Adidas America, Inc. v. Payless Shoesource, Inc.

• Decision Date: 21 December 2007
• Docket Number: No. CV 01-1655-KI.,CV 01-1655-KI.
• Citation: 529 F.Supp.2d 1215
• Parties: ADIDAS AMERICA, INC. and Adidas-Solomon AG, Plaintiffs, v. PAYLESS SHOESOURCE, INC., Defendant.
• Court: U.S. District Court — District of Oregon

529 F.Supp.2d 1215

ADIDAS AMERICA, INC. and Adidas-Solomon AG, Plaintiffs, v.PAYLESS SHOESOURCE, INC., Defendant.

No. CV 01-1655-KI.

United States District Court, D. Oregon.

December 21, 2007.

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Stephen M. Feldman, Perkins Coie, LLP, Portland, OR, Jerre B. Swann, Kil patrick Stockton, LLP, Atlanta, GA, R. Charles Henn, Jr., Kilpatrick Stockton, LLP, Atlanta, GA, Thomas R. Johnson, Perkins Coie, LLP, Portland, OR, William H. Brewster, Kilpatrick Stockton, LLP, Atlanta, GA, for Adidas America, Inc., Adidas Solomon, AG.

Bridget A. Short, Lathrop & Gage L.C., New York, NY, Craig D. Bachman, Lane Powell, PC, Portland, OR, David R. Barnard, Gerald M. Kraai, Lathrop, & Gage, LC, Kansas City, MO, Kenneth R. Davis, H, Lane Powell P.C., Portland, OR, Michael G. Martln, Michael J. Roche, Lathrop & Gage LC, Denver, CO, Milo Petranovich, Lane Powell, PC, Portland, OR, Phillip S. Lorenzo, Lathrop And Gage L.C., Denver, CO, R. Cameron Garrison, Lathrop & Gage L.C., Kansas City, MO, Stephen J. Horace, Lathrop & Gage, LC Boulder, CO, Travis W. McCallon, Lathrop & Gage L.C., Kansas City, MO, William B. Crow, Schwabe Williamson & Wyatt, PC, Portland, OR, William R. Hansen, Bernadette R. McGlynn, Lathrop & Gage, LC, New York, NY, David V. Clark, Lathrop & Gage, LC, Kansas City, MO, William A. Rudy, Lathrop & Gage, LC, Kansas City, MO, for Payless Shoesource, Inc.

KING, Judge.

adidas—America, Inc. and adidas-Salomon AG (collectively, "adidas") filed this action against Payless Shoesource, Inc.("Payless") for trademark and trade dress infringement, dilution, and related federal and state law claims. adidas alleges Payless is willfully infringing adidas' trademark rights by marketing and selling footwear bearing confusingly similar imitations of adidas' Three—Stripe trademark and Superstar Trade Dress.

Before the court are (1) adidas' motion for partial summary judgment(doc. 539); (2) Payless' motion to strikeplaintiffs' demand for jury trial(doc. 545); (3) Payless' motion for summary judgment on adidas' claim of willfulness (doc. 547); (4) Payless' motion for summary judgment dismissing adidas' federal and state dilution claims (doc. 548); (5) Payless' motion for summary judgment on adidas' claim of trademark and trade dress infringement (doe. 550); (6) Payless' motion for summary judgment on affirmative defense of laches (doc. 551); and Payless' motion (doe. 651) to strike the Rule 26 reports of Dr. Gerald Ford.

For the reasons set forth below, adidas' Motion for Partial Summary Judgment(doc. 539) is GRANTED in part, and DENIED in part; Payless' Motion to Strike adidas' Demand for Jury Trial(doe. 545) is DENIED; Payless' Motion for Summary Judgment on adidas' Claims of Willfulness (doe. 547) is DENIED; Payless' Motion for Summary Judgment on adidas' Federal and State Dilution Claims (doe. 548) is GRANTED in part, and DENIED in part; Payless' Motion for Summary Judgment on adidas' Trademark and Trade Dress Infringement Claims (doe. 550) is DNIED; and Payless' Motion for Summary Judgment on the Affirmative Defense of Laches (doe. 551) is DENIED; and Payless' Motion (doe. 651) to Strike Dr. Gerald Ford's Rule 26 Reports is DENIED.

I.Background

The following relevant facts are taken from the parties' respective concise statements of material fact and are undisputed.

