On June 27, 2008, K-Swiss Inc. reached a settlement agreement with Payless ShoeSource Inc., that required Payless to pay $30 million for trademark and trade dress infringement. “Trade dress” refers to the overall look of a product, in contrast to a trademark which refers to a specific insignia or logo on a product. 

Payless’s settlement agreement with K-Swiss comes on the heels of another high profile trade dress infringement suit filed by Adidas AG against the discount shoe chain. In that suit, Adidas alleged that Payless sold and marketed a number of shoes that infringed on its famous three-stripe logo as well as other design features of its shoes.

Specifically, Adidas argued that the Payless shoes featured two-stripe and four-stripe designs that were equal in size, equidistant from each other, and angled similarly to Adidas’s famous three-stripe design. The designs of the Payless shoes and the Adidas shoes were also in substantially the same location between the sole, heel, and laces of the shoe and in colors that contrasted with the background color of the shoes.

The overall effect of these design features resulted in Payless’s shoes appearing confusingly similar to Adidas’s famous three-stripe design. Payless conceded that some of its shoe designs had been modeled off of Adidas’s products, but contended that its use of the two-stripe and four-stripe logos, as opposed to Adidas’s trademarked three-stripe logo, absolved the company from any liability for infringement. The jury disagreed, concluding that Payless had infringed on Adidas’s trademark and trade dress on several occasions. The jury awarded Adidas $304.6 million, including $127 million in punitive damages. 

Adidas                                     Payless

The picture above depicts one of the shoe designs that gave rise to Adidas’s suit against Payless.

The effects of the judgment have reverberated throughout the industry. Just two days after the jury verdict against Payless, Kmart reached an undisclosed settlement with Adidas in a similar suit. Adidas’s  counsel said of the dispute, “You can be assured that Adidas wouldn’t settle any case pursuant to terms where someone could produce athletic shoes with two parallel stripes; four stripes even more so.” Further, Adidas has supported this aggressive rhetoric by filing over three dozen suits against various distributors. One suit against Wal-Mart Stores, Inc. is set for trial on October 6, 2008. If Adidas wins, that success would strongly enhance the position of name-brand shoe manufacturers in future trade dress litigation.

Adidas’s recent success and the potential for future victories should concern other companies in the shoe industry. Shoes closely modeled after or very similar to Adidas’s products have come under strict scrutiny by the company. Use of similar striped logos may be enough to initiate infringement actions and, accordingly, companies should take particular caution to avoid mimicking the overall look of Adidas’s products.

The photos above feature the Adidas “Superstar” shoe next to the version produced by Payless. Beyond the similarities in the stripe logos, the Payless shoe copied the Superstar’s rubber “shell toe,” flat sole, and colored portion of the back heel. When taken together as a whole, jurors were persuaded that the copied design features constituted trade dress infringement.

Similarly to Adidas and K-Swiss, Asics Corp. has stepped up enforcement efforts against competitors for trade dress infringement. Asics’s efforts have been less successful than Adidas’s, particularly in its recent suit against Skechers. There, the court denied Asics’s requests for a preliminary injunction, noting substantial logo and design differences between the Asics and Skechers shoes. The photos below tend to support the court’s decision and shed some light on how manufacturers can avoid trade dress infringement suits. Note the differences in the logo and the clear variation in the overall design of the shoes.

  
Asics                            Skechers

However, Asics has fared better in other trade dress infringement litigation. In its ongoing dispute with Steve Madden Shoes, Asics has elicited favorable settlement agreements from its competitor. Additionally, Asics recently filed another complaint against Steve Madden alleging intentional infringement of Asics’s shoe designs and violations of prior settlement terms and conditions. If Steve Madden is found to have willfully and repeatedly violationed Asics’s designs, a jury may award compensatory damages as well as punitive damages.

These suits suggest that shoe companies should exercise caution when introducing new designs into the market. Significant alteration of a trademarked logo may not be sufficient to overcome an allegation of trade dress infringement, if the overall look and features of a shoe mirror a competitor’s product. 

Arent Fox is continuing to monitor these cases for further development. For more information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Matthew R. Mills
mills.matthew@arentfox.com
202.715.8582

Loni J. Sherwin
sherwin.loni@arentfox.com
202.715.8581