In a judgment of the General Court of the European Union of the 19th June 2019, Adidas saw their hopes of extending their three stripes trademark dashed, as the court ruled that there was no distinctiveness in the three stripes trademark. Furthermore, the court held that the Adidas had failed to prove that the mark had acquired distinctive character through use throughout the member states of the EU.
The case dates back to a 2016 application for an annulment brought by the Belgian company, Shoe Branding Europe BVBA, before the EUIPO, which action for annulment was upheld on the ground that the mark was devoid of any distinct character both inherent and acquired. Furthermore the EUIPO held that, given that Adidas had failed to furnish sufficient proof that the mark had acquired a distinctive character through use in the member states, then such mark should not have been granted protection in the first place.
The court in its judgment upheld the same reasoning as the EUIPO stating that "the mark is not a pattern composed of a series of regularly repetitive elements but an ordinary figurative mark". The court also pointed out that the forms of use, which fail to respect other essential characteristics such as the mark's colour scheme, should not be taken into account when assessing the distinctiveness of the mark.
This judgment can be seen as a huge blow to Adidas and might result in an erosion in its valuation. In fact, share prices were down by 1.8% following the judgment.
This judgment was largely decided on a point of procedure, that is, on the amount of evidence produced by Adidas to show widespread use of the mark within the EU and to thus prove that it had acquired distinctive character. Adidas only provided proof of use of the mark in five member states which the EUIPO, and subsequently the court, ruled was not sufficient. Had Adidas been more diligent and provided proof of more widespread use, it is likely that the outcome of the decision would have been quite different.
This judgment was a culmination of a decade long battle with Shoe Branding Europe, who last year had their own two-stripe trademark invalidated due to its similarity to Adidas' three striped trademark. The Belgian company bought Patrick in 2008, which company was founded in 1892, and thus claim that their mark has been around much longer. Patrick's mark features two stripes which, however, are in an opposite direction to those found on Adidas' shoes and clothing.
This judgment therefore opens up a number of possibilities. Firstly, it may allow Shoe Branding Europe to appeal its own ruling and get their mark registered on the basis that the Adidas mark has been revoked. This, however, is quite an unlikely scenario given that Adidas enjoys other trademark protection within the EU. The second possibility is that Adidas will be able to overturn the judgment. Thirdly, and the most unlikely scenario, is that both marks will be granted protection and registration and must therefore coexist together. The court is unlikely to take this approach as it might cause confusion on the average consumer and would therefore run counter to the intended nature and purpose of trademark registration and protection.
The most likely scenario is that both marks will not be granted registration. Such scenario will create some ambiguity as to whether third parties may make use of the three stripes design or some variation of it on their own goods and branding. Adidas will have to get creative in protecting its interest by relying on its other registered trademarks to try and keep hold of the three stripes mark, in the hopes of a fresh application being made and the necessary proof furnished to show that it does indeed satisfy the requirements of acquired distinctiveness through widespread use. It would be devastating for Adidas' hopes of staking a permanent claim on the three stripes mark in the future, were it to allow third parties to freely make use of the mark without raising any objections. Should a third party start making use of the mark on a wide scale and beat Adidas to the punch and be granted registration, this will have a far greater ripple effect as to their brand valuation and market share.
This case highlights the need for greater care when presenting evidence to sustain claims of acquired distinctiveness through use. The court has gone beyond requiring proof of use in some member states as is traditionally required to prove prior use, but has shown that use across the majority, if not all member states, must be proven in order for the plea of acquired distinctiveness through prior use to be upheld
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