Payless to Pay More?

Collective Brand Inc., operator of the well-known US discount shoe retailer Payless ShoeSource, is again under attack from German-based sporting apparel manufacturer adidas. In a landmark US decision last spring, adidas persuaded an Oregon jury that Payless had wilfully infringed adidas’ trade mark and trade dress in various sneaker designs, and was awarded over $300 million in damages and disgorged profits. This award represented what was thought to be the largest ever US trademark verdict. On appeal, the award was later reduced to just over $65 million – still, a significant award and an important victory for adidas.

Flush from its win against Payless in the US, adidas has elected to try to repeat its success in Canada. Earlier this month, Adidas AG and Adidas Canada Ltd. filed a claim against Collective Brand Inc. in Federal Court. In Canada, adidas’ action will hinge on Payless’ alleged infringement of the rights adidas enjoys in the well-known 3 Stripes Design, and particularly the rights afforded adidas from these three trademark registrations.

If adidas is successful, it is not likely to be awarded damages anywhere near the amounts it secured in the US; nonetheless, the case will be of interest to both trademark lawyers and sneakerheads alike. We’ll keep all of you posted on material developments.

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