All tied up

November 01, 2018
Patterson Thuente IP

Court splits over trade dress, trademark claims

In 2013, the Ninth Circuit Court of Appeals ruled that a trademark holder seeking a preliminary injunction after filing suit against an alleged infringer must establish the likelihood of irreparable harm, rather than relying on a presumption of harm. Not until this year, though, has the court elaborated on the kind of proof required. Its recent ruling sheds light on what does — and doesn’t — demonstrate irreparable harm.

On the run

Adidas America, Inc., is a manufacturer of active footwear and apparel. The “Stan Smith” has been one of adidas’ most successful shoes since its release in the 1970s. It has received extensive media coverage, and the company has sold more than 40 million pairs. Adidas also is known for its federally registered Three-Stripe trademark, which it has featured on products for many years as part of its branding strategy.

Adidas sued its competitor Skechers for infringement. It alleged that Skechers’ Onix shoe infringed the unregistered trade dress on the Stan Smith and that Skechers’ Cross Court shoe infringed the Three-Stripe trademark. Before trial, the district court issued a preliminary injunction prohibiting Skechers from selling shoes that allegedly infringe the trade dress and trademark.

Among other things, a plaintiff seeking a preliminary injunction must establish that it’s likely to suffer irreparable harm in the absence of the injunction. Skechers appealed the preliminary injunction, arguing in part that adidas had failed to satisfy this requirement.

A split decision

The appeals court reviewed the preliminary injunction as it related to the Onix and Cross Court separately. It found that adidas was likely to suffer irreparable harm to its brand reputation and goodwill without a preliminary injunction against the Onix. The Stan Smith’s extensive and targeted advertising and unsolicited media coverage, along with adidas’ tight control of its supply, showed adidas has built a specific reputation around its trade dress with “intangible benefits.” Customer surveys demonstrated those benefits would be harmed by the Onix due to confusion about their source.

But the court struck down the preliminary injunction against the Cross Court based on the lack of evidence of irreparable harm. Adidas argued only that consumers who see others wearing Cross Court shoes associate the allegedly lesser-quality shoes with adidas. The court, however, found no evidence to support this theory other than testimony from adidas employees.

The court also noted the tension between adidas’ consumer confusion and irreparable harm arguments. If a consumer viewed a Cross Court from such a distance that she didn’t notice the Skechers logo and therefore thought it was an adidas shoe, the appeals court reasoned, it was unlikely she would be able to reasonably assess the shoe’s quality.

No harm, no foul

The ruling provides a useful illustration of the types of evidence that show a plaintiff is likely to suffer irreparable harm — and, in turn, the propriety of preliminary injunctions in trademark and trade dress disputes. Parties seeking preliminary injunctions should have evidence showing they would lose control over their business reputation and sustain damage to goodwill in the absence of an injunction.

adidas America, Inc. v. Skechers USA, Inc., No. 16-35204, May 10, 2018, 9th Cir.

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