Nike and RTFKT, the digital fashion/footwear brand it acquired last year, made headlines this spring with their first joint endeavor into the metaverse. In a widely-covered drop in April, the two companies revealed that each of the MNLTH NFT cubes that RTFKT released in February contain a pair of virtual sneakers that mirror the silhouette Nike’s Dunks but can be customized via RTFKT-created skins. In addition to setting the stage for more offerings from the Swoosh and RTFKT, including physical offerings, the drop of the virtual sneakers – which have been coined CryptoKicks – is significant as the name appears to be a nod to some of the technology at the heart of the patent that Nike received back in December 2019 for a “system and method for providing cryptographically secured digital assets,” including the “breeding” of digital sneakers. 

Nike’s “Cryptokicks” is one of the most widely-covered patents when it comes to the metaverse (and virtual fashion/footwear, more specifically), but it is certainly not the only innovation aimed at the virtual world, as leading tech players are developing new hardware and software to cater to consumers’ budding interest in the metaverse, i.e., the combination of aspects of social media, gaming, augmented and virtual reality, and the web that form “an immersive digital world.” 

Noting an uptick on interest in metaverse patents as companies that are developing the building blocks for the virtual world look to protect their innovations, ArentFox Schiff’s Michael Fainberg and Mohammad Zaryab state that among metaverse-specific technologies that they are seeing companies amass patents are “systems for optimizing shared views of virtual objects to multiple wearers of VR headsets; algorithms for generating and moving virtual shapes and scenes in a VR environment based on hand gestures, head motion, or line of sight of the user; systems for generating haptic feedback corresponding to users’ interaction with virtual objects in a virtual environment; and methods for generating 3D avatars of the users, which emulate users’ appearance and behavior,” among others. 

Pursuing patent protection in connection with the virtual world is not without challenges. Just as with physical world-centric inventions, in order to be eligible for patent protection in the U.S. (with regard to the metaverse or virtual world), an invention must new, useful process, and fall within the one of the four statutory categories (machine, manufacture or composition of matter) – or amount to a new and useful improvement on such an invention. While patent protection (i.e., the process of drafting, filing, and working with the United States Patent and Trademark Office (“USPTO”)) “for hardware technologies for the metaverse tends to be quite straightforward – and there are many existing patents for virtual reality and augmented reality headsets,” Mathys & Squire’s Dani Kramer asserts that obtaining software patents for metaverse technologies is “likely to be comparatively more difficult from a subject matter point of view.”  

Fainberg and Zaryab echo this, asserting that patent prosecution is challenging in connection with metaverse tech in large part “due to the strict subject matter eligibility requirements applied to software inventions under 35 U.S.C. 101 in view of the U.S. Supreme Court decision in Alice Corp v. CLS Bank,” which asks – in part – whether a patent application contains claims that are directed to an abstract idea. (This subject matter hurdle was demonstrated in Sandbox Software, LLC v. 18Birdies, LLC back in June 2019 when a Delaware federal court determined that one of metaverse platform Sandbox’s inventions was ineligible for patent protection because it was directed to the abstract idea of playing a multiplayer game and keeping track of its progress, and thus, did not amount to patentable subject matter.)

Software in this realm can also be thorny from novelty/non-obviousness point of view. One of the larger considerations in evaluating a metaverse innovation for novelty/non-obviousness is determining whether the process within the metaverse environment is similar to the same process outside the metaverse environment,” according to DLA Piper’s Joseph Wolfe. “If, for example, the only difference between the proposed invention and the prior art is that the proposed invention is confined to the metaverse environment, it may be difficult for applicants to clear the prior art [with the USPTO].” This is why applicants should “identify that step in the process that is unique to execution in the metaverse environment,” he asserts. 

