Payless to Pay More - Adidas Awarded $300 Million in US Trade-mark Action

In the US District Court for the District of Oregon, Payless Shoesource Inc (Payless) was found to infringe Adidas of America Inc's (Adidas) THREE STRIPE trade-mark in the recent decision of Adidas America Inc et al v Payless ShoeSource Inc (No. 01-1655). Payless was found to have sold over 260 different pairs of infringing shoes. Each of these shoes contained either a 2-stripe or a 4-stripe design. Adidas claimed that Payless copied its THREE STRIPE design shoes, and simply added or removed a stripe from Adidas's designs. It further claimed that Payless sold approximately 30 million pairs of these infringing shoes, resulting in sales of about US$400 million. The nine-person jury agreed with the claimant, and awarded Adidas $305 million. Adidas's counsel asserted that the award was the largest in history for an act of trade-mark infringement. Approximately $30 million was awarded as damages, another $137 million as disgorged profits due to the willful acts of infringement, and a further $137 million in punitive damages. Following the verdict, Payless filed several motions seeking to overturn the decision or reduce the award, arguing that the judgment was unfounded, and that Adidas should not be allowed to leverage its THREE STRIPE design into a "monopoly on the use of two and four stripe designs on footwear." For the amended complaint of Adidas, see: http://s.wsj.net/public/resources/documents/WSJ_3rd_Amended_No418.pdf For the text of the verdict from the case, including photographic displays of the relevant shoes and graphic designs, see: http://s.wsj.net/public/resources/documents/WSJ_JuryVerdict_No861.pdf For commentary on the judgment, visit: http://tinyurl.com/5jwwgg ; and http://tinyurl.com/5j9x69 Summary by: Michael Migus