This week’s IP Matters is a trademark fight over stripes in the billion-dollar footwear industry. Can Adidas’s well-known three-stripe mark strip Shoe Branding Europe off its newer two-stripe mark?
One of the biggest brands in the sportswear industry is Adidas, a German sport brand. Adidas’s iconic three-stripe mark is well known. The three-stripe mark is typically featured along the side of Adidas apparel. Described by Adolf Dassler, owner, as ‘the three stripe company”, Adidas is a reputable brand that has become well known with its three-stripe mark. It’s Adidas’s trademark.
Shoe Branding applied to trademark its two-stripe mark in Europe, similar to Adidas’s trademark.
Shoe Branding Europe BVBA, a Belgian company, filed to trademark two stripes positioned at an angle. It filed the application 1 July 2009 at the European Union Intellectual Property Office (EUIPO). In Shoe Branding’s application, it described the mark as a position mark consisting “of two parallel lines positioned on the outside surface of the upper part of a shoe. The parallel lines run from the sole edge of a shoe and slopes backwards to the middle of the instep of a shoe. The dotted line marks the position of the trade mark and does not form part of the mark.”
Adidas opposed Shoe Branding’s trademark application; says it’s so similar to its iconic three-stripe mark, there is likelihood of confusion.
When Shoe Branding’s application for trademark was published in Community Trade Marks Bulletin in June 2010, Adidas was unhappy. It opposed the application. In its opposition, Adidas tried to show EUIPO how accepting Shoe Branding’s application could give unfair advantage to Shoe Branding.
But EUIPO thought otherwise. In May 2012, EUIPO—through its Opposition Division—turned down Adidas’s opposition.
Adidas appealed EUIPO’s first decision, hoping to protect its early mark of distinction in the sportswear market.
The appeal came before EUIPO’s Second Board of Appeal in November 2013.
Again, Adidas lost.
Dismissing Adidas’s appeal, the Board—amongst other things—held that the trade marks were different and consequently there was no likelihood of the relevant members of the public confusing both brands.
Adidas disagreed with the decision and took its appeal to the Court of Justice of the European Union (CJEU).
Finally, Adidas got what it wanted—it got a big YES from the CJEU.
In reaching this decision, the CJEU faulted the Board of Appeal’s findings. The CJEU found that the Board of Appeal’s conclusion that there was no similarity whatsoever between the marks was wrong. It therefore held that this error of assessment had distorted the Board of Appeal’s assessment regarding the likelihood of confusion by the relevant members of the public and whether there was a likelihood that the public would connect Shoe Branding’s two-stripe mark with Adidas’s earlier three-stripe mark.
With Adidas smiling after the decision, it was Shoe Branding’s turn to appeal the unfavourable decision.
After the CJEU had annulled the Second Board of Appeal’s decision, the Board re-examined Adidas’s appeal. This time, the Board allowed Adidas’s opposition.
The Board—on matters of fact—concluded that (i) there was indeed a certain degree of similarity between Shoe Branding’s mark and Adidas’s registered trademark; (ii) the goods covered by both trade marks are identical; and (iii) the earlier mark—Adidas’s three-stripe mark—has high reputation.
Consequently, the Board agreed with Adidas that there was indeed a likelihood that the relevant members of the public would connect the similar marks and considering Adidas’s reputation, Shoe Branding could have an unfair advantage.
Dissatisfied, Shoe Branding further appealed the decision, taking the matter before the General Court in Luxemburg.
Shoe Branding wanted the Court to annul the decision and shove costs on the Board of Appeal.
EUIPO and Adidas contested the appeal. They wanted the General Court to dismiss the appeal and order Shoe Branding to pay the costs.
The General Court answered Adidas’s and EUIPO’s prayers—it dismissed the appeal and ordered Shoe Branding to pay costs.
But this is hardly the end of the brand war between Shoe Branding and Adidas.
Three Points You Should Note about Trademarks
Below are 3 points you need to note about trademarks:
- Distinctiveness is everything in trademark protection: The best way to avoid buying a trademark-infringement lawsuit is to keep your brand name, logo, sign, symbol, etc, distinctive. Once you are able to achieve this, you will be the ‘Adidas’ in your industry as far as your distinctive marks are concerned. Your distinctive trademark does not only help you look good but distinctively connect your products and services to you and no one else. This is the most powerful thing about trademarks. In arriving at its decision, the General Court—amongst other things—recognized the earlier reputation of Adidas’s three-stripe mark. It also established a link or connection between Adidas’s three-stripe mark and Shoe Branding’s two-stripe mark. The Court then considered the unfair advantage in having a mark similar to the distinctive character of Adidas’s earlier mark and the injury to the reputation or to the distinctive character of Adidas’s mark.
