Two and four-stripe designs held to infringe adidas's three-stripe mark

On July 31 2009 the Commercial Court of Zaragoza issued its decision in a trademark dispute involving adidas AG and adidas España SA (collectively adidas) on the one hand, and Spanish shoe retailer Almacenes Kaymo SA on the other.
adidas sued Kaymo for trademark infringement, alleging that there was a likelihood of confusion between Kaymo's two and four-stripe designs and adidas's well-known three-stripe mark under Article 34(2)(b) of the Trademarks Act. adidas also claimed that Kaymo's use of the designs on sports shoes diluted its mark under Article 34(2)(c) of the act. adidas sought compensation for:
  • the damages suffered (in particular, the loss of profit resulting from the infringement); and
  • injury to the reputation of its three-stripe mark.
In addition, adidas requested that the decision of the court be published in two national newspapers.
The Commercial Court ruled in favour of adidas, concluding that Kaymo's use of the two and four-stripe designs on its sports shoes infringed adidas's three-stripe mark. The court also found that such use diluted adidas's well-known mark. The court thus ordered that Kaymo:
  • stop selling sports shoes bearing the designs at issue or any other design similar to adidas's mark;
  • publish the decision of the court in two national newspapers (once the decision has become final);
  • compensate adidas for loss of profit in an amount of €1,690,540; and
  • compensate adidas for damage to the reputation of its mark at a rate of €209 per day (to be calculated from the starting date of the infringement to the date on which the infringement ends).
The decision is noteworthy for several reasons.
First, the court specifically acknowledged that adidas's three-stripe mark is well known in Spain.
Second, the decision implies that the protection of adidas's mark extends to two and four-stripe designs. According to the court, Kaymo's use of the two and four-stripe designs not only diluted the distinctive character of adidas's well-known mark, but also created a likelihood of confusion among the public as to the origin of Kaymo's goods.
Third, the damages awarded by the court are significant with regard to both the amount and the method of calculation. To calculate the amount of compensation for loss of profit, the court took into account the 'hypothetical royalty fee' criterion (ie, a guaranteed annual minimum royalty that would have been due to the trademark owner had it granted the infringer a licence to use the mark). With regard to the injury to the reputation of the three-stripe mark, the court took into account the investments made by adidas to promote its mark.
Jesús Arribas, Grau & Angulo, Madrid

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