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Trade Mark Dilution: A Case to be Looked Upon

09

MAY

2022

Adidas is a leading manufacturer of athletic apparel and footwear. Skechers is one of the largest footwear companies in USA and is a competitor of Adidas in the footwear and apparel market. Adidas sells variety of shoes with different designs and features. One of its most successful shoes has been the Stan Smith, becoming its top-selling shoe of all time. Adidas filed the present lawsuit against Skechers in 2015, alleging, among other things, that Skechers’ Onix shoe infringes on and dilutes the unregistered Trade dress of Adidas's Stan Smith shoe. Adidas is primarily known for its three-stripe mark and it owns a trademark registration for it as well. Adidas alleged that Skechers's Relaxed Fit Cross Court TR infringes and dilutes adidas' Three-Stripe trademark. Adidas filed for a preliminary injunction on sale of both Onix and Cross Court.

[Picture Credit: gettyimages]

Judgment

The district court issued a preliminary injunction prohibiting Skechers USA, Inc. from selling its Onix and Cross Court shoes. The Court of Appeal herein upheld the district court’s ruling of injunction for sale of Onix shoes, but it reversed the order issuing injunction to Skechers's Cross Court shoe which alleged to be infringing Adidas’s Three-Stripe mark.

Skechers contested over two of the three essentials to prove unregistered trade mark infringement, first with respect to secondary meaning, and other on the likelihood of confusion between the plaintiff's and defendant's products.

“Secondary meaning and likelihood of buyer confusion are separate but related determinations….” Levi Strauss & Co. v. Blue Bell, Inc., 632 F. 2d 817, 821 (9th Cir. 1980). “Some of the relevant factors for determining secondary meaning include the exclusivity, manner, and length of use of the trade dress, the amount and manner of advertising, the number of sales, and proof of intentional copying by the defendant”. Art Attacks, 581 F. 3d at 1145.

The district court, after reviewing ample evidence, inferred that the Stan Smith shoes have indeed acquired a secondary meaning for its product wherein people specifically associate the Stan Smith shoes with Adidas.

Discussing the issue of confusion between the two shoes, the Court reiterated the “Sleekcraft factors” which says, “Likelihood of confusion in the trade dress context is evaluated by reference to the same factors used in the ordinary trademark context[:] strength of the trade dress, similarity between plaintiff's and defendant's trade dress, evidence of actual confusion, marketing channels used, type of goods and likely degree of purchaser care, and the defendant's intent in selecting its trade dress.” AMF Inc. v. Sleekcraft Boats, 599 F. 2d 341, 348—49 (9th Cir. 1979).

The court observed that the similarity between both the products are very apparent as they both share the same white leather upper, a raised green mustache-shaped heel path, angled stripes with perforations, the identical defined stitching pattern around the perforations, and a flat white rubber outsole, with only minor differences being the company logo. What needs to be determined here is whether the shoe when looked in totality creates an impression of being the Stan Smith shoes. The district court based on the evidence had opined that Skechers's Onix shoe infringes on adidas's Stan Smith, which the Court herein does not averts.

Skechers contested that there is no likelihood of irreparable harm. Over this the court observed that if there is “evidence of loss of control over business reputation and damage to goodwill”, it is likely to constitute irreparable harm provided it is backed by substantial evidence. The district court had found the Onix shoe to cause irreparable harm to Adidas’s brand reputation and goodwill based on which it granted the preliminary injunction. Adidas had provided evidence of a survey to show that a good percentage of people believed that Skechers’ Onix shoes were made in association with Adidas. The court thus upheld district court’s decision.

The next point of discussion was Skechers’ Cross Court shoes and Adidas’s Three Stripe mark. The court herein observed that both the shoe designs have similarities with only slight differences and that “Similarities are weighed more heavily than differences” especially when the products in question are closely related as it is in this case. In such cases a diminished standard of similarity is applied.

Both conceptual and commercial strength must be weighed while determining which one is the stronger mark. While a mark's conceptual strength is proportional to the mark's distinctiveness, its commercial strength is based on actual marketplace recognition. The district court had held that Skechers had intended to deceive public regarding the source of the shoe. The court, in this case, upheld the district court’s finding that adidas showed a likelihood of success on its trademark infringement claim.

Trade mark Dilution- “Dilution is ‘the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of— (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception.’” Nissan Motor Co. v. Nissan Compt. Corp., 378 F. 3d 1002, 1011 (9th Cir. 2004) (quoting 15 U.S.C. § 1127). To establish dilution, “a plaintiff must show that (1) the mark is famous and distinctive; (2) the defendant is making use of the mark in commerce; (3) the defendant's use began after the mark became famous; and (4) the defendant's use of the mark is likely to cause dilution by blurring.” Jada Toys, Inc. v. Mattel, Inc., 518 F. 3d 628, 634 (9th Cir. 2008) (citing 15 U.S.C. § 1125(c)(1)).

The court in majority held that the preliminary injunction of Cross Court shoe was erred on the ground that there was no evidence to support the district court's determination that adidas was likely to suffer irreparable injury. However, the injunction of the Onix shoe was upheld.

Author: Saransh Chaturvedi (Advocate, LLM (IIT Kharagpur) – an associate at Khurana & Khurana, Advocates and IP Attorney, in case of any queries please contact/write back to us via email saransh@iiprd.com.

About the Firm

Khurana and Khurana, Advocates and IP Attorneys
Address E-13, UPSIDC, Site-IV, Behind-Grand Venice, Kasna Road, Greater Noida - 201310, UP, National Capital Region, India.
Tel 91-120-4296878, 91-120-4909201, 91-120-4516201
Fax 91-120-4516201
Email info@khuranaandkhurana.com
Link www.khuranaandkhurana.com

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