Running: Jury gives Adidas $305 million in Payless stores trademark suit

Wednesday, May 07, 2008 - 10:29 PM

Photo from U.S. District Court records
This is one of the Payless shoes that a jury found infringed on Adidas' three-stripe trademark.

A federal jury in Portland late Monday ordered Payless Shoesource Inc. to pay $304.6 million for willfully infringing on Adidas America Inc.'s three-stripe trademark logo.

A nine-person jury in U.S. District Court in Portland unanimously awarded Adidas $30.6 million in actual damages, $137 million in punitive damages and $137 million in Payless profits, according to a transcript of the proceeding.

Adidas America is the U.S. subsidiary of German sportswear giant Adidas AG.

William Brewster, an attorney with Kilpatrick Stockton in Atlanta that helped represent Adidas, said he believes the verdict to be the largest ever in a trademark-infringement case. "We are very pleased with this result," Adidas America General Counsel Paul Ehrlich said in a written statement. "Adidas is pleased the jury agreed with our position that Payless' conduct was unlawful and cannot be tolerated. We have been building the Adidas brand for over 60 years, and this verdict supports the value our society places on protecting innovation and quality brands."

Topeka, Kansas-based Collective Brands Inc., which operates Payless and Stride Rite shoe store chains, called the award "excessive and unjustified" on Tuesday. It said it plans to ask the court to set the verdict aside. If that request is not granted, the company said in a statement, Collective "intends to take all necessary steps to overturn it."

Michael M. Ratoza, an attorney with Bullivant Houser Bailey and an adjunct professor at the University of Oregon Law School, said the verdict could have a big impact on retail stores that sell discount products that look like well-known items.

"Not just discount retailers, but even more sophisticated stores. Really, any retailer has to be very cautious about the source of their products."

According to case records, Adidas alleged Payless infringed on its trademark three-stripe logo and its Superstar trade dress by using two- and four-parallel stripes on a variety of shoe styles sold in its stores. Payless operates 4,500 stores in 49 states and sells 200 million pairs of shoes each year. But Adidas-brand shoes are not available in Payless stores.

Following a 14-day trial and two days of deliberation, the jury found in Adidas' favor on all seven claims it was asked to consider, including trademark infringement, trade dress infringement and unlawful and deceptive trade practices.

Adidas has aggressively defended its three-stripe logo. It has pursued 325 infringement matters in the United States, including through 35 lawsuits and 45 settlement agreements, according to records in the case.