In January this year, trade mark lawyers representing American fashion brand Thom Browne[1] told the Manhattan Southern District Court that Adidas “does not own stripes”. On one level they were right – as Thom Browne won its 16 year case against the sporting apparel giant. On another view, Adidas has grown to the second-largest sportswear brand in the world by prosecuting those who dare to copy its stripes. In a very recent action, Adidas has sought to block five applications by Saudi Arabian professional golf tour LIV Golf. In this article we look at the role of trade protection for emerging Australian businesses seeking to build and protect recognisable and unique brands.
Founded by Adolf Dassler in Germany in 1924, Adidas began under the name Dassler Brothers Shoe Company, producing spiked running shoes for athletic events. It wasn’t until after the 1952 Olympics, that Adidas bought its now iconic three-stripe logo from a Finnish footwear brand for two bottles of whiskey and about AU$2,500. The stripes were integrated into the actual design of shoes, and various logo adaptations, and have became pervasive through Adidas marketing campaigns.
In legal circles, Adidas is notorious for aggressively protecting its logo, having brought at least 90 lawsuits since 2008 against a range of retailers, including international brands Polo Ralph Lauren in 2004, Abercrombie & Fitch in 2005 and Forever 21 in 2017. This has resulted in over 200 settlement agreements with the company.
In the Thom Browne case, Adidas was ultimately unsuccessful. Adidas’s case centred around two of Thom Browne’s signature design choices, being four stripes usually looped around one sleeve or one pant leg, and a red-white-and-blue grosgrain tab inspired by the striped ribbons on athletic medals. Thom Browne argued that its “Grosgrain Signature” red, white and blue design contained five stripes and not three, describing it as “white-red-white-blue-white,” while Adidas instead claimed that it was too similar to its three-stripe trademark.
However, an eight-person jury determined that the American designer was not guilty of infringing upon Adidas’s three-stripe emblem. This was in part due to a comparison of the goods concerned, with the jury finding that they were not deceptively similar, and also Thom Browne’s argument that the brands operated in a different market – primarily due to their starkly different price points – which meant they were not competitors.
Despite the Thom Browne judgment, today Adidas is the second-largest sportswear brand globally, valued at in excess of AU$20 Bn. The extent to which its aggressive trade mark protection strategy has facilitated Adidas’ rise is hard to measure scientifically. However any emerging business in Australia that hopes to rely on brand recognition would be wise to protect that brand from copycats, whilst also ensuring that their chosen signifier does not offend pre-existing marks.
In the LIV Golf case Adidas reportedly claim that LIV Golf’s logo “incorporate[s] three stripes in a manner that is confusingly similar to the adidas Marks in appearance and overall commercial impression”[2].
When comparing the marks side by side (as above), US Trade Mark attorneys have already expressed views that this may be an overreach by Adidas[3]. Whether or not Adidas is ultimately successful in this particular battle, it is beyond argument that it has built a globally recognisable and formidable logo.
Any business that relies on a signifier for distinctiveness should register to protect their mark with IP Australia. The Trade Marks Act 1995 (Cth) (Act) allows the owner of a trade mark to register a mark or sign used in connection with their goods or services. IP Australia facilitates the registration of several forms of trade marks, including logos, phrases, words, colours, sounds, smells, pictures, movements, aspects of packaging, or a combination of these.
This registration provides the owner with the exclusive right to use, and authorise others to use, the trade mark for 10 years. At the end of this period, the trade mark may be renewed again, with no limit on the number of times a mark can be renewed.
Additionally, Australia is one of the 107 members of the Madrid Protocol. This Protocol establishes an international system for the registration of trade marks, whereby an international applicant may obtain protection in Australia, provided that the applicant returns a successful examination in their local jurisdiction.
Whilst registration provides superior trade mark protection, the common law in Australia also recognises the existence of unregistered trade marks. These are marks, not appearing on the IP Australia register, which have been used in relation to certain goods or services to such an extent that the mark is capable of distinguishing the goods and services of the business.
The common law offers other protections to business folks working under a well-known name. Causes of action arise in the tort of passing off, and misleading and deceptive conduct under the Australian Consumer Law (ACL). Section 18 of the ACL prohibits a person, who is carrying out any activity related to trade and commerce, from engaging in misleading and deceptive conduct.
In order to successfully register a trade mark with IP Australia, the mark must be capable of distinguishing the goods or services of one trader from those of another. Trade marks will typically be rejected where they are overly descriptive, or if they contain:
A trade mark must be registered within specific classes of goods or services. Australia follows the International (Nice) Classification of Goods and Services for the Purposes of Registration of Trade Marks (10th edition), which groups goods and services into 45 classes. The cost of a trade mark application with IP Australia is dependent on the number of classes sought for registration.
The minimum length of time between the lodgement of a trade mark application and registration, assuming IP Australia accepts the mark, is 7.5 months. This includes a 2 month opposition period, during which time anyone can oppose the mark. If nobody opposes the trade mark, or any oppositions are overturned, the application will be successful and the mark will be registered within 14 days.
IP Australia’s ‘TM Headstart’ pre-application service allows for an applicant to submit their application to an IP examiner, who will assess the trade mark before the applicant formally applies. After this examination, the examiner will provide feedback and the applicant will be offered an opportunity to amend the application.
The Headstart service was designed for first time applicants seeking to avoid common application errors, but is beneficial to all applicants as it provides an IP Australia examiners report within 5 business days and quickens the formal examination to 2 – 4 weeks rather than the standard trade mark application process which takes between 4 – 5 months.
Under section 120(1) of the Act, trade mark infringement occurs when ‘a person uses, as a trade mark, a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to the goods or services in respect of which the trade mark is registered.’
In a practical sense, to determine whether infringement has occurred, a Court will use specific tests based on each concept, as below:
The Act allows the Court to award civil remedies as compensation to owners of registered trade marks who have suffered harm caused by trademark infringement. This includes an injunction, damages or an account of profits. As of September 2023, the maximum penalty that may be imposed is 5 years imprisonment and fines of up to $99,000.
As Adidas has shown the world, developing a recognisable brand and ferociously setting about protecting it, can be an important part of building an iconic and valuable business. Despite this, not every skirmish by brand owners can or will result in victory. Start up business looking to make their mark would be wise to take heed.
If you require assistance with protecting your business’s trade mark, or with intellectual property matters generally, please contact us below.
[1] Marissa Dellatto, ‘Adidas Loses Trademark Lawsuit Against Thom Browne Over Stripe Design’ Forbes (Article, 12 January 2023) <https://www.forbes.com/sites/marisadellatto/2023/01/12/adidas-loses-trademark-lawsuit-against-thom-browne-over-stripe-design/?sh=532e2561682c>.
[2] adidas AG, adidas International Marketing BV opposition filing to LIV GOLF INCORPORATED; LIV Golf Inc., Trademark Trial and Appeal Board Inquiry System, ESTTA1310634 (filed 18 September 2023) item 19.
[3] Tom Beattie, ‘Adidas take legal action against LIV Golf over ‘confusingly similar’ issue’ Mirror (Article, 25 September 2023) <https://www.mirror.co.uk/sport/golf/adidas-liv-golf-legal-action-31025041>.
