Abstract Elements and Trademark Dilution – Adidas versus Thom Browne

Thom Browne, a prominent US designer, introduced a four parallel stripes motif into his clothing designs several years ago. Not taking kindly to Browne’s move, in 2021, Adidas, the major sportswear brand, filed a lawsuit against the designer for trademark infringement. Adidas claimed Browne’s use of the four stripes motif may mislead consumers and dilute the value of Adidas’s trademark. The company petitioned the court for two remedies: monetary damages and an order prohibiting Browne from using the violating mark. Adidas sought nearly USD 8 million in monetary damages: USD 867,000 represents the amount in licensing fees Adidas claims it would have received had it authorized Browne’s use of the trademark. The rest of the amount (USD 7,011,961) consists of the profits Adidas alleges Browne earned from selling clothing items featuring the four-stripe mark.

Abstract Elements

Browne’s lawyers claimed at the start of the trial that “Adidas does not own stripes.” This claim referred to how overly abstract elements, which are common in the business sphere, such as a specific color, cannot be trademarked. The defense also claimed the designer does not use the Adidas trademark at all, but rather a four-stripe mark. In addition, the defense argued that different stripe patterns on clothing items are common and prevalent, and that Adidas has no right to prevent anyone from using them.

In addition, Browne claimed that Adidas currently manufactures sportswear and leisurewear, whereas his target audience is different. He considers his products luxury items that are much pricier than Adidas’s products. He also claimed his products’ distribution points and the distribution points of Adidas products are different, in a way that does not mislead the consumer.

The trial lasted for nine days. Browne showed up at the start wearing his own designs featuring the four stripes. After only three hours of deliberation, the eight jurors found Browne was not liable to Adidas for trademark infringement or trademark dilution.

Bad Blood

It is worth noting, in this context, that Browne and Adidas have a history. In 2007, Adidas filed another lawsuit against Browne, when Browne used a mark with three parallel stripes, not four, in his designs. At the time, Adidas successfully prevented Browne from using the three-stripe mark.

It is possible, in light of this history, that if the case were deliberated in Israel, the court would have arrived at a different conclusion, preventing the continued use of the four-stripe mark, even if it determined Browne’s four-stripe mark does not infringe on Adidas’s trademark. Such an outcome would have been based on unjust enrichment law.

Counterfeit Intellectual Property

In 1998, the Israeli Supreme Court set the ASHIR precedent, allowing the protection of intellectual property not covered by patent, design, or trademark laws. The majority opinion held to award remedies under unjust enrichment law for counterfeit intellectual property, even without a specific intellectual property right violation.

One of the conditions for establishing the protection is proving there is “an additional foundation” on top of the act of taking itself. Such a foundation might come in the form of bad faith, misconduct that offends one’s sense of fairness and justice, if the counterfeit act were carried out under circumstances of unfair competition, or if the taking party knew it was counterfeiting a product developed by another. This foundation reflects the unique severity attributed to the taking party’s wrongful conduct and “parasitism.”

The ASHIR precedent is a clear example of the Supreme Court laying a new path, so it could arrive at the normative outcome it considered suitable. While it initially received mixed reviews, 25 years later, this precedent still stands and is “alive and kicking.”

Unjust Enrichment

As noted above, one could certainly apply the ASHIR precedent to the Adidas-Browne dispute. First, the dispute concerns trademark law, under which a trademark must, as a rule, be registered for the trademark protection to apply.

Virtually the entire monetary relief claimed from Browne was for the gains earned from the sale of clothing items featuring the four-stripe mark, meaning the recovery (or disgorgement) of the enrichment at Adidas’s expense. In fact, this is the main purpose of unjust enrichment law.

Additionally, in this case, there seems to be an “additional foundation” on Browne’s part, given the parties’ past disputes. Previously, Browne used a mark that closely resembled Adidas’s three-stripe trademark, to the point of being identical. After Adidas filed a lawsuit, he stopped using the three-stripe mark and switched to four stripes. These circumstances suggest Browne was not only aware of the taking but also intended to “freeride” on Adidas’s established reputation while potentially misleading consumers.

Such a conclusion results in exactly what the Supreme Court sought to do in ASHIR: eliminate the incentive to copy intellectual property, even when one cannot point at a violation that fits exactly into one of the categories set forth under established intellectual property law. Browne’s evasion of liability, based on the claim his four-stripe mark does not violate Adidas’s three-stripe trademark, may thus appear unjust and inappropriate.

In this sense, one cannot say unjust enrichment law contradicts trademark law in particular (and intellectual property law in general). In unique cases such as these, unjust enrichment law complements trademark law, and provides a more holistic, comprehensive, and complete protection. Applying these principles would have prevented Browne from using Adidas’s three-stripe mark and would have protected not only Adidas’s reputation but the consumer as well.

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Barnea Jaffa Lande is at your service regarding trademark and other IP rights violations.