Looking beyond utility-focused patents, companies are also expected to try to utilize design patent protection for any “new, original and ornamental designs” that they are using in the metaverse. “A virtual business may have – as a primary core asset – a virtual product design, aspects of which that may need protection as trade dress under trademark law – or through a design patent,” Holland & Knight’s Thomas Brooke stated in a recent note

Design patent protection for metaverse-focused ornamental design is certainly possible. As the USPTO states in its Manual of Patent Examining Procedure, “Computer-generated icons, such as full screen displays and individual icons, are 2-dimensional images [that] alone are surface ornamentation,” and that comply with the “article of manufacture” requirement of 35 U.S.C. 171

Protection will, of course, depends on how such designs are claimed. As of now, for instance. “a design patent for, say, a purse, would not cover a purse shown in the metaverse,” Suffolk University Law School professor Sarah Burstein tells TFL. It would be possible, she says, to patent the design of a purse for use in the metaverse “if you put a dotted line around an image of the purse and call it a ‘display screen portion with user interface,’ (e.g., the icons in Apple v. Samsung).” Burstein notes that the USPTO “seems to want to go further, to be able to issue patents for VR/AR/projected purses.” (In a December 2020 request for comments about the article of manufacture requirement of 35 U.S.C. 171, the USPTO suggested that designs for “projections, holograms, and virtual and augmented reality” are protectable.) 

Ultimately, increasing attempts by brands to engage with the consumers in the metaverse by way of games and specific metaverse platforms are “sure to present applicants and practitioners with its own unique set of challenges for obtaining patent protection,” Wolfe states. The potential good news for filing parties, per Wolfe is that “broadly speaking,” many of the same principles or best practices for patenting things like “blockchain innovations and artificial intelligence innovations can be applied to metaverse innovations to help applications successfully navigate through the patent office.” 

This article was originally published on May 25, 2022.

Adidas is putting an end to its long-running Yeezy deal with Kanye West, with the German sportswear giant announcing that “after a thorough review,” it has made “the decision to terminate the partnership with Ye immediately, end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect.” The company further said in a statement on Tuesday that it “does not tolerate antisemitism and any other sort of hate speech,” and West’s “recent comments and actions have been unacceptable, hateful, and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect, and fairness.” 

Analysts expect that the breakdown of the deal will prove to be positive in the long run for adidas, with Evercore ISI analyst Omar Saad saying that the Yeezy franchise makes for a “big risk” for adidas, and Bernstein’s Aneesha Sherman asserting that adidas made the “absolute right decision” from a long-term standpoint. However, more immediately, adidas may have rid itself of the PR disaster that is Kanye and his Yeezy brand by extension, but the move does not come without a cost. After all, the Yeezy line is responsible for no small source of revenue for adidas. Last month, Cowen analyst John Kernan estimated that Yeezy drives approximately 4 to 8 percent of adidas’ annual revenue, which topped $25 billion in total in 2021.

Beyond that, Kernan pointed to indirect benefits of the deal that are reaped by adidas, including that “the halo effects of recognition and digital traffic that Yeezy has afforded the adidas brand.” And still yet, adidas’s separation from West is also expected to give Nike, adidas’s closest competitor even more of an upper hand. “Adidas struggles to compete with Nike for top sponsorships, so Yeezy was one big advantage,” Morningstar analyst David Swartz told CNBC.

An excerpt from adidas' statement re: Yeezy

The anticipated hit to adidas’s bottom line of 250 million euros ($246 million) this year due to the immediate termination – which prompted Bernstein, for one, to cut its 2023 revenue forecast for adidas on Tuesday by about $398 million – adds to existing pressures for adidas. The sportswear-maker is suffering from inventory issues and a lackluster performance in China, which have prompted a 64 percent decline in the price of its Deutsche Börse-traded stock so far in 2022. $ADDYY stock has fallen further recently thanks to West’s antics and amid calls from consumers, celebrities, and various organizations, including the Anti-Defamation League, for adidas to sever ties with the rapper-slash-designer following multiple instances of antisemitism and in the wake of West showing a “White Lives Matter” shirt on the runway of his latest Yeezy brand collection in Paris early this month. 

