After scoring a momentous victory against C&A, H&M and Vendex in the European Court of Justice (see SGI Europe no. 19-13+14 of April 18) in favor of its own Three Stripes logo, Adidas has won a lawsuit launched against an American shoe retailer, Payless ShoeSource, in a U.S. court in Portland, Oregon in November 2001. Adidas claimed that shoes sold by the chain with two or four stripes infringed on its logo and on the trade dress of its Superstar styles.
The jury awarded Adidas $305 million in the Portland case. The amount must be paid by Collective Brands, the new holding company that owns the chain. Matt Rubel, the former Nike group executive who runs Collective, indicated that it intends to take all the necessary steps to overturn the verdict in a court of appeals unless the Oregon court rules in its favors, or orders a new trial or reduces the level of the damages substantially. Calling it excessive and unjustified, he pointed out that the jury’s award was equal to more than 10 times the actual damages found in the case and more than 15 times the profit made on the sale of the infringing shoes.
Nevertheless, the share price of Collective Brands fell by 15 percent following the announcement of the ruling. Furthermore, two days after the verdict, Adidas settled a similar lawsuit levied in 2005 against Kmart, the big mass merchant owned by Sears Holding, cancelling a trial scheduled for next July. The terms of the settlement were not disclosed. Collective has a trial scheduled for July in a similar case brought against Payless by K-Swiss.
In the Three Stripes case in Portland, where the final hearings lasted three weeks, the jury was asked to consider "whether Payless used design features similar to the (Three Stripes) mark without the consent of adidas in a manner that is likely to cause confusion among ordinary consumers." It was asked the same question with regard to Payless' use of certain design elements of the Superstar such as its stylized shell toe cap, its flat sole and the colored portion of its heel.
In criticizing the jury’s verdict, Collective argued that Adidas had offered no evidence that it had suffered damages as a result of Payless’ action or that anyone who had bought a Payless shoe had believed it to be an Adidas shoe.
