adidas prevails in four-stripe case against local retailer

In adidas AG v Pepkor Retail Limited ((187/12) [2013] ZASCA 3), the Supreme Court of Appeal has overturned a Western Cape High Court decision in favour of Pepkor Retail Limited who had succeeded in defending infringement and passing-off claims by adidas AG and adidas International Marketing BV (collectively adidas) in respect of their famous three-stripe device and related footwear get-up.

adidas has its three-stripe device registered as the subject of several trademark registrations covering footwear. It was also not disputed that the trademark and related footwear get-up have a significant reputation in South Africa. Pepkor is a large retail organisation in South Africa that caters for the low to middle-class market. The offending footwear complained of by adidas bore two and four-stripe devices.

Apart from denying any deceptive similarity between the two and four stripes applied to Pepkor’s footwear and adidas’ trademarks, Pepkor raised a number of other defences or contentions, namely that:

1. The stripes featuring on its footwear were not trademarks, but decorations or embellishments.
2. The protection afforded by adidas’ registered trademarks is limited to three parallel stripes (and not to any other number of parallel stripes) configured in terms of its trademark registrations. adidas had impermissibly sought to expand the scope of the protection afforded by its registered trademarks by claiming generic features of shoes as constituent elements of its trademarks.
3. The adidas three-stripe trademark is so notorious, recognisable and distinctive that there is no likelihood that a consumer of the goods concerned would, when confronted with trainers featuring two or four parallel stripes in a decorative fashion, be confused into believing that they are the goods of, or are associated with, the appellants.
4. adidas’ reliance on previous South African judgments and foreign judgments is misplaced and of extremely limited assistance, since those cases cannot assist the factual inquiry and comparative analysis the Supreme Court of Appeal is enjoined to make on the facts of the case.

The Supreme Court of Appeal held that:

1. There was no evidence that the marks would be perceived as pure embellishment or decoration. The fact that other marks appear on the footwear is irrelevant.
2. The registered marks are to be considered as they appear on the register and their scope of protection considered accordingly.
3. Fame is to be considered as part of the overall assessment when one considers whether a likelihood of confusion takes places. The more distinctive a trademark, the more likely confusion will occur when the mark is used on competing products.
4. adidas is entitled to rely on South African (and other) judgments, as persuasive, if not decisive precedents, if they were decided by applying the same principles (as it felt were now involved) to the same or similar facts.

On the question of trademark infringement, the court held that, on four of the six offending shoes, the marks as used were not sufficiently similar to give rise to a likelihood of confusion and, hence, there was no infringement. For the remaining two offending shoes, it felt that the marks created the same general impression: “The likelihood of at least momentary deception or confusion where the purchaser must select the goods from those on display was therefore shown.”

Hence there was infringement under Section 34(1)(a) of the Trademarks Act 194/93.

Turning to the claim of passing off, the court acknowledged previous decisions that, when comparing the overall get-up of the products and considering whether confusion is likely, one must appreciate that the appearance of wording on the products may not avoid a likelihood of confusion because there are people in South Africa who are illiterate. Further, the law of passing off does not confer monopolies to successful get-ups. People are generally free to copy provided they do not cause confusion.

Applying these principles to the offending shoes, the court found that Pepkor was guilty of passing off in respect of certain of the shoes, but not others. The relevance of prominent third-party trademarks helped avoid a successful claim against two of the shoes.

Judge Southwood (supported by a full bench of five judges) granted the interdict accordingly, and awarded costs and an enquiry into damages to adidas.

The judgment provides welcome clarification on the tests for infringement, in particular that the more distinctive a trademark is, the greater the likelihood of confusion. It also illustrates that a defence based on ornamental or decorative will work only in limited circumstances. It is also interesting that adidas was successful against a larger number of shoes in the passing-off claim.

Darren T Olivier, Adams & Adams, Pretoria