- Registering a trademark or trademarks for your business, products, or services is critical: Though Adidas had been known with its three-stripe mark in the sportswear industry, Adidas still proceeded to register its trademark by filing for protection. This is instructive. While our trademark laws—such as Nigeria’s Trademark Act—recognize unregistered marks that have become well known and associated with particular goods or services, registration is vital. Because Adidas had registered its three-stripe trademark, the burden of Adidas having to prove before the Board and Courts that its mark was well known becomes significantly less or completely necessary. In the General Court’s decision, the Court recognized Adidas’s trademark as an earlier mark, both due to use and also registration. If you haven’t done so already, get registered.
- When registering a trademark for your products or services, always consider the most appropriate class or classes that apply: Both Shoe Branding’s two-stripe mark and Adidas’s three-stripe mark were contesting for class 25 of the Nice International Trademark Classification. Adidas had the advantage from day one. How? Adidas had registered ‘other type of trade mark’ 14 December 1999 under No 39950559, and duly renewed for ‘footwear, including sports and casual footwear’ in Class 25. This is Adidas’s description of the mark: ‘The mark consists of three stripes contrasting with the base colour of the footwear. The shape of the shoe serves only for representing how the mark is applied, it does not as such form part of the mark’. And on 26 January 2006, Adidas registered under ‘footwear’ in Class 25 with the following description: ‘The mark consists of three parallel equally spaced stripes applied to footwear, the stripes positioned on the footwear upper in the area between the laces and the sole’. Of course, with a similar description from Shoe Branding for the same Class 25, Shoe Branding was coming late to the stripe-footwear party. Always seek early advice. Ideally, I always recommend product- or service-development stage.
I will now briefly point out 3 ways your business, products, or services can benefit from an Adidas-strong trademark protection
- Avoid building brands for your products or services on marks that have the likelihood of confusing relevant members of the public: To make the likelihood of confusion between your trademark and those of competitors clearer, keep your trademarks simple: Avoid the complicated marks. Keep it simple. One of the reasons Why Adidas may be very confident in its trademark-infringement actions may be that its three-stripe mark is so simple that the likelihood of confusion is clear once there is an identical or similar mark. The instant Adidas action against Shoe Branding’s two-stripe mark is a good example. The less the stripe marks out there, the stronger the Adidas brand.
- When your trademark has acquired reputation, you can stop any copycat from pushing you off in a competitive market, even when they compete on price: Adidas does not plan to lose its huge market share to competitors—big or small. It also does not plan to be cheap. So to stay on top of its three-stripe mark game, it must keep others from using identical or similar mark. Little wonder Adidas has stopped most of the big names in (and even outside) the sportswear industry from using identical or similar stripes. When Puma came up with a four-stripe soccer cleat, Adidas stopped it. When Hennes & Mauritz, Marca Mode, and Vendex KBB came up with two-stripe marks, Adidas successfully stripped them off. Even when Tesla Inc. was going to launch its groundbreaking Model 3 electric car and get three horizontal bars registered at the US Patent and Trademark Office, Adidas successfully got Tesla to withdraw. Tesla eventually changed it to a numeric 3. Adidas, in 2015, also sued Forever 21 over Teenage Mutant Ninja Turtles and Looney Tunes clothing because they featured three stripes on their sleeves.
- To make the likelihood of confusion between your trademark and those of competitors clearer, keep your trademarks simple: Avoid the complicated marks. Keep it simple. One of the reasons Why Adidas may be very confident in its trademark-infringement actions may be that its three-stripe mark is so simple that the likelihood of confusion is clear once there is an identical or similar mark. Adidas’s action against Shoe Branding’s two-stripe mark is a good example. The less the stripe marks out there, the stronger the Adidas brand.
I will leave with this extra tip: In today’s new economy with the increasing number of digital businesses in a highly competitive global market and with disruptive business models that often make prices either crash or disappear, your brand is critical. Trademark—when done rightly—will not only protect brand value but also increase it.
In IP matters, it’s never too early because IP matters to business and development, any day.