I explained earlier how German shoe company Adidas owns stripes. Now the hip shoemaker continues its Battle Against All Bands, emboldened by a $305 million verdict against the parent company of Payless ShoeSource. Last week, Adidas filed a lawsuit against five Los Angeles shoe sellers. Lead defendant Wah Lei Footwear received a letter insisting that it stop selling a particular shoe with four stripes, and warning it must stop selling "any other footwear bearing two, three, or four parallel stripes in a manner likely to be confused with the Three-Stripe Mark," according to a letter Adidas lawyers sent last year and attached to their complaint. (emphasis mine)
The Kilpatrick Stockton attorneys leading this putsch against parallelism revealed their legal theory in the July issue of IPLB ("Inside IP," not online).
"No one goes into a Payless store, tries on a four-striped shoe, buys it, goes home, opens it, and says 'Oh my gosh, this isn't Adidas,'" Adidas lawyer William Brewster said.
Rather, the Adidas trademark was infringed because of "postsale" confusion and "initial interest confusion." In this case, we're told that initial interest confusion would occur "if a consumer sees a shoe in a store window, thinks the shoe is Adidas, realizes that it isn't Adidas, but buys the shoe anyway." Initial interest confusion can occur even if it does not result in a purchase, according to Brewster.
More from the story:
A status-conscious consumer would suffer from postsale confusion if he saw many other people wearing similar-looking Payless shoes, and, believing the shoes to be Adidas, no longer desires a pair. A consumer could also suffer postsale confusion if he saw someone wearing a pair of lower-quality Payless shoes, and, believing the shoes to be adidas, attributes the poor quality to adidas, tarnishing the brand.
The claims of willfull infringement were supported by the discovery of smoking-gun e-mails. Payless executives described the allegedly infringing shoes as 'knockoffs' of Adidas shoes. Other e-mails record Payless employees instructing overseas manufacturers to closely imitate Adidas shoe features.
And that's how Adidas won $305 million—roughly two and half times their opponent's net income for all of 200, and the largest monetary award ever in a trademark case, according to the winning lawyers.
The new case is Adidas America, Inc. v. Wah Lei Footwear, et al., 08-04969-JW, C.D. California. Also named as defendants are Fu Ju Group Inc., L.A. Discount Shoes, Sunny Shoes Corp., and Top Shoes, Inc., all based in Los Angeles County. Lead counsel is Charles Henn, same lawyer who partnered with Brewster on the PayLess case.