Rube Goldberg Trademark Infringement: Adidas AG v Skechers USA Inc. — A lesson on why we need to learn from the EU

Trademarks and design rights are a woeful but combustible combination. Another day and another trademark infringement suit is commenced to circumvent the lack of effective design protection rights in the United States.  On September 14, 2015, Adidas America Inc., sued Skechers USA Inc. in the Federal District Court in Oregon alleging in a 35 page complaint that Skechers infringed the Adidas trademarks known as Stan Smith Trade Dress and Three Stripe Mark.[1]

There are both commercial and legislative reasons why Adidas apparently decided to continue to pursue enforcement of trade dress and design claims which should not be under the purview of the Lanham Act and trademark laws in the United States.[2] Commercially, one can speculate that the announcement in May 2015[3] that Skechers apparently became the number 2 player in the sports footwear market with prior number 2 Adidas “sinking” to number 3 did not sit well internally with Adidas.  Skechers leapt into second place with approximately 5% of the marketplace and Adidas sank to third with 4.6% of the United States share.[4]  Failure in the competitive marketplace must lead to post mortems; was the failure due to misfiring of the  marketplace position with cutting edge designs or fabrics, or was it due to various forms of unfair competition? From the perspective of the design team and middle managers, the latter response obviates any need to explain commercial marketplace failures.

However, the real failure lies with the present intellectual property regime surrounding fashion designs in the United States.  The European Model shows a way forward.  The European Union (“EU”) in its Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 (“Directive”) on the legal protection of designs required each member nation to:

  1. (P)rotect designs by registration, and shall confer exclusive rights upon their holders in accordance with the provisions of this Directive.
  2. A design shall be protected by a design right to the extent that it is new and has individual character.
  3. A design applied to or incorporated in a product which constitutes a component part of a complex product shall only be considered to be new and to have individual character:

(a) if the component part, once it has been incorporated into the complex product, remains visible during normal use of the latter, and

(b) to the extent that those visible features of the component part fulfil in themselves the requirements as to novelty and individual character.(Emphasis Added)

Simply put, a design is subject to protection if the design is novel, meaning that  it is new, has not been made available prior to publication and it must resonate with an informed consumer who would find it unique from other designs.  This makes business sense and ameliorates issues regarding knocking offs[5] let alone exact copying.   Registered designs are protected for the first term for five years and thereafter subject to extension for up to twenty five years.  Unregistered designs are protected for three years from publication. In addition to the EU protection, the Member States can create and enforce their own intellectual property protection structures[6].

In the United States no such regime exits. The most recent attempt at protecting fashion design  was introduced by Senator Charles Schumer by The Innovative Design Protection Act of 2012 (the “IDPA”). ( S.3523-112th Congress (2011-2012). Although woefully short of the Directive[7], it would have ameliorated the worst offenses.

That leaves designers with recourse to Rube Goldberg complaints which conflate intellectual property crafted and intended to connote source of goods to design protection.  Today a designer must look to trademark, patent[8] and copyright protection which effectively is not structured or intended to protect fashion designs.

Copyright protection protects original works of authorship fixed in any tangible medium of expression[9] and should be the obvious default for apparel design protection. But fashion designs are not protected by copyright law.  The reason is that clothing is considered by definition to be functional so it is a useful article and useful articles are not subject to copyright protection.[10]  While it is possible to secure copyright protection if one can show the design can be identified from and apart from the apparel, it is a functional high bar.

Trademark law seeks to apprise a consumer of the source of the goods. This means a unique, distinctive trade name or logo so there is no confusion as to the creator of the goods.  Trade dress protection goes to the overlook and feel of packaging that serves to identify source. The key in both of these frameworks is to identify who or what produced the goods. Style as to how that is done is not the concern. So long as a consumer, without confusion, can identify the source of goods based upon the trade name, logo or trade dress which has acquired secondary meaning[11], trademark protection is available. But a fashion design is not indicative of source otherwise every garment would be a trademark.

The paucity of United States fashion design protection encourages counsel to grasp at whatever arrows may be in the quiver of United States intellectual property rights to protect a perceived or actual misappropriation of an original design. So what to make of the Adidas case against Skechers? Adidas effectively is arguing that Skechers produced a “Stan Smith Kock Off,” a design copy,  and therefore infringed the Mark. Therein lies the Rube Goldberg quality of this case; Adidas complains of a design copy and brings a case based on source confusion.

First recall that trademark must connote source of goods.  Applying that concept to the Adidas case, one is factually befuddled when viewing the Stan Smith Knock Off and the Stan Smith Trade Dress Shoe. The Stan Smith Trade Dress Shoe replaces the Adidas three stripe mark with angled perforations which does not resemble a stripe. Looking at that design, it will take creative surveys and evidence to establish the secondary meaning by which the Stan Smith Trade Dress Shoe is associated with Adidas; to be clear if the Stan Smith Trade Dress Shoe had the Adidas Three Stripe Mark[12] the argument might be different. But that is not the case. So if the Stan Smith Trade Dress Shoe does not denote Adidas, it will take a leap of faith to find confusion with the Skechers shoe.

But most telling is the Complaint denomination of the Skechers shoe as the Stan Smith Knock Off.  Without belaboring it, knocking off has been seen as the creative engine of the fashion industry. A knockoff is not counterfeit wherein one affixes a trademark to confuse the actual source of goods.  In the Adidas Skechers case there is a close resemblance; but merely knocking off, as labeled in the Complaint, is not a violation of trademark law.

While this will be an interesting case to follow the real response from the legal and fashion community to address the paucity of existing fashion design protection in the United States and to converge with the regime existent in the EU.

[1] The Complaint also alleges infringement of the Supernova trademark which unlike the Stan Smith and Three Strip is not trade dress but a true trademark.

[2] The purpose herein is to address only the Federal trademark and Trade Dress Infringement and Trademark Dilution claims, not the related State and Common Law claims

[3] See Skechers Overtakes Adidas; Becomes No 2 in U.S. Footwear Zacks Equity Research Published May 20, 2015 here.

[4] Nike was and remains the Number 1 brand in the United States.

[5] See discussion below regarding the “Stan Smith Knock Off”

[6] For example see the French Intellectual Property Code  Artc. L 112.2. See Red Soles Aren’t Made for Walking: A Comparative Study of European Fashion Laws, 5 Landslide 6, available here.

[7] The IDPA only protected against intentional, deliberate copies that are “substantially identical.” This language is a potential bonanza for the Intellectual Property  litigation bar.

[8] 35 U.S.C.A. § 171 Design Patents are theoretically available but due to the extended time necessary to secure the same, cost and the burden of proving that the design is novel or nonobvious, they are rarely deemed a useful vehicle.

[9] 17 USCA §102

[10] 17 U.S.C. § 101

[11] For background on trade dress and secondary meaning see 1 McCarthy on Trademarks and Unfair Competition §8:5 (4th ed.); TarfFix Devices, Inc. v. Marketing Displays, Inc. 532 US 23, 58 USPQ2d 1001 (2001)

[12] The three stripes have acquired secondary meaning and are ineluctably associated with Adidas

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