United States District Court, N.D. California
ORDER DENYING MOTION TO DISMISS RE: DKT. NO.
HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE.
January 18, 2019, Plaintiff Humu, Inc. (“Humu”)
brought suit against Defendant Hulu, LLC (“Hulu”)
seeking declaratory judgments of: (1) no likelihood of
confusion, trademark infringement, or unfair competition; and
(2) no dilution. Dkt. No. 1. Defendant subsequently provided
Plaintiff a covenant not to sue, after which Plaintiff filed
an amended complaint. See Dkt. Nos. 30-1 Ex. 2
(“Covenant”), 25 (“FAC”).
before the Court is Defendant's motion to dismiss
Plaintiff's amended complaint, briefing for which is
complete. See Dkt. Nos. 30 (“Mot.”), 43
(“Opp.”), 44 (“Reply”). Defendant
contends that the Court lacks jurisdiction in light of
Defendant's provision of a covenant not to sue. The Court
finds the disputed covenant does not deprive this Court of
jurisdiction and thus DENIES Defendant's
III of the Constitution limits the jurisdiction of the
federal courts to actual “cases” and
“controversies.” U.S. Const. art. III, § 2.
And “[t]he rule in federal cases is that an actual
controversy must be extant at all stages of review, not
merely at the time the complaint is filed.” Steffel
v. Thompson, 415 U.S. 452, 459 n.10 (1974). “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, LLC v.
Nike, Inc., 568 U.S. 85, 91 (2013) (quoting Murphy
v. Hunt, 455 U.S. 478, 481 (1982) (per curiam)). A
defendant, however, “cannot automatically moot a case
simply by ending its unlawful conduct once sued.”
Id. The measure for when voluntary cessation
deprives the tribunal of power to hear and determine a case
is whether the defendant has carried its “formidable
burden of showing that it is absolutely clear the allegedly
wrongful behavior could not reasonably be expected to
recur.” Id. (quoting Friends of the Earth,
Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167,
189 (2000)). As concerns a covenant not to sue, courts
consider, “in addition to other factors: (1) the
language of the covenant, (2) whether the covenant covers
future, as well as past, activity and products, and (3)
evidence of intention or lack of intention, on the part of
the party asserting jurisdiction, to engage in new activity
or to develop new potentially infringing products that
arguably are not covered by the covenant.”
ChromaDex, Inc. v. Elysium Health, Inc., No. SACV
16-02277-CJC(DFMx), 2017 WL 7080237 (C.D. Cal. Nov. 28, 2017)
(quoting Nike, Inc. v. Already, LLC, 663 F.3d 89, 96
(2d Cir.), aff'd 568 U.S. 85 (2013)).
parties dispute turns on whether Defendant's covenant not
to sue here sufficiently tracks the covenant not to sue
provided in Nike, which mooted the actual
controversy there. Defendant contends that its proffered
covenant “mirrors the covenant that the Supreme Court
held mooted the Nike case and thus meets each of the
facts identified by the Nike [C]ourt.” Mot. at
8. Most important, Defendant claims that “like the
Nike covenant, Hulu agrees to refrain from
‘making any claim(s) or demand(s)' on account of
any possible cause of action based on or involving trademark
infringement, unfair competition, or dilution based on
Humu's use of the HUMU mark as alleged in the Original
Complaint.” See Mot. at 8. But Defendant
mischaracterizes the covenant at issue here. Unlike the
covenant in Nike, Defendant's covenant contains
a critical proviso, omitted from Defendant's just-cited
description, and underlined in the following:
Hulu . . . hereby unconditionally and irrevocably covenants
to refrain from making any claim(s) or demand(s) . . . on
account of any possible cause of action based on or involving
trademark infringement, unfair competition, or dilution,
under state or federal law in the United States relating to
the Hulu Marks based on Humu's use of the HUMU mark in
the manner described in the Complaint in connection with
the Humu Services offered to the Humu Customers, or in
connection with any other goods or services similar to the
Humu Services marketed directly to the Humu Customers .
. . .
See Covenant at 1-2 (emphasis added).
relevant to the pending motion, Defendant articulates its own
definitions of “Humu Services” and “Humu
Customers” for purposes of the covenant, which
Plaintiff maintains do not encompass all of Plaintiff's
existing or imminently planned activities. See Id.
at 1 (defining the terms “Humu Services” and
“Humu Customers”); Opp. at 9-13. For example,
Defendant's definition of “Humu Customers” in
the covenant encompasses “large business enterprises
and organizations interested in implementing researched-based
tools to motivate employees across the organization to take
small steps to improve employee happiness, which in turn
drives high morale and employee retention.”
See Covenant at 1. But Plaintiff notes that while it
“tends to be retained by large organizations and
employers, ” it offers its services to
“individual users.” See Opp. at 11- 12.
Further, the covenant's limitation to services
“marketed directly to the Humu
Customers” plausibly does not cover general marketing
activities, in which Plaintiff has engaged and intends to
continue to engage. See Covenant at 2 (emphasis
added); Opp. at 14.
totality of the circumstances shows there remains a
controversy for the Court to exercise jurisdiction over
Plaintiff's declaratory judgment claims. Given the
critical proviso language, and contrary to Defendant's
arguments, the disputed covenant not to sue differs in
material ways from the covenant at issue in Nike, or
in any other case the parties identified. Based on the
language of the covenant itself, the Court thus cannot
conclude that it is “absolutely clear” that
Defendant's covenant eliminated all potential
infringement disputes related to Plaintiff's actual and
imminently planned uses of the HUMU mark. See Already,
LLC v. Nike, Inc., 568 U.S. at 91.
the Court DENIES Defendant's motion.