Adidas Battle Against Its “Three Stripe Mark”

The jury deliberated for three hours during the one-week trial in Manhattan's Southern District Court. The eight-person jury voted in favour of Thom Browne after it was sued by Adidas in 2021 for $7.8 million on claims that it imitated Adidas' signature three-stripe emblem and pattern.

BACKGROUND:

Around 2005, the Browne brand began selling a three-striped design, known as the “Three-Bar Signature.” Adidas contacted the brand about the design around two years later, and Thom Browne agreed to stop using it. Following that, in 2008 and 2009, the “Four-Bar Signature” appearance became available. Thom Browne's usage of the striped design on activewear, according to Adidas, was likely to generate consumer misunderstanding and deceive the public. The timeline of the case can be tracked as follows:

• According to court filings in the case, Adidas has filed over 90 lawsuits and entered more than 200 settlement agreements relating to the trademark since 2008. Thom Browne used to feature a three-bar design on its garments until switching to a four-stripe design after Adidas objected in 2007.
• The trial in the United States District Court for the Southern District of New York follows more than four years of back-and-forth between the parties since adidas launched an opposition proceeding in 2018 in response to a trademark application for a striped mark filed by Thom Browne in the European Union.
• In December 2020, adidas filed a stateside opposition with the Trademark Trial and Appeal Board of the United States Patent and Trademark Office, urging the trademark body to halt three pending trademark applications for red, white, and blue stripe trademarks for use on footwear filed by Thom Browne earlier that year.
• In 2021, Adidas sued New York designer Thom Browne’s company, saying that Thom Browne’s four-bar and “Grosgrain” stripe designs on its shoes and high-end activewear infringed on its three-stripe trademark rights
• Adidas filed a trademark infringement and dilution claim against Thom Browne in June 2021, setting the setup for the present trademark trial (which, of course, is about competition as much as it is about trademarks)
• The German multinational, which is famously litigious when it comes to its striped logo, said that Browne was directly competing with it by supplying sportswear and athletic-styled footwear bearing confusingly similar imitations of its three-stripe mark.
• Aside from the obvious components of competition at work, adidas contends that buyers are likely to infer that goods of Thom Browne’s originate from the same source, or that they are affiliated with Adidas.
• Thom Browne responded in part by attempting to have one of Adidas three-stripe trademark registrations invalidated on the grounds that the mark, which consists of three diagonal quadrilaterals positioned parallel to each other upon a contrasting background, places competitors at a significant non-reputation-related disadvantage because it is not limited to any specific number or orientation of stripes.
• Despite of all the allegations by Adidas, Thom Browne, which was purchased by Zegna Group in 2018, continuously stated from the beginning that there have been no instances of true confusion between its usage of four horizontal parallel bands and Adidas use of three stripes.

ANALYSIS OF THE CASE

In the instant case, adidas asserted 2 claims i.e. a claim of trademark infringement and a claim of trademark dilution by the defendant Thom Browne.

Trademark Infringement Claim

Adidas accused Thom Browne of infringing its “Three Stripe Mark” through the use of two branding designs called the “Four Bar” and “Grosgrain” designs i.e. a red, white and blue line pattern design to its specific products. Adidas further argued that Thom Browne’s use of the Four Bar and Grosgrain designs on its products is likely to cause public confusion and deceive the public into thinking that the products are made, sold or otherwise associated/sponsored by adidas.

Though Adidas refrained from claiming that this confusion occurs at the point of sale of Thom Browne products but it asserted that it occurs at rather pre-sale or post-sale. By giving this assertion Adidas tried to put more weight on the degree of infringement and the confusion caused to the consumers since final consumers ultimately sees the infringed mark in stores (offline or online), social media sites or even when consumers other than the Thom Browne customers sees those customers wearing the Accused Products.

In response, Thom Browne argued that Adidas exercised unreasonable delay in asserting its claims. As per the court documents, products featuring the "Four-Bar Signature" were first sold in 2009 and were displayed on items of activewear at the fashion brand's flagship New York store from 2010. However, Adidas claimed that it only became aware of the alleged infringement in early 2018, when Thom Browne applied to trademark the “Grosgrain Signature”.

For determining the above claim, the Jury took into consideration various factors such as:

1. Strength of the Mark: The Jury considered whether Adidas mark has sufficient ability to get the products recognized under it as linked to a specific brand. Other relevant pointers can be advertising, media coverage of products bearing the mark, sales success, etc. The Jury found that people were able to relate more with Adidas mark due to its “identifiability factor” and thus its similar use by other parties will certainly cause public confusion.
2. Degree of Similarity: They also took into account the degree of similarity between the two marks such that whether any similarity or lack of similarity between the two will cause public confusion. Moreover, if the quality of their offered products are similar then there are more chances of confusion. Here, Browne argued that it’s mark featured five stripes describing it as “white-red-white-blue-white” and was not similar to the Adidas mark.
3. Consumer Reach: Another factor to determine infringement was whether both the marks are competing against the same set of consumers. Here, Thom Browne argued that they operate in different markets, serving different customers, and offer their products at strikingly different price points. It also contended that this case is not about competition but is whether Adidas can own all stripes.
4. Evidence:
   The jury considered whether there was likelihood of confusion among the consumer base and for the same presence of evidence of actual confusion was sufficient to prove the likelihood factor. Similarly, the absence of evidence of actual confusion can prove to be opposite.
5. Intention: They also considered the intention behind Browne’s use of the mark and analyzed whether it acted on the bad faith or took proper due care and attention without turning blind eye to it.

Trademark Dilution Claim

Adidas in its arguments also contended that there has been a "trademark dilution" of it’s distinctive “Three Stripe mark” by eroding its distinctiveness in the mind of the public. For deciding on dilution under federal law, the jury took into consideration the following factors:

1. How famous is Adidas Three Stripe Mark;
2. Was Adidas Three Stripe Mark famous before Thom Browne first sold any of the products bearing the mark in question;
3. Whether Thom Browne’s use of its “Four Bar and Grosgrain” design is likely to dilute the distinctiveness of Adidas mark.

JURY’S DECISION

After less than three hours of deliberation, the jury of eight person ruled in favor of Thom Browne Inc. and found that Thom Browne Inc. is not liable for the trademark infringement or dilution of the Adidas mark. Thom Browne Inc. was also not found liable for damages or profits made from the sale of products featuring the four-stripe design, as well as its hallmark red-white-and-blue grosgrain ribbon motif. Accordingly, the court verdict to dismiss the complaint in its entirety.

This decision has ultimately given a blow on Adidas monopoly over the “three-stripe” mark and will surely have a spillover effect over other countries especially India. As per various news articles, Adidas was disappointed with the verdict and will as a future recourse continue to vigilantly enforce its IP rights following due process of law including filing any appropriate appeals. Moreover, this decision has opened a pandora of debates with respect to well-known marks and the degree of its identifiability. Hence, we believe that this verdict will attract more trademark litigation cases in India.

Author: Atul Dhyani is a Partner at KAnalysis. Views are personal.