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 image: adidas Stan Smith (left) & Skechers Onix (right)

image: adidas Stan Smith (left) & Skechers Onix (right)

In the midst of a larger-scale trademark tear, which has seen adidas take on brands ranging from Tesla and FC Barcelona to Juicy Couture and Marc Jacobs, adidas has been handed a preliminary win, paired with a bit of a loss, in the case it filed against Skechers in September 2015. In a 43-page opinion, the 9th Circuit Court of Appeals sided with the German sportswear giant in its effort to prevent rival Skechers from manufacturing, distributing, advertising, selling, or offering for sale sneakers that are “confusingly” similar to its classic Stan Smith.

In a unanimous decision from the 9th Circuit’s 3-judge panel released on Thursday, the court upheld a previously-issued preliminary injunction, which served to prohibit Skechers from selling shoes that allegedly infringe and dilute (i.e., lessen the distinctiveness of) adidas’s Stan Smith trade dress and 3-stripe trademark, for the duration of the parties’ legal battle, and then, potentially, after the close of the trial. 

Writing for the panel, Judge Jacqueline Nguyen stated that the lower court, the U.S. District Court for the District of Oregon in Portland, “did not abuse its discretion in issuing the preliminary injunction as to adidas’s claim the Skechers’s Onix shoe infringed adidas’s unregistered trade dress of its Stan Smith shoe.”

Speaking specifically to the merit of adidas trade dress claim – its trade dress covers the appearance of its Stan Smith design, including the three perforated stripes on the body of the shoe the prominent heel tab, and “a particularly flat sole,” among other elements – the court held that adidas is likely to succeed at trial, and therefore, is entitled to preliminary injunctive relief.

The court found that adidas would likely prevail on its trade dress infringement claim at trial because the sportswear giant was able to meet the legal requirements for protection, which include “the trade dress is nonfunctional, the trade dress had acquired secondary meaning, and there is a substantial likelihood of confusion between the parties’ products.” 

Moreover, the court held that the district court was correct in finding that adidas showed a likelihood that it will succeed at trial in connection with its trademark infringement and trademark dilution claims, as well, for its wildly popular Stan Smith. Adidas told the court in its complaint – which cited claims of trade dress and trademark infringement, as well as trademark dilution – that it has sold over 40 million pairs if its famous Stan Smith shoe worldwide. 

Despite its initial victory in connection with Skechers’ Onix shoe, it was not all wins for adidas in court this week. The court declined to uphold an injunction on the basis that Skechers’s Cross Court shoe infringed and diluted adidas’ 3-stripe trademark.

As the court summarized, adidas argued that “Skechers harmed [it]s ability to control its brand image because consumers who see others wearing Cross Court shoes associate the allegedly lesser-quality Cross Courts with adidas and its 3-stripe mark.” The two of the judges held that the issuance of a preliminary injunction in connection with Skechers’s Cross Court shoe was improper “because adidas did not show that it would be irreparably harmed from the sale of the Cross Court [shoes].”

According to the court’s decision, such a finding implies that “adidas is viewed by consumers as a premium brand while Skechers is viewed as a lower-quality, discount brand,” and the only evidence that adidas put forth to prove this “was testimony from adidas employees,” which the court did not find to be persuasive. 

The court also took issue with adidas’ assertion that “after the sale [of the Skechers Cross Court shoe], someone else looking at a Cross Court shoe from afar or in passing might not notice the Skechers logos and thus might mistake it for an adidas.”

The court was similarly unmoved by this argument, stating, “If a consumer viewed a shoe from such a distance that she could not notice its Skechers logos, it is unlikely she would be able to reasonably assess the quality of the shoes. And the consumer could not conflate adidas’s brand with Skechers’s supposedly ‘discount’ reputation if she did not know the price of the shoe and was too far away to tell whether the shoe might be a Skechers to begin with.”

Judge Richard Clifton, on the other hand, disagreed, stating in his dissenting opinion that the district court was “well within its discretion to infer that confusion between Skechers’ ‘lower-end’ footwear and Adidas’s footwear was likely to harm Adidas’s reputation” and “this is precisely the type of harm that is ‘irreparable.'”

Adidas and Skechers are scheduled to appear in court on June 4 for the start of their trial. 

Following the court’s decision on Thursday, an adidas spokesman said, “We will not stand by and allow others to blatantly copy our products,” and vowed that adidas is “committed to bringing a complete end to Skechers’ pattern of unlawful conduct [at the parties’ impending trial].” 

UPDATED (May 31, 2018): Just days ahead of trial, which was slated to begin on June 4, adidas and Skechers have managed to come to an agreement to settle the case. Counsel for Adidas, R. Charles Henn Jr. of Kilpatrick Townsend & Stockton LLP, told Law360 on Wednesday that the terms of the settlement are confidential. “All we can tell you is that the dispute has been resolved amicably,” he added.

* The case is ADIDAS AMERICA, INC., ADIDAS AG, and ADIDAS INTERNATIONAL MARKETING B.V., v.  SKECHERS USA, INC., 3:15-cv-01741.