As for West’s end of the bargain, he will be forced out of a fair share of cash as a result of the breakdown of the deal. Bank of America valued the sneaker side of West’s business, alone, at as much as $3 billion in 2020. More recently, in 2021, UBS Group AG put a value of $3.2 billion to $4.7 billion West’s sneaker and apparel business, including his deal with adidas.  

Trademarks & Morals

Entered into in 2016 and slated to run until 2026, the Yeezy arrangement saw West license the Yeezy brand name to adidas in exchange for royalties of approximately 15 percent of the sales of Yeezy products. (West’s Mascotte Holdings is the sole holder of the trademark rights in – and registrations for – “Yeezy” and “YZY” for use on footwear and apparel, which West’s corporate entity licensed to adidas for use in connection with the footwear collection. This enabled West to monetize this intellectual property (and bring in royalties), while still maintaining complete ownership over the Yeezy brand.)

In terms of the products, themselves, adidas was in charge of design and manufacturing, and it gained ownership of the designs as part of the deal, with relevant trademark, copyright, and patent registrations for the hot-selling sneakers, for example, issued to (and maintained by) adidas. These rights range from the SPLY-350 trademark to design patents for the Yeezy Boost. (Note: Adidas and other big brands assuming ownership of designs that result from collaborations in which they are involved is not in any way uncommon, and in fact, contracts that parties like West enter into with brands like adidas routinely include iron-clad clauses that mandate that they are assigning any such rights to their collaborative partner. We saw it here with Nike-owner Converse, for instance.)

As for how adidas will be able to terminate the deal without facing breach-of-contract ramifications from West, who it was contractually tied to, chances are, it has invoked a morals clause in the agreement, a provision that typically prevents endorsers or other collaborating parties from engaging in conduct – and sometimes speech – that will bring either the party into “public disrepute, scandal, embarrassment,” or generally cast an unfavorable light on the company’s reputation. While “criminal conduct commonly falls under the definition of prohibited acts in a morals clause,” Fox Rothschild LLP attorneys stated in a recent note that “acts that fall short of breaking the law can violate a morals clause, too.” For example, they state that some morals clauses prohibit conduct that is “offensive, shocks or insults public morals or public decency,” with companies generally pushing for broad morals clauses i to protect their brand and reputation.

adidas design patent for Yeezy sneaker

The inclusion of sweeping morals clauses – which counsel for parties like West would undoubtedly seek to streamline (pushing potentially for more limited clauses that kick in only in the event of a criminal conviction, for example) – means, at least in theory, that companies can get out of deals with relative ease should they take issue with the behavior of a contracted creative.

However, such broad clauses are not without potential drawbacks. “Although morals clauses are considered industry standard in Hollywood [and beyond],” Fox Rothschild asserts that “the precise meaning and scope of such clauses” – particularly when companies keep the language defining the objectionable conduct broad, “so as to cover a range of conduct that would breach the agreement” – are “notoriously ambiguous, making them often difficult to enforce.” 

Against this background, the very-recent termination of the adidas Yeezy deal raises some interesting issues for the sportswear behemoth, including in regards to how it will approach excess Yeezy inventory and the designs, themselves. Efforts by adidas to liquidate no shortage of existing Yeezy inventory that it and its authorized retailers have on hand to off-price retailers and/or to resale entities seems likely, as does sending them to markets where Kanye West’s fallout is not so pronounced. (There is, of course, also the potential for destruction should other avenues prove less-than-fruitful.)

On the IP front, the sportswear company’s ownership of the designs that make up the Yeezy collection poses questions about what it can and cannot do with the designs going forward. While adidas has emphasized that it is the “sole owner of all design rights to existing products” under the partnership, that does not necessarily pave a clear path forward. The company would run the very real risk of trademark infringement liability, for instance, in the event that it were to use the Yeezy name without authorization from West to sell shoes (even if it owns the designs for those shoes). Adidas’s ownership of the designs also does not ensure that it would get away with selling the Yeezy footwear designs as distinct from West, including from a PR point of view.

