Three stripes and you're out? adidas v Shoe Branding
On 18 December 2013, adidas AG (adidas) applied to register a mark as a figurative European trade mark (EUTM), bearing the description: “the mark consists of three parallel equidistant stripes of equal width applied to the product in whatever direction”.
Just over five months later (which timescale included a three-month opposition period), the mark was registered. No evidence of acquired distinctiveness was requested by the examiner.
On 16 December 2014, almost exactly a year after the mark had been filed, Shoe Branding Europe BVBA (SBE) applied to cancel the registration for lack of distinctiveness, arguing that it comprised merely a basic geometric sign which could be used for decorative purposes. SBE also argued that there was a contradiction between the mark type claimed (“figurative”) and the description, which indicated positioning, claiming that the European Union Intellectual Property Office (EUIPO) should have invited the applicant to remedy the discrepancy by changing the mark type to “other”. The mark type was therefore uncertain, and could conceivably grant broad protection for a wide range of goods (“clothing; footwear; headgear”).
adidas noted that the mark had been registered despite a third party having filed observations on its supposed lack of distinctiveness. It also pointed out that SBE had filed for several two-stripe marks, and that consumers had been taught to recognise the mark as designating trade origin as a result of the intensive use adidas had made of it over the years.
adidas filed around 12,000 pages of evidence of market use and recognition, including lucrative sponsorship deals with leading sports personalities and football teams.
adidas argued that market survey evidence from many EU countries supported its claim for acquired distinctiveness (including the fact that more than 60% of consumers in Spain and Germany who purchase sports clothing recognised the mark as designating origin).
The Cancellation Division found the mark to be invalid. On the formalities point, it held that the written description of the mark did not position the stripes on a particular part of a product in a constant size or particular proportion to the product; since the mark was registered as a figurative mark and not a position mark, its scope of protection was strictly limited to the graphical representation filed. Any use of the mark shown by adidas therefore had to demonstrate use of the mark exactly as applied for.
The mark had no inherent distinctiveness because consumers would likely perceive it as merely decorative.
As regards the evidence of use filed, the EUIPO noted that insofar as this related specifically to the mark as registered it was “paltry”, stating that “some images showing a design on a football shirt or boot that resembles the three lines of the contested EUTM is no basis on which to conclude that [it] is recognised as [adidas’s] trade mark in the internal market of 500 million people”. In short, adidas had not made the connection between the imposing market share and notoriety of the adidas brand on the one hand, and the exposure of the public to the contested mark on the other.
adidas appealed against the decision, maintaining that the Cancellation Division had carried out an incomplete review of the evidence (eg, excluding images showing the mark in the same size/proportions but viewed as going in a different direction – adidas maintained that these were permitted variations which did not alter the distinctive character of the mark); that the description of the mark did not conflict with the figurative classification; that the presence of other adidas marks being used alongside the three stripes cannot bar a finding of acquired distinctiveness; and that established case law confirmed that it is not necessary to show acquired distinctiveness for every member state.
SBE reiterated its claims that consumers would see the mark as ornamental, and that the description was clearly intended to widen its scope by adding “in whatever direction” (since the direction of the sign may well affect its distinctiveness). As regards adidas’s attempts to have the survey evidence extrapolated to member states in relation to which no evidence had been adduced, SBE argued that that would only be permissible if the parallel markets were homogenous and where at least some evidence had been shown for the territories in question.
The Board of Appeal held that the description added to the mark did not fatally conflict with its classification as figurative, nor did it necessarily imply that the mark was a position mark. Although the phrase “in whatever direction” was controversial, since it appears prima facie to allow countless ways in which the mark might appear, the Board of Appeal held that there was nothing to prevent a proprietor from attaching his mark to a product in any manner or orientation he sees fit. The Board of Appeal noted, however, that whether use of a mark in a specific orientation could be regarded as genuine use of the mark as registered was another question entirely (on which it did not opine further). In any event, the categorisation of the mark as “figurative”, together with the verbal description, did not constitute a procedural error.
As regards adidas’s claims that the mark had acquired distinctive character, the Board of Appeal reviewed relevant case law on acquired distinctiveness (including the four finger KitKat decision, case no. C-215/14).
It concluded that much of the evidence filed by adidas related to other marks it has registered comprising three parallel equidistant stripes in different lengths and different directions. However, that alone was not reason enough to discard the evidence; consideration had to be given as to whether the use shown was in a form different from the form registered. In this regard, the Board of Appeal noted that the registration was extremely simple: three vertical, parallel, thin, black stripes against a white background whose height is approximately five times its width. A mark which deviates significantly from those characteristics could not be held to constitute legitimate proof of use of the mark.
The Board of Appeal noted exhibits which showed three white stripes against a dark background on clothing and bags, and concluded that this was of doubtful value; similar use on footwear showed much thicker, shorter stripes than those in the registration. Use of the mark in a logo form alongside the ADIDAS word mark were also unhelpful, as the renowned word mark so completely eclipsed the figurative stripes element that “it looks like mere decoration”.
Advertising and marketing expenditure figures were not linked to the particular mark as registered, nor was the proportion spent on specific goods highlighted. As regards the extent to which acquired distinctiveness must be shown across the EU, the Board of Appeal did not give helpful guidance – it acknowledged that previous case law held that there cannot be a requirement for proof to be adduced from each individual member state, but went on to state that if the evidence submitted “does not cover a part of the [EU], even a part which is not substantial or consists of only one member state, it cannot be concluded that distinctive character has been acquired through use of the mark throughout the [EU]”.
Overall, the Board of Appeal was critical of the evidence submitted, noting that much of it was irrelevant (not referring to three stripe marks at all) and/or did not refer to the specific three stripe mark in question.
The appeal was therefore dismissed.
It seems that adidas has appealed further to the General Court, comprising its third (but not necessarily final) strike in the three stripe saga.
The case confirms the increasingly high hurdle faced by owners of marks that may on one analysis be deemed “decorative” or “surface decoration”. Despite the undeniably well-known consumer association between three stripes and adidas across much of the world, this decision confirms, yet again, that a trade mark owner must file the right evidence, focusing on the relevant mark and making it clear to what extent sales figures, advertising spend, market share, etc relate to that specific mark, rather than a wider stable of the owner’s brands.
Case details at a glance
Jurisdiction: European Union
Decision level: Second Board of Appeal
Parties: adidas AG and Shoe Branding Europe BVBA
Citation: R 1515/2016-2
Date: 07 March 2017