Adidas loses battle of the stripes in trademark infringement lawsuit

Intellectual Property /
John Simpson
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By Tony Poland, LegalMatters • Adidas’ recent Dutch Supreme Court loss after a 25-year trademark infringement fight with international clothing company H&M illustrates how owning a famous logo can be a “double-edge sword,” says Toronto intellectual property lawyer John Simpson.

The Dutch court refused to hear the multinational sportswear company’s appeal of an earlier decision that found H&M’s use of two stripes did not infringe on Adidas’ iconic three-stripes logo.

Simpson, who was not involved in the case and comments generally, tells LegalMattersCanada.ca there are “two interesting points to note in this case.”

“The first is the fine line between decorative designs and designs that are used to function as trademarks,” he says. “The second is how in some cases, having a really famous logo can be a double-edged sword when it comes to enforcing the rights to it. 

“There is a benefit to being famous, of course. However, when a trademark is so famous, it can be more difficult to prove that a likelihood of confusion exists between it and another brand. That is because consumers are so conditioned to seeing the original that they can differentiate the differences in others. With a less-famous trademark, it can be easier to prove the likelihood of confusion.”

Trademark law helps firm protect its goodwill, reputation

Simpson, principal of IP and new media law boutique Shift Law Professional Corporation, says trademark law is partly about consumer protection, helping consumers identify the source of the goods they are purchasing. It is also about helping company’s protect their goodwill and reputation in the marketplace.

Adidas filed suit in 1997, claiming that the two stripes used in H&M clothing was likely to confuse the public about the source of the products. However, H&M argued that the stripes were not meant to serve as a trademark and were purely decorative.

Simpson says another brand’s use of stripes on clothing is not enough in itself to prove trademark infringement.

“It’s likely people would look at the stripes on the clothing and say it reminds them of Adidas,” he says.  “However, that is not sufficient to prove infringement. If you are suing for infringement of your trademark rights in stripes, you must prove that the stripes identify you as a trade source and that the infringer’s stripes are confusing customers about the source of the infringer’s products. If your stripes are registered as a trademark and you are famous for them, then you could also sue for infringement on the basis that the infringer’s stripes are depreciating the value of the goodwill in your stripes by diluting their distinctiveness. 

For H&M, the main challenge is getting past the fact that the average person would look at the product in question and be reminded of Adidas, says Simpson.

Must demonstrate they are not riding on Adidas’ coattails

“They would have to demonstrate that they are not riding on Adidas’ coattails or trying to,” he says. “The challenge for Adidas is that with being so famous it makes consumers more attuned to slight differences, such as the use of two stripes.”

While there is little doubt Adidas’ three stripes is instantly recognizable as a trade source, it would be unfair to preclude other brands from using stripes on their products in a purely decorative way, says Simpson.

“For good reason, courts are reluctant to grant monopolies over certain forms of expression, such as putting stripes on an article of clothing,” he says. “Courts have recognized it is important to limit the scope of trademark rights in things like stripes and colour schemes. Yes, Adidas has an exclusive right to use three stripes. But you cannot let that creep to the point where anyone who puts a single, double or quadruple stripe on any article of clothing is infringing on Adidas’ rights.” 

For this reason, says Simpson, “Adidas must demonstrate it is using its stripes design as a trademark and not just as something decorative. It’s not just about how the infringer uses it but it’s how Adidas uses those stripes as well,” he says. “When you have a logo incorporating something such as stripes, it can be more difficult to prove that it is an indicator of source than a design like the Nike swoosh for example. 

‘The Nike swoosh is not just a decorative thing’

“The Nike swoosh is not just a decorative thing. Even in a vacuum without decades of having been conditioned to it, the average consumer could look at something like that swoosh and likely be able to see that it is a trade source indicator and not just decoration. Whereas stripes, not necessarily.”

Simpson says Adidas “needs to constantly reinforce the connection between its stripes and their use as a trade source.”

“From a trademark law perspective, it involves more than simply putting stripes on the articles of clothing,” he says, “They have to constantly reinforce that connection through advertising and little things that might seem inconsequential such as product hang tags to show that it not just shirt with a cool design on it or shoes with three cool stripes, it’s an indicator of source.

“They must prove it is not just their intent to use the stripes as a trademark, but that consumers see it that way so they need to be very consistent in what they do,” Simpson adds. “They have to make it clear that they are not just a company that sells many things with stripes on them. It comes down to consistency, and reinforcing that association which is harder to do with something like stripes than it is with a swoosh.”