Less than a month after the European Court of Justice (ECJ) ruling in Adidas v Marca Mode [2008] C-102/07, Adidas has won a U.S.$305 million payout in the United States from Collective Brands in a lawsuit seven years in the making. A federal jury in Adidas AG v Collective Brands Inc [2008] (Portland, Oregon, Federal District Court) decided that both the two and four stripe logos used by Collective Brands on its various ranges of footwear infringed the well known and, in the jury’s collective mind, “iconic” three stripes of Adidas.

BACKGROUND

Collective Brands, located in glamorous Topeka, Kansas, sells shoes under several brands, including “Stride Rite”. Stride Rite markets numerous brands of children’s shoes and some ranges of adult products across the United States and under other brand names including Keds, Robeez, Saucony, and Sperry Top-Sider. The complaint by Adidas was that Collective Brands was selling a vast range of trainers with decorative designs comprising either a two or four stripe motif. Adidas argued that these trainers infringed its U.S. trade mark rights for its well known three stripes collection of sports shoes. In 2001, Adidas filed a suit against Collective Brands for trade mark infringement and also argued that the various articles of footwear sold by Collective Brands created actual and/or a likelihood of confusion with their own famous footwear and athletic apparel. Collective Brands argued that the differing numbers of stripes used on their footwear created a clear distinction in source of sale from Adidas’ three stripes.

DECISION

In a federal jury trial lasting several weeks, a nine person jury panel in Portland, Oregon found that Collective Brands’ shoes infringed Adidas’ U.S. trade marks. The jury awarded damages to the tune of U.S. $305 million be paid by Collective Brands. This award comprised U.S.$30.6 million in actualdamages caused to the Adidas marks and U.S.$274 million in further damages to be divided between profits of Collective Brands and, most controversially, in punitive damages.

REACTION

Virtually seconds after the jury returned its verdict, Collective Brands filed a motion seeking to have the verdict set aside, or to have the damages award significantly reduced. Collective Brands called the judgment “irrational”, saying it was 15 times more than the profits made on the shoes, and complained that Adidas did not offer any credible evidence of confusion between the marks and the various striped shoes sold by Collective Brands. In a press release, Collective Brands stated that “Collective Brands is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value”.

Naturally, Adidas had a different opinion regarding the jury’s verdict. The award against Collective Brands was the biggest victory for Adidas in its effort to block retailers from using similar striped motifs on shoes and athletic apparel. Paul Ehrlich, general counsel for Adidas North America, stated outside the court house that, “Adidas has been building its brand for more than 60 years and the verdict underscores the importance of protecting consumers from unfair and deceptive practices. Adidas is pleased the jury agreed with our position that [the] conduct was unlawful and cannot be tolerated.”

COMMENT

This verdict, as well as the ECJ’s ruling in favour of Adidas, will no doubt strengthen Adidas’ bargaining power in future settlement talks with Collective Brands and any other footwear manufacturers that incorporate stripe motifs on their products, especially if those products are sporting shoes. This U.S. case could still take years to resolve on appeal, although there may be little hope of Collective Brands’ alternative request of a new trial being granted. The case illustrates that even something as innocuous and, arguably, unremarkable as a stripe motif can, given enough time and with the right IP protection and expertise, become completely untouchable by any other party.