Shoe Branding Europe V. Adidas: Case History

22nd June, 2019 - 4:53 am Categories: Legal Issues Trademark 0 Comments

Introduction of  Companies involved in the dispute

 Shoe Branding Europe BVBA is a Belgian footwear company and wants to register it’s 2 stripe logo as a trademark. Adidas has its roots in Germany but now it’s a global company dealing in Sportswear. Adidas has a 3 stripes logo to differentiate its product from other products in the market.

The three-stripe logo was first registered by Adidas’s founder, Adi Dassler, on a football boot on 18 August 1949, but the court said it was not sufficient to identify the products as originating from the brand.[1]

Below there is a picture of Adidas logo and the parallel stripes logo of Shoe Branding Europe. 

The Dispute

Adidas initiated trademark opposition proceedings against Belgian footwear company Shoe Branding Europe BVBA (“Shoe Branding”) alleging that two of Shoe Branding’s pending European Union trademark applications – both of which consisted of a 2-stripe design – are “confusingly similar” to its well-known 3-stripe trademark. As a result of such similarity, adidas demanded that the trademarks not be granted registration status in the EU.[1]

In July 2009 Shoe Branding filed a trademark registration application for the following position mark for footwear, which was opposed by Adidas.

The opposition was dismissed by OHIM’s Opposition Division and by the Board of Appeal, which held, in essence, that ‘Adidas 3-stripe mark was so banal that it could enjoy protection only against identical, or virtually identical, reproductions.’ In particular, the Board held that the ‘differences in the details in the positioning (i.e.  the instep area versus the area between the laces and sole), sloping (i.e. inclination) and the number of stripes, were sufficient to dispel any likelihood of confusion.’ Applying the same similarity test, the Board of Appeal also held that ‘these dissimilarities were sufficient to dispel a risk of a link being made between the marks.  Therefore, the application could not take unfair advantage or be otherwise detrimental to the distinctive character or repute of Adidas’ 3-stripes mark.’ While the Board acknowledged that the 3-stripes mark had been extensively used and therefore had enhanced distinctiveness, it limited the recognition of such acquired distinctiveness to exactly the way that the 3 stripes were applied in a specific position on footwear.[1] Board of Appeal held that adidas’ 3-stripe trademark does not bear sufficient source-identifying properties. The Board of Appeal also stated that there is “no reason to believe that consumers would assume that [adidas’] three lines are primarily intended to denote a connection with a specific provider of clothing, footwear and headgear products.”[1] This means according to Board of Appeal, Adidas 3 strip mark was not fulfilling one of the important functions of a trademark, that is source identifier. So, in 2009 Belgian rival shoe branding Europe won Trademark status for its 2 stripe design triggering action from the German firm Adidas.

Then , Adidas appealed to the European Union General Court [EUIPO] which reversed OHIM’s decision on 21^st May 2015[2] The General Court noted that the Board did not explain why all the other clear elements of similarity between the marks, such as the shape, size and colour of the stripes and their positioning on the outside of a shoe were not relevant. After carrying out a global assessment of the signs and taking into account the elements which were clearly common to the marks at issue, the General Court held that the Board was wrong to say the marks were dissimilar.[3]

The General Court held that Shoe Branding Europe’s 2 stripe mark was similar to Adidas 3 stripe mark which would lead to likelihood of confusion and would be detrimental for sales of Adidas as Adidas have a global market, and no one can ride on the prestige gained by Adidas. No one can take unfair advantage of Adidas famed trademark.

Shoe Branding appealed the General Court’s decision to the Court of Justice of the European Union (“CJEU”), the EU’s highest court, alleging that its 2-stripe trademarks have coexisted with adidas’ 3-stripe mark for many decades with no evidence of confusion. Upholding the lower court’s findings in early 2016, the CJEU held that the difference between 2 and 3 stripes was insufficient to affect the similarities between the two sneaker designs under European trademark law. As a result, Shoe Branding’s trademark applications have been shot down.[4] So, we see EU’s highest Court also agreed with the finding of the General Court. In 2014, in the midst of the 2-stripe v. 3-stripe opposition battle, Shoe Branding initiated a separate proceeding, asking the EUIPO to declare that adidas’ 3-stripe mark is not a valid trademark registration.  Shoe Branding argued in its filing that adidas’ 3-stripe mark one that consists of three vertical white lines against a black background and applies to “clothing; footwear; headgear” lacks the distinctiveness and source-identifying character required for trademark protection. And the EUIPO’s Second Board of Appeal agreed, holding that adidas’ 3-stripe mark amounts to mere decoration and lacks “secondary meaning” or “acquired distinctiveness”.  [1]

Recently The General Court of the European Union said it had upheld a 2016 decision of the European Intellectual Property Office (EUIPO) to annul a previous acceptance of the trademark, which Adidas registered in 2014 for clothing, footwear and headgear. Adidas needed to show that three parallel stripes, regardless of direction on the product, had acquired a “distinctive character” throughout the EU based on its use so that consumers inherently knew a product was from Adidas and could distinguish it from products of another company.  The court said the mark was not a pattern but an “ordinary figurative mark” .[2] Since, Adidas could not prove acquired distinctiveness in all the regions of the European Union, the General Court did not grant trademark protection to the 3 stripes which is seen on Adidas products.

