adidas' three-stripe mark infringed despite lack of likelihood of confusion

In adidas AG v Batash (CA (TA Distr) 2028-08, July 30 2014), the Tel Aviv District Court has held that adidas AG’s registered three-stripe marks for clothing were infringed by sports apparel bearing three parallel stripes, even in the absence of a likelihood of confusion, as the marks used by the defendant were identical to adidas' marks. However, the court dismissed adidas’ passing-off claims due to the lack of likelihood of confusion resulting from price differences between the parties' goods and the fact that the infringing goods bore the defendant's name in a prominent manner. It was further held that the claim for dilution had not been established.

adidas, the well-known manufacturer of sportswear, uses a three-stripe mark to mark its products. In Israel, adidas holds, among others, two registrations for a three-stripe mark for sportswear:

     Mark 93206                                                        Mark 93205  

The Israeli police seized several hundreds of items (sports suits, shirts and trousers) that bore three parallel stripes on the sleeves and trouser legs from defendant Batash, an importer of lower-end clothing. The items did not display other marks owned by adidas and bore the name Batash.   

adidas brought suit against the importer on the grounds of infringement of its registered trademarks, passing off, injury to goodwill and unjust enrichment; it requested an injunction, an accounting and statutory damages. 

The Tel Aviv District Court found that the marks used by the defendant were identical to adidas' registered marks and that, therefore, it was not necessary to show a likelihood of confusion in order to establish infringement. Interestingly, although the court did not reject the defendants' argument that a likelihood of confusion had not been established - due to the fact that neither adidas' name nor its well-known triangle mark () appeared on the infringing goods, that the importer's name appeared prominently on the goods, and that there was a vast difference in price and quality between the parties’ goods - the court held that trademark infringement had been established since confusion is not always necessary and since the defendant had used a mark that was identical to adidas' registered marks. Accordingly, adidas was awarded a permanent injunction.

However, adidas did not prevail on the other grounds. In the absence of a likelihood of confusion, use of the three stripes was held not to constitute passing off, for which a likelihood of confusion is a statutory requisite. Thus, the remedy of statutory damages, which is available in cases of passing off, was held to be inapplicable.

Another interesting point is the court's holding that, in the absence of a likelihood of confusion, there was no risk that consumers would attribute the lower quality of the defendant's goods to adidas; therefore, the defendant’s use of three stripes did not dilute adidas' three-stripe mark. Applying the court-made doctrine of dilution, the district court cited the recent Supreme Court ruling in adidas AG v Yassin, in which it was held that, while the doctrine of dilution does not require a likelihood of confusion, dilution in the absence of any confusion should be reserved for extraordinary cases (eg, where there is no likelihood confusion because the goods belong to totally different categories) and should not apply where there is no likelihood of confusion between goods of the same type. Referring to this Supreme Court ruling (which concerned the use of a four-stripe mark), the district court held that the defendant’s use of the three-stripe mark did not dilute or affect the reputation of adidas.

The court awarded a permanent injunction and ordered the destruction of the infringing goods; it refused to order an accounting in light of the negligible profits made by the defendant.      

David Gilat and Sonia Shnyder, Gilat Bareket & Co, Reinhold Cohn Group, Tel Aviv