. | No live controversy; § 2202 does not confer jurisdiction. |
Key Cases Cited
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (U.S. 2007) (actual controversy and jurisdiction in declaratory judgments)
- Nike, Inc. v. Already, LLC, 663 F.3d 89 (2d Cir. 2011) (covenant not to sue can destroy jurisdiction in DJ actions)
- Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338 (Fed. Cir. 2010) (scope of covenant not to sue and its effect on jurisdiction)
- Caraco Pharm. Labs., Ltd. v. Forest Labs., Ltd., 527 F.3d 1278 (Fed. Cir. 2008) (context-specific covenant analysis; ANDA distinction)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (U.S. 2007) (live controversy and declaratory judgment jurisdiction)
- Pub. Serv. Comm’n of Utah v. Wycoff Co., Inc., 344 U.S. 237 (U.S. 1952) (declaratory judgments and immediacy requirement)