Adidas v Pacific Brands

This case centered on Pacific Brands production and sale of shoes with 4 stripes running down the side. The plaintiff, Adidas, argued that the 4 striped shoes were likely to confuse or deceive consumers into thinking Pacific Brands shoes were made by Adidas, a breach of s120 of the Trade Mark Act.

Adidas was seeking an injunction, preventing Pacific Brands from using the design, damages with interest, an account of profits and for Pacific Brands to deliver the remaining stock to them.

The two trade marks being argued were from 1957 and 2002 (Trade Marks can be registered for 10 years and renewed for perpetuity), and both concerned three stripes on the side of sport and casual shoes, Adidas' position was that any stripes on shoes were covered by the trade marks, while Pacific Brands argued that 4 stripes were clearly distinguished from 3 stripes.

The Adidas claim centered on s120(1) of the Trade Mark Act, which covers use of a trade mark with respect to the same class of goods. There was no debate as to validity of the Adidas trade mark within the definition of s17 of the trade marks act. The 3-stripe symbol has clearly been used to distinguish Adidas with respect to shoes.

Pacific Brands defence rested on two arguments, first; that the use of stripes did not amount to use as a trade mark within the act, and second; that the 4-stripes were not "deceptively similar".

The first argument ran as follows;
Pacific Brands argued that the stripes were not for use as a trademark because they were used in different ways (functional, as well as design), in response Adidas argued that the 'badge of origin' claim doesn't mean it is only for that purpose (Johnson & Johnson v Sterling Pharmaceuticals, Pepsico v Kettle Chip co.)
The second argument was that the shoes were branded with Pacific Brands own brand names, this was rebutted by citing Allsop J in Anheuser v Budejovicky.
Adidas submitted that that the test for use as a trade mark should come from Aldi Stores v Frito-Lay, where the test is whether the public would perceive it as being used to distinguish from competitors. They also raised the placement of the stripes on side of the shoes, citing Beecham Group v Colgate-Palmolive, where this was found to be a factor.

The Federal Court found that, despite Pacific Brands claims that it did not advertise and thus was not associated with the stripes, that they were still using the stripes as a trade mark.

On the second argument, both sides called experts from consumer and marketing groups. An early proposition put forward by the Defendants was that their shoes were sold for lower prices and in different places, and as such consumers would be not confused. This argument was rebutted with the assertion that many leading brands were now being stocked at K-Mart, and as such the possibility to be mislead still arose.
The final limb of the Adidas argument centered on context, and that to determine the context based on where it was sold would create an absurdity where the ruling would change if Athlete's Foot were to sell that particular item.

The Federal Court found that two of the 12 shoes involved in the case, The Stingray Shoe and the Airborne shoe did breach the Adidas trade mark. Though the court was not convinced as to intent, it did find that there was a real and tangible danger of confusion occurring.

Adidas and Pacific Brands have been given 28 days to agree on damages.

s120 Trade Marks Act

TRADE MARKS ACT 1995 - SECT 120

When is a registered trade mark infringed?

             (1)  A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.

Note 1:       For registered trade mark see section 6.

Note 2:       For deceptively similar see section 10.

Note 3:       In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A.

             (2)  A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

                     (a)  goods of the same description as that of goods ( registered goods ) in respect of which the trade mark is registered; or

                     (b)  services that are closely related to registered goods; or

                     (c)  services of the same description as that of services ( registered services ) in respect of which the trade mark is registered; or

                     (d)  goods that are closely related to registered services.

However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.

Note 1:       For registered trade mark see section 6.

Note 2:       For deceptively similar see section 10.

Note 3:       In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A.

             (3)  A person infringes a registered trade mark if:

                     (a)  the trade mark is well known in Australia; and

                     (b)  the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:

                              (i)  goods ( unrelated goods ) that are not of the same description as that of the goods in respect of which the trade mark is registered ( registered goods ) or are not closely related to services in respect of which the trade mark is registered ( registered services ); or

                             (ii)  services ( unrelated services ) that are not of the same description as that of the registered services or are not closely related to registered goods; and

                     (c)  because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and

                     (d)  for that reason, the interests of the registered owner are likely to be adversely affected.

Note 1:       For registered trade mark see section 6.

Note 2:       For deceptively similar see section 10.

Note 3:       For well known in Australia see subsection (4).

Note 4:       In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A.

             (4)  In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia , one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason.