Adidas Loses Trade Mark Battle in Europe

Adidas Loses Trade Mark Battle in Europe
June 21, 2019


The sportswear company Adidas AG (OTC: ADDYY) once again lost a court battle regarding the three-stripe logo on footwear, clothing, and headgear. While pouring cold water over Adidas’ plans to expand its trademark three-stripe design in the EU, the General Court pointed out that it was not adequately distinct. The General Court of the European Union further opined that the three parallel stvripes drawn in any direction could not be construed as a valid logo. The General Court of the 28-member bloc opined that the three parallel stripes are nothing more than “an ordinary figurative mark.” The stock closed at $152.30, up $1.60 or 1.07% from the prior close.

On August 18th, 1949, Adi Dassler, the founder of Adidas, attempted to register the three-stripe logo used on a football boot. However, the attempt failed and the court stated that it was not enough to recognize the products that originate from Adidas.

Mark Caddle, who works as a trademark lawyer at Withers & Rogers (European intellectual property firm), explained why Adidas lost the case. He said Adidas “failed to provide sufficient evidence to show that when seeing three stripes on clothing, footwear or headgear, consumers immediately associate such products with Adidas.”

In its judgment, the General Court said: “Adidas does not prove that that mark has acquired, throughout the territory of the EU, distinctive character following the use which had been made of it.”

This was not the first time the German firm failed to safeguard the three-stripe logo. In 2003, Adidas lost a battle with Fitnessworld, a Dutch firm, which was marketing its products with a two-stripe logo. Again in 2014, the European Union Intellectual Property Office granted a trademark on “three parallel equidistant stripes of identical width, applied on the product in any direction” on shoes, clothing, and hats.

However, two years later, EUIPO canceled the approval by pointing out that the logo is not unique. The decision was made after a Belgian company, Shoe Branding Europe BVBA, filed a request for cancellation with the EUIPO. Notably, while announcing the judgment, the General Court of the European Union stated that it is upholding the 2016 decision of the European Intellectual Property Office (EUIPO) to cancel earlier approval of the trademark.

Adidas spokesperson expressed disappointment over the ruling via an email message: “Adidas is disappointed with the recent ruling by the General Court to uphold the cancellation of the company’s 3-Stripe mark applied to our products in whichever direction in Europe.”

Furthermore, the spokesperson revealed to CNBC that the company is looking at other options.

“This ruling is limited to this particular execution of the 3-Stripe mark and does not impact on the broad scope of protection that Adidas has on its well-known 3-Stripe mark in various forms in Europe. Whilst we are disappointed with the decision, we are further evaluating it and are welcoming the useful guidance that the Court will give us for protecting our 3-Stripe mark applied to our products in whichever direction in the future.”

David Stone, the global head of intellectual property at the law firm Allen & Overy, pointed out that the cancellation of the trademark underlined the difficulty faced even by popular brands vying for protection throughout the EU.

Stone said, “The cost is enormous – and missing out Malta, for example, can prove fatal. The pendulum has probably swung too far in that direction, and it may well be time to accept that EU consumers do recognize these signs as trademarks.”

David Haigh, chief executive of consultancy Brand Finance, believes that the judgment could cause a dent on the Adidas brand, which is presently valued at $14.30 billion.

Haigh said, “The name is more important, but the recognizable three stripes are also a major contributor to recognition.”

The market is anticipated to react negatively to the court ruling.

Technically, the stock is trading above its 50-day moving average. However, the RSI indicator is in the overbought region. As a result, we can expect a price correction to begin soon.

add - technical analysis - 21st June 2019

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Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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