Jury awards over $300 million for 'adidas-inspired' running shoes

In adidas America Inc v Payless ShoeSource Inc (Case 01-1655-KI, May 5 2008), a federal jury in the US District Court for the District of Oregon has held that a discount shoe retailer, Payless ShoeSource, was liable to running-shoe maker adidas America Inc for almost $305 million. 
Payless was held liable for infringement, dilution, unfair competition and deceptive trade practices with respect to adidas’s 'three-stripe mark' (the design that appears on the sides of adidas's running shoes). Payless was also found liable with respect to adidas’s SUPERSTAR trade dress. The jury made specific findings of liability for each of more than 250 different styles of running shoes, all of which included either two or four parallel, equal-width stripes that were equally spaced in the mid-foot portion of each side of the shoes. The jury found no liability as to one shoe style that appeared to consist of only one stripe on the sides of the shoes.
Turning to monetary relief, the jury:
  • awarded adidas $30,610,179 in actual damages;
  • found that Payless acted wilfully or in bad faith, supporting an award of $137,003,578 for Payless’s profits; and
  • found that Payless acted with malice or in wanton and reckless disregard of adidas’ rights, which supported an award of $137,003,578 in punitive damages based on adidas’s claims under Oregon state law.
Payless subsequently filed several post-trial motions, seeking:
  • judgment as a matter of law on adidas’s liability claims or, in the alternative, a new trial;
  • judgment as a matter of law on adidas’s damages claim or, in the alternative, a new trial on damages or reduction of the jury award;
  • a new trial or reduction of the jury award (remittitur); and
  • judgment as a matter of law or a new trial due to adidas’s alleged failure to prove actual damage.
On the issue of wilfulness, Payless also filed under seal a supplemental motion for new trial. The parties briefed the motions and the court took them under advisement after hearing argument on July 21 2008.
The State of Oregon also filed a motion to intervene based on its status (under Oregon statutes) as a judgment creditor on any awards of punitive damages based on violations of Oregon state law. Oregon law requires that 60% of punitive damages on state law claims (in this case, 60% of $137,003,578) be paid to the Oregon Department of Justice’s criminal injuries compensation account. Payless opposed the motion, arguing that:
  • intervention was premature before judgment was entered on the jury verdict; and
  • intervention was not needed to protect the state’s right to a share of a judgment awarding punitive damages. 
adidas concurred with Payless’s position that:
  • the state’s motion was premature; and
  • the state had not shown that it was entitled to intervene at this stage.
David S Fleming, Brinks Hofer Gilson & Lione, Chicago

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