Adidas Loses International Trade-mark Case

One of the infringement provisions within the European Union's Trade Marks Directive was recently interpreted by the European Court of Justice ("ECJ"), in Adidas-Salomon AG and Adidas Benelux BV v. Fitnessworld Trading Limited.   The Dutch High Court referred the case to the ECJ in response to Adidas' appeal to that Court from a lower court decision.   The action pending before the High Court involves Adidas' registered trade-mark for a motif consisting of three vertical parallel stripes and the use by Fitnessworld of a motif on its sportswear clothing with two vertical parallel stripes.   German-based Adidas initially brought the action in the Netherlands against UK's Fitnessworld Trading claiming that there would be a likelihood of confusion between the two companies' motifs, allowing Fitnessworld to trade on Adidas' reputation.   The action was commenced in the Netherlands, since it is one of the countries in which Adidas' trade-mark was registered.   Fitnessworld was marketing sportswear in that country with the impugned motif.   The Dutch lower court had dismissed Adidas' trade-mark infringement action on the basis that there was no likelihood of confusion.   Specifically, the court found that the two-stripe motif had been commonly used in Holland to embellish sportswear and Fitnessworld's use of the motif had only been for embellishment. The appeal of that decision was stayed by the Dutch High Court to permit a reference to the ECJ of   several questions relating to the interpretation of Article 5(2) of the Directive.   Pursuant to Article 5(2) of the Directive: "Any member state may … provide that the proprietor [of a trade-mark] shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade-mark in relation to goods or services which are not similar to those for which the trade-mark is registered, where the latter has a reputation in the member state and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade-mark." First, the ECJ confirmed that, notwithstanding the words of the provision, Article 5(2) also applies to the use of trade-marks on similar goods to those for which the trade-mark at issue is registered.   Secondly, the use of the provision was not conditional on a finding that there was a likelihood of confusion between the trade-mark and impugned motif.   Rather, the degree of similarity required between the two is established where the public could establish a link between the motif and the trade-mark.   Lastly, the court held that "where, according to a finding of fact by the national court, the relevant section of the public views the sign [motif] purely as an embellishment, it necessarily does not establish any link with a registered mark."   In such circumstances, the degree of similarity between the motif and the mark would not be sufficient to establish such a link. For Adidas, the ECJ's ruling is troubling, given the Dutch lower court's finding of fact that Fitnessworld's use of the motif was for embellishment purposes only. To review the decision of the ECJ, please visit: http://makeashorterlink.com/?P1CA23896. For an alternative summary of the case, please visit: http://www.dw-world.de/english/0,3367,1431_A_1012189_1_A,00.html; http://www.tdctrade.com/alert/eu0322e.htm; or http://www.lawreports.co.uk/ecjoctd0.3.htm. Summary by:   Lenni Carreiro