Jury Awards Adidas a Record-Setting $305M in Damages, But Payless Fights for Reversal

Holding:

In this action for trademark infringement and dilution under the Trademark Act of 1946 and deceptive trade practices under state laws, a nine-person jury issued a verdict in favor of shoemaker Adidas and against shoe retailer Payless. Specifically, the jury before the U.S. District Court for the District of Oregon unanimously awarded Adidas AG's' U.S. subsidiary $30.6 million in actual damages, $137 million in punitive damages and $137 million in Payless profits for a total of $304.6 million. The award was for infringing Adidas’ three-stripe trademark and shoe styles, aggravated by a finding of malice and reckless disregard of Adidas’ rights. A week after the verdict was issued, defendant Payless filed at least three motions that sought to overturn the adverse ruling, including a motion for judgment as a matter of law or new trial, allegedly on the ground that Adidas failed to prove actual damages and willfulness.

Detailed Summary:

Plaintiffs Adidas America, Inc. and Adidas-Salomon AG (“Adidas”) instituted this action in November 2001 against defendant Payless Shoesource, Inc. (“Payless”) for trademark infringement and dilution, injury to business reputation, unfair competition under the Trademark Act of 1946; anti-dilution laws of several states, including that of Oregon; the fair business practices and unfair and deceptive trade practices acts of several states, including the Oregon Unlawful Trade Practices Act.

Specifically, the complaint alleged that “defendant is offering for sale and offering footwear that bears confusingly similar imitations of Plaintiffs’ registered THREE STRIPE Mark and SUPERSTAR Trade Dress. Defendant’s footwear is not manufactured by…

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