A draft of some of the terms of the deals West entered into with Gap and adidas

It is worth noting that adidas has sold designs that look a lot like those that fall under the Yeezy umbrella without labeling them as Yeezy and without facing off against infringement claims waged by West (because it owns the Yeezy designs, and thus, has the right to make derivatives of those designs). Legally speaking, it could continue to do so, but it is not immediately clear how consumers would react. Cutting ties with Kanye but continuing to sell the same footwear as the styles that it previously offered up under the Yeezy name with generic “adidas” branding might not sit well with consumers (and thus, might not make sense from a PR standpoint) in the very near term.

Moving Forward

More realistically, and what adidas will almost certainly do at some point in the future (and what is common for companies to do in the wake of the culmination of design collabs) in order to get further returns on its investment in the Yeezy designs is to offer up footwear that is mirrors the styles that it previously sold as part of the Yeezy deal albeit without Yeezy branding. But again (and depending on the terms of the assignment of rights agreement), that might not be a sure-fire win or easy for adidas, as part of what made the Yeezy collection a success was the distinctiveness of the designs.

The undeniable link between the adidas-designed Yeezy sneakers and West, himself, poses relevant issues about the extent to which consumers associate the design of the Yeezy products – even without the Yeezy name on them – with adidas as opposed to with West. This is a doubled-edged sword to an extent. On one hand, there is the likelihood that consumers associate with silhouette/design of the Yeezy Boosts, for instance, so much with West that it could complicate adidas’s ability to successfully offer up the designs under its own branding going forward in the event that consumers opt to keep cancelling Kanye. On the other hand, given that West almost single-handedly drove the popularity of the Yeezy designs, there is a chance that the sneakers will not nearly be as coveted with him out of the picture. (There are also questions to ponder about the strength of adidas’ trademark and trade dress rights in those silhouettes given that consumers so closely associate them with West as the source.)

In terms of a morals provision, which will impact the extent to which adidas can neatly walk away from the deal unilaterally, there are typically “a number of thorny issues for brands and celebrities,” ArentFox Schiff’s Sarah Alberstein, Amal Dave, Jay Halpern, and Dan Jasnow stated in a note this spring. For instance, “What actions will trigger the clause? Is a credible accusation of prohibited conduct enough to terminate the contract? Or should there be some burden on the brand to establish that the prohibited conduct occurred?” These issues are compounded, they state, “if the celebrity has equity interest in the brand, which would typically need to be unwound if the relationship is being terminated due to conduct.” 

Luckily for adidas, the latter is not at play here. However, that does not mean that a handful of other issues are not on the table and likely to play out – potentially in the public eye and/or in court – in the coming weeks and months.

UPDATED (Nov. 9, 2022): adidas CFO Harm Ohlmeyer confirmed that the company will, in fact, sell previously-Yeezy-branded products under the adidas name next year. “We own all the IP, we own all the designs, we own all the versions and new colorways, so it’s our IP, it’s our product. We believe there are interesting things coming to fruition in 2023, that’s what we’re working through,” Ohlmeyer said in an analyst call on Wednesday. As for existing Yeezy inventory, the company’s finance chief said adidas is still determining whether or not to sell them off as-is.

The important exception to adidas’s “we own all the IP” claim is, of course, the Yeezy trademark for use on sneakers, apparel, etc., which is owned by Kanye via his Mascotte Holdings company.

Hermès is on the receiving end of a striking new lawsuit, with mass-market sneaker-maker Skechers accusing the French luxury goods brand of infringing two of its design patents by way of a couple of pricey sneaker styles. According to the 19-page complaint that it filed in a New York federal court on October 18, Manhattan Beach, California-based Skechers alleges that it maintains two design patents for “novel, non-obvious, and ornamental designs” embodied in the sole of its MASSAGE FIT sneakers, and that Hermès, which is best known for its $10,000-plus Birkin bags, infringed those patents by “making, using, selling, offering for sale, and/or importing for sale shoes” that Skechers claims “embody the inventions disclosed in [its] patents.” 

