Adidas and Nike. Rivals in sportswear. But now both face significant trade mark problems within a few hours of each other.
Earlier this week the EU General Court gave judgment invalidating Adidas’ signature three-stripe trade mark. Meanwhile, Nike once again found itself in hot water regarding the apparent appropriation of one of its star sponsored athletes’ signature trade marks. The common thread? Brand owners, not just those in sportswear, should take note that no matter how iconic or high-profile the brand, overstretching oneself can lead to consequences in court – whether a court of law or the court of public opinion.
Three stripes and you’re out
For over a decade, Adidas has been locked in a series of disputes in relation to the trade marks protecting its three stripes logo, arguably the signature element of the entire Adidas brand. As far back as 2007, Adidas managed successfully to assert its EU figurative trade mark (for three equally-sized and -spaced near-vertical stripes applied to the side of various sports and leisure goods in a contrasting colour) in a trade mark infringement claim against H&M.
Perhaps emboldened by this success, Adidas proceeded in December 2013 to apply for a trade mark for three stripes. But it did not specify where on the garment such stripes would appear or in precisely what form. The application succeeded and was registered in May 2014, in the following form:
The (optional) description attached to the trade mark reads: a sign consisting of “three parallel equidistant stripes of identical width, applied on the product in any direction” for clothing and footwear. Clearly, this registration was significantly broader than the one relied on by Adidas in 2007.
Enter Shoe Branding Europe (SBE), a Belgian company. It owns several sports brands, including Patrick.
Adidas had previously managed to invalidate SBE’s trade mark for two stripes (slanting in the opposite direction to Adidas stripes, and featured on Patrick products) on the basis of Adidas’ earlier rights in three stripes. In a possible tit-for-tat move, SBE applied to invalidate Adidas’ 2014 registration due to an alleged lack of distinctive character. Following a judgment from the General Court that was released on the 19 June 2019, Adidas’ luck appears to have run out.
The General Court upheld earlier decisions of the EU Intellectual Property Office (EUIPO) Cancellation Division and Board of Appeal (which concluded that the mark lacks both inherent and acquired distinctiveness) for the following reasons:
1. Adidas had argued that the mark was intended to be a pattern and not a traditional figurative mark. Had Adidas succeeded with this argument, it would have been easier to prove that use of the mark in a different form to the registered form would “count” for the purposes of acquired distinctiveness (see below).
The General Court rejected this argument as the mark had been registered as a figurative mark with no indication that it should be interpreted in any other way.
2. Much of the evidence that Adidas had provided to the EUIPO in order to prove use of the mark for the purpose of acquiring distinctiveness was rejected by the EUIPO because the forms of use of the mark differed from the registration itself.
Adidas had argued that this evidence should not have been rejected, given the rule of permissible variations. That is, if a trade mark is used in a manner which differs immaterially from the form in which it is registered, such use should “count”. The General Court rejected this argument on the basis that because the trade mark is extremely simple, even a slight difference could alter the distinctive character of the mark. This was bad news for Adidas, because it transpires that its stripes appear on its products in quite a range of widths, spacings, orientations and colours.
3. Even if Adidas had managed to persuade the General Court that the variations in the form of use were permissible, the General Court gave a withering assessment of the quality of the evidence produced by Adidas to prove acquired distinctiveness through use. The evidence included 23 market surveys, of which only five were relevant. The remaining 18 surveys concerned different versions of the three stripes to the one registered, and even the five admissible surveys were flawed (for example, they used leading questions) and inconclusive. Given that it is now quite well established that to demonstrate that an EU trade mark has acquired distinctiveness one must prove this in each and every Member State, Adidas was always going to struggle to overturn the EUIPO’s decisions. The poor quality evidence was…well, the third strike.
KLAW back of trade marks from Nike?
Last year when Roger Federer walked onto Centre Court of Wimbledon wearing clothing from his new sponsor, Uniqlo, his “RF” logo was not located on any of the kit (other than his trainers, which were still made by Nike). Why?
During Federer’s time partnered with Nike, the sports brand registered trade marks for the RF monogram for clothing and footwear in various countries across the world. When the partnership ended, Nike retained ownership of the trade marks. Therefore, legally, in the absence of a commercial agreement between the parties, Roger Federer’s new sponsor could not use Federer’s own logo on his own co-branded kit without risking trade mark infringement. Federer, who can still use his full name and signature freely for branding purposes, has been quoted as saying that he hoped Nike would assign registrations for the logo to him. The latest news seems to be an impasse: Nike has stopped selling RF-branded clothing (presumably due to loss of the contractual right to do so) but, despite reports in April 2019 to the contrary, Nike remains the registered owner of the marks (at least in the UK and EU). Needless to say, this stance was unpopular among tennis fans, and of course with Federer himself.
More recently, Kawhi Leonard, a basketball player for the Toronto Raptors (winners of this year’s NBA Championship Series), has filed a lawsuit in California against Nike over his personal logo, KLAW. Leonard alleges that Nike has fraudulently copyrighted the logo, even though Leonard has since switched sponsors from Nike to New Balance.
The KLAW logo is styled on the player’s hand, his initials KL and the shirt number he has worn for most of his career, 2. Leonard claims that as part of an endorsement deal, he permitted Nike to use the logo on certain merchandise. Unbeknown to Leonard, however, Nike subsequently registered the copyright of the logo and, according to Leonard, falsely represented that the logo was Nike’s design. (Unlike the UK, the US operates a system of copyright registration.) This case has yet to be heard but, as in the Federer dispute, the court of public opinion has been critical of Nike for not releasing the player’s logo when he switched to his new sponsor, New Balance.
Take home points
1. From Adidas, it can be seen that the simpler and less inherently distinctive a figurative registered trade mark is, the harder the brand owner will have to work to prove acquired distinctiveness. Not only will the owner need to provide extensive evidence covering all EU Member States (in the case of an EU trade mark), but the evidence must demonstrate that the mark which has acquired the distinctiveness is – more or less – identical to the mark on the register.
2. Along with the recent judgment in which a McDonalds’ trade mark for BIG MAC was invalidated, the Adidas judgment suggests that the EU registry and courts are taking an increasingly tough line with famous brands and famous marks. One cannot simply assert fame: this must be proven in evidence, where necessary. That said, brand owners should not be dissuaded from attempting to register challenging marks. The rewards are significant. For example, depending on circumstances, it might be possible to avoid the need to prove confusion and/or to focus an infringement claim on a small but important part of a product. Both advantages can make a claim against a lookalike product significantly easier. It is however always important to consider the interplay between the form in which a trade mark is used and the form in which it is registered.
3. From both the Adidas judgment and the position in which Nike finds itself, it is clear that perception of the branding assets that a brand owns can be over-optimistic, and this might be revealed in the cold light of a dispute. It is never the wrong move to be forensic in analysing one’s branding portfolio. Calculated risks sometimes pay off, but the court of public opinion can sometimes be damning in the case of overreach (and do more damage than the branding asset itself might deliver).