adidas America, Inc. v. Thom Browne, Inc.

Background

adidas America, Inc. and adidas AG sued Thom Browne, Inc. over alleged infringement of adidas’s trademark consisting of three parallel stripes. The complaint alleged that Thom Browne used striped patterns on activewear, including sweatpants, hoodies, and shirts, in a way that was confusingly similar to adidas’s Three-Stripe Mark. adidas sought monetary relief and an injunction barring the sale of infringing products.

Thom Browne had used several striped designs, including a Three-Bar Signature and later a Four-Bar Signature. In 2007, an adidas employee contacted Thom Browne about the Three-Bar Signature, and Thom Browne agreed to stop using that design. Thom Browne then adopted the Four-Bar Signature and later used it on activewear. adidas said it learned of that use in 2018, objected to it, and engaged in settlement discussions before filing this action in 2021.

Thom Browne asserted, among other defenses, that adidas’s claims were barred by acquiescence, estoppel, and laches, and that adidas had abandoned the Three-Stripe Mark. The parties filed cross-motions for summary judgment on those defenses. Summary judgment is a decision without a trial when no reasonable factfinder could rule for the opposing party based on the undisputed facts. adidas also moved to strike a reply statement of objections and responses to adidas’s factual statements.

Motion to Strike

The court denied adidas’s motion to strike. Although the local rule did not expressly authorize reply statements of undisputed facts, the court concluded that it also did not prohibit them. Because adidas had used its response to Thom Browne’s factual statement to raise additional factual assertions, the court found it fair to allow Thom Browne to respond.

Acquiescence

Acquiescence is a defense requiring an active representation that the plaintiff would not assert a right, an unjustified delay, and resulting prejudice. The court held that adidas had not actively represented that it would refrain from asserting an infringement claim. The court stated that adidas’s silence, including any failure to respond to Thom Browne’s inquiries, was not an active representation. It therefore granted summary judgment for adidas and dismissed Thom Browne’s acquiescence defense.

Estoppel

Estoppel generally requires a misrepresentation, reasonable reliance, and prejudice. The court held that adidas had not made an affirmative misrepresentation about asserting its claim. It therefore granted summary judgment for adidas and dismissed Thom Browne’s estoppel defense.

Abandonment

Thom Browne argued that adidas abandoned the Three-Stripe Mark by failing to challenge extensive third-party use of stripes. The court rejected that defense. It relied on evidence that adidas had sent more than 200 cease-and-desist letters, entered into more than 200 settlement agreements, filed more than 90 lawsuits concerning the mark, and invested hundreds of millions of dollars each year in marketing and promotion tied to the mark. The court held that there was no genuine factual dispute showing either an intent to abandon the mark or conduct that caused the mark to become generic or lose its significance. It granted summary judgment for adidas and dismissed Thom Browne’s abandonment defense.

Laches

Laches is a defense based on the plaintiff’s knowledge of the alleged misconduct, an unjustified delay in acting, and prejudice to the defendant. The court denied summary judgment to both parties on this defense because genuine disputes of material fact remained.

The main factual dispute concerned whether adidas knew or should have known by 2012 that it had a provable infringement claim. Thom Browne argued that reasonable monitoring would have revealed Four-Bar activewear earlier, including products displayed at a Thom Browne store. adidas argued that it was not required to monitor Thom Browne closely at that time because Thom Browne was primarily a tailored-clothing company and its Four-Bar activewear was a small part of its business and was not widely promoted.

The court also found a factual dispute about economic prejudice. Thom Browne presented evidence that it had invested heavily in the Four-Bar Signature, including through fashion shows and advertising, and that changing products using the design would be very costly. The court rejected Thom Browne’s claim of evidentiary prejudice based on lost records, a deceased former chief financial officer, and a witness’s faded memory because that evidence related only to proving laches, rather than to a separate substantive defense to infringement. But the court held that the claimed investments and the substantial revenue from Four-Bar activewear could support economic prejudice.

Disposition

The court denied adidas’s motion to strike. It denied Thom Browne’s motion for summary judgment. It granted adidas’s motion for summary judgment in part and denied it in part. Specifically, it entered summary judgment for adidas dismissing Thom Browne’s abandonment defense and dismissed the portions of Thom Browne’s first affirmative defense asserting acquiescence and estoppel. It denied summary judgment to either party on the portion of that defense asserting laches, which remained in the case. The court stated that trial would convene on January 3, 2023.