A.The Parties and Their Products

adidas manufactures and sells athletic and casual footwear.As early as 1952, adidas began placing three parallel bands on athletic shoes, and in 1994, adidas registered the first of several variations of Three—Stripe trademark with the U.S. Patent and Trademark Office.The 1994 Three—Stripe mark consists of three parallel and equidistant double-serrated stripes of contrasting color on the side of the shoe running diagonally from the mid-sole forward to the shoelaces.In 1999, adidas registered a slight variation of the Three— Stripe mark, which consists of three parallel and equidistant straight-edged stripes of contrasting colon running diagonally from the mid-sole forward to the laces on the side of the shoe.¹

Among its many different models of shoes, adidas manufactures and sells the Superstar, Country Ripple, Tuscanyfadi Racer, Pranja, Copa Mundial, Campus, Samoa, Stan Smith Millennium, and Mei, which are all at issue in this case.Each of the shoes at issue here bear variations of the registered Three—Stripe mark.Some bear three double-serrated stripes, others bear three straight-edged stripes.For the purpose of its trademark claims, adidas does not claim proteetable rights in any shoe feature other than its Three—Stripe Mark.

adidas has used and promoted the Three—Stripe Mark since 1952, and promotes itself as "The Brand With Three Stripes." adidas has used the mark in connection with its frequent sponsorship of professional sports events and organizations, such as the World Cup soccer tournament, the Boston Marathon, the New York Yankees, University of Notre Dame, the University of California at Los Angeles, the University of Nebraska, and the University of Tennessee. adidas also sponsors numerous professional athletes who wear apparel bearing the Three—Stripe mark.Since introducing the Three—Stripe mark, adidas has spent millions of dollars promoting the mark and products bearing the mark.In recent years, adidas' annual sales of products bearing the Three—Stripe mark have totaled in the billions of dollars globally, and in the hundreds of millions of dollars within the United States.

adidas also claims protected rights in a Superstar Trade Dress. adidas first introduced the Superstar Trade Dress in 1969 and its principle features have not changed since that time.It consists of: (1) three parallel stripes (i.e., the Three—Stripe Mark) on the side of the shoe parallel to equidistant small holes; (2) a rubber "shell toe"; (3) a particularly flat sole; and (4) a colored portion on the outer back heel that identifies the shoes as adidas' brand.

adidas has used and promoted the Superstar Trade Dress since its introduction in 1969.The general public, professional and amateur athletes, hip-hop music artists, and the media commonly associate the Superstar Trade Dress with adidas.The Superstar was widely used by professional basketball players in the 1970s.In the late 1980s, the adidas "shell toe" reemerged as a fashion shoe, made popular by hip-hop music artists such as the Beastie Boys and Run-DMC.Since 1999, sales of Superstar shoes `have exceeded $711 million, with more than 5 million pair sold in the United States in 2001.

adidas has enforced its rights in both the Three—Stripe mark and the Superstar Trade Dress.Since 1995, adidas has pursued over 325 infringement matters involving the Three—Stripe mark in the United States, filed more than 35 separate lawsuits for infringement of the Three—Stripe mark, and entered into more than 45 settlement agreements with companies selling infringing footwear.

Payless is one of the nations' largest retailers of discount casual and athletic footwear.Payless operates approximately 4,500 stores in 49 states, and sells more than 200 million pairs of shoes annually.Since at least 1994, Payless has marketed and sold athletic shoes bearing parallel stripes.²Though Payless no longer sells footwear bearing three parallel stripes, Payless does sell several models of athletic footwear that bear two or four parallel straight-edged stripes, running diagonally from the mid-sole forward to the laces.Payless does uses stripe designs on shoes not to signify source, but as mere decoration or ornamentation.

Payless also sells shoes that have a rubber "shell toe," a flat sole, and a colored portion on the outer back heel.Instead of using three stripes, however, Payless' "shell toe" shoe bears four parallel straight-edge stripes on the side of the shoe, parallel to equidistant small holes.Payless acknowledges that it uses adidas' shoes as "inspirations" for its stripe-shoe designs.

None of Payless' allegedly infringing shoes bear three stripes.Rather, they all bear either two or four parallel stripes running diagonally from the mid-sole to the laces.Payless shoes are sold almost exclusively at Payless retail stores, and adidas shoes are not available at Payless retail stores.Although the parties dispute whether they compete for the same consumers, adidas and Payless do advertise their respective products through at least some of the same media channels.

B.History of the Dispute

In 1994, adidas filed an action alleging Payless willfully infringed adidas' trademark rights by selling athletic shoes bearing confusingly similar imitations of Midas' Three-Stripe mark.³Pursuant to a subsequent 1994 Settlement Agreement, Payless agreed not to sell athletic shoes bearing "three substantially straight parallel stripes on the side of the shoe running diagonally from the outsole forward to the lacing area," or "two or four parallel double-serrated stripes of contrasting color running diagonally from the outsole forward to the lacing area." adidas, in turn, agreed to dismiss the action with prejudice, and to release any claims that it "brought or could have brought" based on Payless' use of "two or four parallel double-serrated stripes" on footwear.Payless thereafter ceased selling three-striped shoes, as well as shoes with two or four double-serrated stripes, but continued to sell shoes with two or four straight-edged stripes.

In November 2001, adidas filed this action, claiming Payless violated the 1994 Settlement Agreement; and alleging some of Payless' two- and four-stripe shoe designs infringed adidas' Three-Stripe mark and Superstar Trade Dress.Payless moved for summary judgment on all of adidas's trademark claims, arguing that the claims were barred by the parties' 1994 Settlement Agreement because the 1994 Settlement Agreement only...