In its relatively brief complaint, Skechers – which says that it has “earned its reputation as a world leader in designing cutting-edge footwear” – alleges that Hermès’s $800 Éclair and $940 Envol sneaker styles have “substantially the same sole” as those claimed in its D965,263 S and D925,183 S patents, the designs of which are “embodied in the highly successful SKECHERS GO WALK series featuring the MASSAGE FIT sole, as well as various other Skechers styles.” Specifically, Skechers is taking issue with Hermès’s alleged copying of the mid-sole and undersole design elements of its patented sneakers.

A side-by-side of Skechers' patent and one of Hermès' sneakers

Setting out a design patent infringement claim for each of its patents, Skechers argues that Hermès “has profited and is profiting from such infringements,” and thus, is seeking monetary damages, as well as injunctive relief to bar “Hermès, its owners, officers, agents, servants, employees, attorneys, successors, and assigns, and all others in active concert or participation with Hermès, from continued infringement of the ’263 patent and the ’183 patent.” 

As for the merits of Skechers’ claims, the case may not prove to be a win across the board for Skechers. “A design patent is infringed when a product looks the same as the claimed design,” Suffolk University Law School professor Sarah Burstein tells TFL, stating that the claimed design and allegedly infringing products do not have to be exactly the same, but they “need to be very similar.” In the event that “the accused design and the claimed design are not plainly dissimilar, looking at them in a vacuum,” Burstein says that “the court (or jury) can also consider other pieces of prior art, which may narrow the presumptive scope of the design patent.”

A side-by-side of Skechers' patent and one of Hermès' sneakers

With that in mind, she says that Hermès’s sneakers “do not look similar enough, under this test, to infringe the ’183 patent, [as] there are significant visual differences including the shapes of the heels and the toe portions.” Because the ’263 patent uses dotted lines to disclaim parts of the sole shape, “it has a broader scope,” per Burstein. Since Skechers also specifically disclaims the heel and toe portions that are the most dissimilar, it will be “a closer question on infringement,” and thus, “this might be a case where consideration of the prior art might be helpful.”

Reps for Hermès were not immediately available for comment on the lawsuit. Both of the allegedly infringing Hermès sneaker styles were still available for purchase on its e-commerce site as of the time of publication.

THE BIG PICTURE: While it is not particularly common to see the likes of Hermès on the defendant side of an infringement litigation (or the plaintiff side either, frankly, as it is not as litigious as some of its peers), the lawsuit, nonetheless, falls somewhat neatly in line with the relative frequency of litigation in the footwear space, where product lifecycles tend to be longer than those in fashion (save for things like staple handbags, footwear, and accessories), R&D costs tend to be significant, and intellectual property protection – from trade dress to design patents – is common.

Citing its practice of “invest[ing] tremendous resources into research and development to introduce fresh, unique and exciting footwear technology” and the need to “seek legal recourse when competitors blatantly tread on our rights,” Skechers has waged infringement cases over its “Go Walk” design patents in the past, including against Steve Madden and Reebok. Meanwhile, this summer, it filed – and has since settled – an unrelated trademark lawsuit against Brooks, accusing its fellow sneaker-maker of infringing and diluting its “famous ‘S’ logo” by using a “confusingly similar ‘5’ mark” on footwear. At the same time, Skechers is no stranger to being sued for infringement, with Nike filing more than one suit against it, stemming from what the Swoosh called a larger pattern of Skechers “copying its competitors’ designs and using innovative technologies developed by others to gain market share instead of innovating its own designs and technologies.” 

The case also comes as fashion and luxury brands continue to place notable weight on athleticwear and footwear to cater to a broader pool of consumers, including millennials and Gen-Z, while also “grabbing market share from traditional sportswear brands like Nike and adidas.” This summer, British automaker McLaren, for instance, announced that it would introduce footwear by way of a tie-up with sneaker-maker Athletic Propulsion Labs. At the same time, Thom Browne has been busy expanding its footprint beyond tailoring into sportswear and athletic-style footwear offerings, which has prompted a clash with adidas. And maybe most famously, Balenciaga launched the $895 Triple S sneaker in 2017, and the Track sneaker a year later with striking success. (Balenciaga nabbed a U.S. patent for the design of the latter.)

