HSK, LLC v. United States Olympic Committee
248 F.Supp.3d 938, 2017 WL 1239775, 97 Fed. R. Serv. 3d 662 (2017)
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Rule of Law:
A plaintiff's subjective fear of a potential lawsuit, based on a defendant's public statements and enforcement actions against unrelated third parties, does not create an 'actual controversy' sufficient to establish subject-matter jurisdiction for a declaratory judgment action without a direct threat or communication from the defendant to the plaintiff.
Facts:
- The United States Olympic Committee (USOC) published 'U.S. Olympic and Paralympic Brand Usage Guidelines' stating that commercial entities who are not official sponsors may not post about the Olympic Games on their corporate social media accounts.
- The guidelines warned that federal law allows the USOC to sue entities using its trademarks, such as '#RIO2016' or '#TeamUSA', for commercial purposes without its consent.
- In July 2016, prior to the Rio Olympic Games, media outlets reported that USOC was warning non-sponsor businesses against using its trademarks and was threatening to enforce its rights.
- HSK, LLC d/b/a Zerorez MN (Zerorez), a company that is not an official Team USA sponsor, had planned to discuss the 2016 Olympic Games on its corporate social media.
- USOC never directly communicated with Zerorez or threatened it with legal action regarding its planned social media posts.
- Fearing legal action from USOC based on the public guidelines and media reports, Zerorez refrained from posting about the Olympics.
Procedural Posture:
- HSK, LLC d/b/a Zerorez MN (Zerorez) filed a declaratory-judgment action against The United States Olympic Committee (USOC) in the U.S. District Court for the District of Minnesota, a federal trial court.
- USOC filed a motion to dismiss for lack of subject-matter jurisdiction.
- Zerorez filed its responsive brief opposing the motion one month late.
- USOC then filed a motion to strike Zerorez's untimely responsive brief.
- In response, Zerorez filed a motion for an extension of time to file its brief.
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Issue:
Does an 'actual controversy' exist for a declaratory judgment action when a company, which has not been directly threatened by a trademark holder, fears an infringement lawsuit based solely on the trademark holder's public brand guidelines and widely reported enforcement actions against other, unrelated companies?
Opinions:
Majority - Wilhelmina M. Wright
No, an 'actual controversy' does not exist under these circumstances. For a federal court to have jurisdiction over a declaratory judgment action, there must be a substantial controversy between parties with adverse legal interests that is of sufficient immediacy and reality. A plaintiff's apprehension of being sued, if not inspired by the defendant's actions toward that specific plaintiff, is insufficient to create a justiciable controversy. Here, Zerorez's fear was based on USOC's general guidelines and its enforcement actions against other companies, as reported in the media. USOC never communicated with or threatened Zerorez, and there was no history of litigation between them. The court reasoned that the controversy existed only 'in the mind of only one side,' making it speculative and one-sided rather than a concrete dispute between the two parties. To hold otherwise would eviscerate the actual-controversy requirement, as it would allow any non-sponsor company to sue USOC based on the same general fear.
Analysis:
This decision clarifies the 'actual controversy' requirement for declaratory judgment actions in the intellectual property sphere, reinforcing that a general, unsubstantiated fear of litigation is insufficient to invoke federal jurisdiction. The ruling establishes that a trademark holder's public enforcement of its rights against third parties does not automatically create a justiciable controversy with every other potential infringer. This precedent protects rights holders from having to defend against preemptive lawsuits from parties they have never threatened, thereby preventing federal courts from issuing advisory opinions on hypothetical disputes and ensuring that litigation resources are reserved for concrete, existing conflicts.
