The odd spectacle of courts in different countries coming to opposite conclusions on the same set of facts emerged recently in South Africa, when Adidas’ trademark infringement action in the Western Cape High Court failed to protect its well-known three-stripe logo against defendant Pepkor, which used a similar four-stripe design on its shoes.
The Adidas mark consists of three identical and equidistant lateral stripes running parallel to each other along their shoes. The Pepkor mark shared these characteristics, with the exception of having either two or four stripes.
Adidas argued that the public would be confused by these two products and submitted survey evidence showing that many respondents interviewed had identified the Pepkor shoes as being those of Adidas. Pepkor, on the other hand, argued that it used the two/four-stripe designs as mere decorations.
The court referred to the substantial exposure enjoyed by Adidas products, holding that consumers were sufficiently discerning to be able to distinguish easily between Adidas’s stripes and Pepkor’s two or four-stripe designs.
The essential part of the ruling was that Adidas does not have a monopoly in parallel stripes of an equal width and distance on the surface of shoes, irrespective of the number of stripes used or their established recognizable usage. In addition, Adidas had never registered two or four-stripes as trademarks.
Ruling of the US court
This ruling stands in stark contrast to decisions on similar facts elsewhere in the world. In the Payless case, for example, decided in the US state of Oregon, Adidas successfully sued over the use of two and four-stripe marks. It is interesting to compare the American court’s view with that in the Pepkor case. In the former, the court considered confusion was likely because:
“Although three stripes obviously do not equal four stripes, the issue is not simply the number of stripes. Instead, the issue is whether the total effect of the allegedly infringing design is likely to cause confusion in the minds of an ordinary purchaser. While there can be no debate that defendants’ four stripe mark has one stripe more than Adidas’ Three Stripe Mark, so too there can be no debate that many of the other features of the stripes displayed on defendants’ [shoes] are strikingly similar – if not identical – to the features of the Three Stripe Mark displayed on [Adidas’] Superstar IIK and Campus II models…. “The stripes are equal in size, are placed equidistant at a similar or identical angle, are in substantially the same location between the sole and the reinforced area which supports the shoelace holes (with the necessary adjustment to accommodate four rather than three stripes), are displayed in colors which contrast with the background color of the shoes, and have serrated edges. Thus, this court cannot simply count the number of stripes and determine as a matter of law that four stripes are not confusingly similar to three stripes.”
Interestingly, damages in the Payless case were assessed at $305 million, one of the highest awards to date.
The European approach
Courts in Europe leave more room for escape to would-be infringers. In the Salomon-Adidas v Fitnessworld case, the Court of Justice of the European Union adopted the approach that if a trademark is viewed as decorative by the public, that, in itself, will not be an obstacle to obtaining protection. However, where the mark is viewed purely as an embellishment and not as an indication of origin, with no link to the registered mark, there will be no infringement.
In the Adidas v Marca Mode case, the court stressed the need to keep certain motifs available for use in the trade, in particular stripe motifs, which are widely used on sports and leisure clothing by numerous traders. Despite this, the court held that competitors of Adidas should not be allowed to use striped logos which are confusingly similar to Adidas’s. A balance should therefore be struck between confusing similarity and the principle that traders should be free to use common or descriptive indications.
The court in the Marca Mode case also made the important observation that the increased fame of a mark usually goes hand in hand with the desire by other traders to use similar marks. This, in turn, may have a negative impact on the distinctive character of the mark and may jeopardize its essential function, namely the ability to ensure that consumers know where the trademarked goods come from.
The European Court’s approach is therefore to establish whether the defendant’s use could harm the mark’s ability to indicate the origin of the plaintiff’s products, which would be the case where a material link is seen to exist between the parties’ respective products.
Against this background, a shoe with either two or four stripes could be regarded as having purely decorative patterns, and its use would then not be infringing.
The Pepkor case has created a seemingly paradoxical situation where a famous mark qualifies for only limited protection by very reason of the fact that it is famous. Although Adidas’ three-stripe logo has for many years received massive consumer exposure around the world, otherwise similar two or four stripe-patterns used by competitors apparently fall outside the monopoly granted to Adidas. In other words, as matters stand, the act of a third party will not be considered to be infringing unless the mark is reproduced exactly. This has the effect of making Adidas very much a victim of its own success. It will be interesting to see if the decision will be appealed.
Ilse du Plessis is a director at Edward Nathan Sonnenbergs (ENS) and currently practises as an attorney in the intellectual property department
Wim Alberts is a professor at the University of Johannesburg and a special IP counsel to ENS
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