Brands across the board have routinely amassed – and enforced – rights in source-indicating designs and novel inventions, but sportswear brands, in particular, “are applying for more trademarks and design patents to protect their designs,” including silhouettes, lawyer Zak Kurtz of the Sneaker and Streetwear Law Firm tells TFL. The increase in trademark and design patent filings (and companies’ enforcement of such protections) demonstrates “how important things like sneaker silhouettes, for example, can be to a brand,” especially in the increasingly crowded and competitive athletic footwear market, which is expected to reach $165 billion in value by 2030, according to Allied Market Research. 

The case is Skechers U.S.A., Inc., et al. v. Hermès International, et al.,1:22-cv-08862 (SDNY).

Brooks is pushing back against the trademark and design patent infringement lawsuit waged against it in July by Puma, in which the German sportswear brand claims that Brooks is not only infringing its NITRO trademark by selling sneakers bearing that mark but goes further by adopting “every aspect” of a sneaker for which PUMA has a design patent in furtherance of what PUMA calls a larger “pattern of [Brooks of] copying [its] technology and disrespecting [its] intellectual property rights.” In the answer that it lodged with a federal court in Indiana on September 28, Brooks denies Puma’s infringement allegations and sets out a handful of counterclaims, seeking declarations from the court that it is not infringing Puma’s alleged trademark rights and its design patent, and angling to get Puma’s patent invalidated. 

On the trademark front, Brooks aims to chip away at Puma’s infringement claim, arguing that “Puma asserts that its decision to name its line of nitro-infused midsole shoes ‘Nitro’ gives [it] the right to prevent Brooks from using the word ‘nitro’ to describe Brooks’ earlier-introduced, nitro-infused midsole shoes.” Puma “is wrong,” according to Brooks, which claims that “Puma has no rights to the word ‘nitro,’ which it uses in a descriptive manner, and it certainly has no rights to prevent Brooks from using ‘nitro’ to describe Brooks’ own nitro-infusion technology.” 

Seattle-headquartered Brooks asserts that not only does Puma lack a trademark registration for “Nitro” (it filed trademark applications in December 2021), its use of “nitro” on its collection of nitro-infused midsole shoes is descriptive, and Puma “has not acquired any secondary meaning in the mark.” 

Even if “Puma’s use of ‘Nitro’ was not descriptive (which it is),” Brooks argues that Puma – which began offering up its “Nitro” sneakers “in or around 2020, at least a year after Brooks first introduced nitro-infused midsoles” – “would have no priority and no enforceable rights in ‘nitro’ for running shoes or apparel, [as] numerous other running shoe companies, including Brooks, used the word “Nitro” for running shoes long before Puma.” Brooks claims that it first offered a shoe called the “Nitro” shoe in 1998, and since then, no shortage of other brands – from Nike and adidas to Saucony and Asics – have offered up running shoes under the Nitro name. 

Two pairs of Brooks running shoes alongside a "Run on Nitro" deescriptor

(Brooks also notes that the U.S. Trademark and Patent Office “has repeatedly rejected attempts [by other companies] to register ‘nitro’ as a trademark for nitro-infused products,” with examiners for the trademark office explaining that “nitro” is “a descriptive shorthand term for ‘nitrogen,’ that ‘nitro’ is not distinctive to the nitro-infused products of any one company, and that ‘nitro,’ therefore, cannot be registered as a trademark when used in connection with nitro-infused products.” The “same result holds true” for Puma and its nitro-infused shoes, Brooks contends.)

Beyond Puma lacking trademark rights in “nitro,” Brooks argues that it is not using the term as an indication of source of its sneakers, stating that “none of [its] nitro-infused shoes are named or labeled as ‘nitro’ or anything similar.” Instead, Brooks claims that it uses the term “nitro” exclusively “to describe the nitro-infused technology in its products.” This is significant, as a successful infringement claim requires “use” of a trademark – in a trademark capacity – by the allegedly infringing party. 

