There is a growing population of fashionistas and #sneakerheads skyrocketing the sales of fashion retailers and traditional sneaker companies, such as @Nike and @Converse. Forbes contends that sneakerheads represent approximately 5% of the $22 billion dollar sneaker market in the U.S., which works out to roughly $1.1 billion dollars. Sneakerheads have an undeniable economic impact on the sneaker industry causing major sneaker companies to vie for their brand loyalty at every turn; thus, it should come as no surprise that these manufacturers have recently been embroiled in litigation to protect their trademarked brands and standing within the sneaker community.
A recent sneaker war – resulting in a seminal trademark infringement case– between Converse and a number of brands concluded this July and is expected to have a number of trickle down effects on the retail industry at large. By way of background, in October 2014, Converse filed a lawsuit against 30 companies, including Skechers and New Balance, alleging infringement of Converse’s iconic sneaker’s bumper toe, striped midsole and toe cap. The case hinged on whether the Chuck Taylor bumper toe, striped midsole and toe cap had acquired “secondary meaning” within the retail market. In layman’s terms, Converse needed to prove that these sneaker-elements were distinctive and prompted an association in the consumers’ minds between the element(s) and the manufacturer. A number of companies, in a measure to maintain their brands’ fashion integrity, opted to acknowledge their copycat designs and settle out of court, including Ralph Lauren, H&M, and Aldo. Skechers and New Balance, however, decided to press on with the case, and ultimately, correctly read the tea leaves. In the decision handed down by the U.S. Internal Trade Commission, the judge ruled that Converse didn’t have a common law trademark in the midsole, the bumper element nor the toe cap, and that the shoe design was not distinctive enough to acquire secondary meaning or iconic status.
The implications of this decision will not only reverberate throughout the halls of the fashion industry, as major retailers now seek to devise strategies to protect their innovative designs, but also the retail real estate market where more and more established, cutting edge brands will presumably seek restrictive covenants in their leases to thwart competition in order to survive in this ever evolving retail climate. A major takeaway from this decision is that retail brands will have an increasingly difficult task proving a trademark infringement claim because very few designs are wholly original. Given the uphill battle of establishing trademark infringement, obtaining restrictive covenants in leases may be the next legal approach for retail brands looking to protect certain designs and uses for the sake of their long term business interests.
Distinctions between fashion brands, especially sneaker brands, has become blurry as many retailers now sell items that are eerily similar to each other (e.g. New Balance’s “PF-Flyer” and Converse’s Chuck Taylor). Plus, proving trademark infringement is a difficult feat as this recent decision bears out. Therefore, landlords and developers of major shopping centers should keep this decision in mind and anticipate that major retailers will seek broader and more extensive exclusive protections in the hope of safeguarding their brands’ identity and signature elements.