Adidas is stepping up its fight against Russian counterfeits by targeting two large-scale footwear retailers in country. Fakes of international sports brands have long been a disruptive issue in Russia's open markets and unorganized trade, but some of the latest trademark claims involve established retailers.
Adidas filed a new lawsuit a few days ago against a large-scale Russian shoe retailer, Centrobuv, in a federal court in Moscow, demanding five million roubles (about €125,000) for infringement of the Three Stripes trademark, double what it had requested before. A preliminary hearing on the case is reportedly scheduled for March 10.
Adidas has also taken action against Alba, another Russian shoe retailer that produces the shoes it sells. It is accusing both companies of selling shoes bearing signs identical or confusingly similar to its well-known Three Stripes trademark, but it has not been easy for the company to assert what it regards as its rights.
In 2009, Adidas won a half-victory in its case against Centrobuv, a chain of 335 stores, which was selling women's athletic shoes with diagonal stripes under the Centro brand. The merchandise was confiscated, but the Federal Arbitration Court of Moscow handed a fine of only 30,000 roubles (a little more than €700) against Centrobuv, although Adidas had demanded damages of 2.5 million roubles (about €61,500) against each of the two retailers. The Russian retailer was still unhappy with this tiny fine, but all of its appeals were rejected.
Unhappy with the court's ruling, Adidas then filed a civil claim for compensation and the court awarded it a higher penalty of 1 million roubles last November. Centrobuv‘s appeal against this sentence was also rejected by the Appeal Court. Adidas said its original claim of 2.5 million roubles for material compensation had been adequate at the time, but this time it is asking for double the amount because of alleged repeated offenses by Centrobuv.
While Adidas had mixed success in its claims against Centrobuv, it lost two lawsuits last year against Alba because the court felt that customers would not be confused into thinking that its shoes were from Adidas. That case involved about 400 pairs of shoes, sold at the equivalent of about €100 each. Adidas has taken the matter to an arbitration court, but the case is currently suspended pending an investigation requested by Alba.
The legal tussles come at a time when the Adidas group is enjoying robust growth in Russia. It is recovering from a tough time in the market, when it was hit by economic sluggishness and the devaluation of the rouble. The company's Russian business rapidly picked up again last year, generating double-digit sales growth for the Adidas group in the last quarters.
However, counterfeits remain a huge issue in Russia, since an estimated 50 percent of the footwear and apparel sold in the country are fakes. Since 2008 Adidas, which is the most popular sporting goods brand in Russia, has filed about 40 trademark cases in various courts, but Alba and Centrobuv are reportedly the first and only established retailers to be targeted by such claims from the German company. Most counterfeits in Russia are sold in open markets and other unofficial channels.
The development of managed retail space is part of the group's riposte against counterfeits. Since the economic slowdown, the company has made rapid strides in the expansion of its retail business in Russia and the CIS countries. The share of its wholesale sales in Russia was further reduced last summer when Adidas parted ways with one of its main retail partners, Sportmaster, because it could not agree on trading terms. It is still working with retail partners such as Tonad in Ukraine and Top League in Russia. At the end of 2010, Adidas Group had 739 stores operating under the Adidas and Reebok banners in the CIS countries, plus more than 250 selected retailers selling its products in their multi-brand stores.
