Arc’teryx and Adidas must thrash out TM dispute over Terrex signage at trial

Luxury Canadian outdoor brand claims Adidas' store sign displayed with three-stripe mark a few doors away is confusing for consumers | Justice rejects Adidas’ denial and orders temporary injunction until it trademarks Terrex.

Adidas Canada has lost a trademark dispute with a luxury Canadian outdoor-equipment brand—at least for now.

Amer Sports Canada, which owns the brand Arc'teryx, sued Adidas Canada in February 2023 just a few weeks after it opened a retail store under Adidas’ TERREX name, a few doors down the street from an Arc’teryx store in the Kitsilano area of Vancouver.

In its complaint filed in the Supreme Court of British Columbia, Vancouver, Arc'teryx argues that it would suffer irreparable harm, claiming that Adidas Canada is wrongfully trading on the reputation and goodwill of the Arc'teryx brand, and that it will suffer irreparable harm as a result.

Arc’teryx also claims that Adidas is infringing laws related to the protection of trademarks, passing off, and unfair competition.

And, since Adidas’ Kitsilano storefront banner does not feature the name ‘Adidas’—instead comprising a combination of its famous three-stripe design and the Terrex sign—this will cause consumer confusion, it argues.

This is despite the triangular three-stripe design, or ‘Performance Bars’, being accompanied by the name ‘Adidas’ at numerous other locations-including stores in Vancouver.

Adidas three-stripes ‘resembles’ letter ‘A’

Arc'teryx claims that the Performance Bars resemble a stylised letter ‘A’ and its positioning in front of the word Terrex results in signage resembling ‘A TERREX’, a format which it insists creates consumer confusion.

The Canadian brand continues to argue that even without the Performance Bars, the name Terrex on the storefront and its proximity to the Arc’teryx store is enough to create consumer confusion between the two.

Adidas Canada vehemently denies those claims, arguing that Arc’teryx is bound to fail and the injunction should be refused because the plaintiff “is seeking to restrain legitimate competition”.

Temporary restraint

But, in his order dated January 2, Justice Nigel Kent rejected these arguments, granting an interlocutory injunction on the stipulation that the parties go to trial.

Under this injunction, Adidas must refrain from using the name Terrex as the name of its Kitsilano store only, saying that “these types of injunctions are an extraordinary remedy and must be framed as narrowly as possible”.

It is unclear whether Adidas will have to remove the sign entirely, although that is the implication.

Justice Kent also ordered that the injunction will expire “if and when the pending Adidas application for a trademark registration in international class 35 for Terrex in association with retail store services is granted”.

'Waxing poetic'

He criticised Adidas’ defence, describing how it “waxes poetic about the Adidas brand with unnecessary reference in multiple paragraphs to numerous named athletes, professional and amateur leagues/teams and so on”.

However, he wrily observed that application materials submitted by Arc’teryx comprised “some 13 separate volumes which, stacked on top of each other, were almost four feet high”.

In contrast, Adidas’ “filed an admirably succinct Application Response”, he said.

'Arcane' trademark law

As for Arc’teryx’ claim of irreparable harm and plea for damages, this would have to be fought over at trial.

“I am not presently persuaded that this type of intellectual property trespass is capable of being fully remedied by an award of damages,” he wrote.

“Regardless of the methodology underlying any approach to assessment, money may be a poor substitute for the uniqueness or distinctiveness of an original art form, even if the latter was created for commercial purposes. All the more so, perhaps, where, as here, David is pitted against Goliath in an already uneven contest.”

He added: “It may seem silly to some that the same trademarks cannot be safely used as a store banner without risk of infringement, but that is the arcane way in which trademark law is structured.”

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