New beginnings for Adidas and its protection of the three stripes

You probably thought that the Adidas saga reached its end with last year´s European Court of Justice (ECJ) ruling (case C‑396/15 P, summary). As it seems, the reality is different. In fact, with the latest EUIPO decisions on the three stripes, in all likelihood, we are at yet another beginning.

Background of the case

Adidas has been sporting their three stripes since their early days in 1949. Even the founder, Adolf Dassler, referred to the company as “the three stripe company”. However, IPOs around the world have been harder to persuade and the cases usually reached national and international courts. In 2016, the ECJ ended a six-year old battle between Adidas and their competitor Shoe Branding Europe BVBA, giving recognition to Adidas´ three-striped shoes.  Stating that the popular decoration has acquired distinctiveness through years of use, the decision meant a halt to the production of all sneakers with anything from two to five stripes. 

However, the recent case in front of EUIPO´s Board of Appeal might be in discord with this ruling. On 21 May 2014, Adidas registered a figurative mark (EUTM no: 012442166), with the description of “the mark consists of three parallel equidistant stripes of equal width applied to the product in whatever direction”. Their aforementioned rival Shoe Branding Europe contested the mark in December 2014, claiming that the trademark is indistinctive and incorrectly registered, with its description pointing to a position, and not a figurative trademark. Adidas responded that their claims against Adidas were contradicting and baseless, as Shoe Branding itself filed for registration of several two-striped trademarks. In addition, they offered sales figures, advertisements and surveys showing enhanced recognition among sportswear buyers throughout Europe. Nevertheless, EUIPO´s Cancellation Division was not convinced (decision 10 190 C of 30 June 2016). Firstly, they dealt with the topic of the nature of the sign. Due to the confusion the description was causing, the Division was of the opinion that the trademark should not have been registered in the first place. As it was registered, and as a figurative mark, only the sign strictly matching its graphical representation ought to be taken into consideration (meaning “in all positions” part is invalid). Talking about the enhanced distinctiveness, the Cancellation Division stated that the three lines would most likely go unnoticed with most of the consumers, let alone be connected to a specific producer. Labeling them as “banal”, they thought they should be open for use for their competitors as well. The Division made an interesting remark on what might change the simplicity of the mark, and consequently, their opinion. Stating that if the lines were put in front of a different-colored background, or within a geometrical figure, that that might be the deciding element in catching the consumers´ attention. The question that comes to mind is whether that really makes a difference? For example, if the stripes were within a rectangle, would the consumers suddenly connect the lines to Adidas, if they previously have not? Would the color of the background really enhance the recognition rate, compared to the rather famous stripes? The answer to these questions is connected to the next paragraphs of the Division´s decision, tackling the acquired distinctiveness. The Cancellation Division was questioning if the “considerable sums of money invested by the EUTM proprietor in the Adidas brand, or the colossal sales achieved under the different Adidas trade marks (and name), translate into public recognition of the mark in question”. Skeptical, they invalidated Adidas´ trademark.

Decision of the Board of Appeal

Adidas appealed the Division´s decision (decision R 1515/2016-2 of 7 March 2017), claiming that an abundance of evidence showed the lines exactly as graphically represented and, even if the stripes were oriented differently, that would not change the distinctive character of the mark. Also, they pointed out the Division´s indifference, or even a negative attitude, regarding the evidence of enhanced distinctiveness.

The first remark the Board of Appeal made was about the nature of the mark. The controversial wording “in any position” was considered as the liberty of the trademark owner to place the mark on the product as they seem fit. Therefore, they did not share the Division’s opinion of the lines being a position trademark. They continued on to the core questions, whether the trademark was present on the offered evidence and if it had gained enhanced distinctiveness. They discarded all the evidence showing white stripes on a black or colored background, as, in their opinion, they represented two stripes on a white background, instead of three, thus significantly deviating from the graphical representation.

As for the other evidence, mainly showing the stripes accompanied by the word “adidas”, it was rejected on the grounds of serving as a decoration to the word. The Board´s disbelief of the mark being correctly used as a trademark resulted in diminishment of the value of turnover figures. Accompanied by their doubt that the relevant public associates the stripes with Adidas, especially on an EU-wide level, they considered the trademark as devoid of a distinctive character, be it inherent or acquired, upholding the Cancellation Division’s decision in its entirety.

Comment: It is yet to be seen if Adidas is going to take this case to the European General Court. Given their current record, it would not be unperceivable. We will keep you up to date with all the twists and turns of the Adidas saga.