As for Puma’s design patent infringement claim, Brooks claims that Puma’s allegations – which center on its D897,075 patent, namely, “a single claim directed to the midsole of a shoe” – are “meritless,” as the D075 patent design and the design of its Aurora BL sneaker are “plainly dissimilar.” And the “numerous, immediately-apparent differences in design” between the patent design and the Aurora BL make it so that “an ordinary observer would not confuse the overall design of the Aurora BL with the overall design of [Puma’s] D075 patent,” according to Brooks. 

While “no ordinary observer, giving such attention as a purchaser usually gives, would confuse the two designs” (i.e., the standard for gauging design patent infringement), Brooks asserts that there is an even more fundamental issue: Puma’s patent is invalid. “In addition to being primarily functional rather than ornamental,” Brooks argues that “the design in the D075 patent is not novel and is obvious over the prior art,” such as various Nike Air Max styles and Balenciaga’s hot-selling Triple S sneakers, among others. Brooks claims that “Puma omits examples of prior art soles that would further lead the ordinary observer to conclude that the differences between the design of the Aurora BL and the claimed design were significant, and that the designs were dissimilar.” 

With the foregoing in mind, Brooks says that it is entitled to declaratory judgments, including a judgment that Puma has no rights in “Nitro” for use on footwear; a judgment that it is, thus, not infringing Puma’s alleged “Nitro” mark; and a judgment that it is not infringing Puma’s D075 patent because “in the eye of an ordinary observer … the design claimed by the patent and Brooks’ accused product are not ‘substantially the same’ such that ‘the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other.’” Brooks is also seeking a judgment as to the invalidity of Puma’s patent on the grounds that its fails to meet the statutory requirements for patentability. 

A side-by-side of Puma's D075 patent and Brooks' Aurora sneaker

And still yet, Brooks is also seeking an order dismissing the complaint with prejudice, along with a finding that this case is exceptional, and that reasonable attorney’s fees and costs should be awarded as a result.  

Not merely an isolated instance, Brooks argues in its response that the Puma lawsuit is part of “a worldwide campaign on its rival’s part to bully Brooks into abandoning use of ‘nitro’ to describe its nitro-infused midsole technology.” Specifically, Brooks states that Puma has “brought emergency motions for injunctions against [it] … in multiple foreign countries … based on alleged licenses to ‘Nitro’ that Puma claims to have obtained from non-footwear companies.” Puma has “even gone so far as to try to freeze Brooks’ European bank accounts, purportedly in order to preserve the availability of money damages,” Brooks asserts, “even though Brooks is an established international company and a Berkshire Hathaway subsidiary, and Puma’s damages claim, by its own account, totaled only 150,000 Euros.” 

“None of Puma’s aggressive tactics has succeeded,” Brooks claims, asserting that “no court in any country has granted an injunction against Brooks, and German courts have already twice rejected Puma’s request for an ex parte injunction on the basis that ‘nitro’ is descriptive of Brooks’ and Puma’s technology.” Against the background, Brooks contends that it “will not be intimidated by Puma’s efforts to enforce invalid intellectual property rights or to prevent [it] from accurately describing its innovative nitro-infused midsole technology,” which is why Brooks says that it is bringing its counterclaims. 

Not limited to its answer and counterclaims, Brooks Sports also lodged a motion to transfer the venue of the Puma lawsuit out of the U.S. District Court for the Southern District of Indiana the U.S. District Court for the Western District of Washington on September 28, arguing that “there can be no dispute that venue is proper in W.D. Wash.” because, among other things, “Brooks is incorporated and headquartered there, and thus ‘resides’ in W.D. Wash,” and W.D. Wash. is “no less convenient for Puma than this District, since Puma is located in Massachusetts and does not allege a presence in this District.” 

