"Two stripes are enough" – adidas succeeds in opposing competitor's 2 stripe trade mark application on basis of its 3 stripe registration

The similarity between a two stripe design for shoes and adidas' earlier trade mark for its renowned three stripe shoe, combined with adidas' significant reputation in that mark, means that adidas can oppose the two stripe application for use on shoes, as there is a substantial risk that the use of the two stripe mark being applied for is taking unfair advantage of the reputation of adidas' mark.

This decision by the EU General Court on 1 March 2018 (cases T-85/16 and T-629/16) is a reminder that the courts will take a strict view on trade mark applications that sail too close to famous marks.  In this case, the General Court was particularly scathing of a 2007 advertising campaign used once by a licensee of Shoe Branding Europe, which featured the slogan "Two stripes are enough".  The General Court considered this as evidence of the risk of unfair advantage being taken of the repute of the adidas mark by Shoe Branding Europe.  Care must be taken by brand owners not to engage in, and to ensure that any licensees do not engage in, marketing campaigns that could be misconstrued as taking advantage of, or seeking to trade on, the repute of a similar earlier mark.

The decision also suggests that any use of the two stripes by Shoe Branding will likely be infringing, given the findings of the General Court in relation to registration and the similarity of the tests for trade mark infringement. Last year, adidas sued Puma in relation to the latter's use of four stripes on sports footwear.

On 1 March 2018, the General Court of the European Union held that adidas may oppose the registration by Shoe Branding Europe of two EU trade marks consisting of two parallel stripes on a shoe.  This decision affirms earlier decisions by the European Union Intellectual Property Office (EUIPO).

Background

The dispute history of the two oppositions is complex; in summary, in 2015 and 2016, the Board of Appeal of the EUIPO allowed adidas' oppositions to Shoe Branding's two stripe mark applications on the basis of Article 8(5) of Regulation No 207/2009. This Article provides that: the trade mark shall not be registered where it is identical with, or similar to, an earlier trade mark which has a reputation in the EU, and where the use without due cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark.

Shoe Branding Europe appealed the decision of the Board of Appeal in relation to the 'footwear' application (T-629/16) on three grounds;

1. that adidas did not establish that its registered mark has a sufficient reputation in the EU for either footwear or safety footwear.  The General Court disagreed on the facts presented by adidas.  In particular, it considered that the adidas mark at least has a significant reputation in Germany (and a number of other member states).  According to settled case law, the condition as to reputation is fulfilled if the mark has a reputation in a substantial part of the EU territory, even if that reputation is in a single member state.
2. that the Board of Appeal failed to take into account that the use of its marks would neither take unfair advantage of nor be detrimental to the distinctive character or the repute of the adidas mark.  This argument consisted of four main complaints:
   1. the Board of Appeal incorrectly held that sportswear and sports footwear were everyday consumer goods, whereas they are actually specialised goods and, accordingly, the consumer would be more discerning when making a purchase;
   2. the Board of Appeal should have taken into account certain differences between the Shoe Branding Europe mark and the adidas mark, including the length and colour of the stripes;
   3. the Board of Appeal failed to take into account the extremely weak inherent distinctive character of the adidas mark; and
   4. the use of the Shoe Branding Europe mark would not take unfair advantage of, or be detrimental to, the distinctive character or repute of the adidas mark.
      1. In relation to complaints (a) and (b), the General Court held that Shoe Branding Europe was precluded from raising these complaints as these issues were dealt with in an earlier judgment (an appeal from which was dismissed by the Court of Justice) and, as a result, this judgment was final and has the authority of res judicata.  Even if the complaints were admissible, the General Court considered them to be unfounded.
      2. In relation to complaint (c), the General Court held that, whatever the inherent distinctive character of the adidas mark, the finding by the earlier courts of the reputation of the adidas mark shows that it had acquired a distinctive character through use.
      3. In relation to complaint (d), the General Court considered that the high, long-held and enduring reputation of the adidas mark, combined with the fact that the Shoe Branding Europe mark was to be applied to identical goods, strongly increases the probability of unfair advantage being taken.  In particular, adidas pointed to a 2007 marketing campaign by Shoe Branding Europe, which used the slogan "two stripes are enough".  The General Court considered this evidence as a concrete example of the risk of unfair advantage being taken of the repute of the adidas mark by Shoe Branding Europe.
3. The third and final appeal ground by Shoe Branding Europe was that it had due cause for the use of the mark the subject of the application. The General Court rejected this ground, referring back to the 2007 marketing campaign as evidence of the use of the mark not having always been in good faith. 

In relation to the 'safety footwear' application (T-85/16), many of the same grounds above were put forward by Shoe Branding Europe, with the General Court reaching similar findings, ultimately concluding that there was a risk that Shoe Branding Europe would take unfair advantage of the repute of the adidas mark by using its two stripe mark in relation to 'safety footwear'.  The Court again focused on the use of the marketing campaign slogan "two stripes are enough", as indicating that Shoe Branding Europe has not always used its mark in good faith, and might seek to trade off the reputation of the adidas mark in the future.

Accordingly, the General Court held that adidas could oppose the registration of the two applications by Shoe Branding Europe.  Shoe Branding Europe has two months to bring an appeal before the Court of Justice of the EU.

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