Now let’s see the concept of distinctiveness to understand why Adidas lost the case.

Distinctiveness refers to the features of a registered design that identify products or services as originating from a specific company. There are 2 types of  Distinctiveness – One is Inherent Distinctiveness and the other is Acquired Distinctiveness. In the Adidas –Shoe Branding Europe case, Adidas could not prove Acquired Distinctiveness.

Now, let’s see the table below regarding spectrum of distinctiveness, to understand the concept of distinctiveness and how it is used in the present Adidas case.

When we see the spectrum of distinctiveness, we see fanciful and arbitrary marks are inherently distinctive, that is no secondary meaning required to give protection to these marks. But in case of descriptive marks, they do not qualify for legal protection unless they acquire something called “secondary meaning.” A descriptive term has a secondary meaning only if and when the public comes to associate that term with that particular company. So, an optometrist’s office titled “Vision Center” would not be granted federal protection unless that phrase has become uniquely associated with that particular company.[1]

By applying the above logic in the case of Adidas-Shoe branding, the 3 strip mark of Adidas had not acquired the secondary meaning, that is consumers in all the European region did not associated the 3 strip mark with Adidas. By seeing the 3 strip mark, immediately Adidas does not come to their mind. Thus acquired distinctiveness could not be proved.

CONCLUSION

To conclude we can say that the legal Battle between Adidas and Shoe Branding Europe is one of the longest legal battles concerning the 3 strip mark of Adidas. When Adidas won the case against shoe branding Europe regarding similarity of both the companies marks, where shoe branding 2 strip mark was shown similar to Adidas 3 strip mark, the shoe branding Europe company decided to file a case regarding the registrability of Adidas 3 strip mark and the result of which is the acceptance of the 3 strip mark as trademark is removed/taken back by the General Court of European Union. Though Adidas can appeal to the highest Court of European Union regarding this decision. The author feels this decision can affect sales of Adidas as now other companies can use the 3 strip mark on their products and people can get confused regarding the origin of such products. Proving acquired distinctiveness is the important thing to prove in European Union if Adidas wants to protect its 3 strip mark in EU.

Author: Purnashri Das , Intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at Ankit Kumar ankit@iiprd.com.

References:

[1] Adidas loses three-stripe trademark battle in European court, June 19 2019, The Guardian, https://www.theguardian.com/law/2019/jun/19/adidas-loses-three-stripe-trademark-battle-in-european-court, accessed on 21^st June 2019

[2] Andrew Parrish, Shoe Branding Europe BVBA shirts parallel stripes CTM,18^th January,2016, IP white Board, https://ipwhiteboard.com.au/wrong-side-of-the-line-more-absolute-grounds-rejections-for-stripe-marks-of-k-swiss-inc-and-shoe-branding-europe-bvba/shoe-branding-europe-bvba-shirts-parallel-stripes-ctm, accessed on 21^st June 2019

[3] Adidas has been battling over the right to Stomp out Another Brand’s 2-stripe trademark, Fashion Law, March 2 2018, www.thefashionlaw.com/home/adidas-has-been-battling-over-the-right-to-stomp-out-another-brands-2-stripe-trademark, accessed on 21^st June,2019

[4] Ibid

[5] Alberto Bellan, March 2, 2016, Of stripes, positions, and shoes: CJEU’s decision in Adidas three-stripe case, The IPKat, http://ipkitten.blogspot.com/2016/03/of-stripes-positions-and-shoes-cjeus.html, accessed on 21^st June 2019

[6] Supra 3

[7] Adidas AG v. Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM), Judgement of the General Court (7^th Chamber) 21 May 2015, Case T‑145/14

[8] Supra 5

[9] Supra 3

[10] Adidas loses EU bid to extend three-stripe trademark, June 19, 2019, Reuters, https://uk.reuters.com/article/uk-eu-court-adidas/adidas-loses-eu-bid-to-extend-three-stripe-trademark-idUKKCN1TK0PR, accessed on 21 June 2019

[11] ibid

[12] The Lanham Act has codified this fundamental legal principle. See Lanham Act § 2(e)(1), Ibid

[13] David Scalise, JD, Alexa Koenig, JD, MA and Brandon Carr, JD, The Quest for Distinctiveness in Trademark and Trade Dress Law, Graziadio Business Review, https://gbr.pepperdine.edu/2011/02/the-quest-for-distinctiveness-in-trademark-and-trade-dress-law, accessed on 21 June 2019

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