Adidas v Thom Browne: Stripes battle may run and run

The battle of stripes between  Adidas and the luxury fashion company  Thom Browne is far from over, as the sportswear giant has not said its final word.

The two companies have been disputing a stripe design since 2021, when Adidas sued Thom Browne in the US District Court of the Southern District of New York, alleging that the luxury brand’s use of the contentious motifs on its activewear was likely to confuse and deceive the public.

Adidas sought both money relief and an injunction preventing Thom Browne from selling any products that allegedly infringed its 74-year-old three-stripe mark. In response, Thom Browne argued that they operated in an entirely different market and were not competitors.

Moreover, the fashion label contended that Adidas had exercised unreasonable delay in taking action, as the activewear bearing the contentious designs was on display at Thom Browne’s store in downtown New York beginning in 2010.

After an eight-day trial and a two-hour deliberation, the jury in Manhattan federal court found Thom Browne  not liable for trademark infringement or dilution. The German sportswear giant has appealed the court’s final judgment, and the case is set to be heard in the Second Circuit in February 2024.

However, the stripes battle did not end there; instead, it took an unexpected turn when Adidas discovered email correspondence, months after the original trial, which Adidas contends could be relevant to the issue of whether Thom Browne knew that using the stripe designs on activewear might cause confusion with Adidas’ famous three-stripe pattern.

Last summer, during a separate UK dispute between the two companies involving the same marks and many of the same products, a series of “confidential” emails came to light. Thom Browne had not produced these emails in the US action, prompting Adidas to request their disclosure to their US counsel.

Four email strings, dating from 2016 to 2019, were from employees who cautioned the designer about potential confusion between specific designs and Adidas’ mark. According to the German sportswear giant, Thom Browne and his lawyers improperly and intentionally withheld these “bad faith” emails during the US case’s discovery phase, which would have significantly influenced the case’s outcome. Adidas further claims that it was denied a fair trial and has moved the court to vacate the jury verdict and grant a new proceeding based on the newly discovered evidence and Thom Browne’s alleged misconduct.

Thom Browne: emails ‘missed in error’

Naturally, Thom Browne vigorously opposed Adidas’ motion for a new trial. In a 25-page brief, the American brand first refuted Adidas’ assertion that evidence had been intentionally concealed. Adidas contended that Tom Browne must have collected the emails during the document search, as the ESI order mandated the use of specific terms, including “adidas”. Since each email contained the required word, the German group insisted that the four emails should have been found in the search, and, therefore, had been deliberately concealed by their opponent.

In response, Thom Browne maintained it followed the procedure, resulting in the production of 500,000 pages. Given the high volume of documents, the luxury brand argued that such procedures are prone to reasonably expectable errors. Thom Browne asserted that neither its members nor its counsel deliberately attempted to conceal the emails; instead, they simply did not surface.

In any event, Thom Browne asserted that it had no reason to hide the four emails, as they would not have been material to the issues before the jury. It further argued that Adidas misconstrued the “ultimate issue” of the case, which revolved around whether Thom Browne’s design on the accused products was likely to confuse consumers in the US, not a likelihood of confusion of the Four-Bar Signature in general.

The fashion brand insisted that the four emails were irrelevant to the case and did not indicate any admission of liability on Thom Browne’s part. Three of the emails discussed products designed for Spain’s FC Barcelona football team, which was not part of the lawsuit, and the fourth email concerned a retail store in Asia, falling beyond the scope of the US trademark rights. Thom Browne argued that these emails pertained to subject matters outside the scope of the case, and, therefore, would not have impacted the trial’s outcome, even if they had been admitted.

Was Adidas ‘aware’ of FC Barcelona connection?

Thom Browne also challenged Adidas’ argument that it could not have discovered the contentious emails earlier, as these emails were exclusively in Thom Browne’s possession, even though they fell within the document requests. Thom Browne responded that Adidas was simply not diligent in pursuing discovery.

Thom Browne emphasised that Adidas was aware of the luxury brand’s interaction with FC Barcelona, yet the company never inquired about Adidas in that context. This allegedly undermines the sportswear giant’s argument that it was justifiably ignorant of the facts presented in the contentious emails. Thom Browne firmly maintained that non-disclosure of the four emails did not, under any circumstances, change the outcome of the case or justify a new trial: the jury verdict was based on sufficient and credible evidence.

What happens next?

The trial judge has not yet ruled on Adidas’ request. As Thom Browne pointed out in its response, the party moving for relief under Federal Rule of Civil Procedure 60(b)(2) must meet an “onerous standard”.

This entails demonstrating not only that the evidence is admissible, but also of such importance that it probably would have changed the outcome of the litigation. Consequently, the onus falls squarely on Adidas to meet this exceptionally high burden.

The German sportswear giant is seeking an “indicative ruling” from the court, that it would grant the company’s motion on remand. This, in turn, would allow Adidas to notify the Second Circuit Court of Appeals, where the appeal is currently scheduled, preventing it from spending its resources on “deciding an appeal that may ultimately be mooted”.

If the court finds that there is a reasonable basis to believe that the jury verdict in favour of Thom Browne was erroneous or unjust, it will give Adidas the opportunity for a fresh start. Indeed, the case will be heard by a different jury, with the possibility of introducing new evidence and arguments, including the four emails. Nevertheless, should the court decide otherwise, and the case proceeds to the appeal, it will only permit re-examination of the existing evidence and arguments by the appellate judges.

Substantial justice vs public interest

In addressing Adidas’ request, the court will consider multiple factors to strike the delicate balance between the need for substantial justice, and the public interest in the finality of judgments. The standard for overturning a jury trial is of the highest level, requiring an exceptionally convincing demonstration of error or prejudice. To grant such a request, the trial judge must determine that the contentious four emails would have altered the trial’s outcome and that Thom Browne’s alleged failure to produce them during the discovery phase was so harmful as to affect the fairness of the trial. Although the chances of a retrial are slim, the decision ultimately rests within the court’s discretionary authority.

Nels Lippert is chair of the intellectual property practice at Tarter Krinsky & Drogin. He can be contacted at:  nlippert@tarterkrinsky.com

Elsa Nollet is an associate at Tarter Krinsky & Drogin. She can be contacted at:  enollet@tarterkrinsky.com