Addressing the evidentiary standard for irreparable harm in a Lanham Act case, the US Court of Appeals for the Ninth Circuit affirmed the district court's grant of a preliminary injunction preventing a sneaker company from selling an allegedly infringing tennis shoe, but reversed the preliminary injunction on another shoe because although plaintiff established a likelihood of success on the merits, it failed to establish irreparable harm. Adidas America, Inc. v. Skechers USA, Inc., Case No. 16-35204 (9th Cir., May 10, 2018) (Nguyen, J) (Clifton, J, concurring in part and dissenting in part).
In just one chapter of what the Ninth Circuit called the parties' "history of trademark litigation," Adidas sued Skechers alleging that Skechers' Onix shoe infringed Adidas's unregistered trade dress for its Stan Smith shoe, and that Skechers' Cross Court shoe infringed and diluted Adidas's Three-Stripe trademark.
The district court granted Adidas preliminary injunctions barring Skechers from selling either shoe, finding that Adidas established that (1) it was likely to succeed on the merits, (2) it was likely to suffer irreparable harm, and (3) the balance of equities tipped in its favor. Skechers appealed.
On appeal, Skechers challenged elements (1) and (2) of the preliminary injunction factors. The Ninth Circuit found that the district court had not abused its discretion in finding that Adidas had shown it was likely to succeed on the merits with respect to both sneakers for which preliminary injunction was sought. Likewise, the Court agreed that Adidas had shown it was likely to suffer irreparable harm if Skechers was not barred from selling the Onix shoe. The Court disagreed, however, with the district court's finding that Adidas was likely to suffer irreparable harm if the preliminary injunction was not granted barring Skechers' sale of the Cross Court shoe.
"The extensive and targeted advertising and unsolicited media, along with tight control of the supply of Stan Smiths, demonstrate that Adidas has built a specific reputation around the Stan Smith with 'intangible benefits.'" Further, Adidas's consumer surveys—which showed that approximately 20 percent of surveyed consumers believed that Skechers' Onix shoe was somehow affiliated with Adidas—"demonstrate that those intangible benefits will be harmed if the Onix stays on the market." Comparatively, Adidas's "narrow argument of irreparable harm as to the Cross Court: that Skechers harmed Adidas's ability to control its brand image because consumers who see others wearing Cross Court shoes associate the allegedly lesser-quality Cross Courts with Adidas and its Three-Stripe mark," fell short.
The Court specifically took issue with Adidas's evidence (or lack thereof) that Skechers has a "lower-quality, discount brand" reputation. Additionally, the Court noted that Adidas's theory of harm conflicted with its post-sale theory of consumer confusion:
If a consumer viewed a shoe from such a distance that she could not notice its Skechers logos, it is unlikely she would be able to reasonably assess the quality of the shoes. And the consumer could not conflate adidas's brand with Skechers supposedly "discount" reputation if she did not know the price of the shoe and was too far away to tell whether the shoe might a Skechers to begin with.
The "post-sale confusion from afar" would still cause irreparable harm to the Stan Smith shoes, however, because it would "harm the value Adidas derives from the scarcity and exclusivity of the Stan Smith brand."
Judge Clifton dissented in part, arguing that both preliminary injunctions should have been affirmed: "If a shoe bearing a mark that looks like the Three Stripes cannot reliably be identified as being an Adidas shoe, available at Adidas prices, and made to satisfy the quality standards of Adidas, then that Three-Stripe mark will lose some of its value and Adidas will be harmed."
The Other Shoe Drops In Sneaker Trademark Case
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