The case is PUMA SE, et al. v. Brooks Sports, Inc., 1:22-cv-01362 (S.D. Ind.).

A New York federal judge has sided with Lululemon and tossed out a lawsuit waged against it by Peloton over the parties’ lookalike sports bras and yoga pants. In an opinion and order on Thursday, Judge Andrew Carter of the U.S. District Court for the Southern District of New York (“SDNY”) granted Lululemon’s motion to dismiss Peloton’s lawsuit, finding that the declaratory judgment action that Peloton lodged against it last year – prompted by a cease-and-desist letter that it received from Lululemon – amounts to an anticipatory action. The suit is part of a pair of rival cases between the two parties, which pulled the plug on a 5-year-long co-branding partnership last year. 

The clash got its start on November 24, 2021 when Peloton filed a declaratory judgment action against Lululemon with the SDNY, alleging that it received a cease-and-desist letter from Lulu (in which Lulu alleged that five of Peloton’s private label sports bras infringe its design patents, and a pair of Peloton-branded leggings infringe its trade dress rights). In furtherance of its DJ suit, Peloton sought a declaration from the court that, among other things, it did not infringe Lulu’s patents or trade dress. Escalating the matter, Lululemon lodged a complaint of its own on November 29 – albeit with the Central District of California – arguing that Peloton is on the hook for design patent and trade dress infringement in connection with its sale of “copycat” athleticwear. 

Nov. 11, 2021 – Lululemon sends cease-and-desist letter to Peloton

Nov. 24, 2021 – Peloton sues Lululemon (declaratory judgment)

Nov. 29, 2021 – Lululemon sues Peloton (design patent & trademark infringement)

Lululemon pushed for dismissal early this year, claiming that that Peloton filed “an improper anticipatory declaratory judgment action” – after Lulu says it approached Peloton in response to the letter in order to resolve the matter out of court – in order to “game” the venue in the design patent and trade dress infringement case. 

In his order on Thursday, Judge Carter determined that Peloton’s DJ suit “is an anticipatory action that warrants dismissal.” Here, “both parties agree” that in the wake of receiving Lulu’s cease-and-desist letter, Peloton informed Lulu on November 15 that it could not guarantee that its response would be ready by the November 19 deadline. Lulu responded that “[a]s a matter of professional courtesy, we are happy to consider extending the deadline for response,” once Peloton proposes a new deadline. “Peloton answered by proposing a deadline of November 24, and lululemon agreed,” according to the court, with Lulu stating that “[p]er your request, lululemon agrees to extend the deadline for Peloton’s response to November 24.” 

Instead of sending a response to the cease-and-desist on November 24, Peloton filed suit against Lulu on that day. 

“This context and timing – Peloton representing that it would likely not be ready to submit a response as requested, proposing a new deadline by which to respond, and then instead filing the declaratory judgment suit on that date – supports a finding that this suit is an improper anticipatory declaratory judgment action,” Judge Carter states in his order. And noting that “the balance of convenience favor[s] neither party” in the case at hand, the judge granted Lulu’s motion to dismiss.  

While one case is off the table, the one that Lululemon filed against Peloton is still in play and slated to resume following a suspension for the duration of the Peloton v. Lulu matter. 

UPDATED (Sept. 30, 2022): The parties have settled the remaining matter, with counsel for Lululemon filing a notice of voluntary dismissal with the U.S. District Court for the Central District of California. The dismissal is with prejudice. In a statement, the parties revealed that they “have negotiated a mutually agreeable settlement, and are pleased the matters could be resolved amicably, resulting in dismissal of the pending litigation between them.” While the full extent of the agreement has not been made public, Peloton agreed to discontinue “certain designs” that Lululemon had objected to in the suit, albeit, without the company revealing any wrongdoing.

The cases are Peloton Interactive, Inc. v. Lululemon Athletica Canada Inc., 1:21-cv-10071 (SDNY), and Lululemon Athletica Canada, Inc. v. Peloton Interactive, Inc., 2:21-cv-09252 (C.D.Cal.)