By Dolf Segaar, Sports Lawyer at CMS Amsterdam and Elly Besterveld, Support Lawyer at CMS Amsterdam The Netherlands
For 23 years, Adidas and H&M have been in a battle over “stripes”.
Adidas is the holder of the well-known “three-stripe” trademark in the sports and leisure clothing category.
In 1997, H&M sold fitness clothing from the “Work Out” series. with a “two-stripe” sign. Adidas ordered H&M to stop the sale and started legal proceedings.
For a long time, Adidas emerged as the winner in the legal battle which followed, but very recently The Hague Court of Appeal ruled that H&M does not infringe the three-stripe trademark of Adidas.
The case started in 1997 with interim relief proceedings and went all the way through the Dutch Supreme Court to the Court of Justice of the EU. After the decision of the Court of Justice, the case went again to the Supreme Court, who referred the matter to the Court of Appeal of Arnhem and who decided, in 2015, in favor of Adidas.
To prevent the provisional measure ordered by the Court from losing its effect, Adidas started proceedings on the merits before the District Court of The Hague.
In 2017, the Hague District Court ruled that H&M’s two stripes of clothing infringed the three-striped mark of Adidas, after which H&M appealed at the Court of Appeal in The Hague.
In January 2020, the Hague Court of Appeal published its abovementioned decision in favour of H&M.
Decision of the Hague Court of Appeal
Adidas three stripes versus H&M two stripes
In the Court’s opinion, the three-stripe trademark of Adidas is characterized by the specific combination of three vertical parallel running stripes, with gaps equal to the width of the stripes. There exists a pattern: a multiple repetition of components. The pattern covers a significant portion of the shoulder / sleeves and the side of the pants.
The H&M two-stripe sign is regarded by the Court as one thick line with a (narrower) line between them. According to the Court, this does not form a pattern, because the multiple repetition is missing.
No likelihood of confusion
The Court decides that there is no likelihood of confusion.
This applies even though the three stripes of Adidas is a well-known trademark, which enjoys a broader scope of protection due to their high degree of consumer recognition and dominant market presence, and the sold goods, being sportswear of either party, were similar.
The Court of Appeal comes to the conclusion that there is only a very small degree of similarity between the Adidas trademark and the sign of H&M. The combination of stripes and gaps between the trademark of Adidas and the sign of H&M deviate significantly (the number of stripes, the width of the gaps and the consequences thereof for the overall picture). Because of the limited similarity, which is only caused by the non-distinctive elements (the stripes), there is no likelihood of confusion.
The role of market research reports
The Court decided also that the provided market research reports are not sufficient to consider that there is a likelihood of confusion.
In market research reports regarding a well-known trademark the so-called market leader effect plays a role. This means that people will probably answer Adidas, as one of the market leaders, if they are asked to say something about the origin of sportswear.
Earlier studies of Adidas showed convincing figures of confusion: people saw H&M clothing and thought that it was designed by Adidas. H&M criticized the market leadership effect of Adidas and provided the Court with a new study. This study revealed that only 10% of the consumers, who were surveyed, named Adidas after viewing H&M’s striped Work Out clothing.
The Court underlined that the results of the market research reports produced in connection with the case are not decisive to assume whether there is a likelihood of confusion among consumers. According to the Court of Appeal market investigations can, at most, be an aid in determining such likelihood of confusion. The likelihood of confusion cannot be determined with sufficient certainty by a market investigation. The possible questions to respondents are often either too vague or too guiding to provide reliable answers.
After winning the first few battles Adidas has lost this latest important one.
Adidas has to pay an amount of approximately € 80,000 as compensation for legal costs to H&M. Adidas can still appeal to the Dutch Supreme Court, but there it will only be possible to appeal legal issues and no factual findings by the Court of Appeal, such as considerations relating to the stripes.
It is likely, therefore, that this latest decision will be the final one in this long-running saga!
Dolf Segaar and Elly Besterveld may respectively be contacted by e-mail at ‘firstname.lastname@example.org’ and ‘elly email@example.com’