YSL seeks to bring Louboutin saga to a close (at least, for now... *sinister laugh*), moves to dismiss counterclaims voluntarily
It appears that the fashion law case of the decade might end not with a bang, but with a voluntary motion to dismiss YSL's counterclaims. New York Magazine's The Cut reports that Yves Saint Laurent America's six counterclaims against Christian Louboutin, S.A., deal with issues that "YSL now considers irrelevant." Or as YSL's brief (embedded below) puts it:
"In light of YSL's conclusive victory in defeating Louboutin's claims, and for [other] reasons detailed herein, YSL believes it is appropriate to dismiss its counterclaims voluntarily, thus resolving what remains of this litigation and allowing the parties to close the book on this litigation and refocus their attention on their respective fashion creations."
YSL's strategy is clever, if perhaps a tad too cute: it seeks to dismiss the throwaway counterclaims (for "tortious interference" and "unfair competition" under New York law) with prejudice, but asks the court to dismiss the important counterclaim (for cancellation of Louboutin's red-sole trademark registration) without prejudice, meaning the latter issue could be raised again at some point in the future.
To accomplish this goal, YSL invokes a principle learned by all first-semester law students: the federal courts have limited jurisdiction, and are empowered to adjudicate only certain categories of cases -- for present purposes (to be sure, there are multiple exceptions), that means cases in which a federal claim is present. According to YSL, "[a]lthough Louboutin's claims against YSL previously provided a basis for subject matter jurisdiction in the district court, that basis is no longer present now that the Second Circuit has directed that final judgment be entered in YSL's favor on all of Louboutin's federal trademark claims."
YSL shows its hand a bit on page two: "Under controlling law in this Circuit, district courts lack subject matter jurisdiction to adjudicate a claim for cancellation of a federal trademark registration if no other basis for federal jurisdiction is present; instead, such claims must be brought before the Trademark Trials & Appeals Board (the "T.T.A.B.") of the United States Patent and Trademark Office." In other words, YSL wants to preserve the option to seek cancellation of Louboutin's trademark registration, perhaps at the TTAB or in a later federal-court action; it just doesn't want to go to the trouble and expense of doing so right now.
But as YSL points out, it's ultimately up to the district court to decide whether to allow voluntary dismissal of the counterclaims at this stage of litigation (see the applicable legal standard on page three of the brief), and Judge Marrero might find YSL's strategy too slick, and/or unappealing from a judicial/administrative economy perspective. On the other hand, the court might just want to get rid of the case. Alternatively, the outcome could depend on Louboutin's response to YSL's brief. We shall see....