Co-author Peter Dang, recent graduate of the University of Washington School of Law and admitted member of the Washington State bar.
Imitation may be the sincerest form of flattery, but try telling that to Converse. Last month, Converse filed multiple lawsuits in the U.S. District Court for the Eastern District of New York against 31 alleged infringers including Sketchers, H&M and others, for importing and selling knockoffs of Converse’s iconic shoes, the Chuck Taylor. Converse claimed that such alleged infringers infringed the Chuck Taylor’s distinctive shoe designs (aka trade dress) (15 U.S.C. § 1114), diluted such trade dress’ distinctiveness (15 U.S.C. § 1125(c)), and used such trade dress in a manner that constituted unfair competition (15 U.S.C. § 1125(a)). The trade dress at issue in both cases consists of Chuck Taylor’s federally registered “midsole design” and “outsole design” (collectively, the “Designs”). The midsole design (Reg. No. 4,398,753 – see image above) refers specifically to the Chuck Taylor’s “toe bumper” and “toe cap,” while the outsole design (Reg. No. 1,588,960) refers to the distinct diamond pattern on the sole of the shoe.
Simultaneously to filing its federal lawsuits, Converse filed a parallel complaint at the International Trade Commission (ITC) against the same alleged infringers for unfair trade practices (19 U.S.C. §1337 et seq.) related to importing shoes that infringed the Designs.
So why are these cases important? Beyond the large amount of potential financial recovery at stake, the outcome of these proceedings will have strong implications for cross-border trademark protection. Converse’s victory in its federal lawsuits may provide greater means for U.S. and foreign retail product producers to protect their products’ designs from unauthorized use in the U.S. by potentially expanding U.S. legal protections afforded to clothing and footwear trade dress. Further, an ITC ruling in Converse’s favor provides Converse the means to not only prevent the infringement of their trade dress, it also helps to stem the cross-border flow of shoes infringing their Designs.
Commentators have reported that Converse faces challenges in its actions because the Designs’ elements may be considered functional, and thus not protectable. Under U.S. trademark law, only distinctive non-functional elements of trade dress are protectable. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775 (1992). Since the Designs’ rubber toe bumper and cap, and outside design are arguably used to prevent wear and provide foot protection, they may be considered functional elements of the Chuck Taylor, and thus unprotectable.
In contrast, others believe that footwear trade dress precedent may give Converse the legal basis it needs to succeed in such actions through the Designs’ potential secondary meaning. In Christian Louboutin, S.A. v. Yves Saint Laurent Am. Holding, Inc., 2012 WL 3832285 (2nd Cir. 2012), the Court found that Louboutin’s iconic red sole of its luxury women’s shoe to be distinctive despite being a element of the shoe’s sole due to secondary meaning (aka acquired distinctiveness) that the sole had acquired amongst the general public, thereby granting Louboutin trade dress protection to its shoe’s red sole. As the Chuck Taylor shoes have been widely available in U.S. commerce for decades, Converse may be able to establish that the Designs acquired secondary meaning amongst the U.S. public, and are thus protectable despite their apparent functionality.
Impact of the ITC Action
Although Converse’s victories in its federal court actions would likely result in substantial financial recovery for Converse, a favorable ITC decision would arguably provide Converse greater cross-border benefits. The ITC provides rights holders of U.S. patent, trademark and copyright rights the means to petition the U.S. government under Section 337 of the 1930 Tariff Act to conduct an investigation of unfair trade practices, including the importation of goods infringing such U.S. IP rights. If such infringing importation is found, the ITC may issue a ban on such infringing imports. In Converse’s case, an ITC issued ban would prevent the alleged infringers’ importation of footwear utilizing the Designs into the U.S., and potentially deter transshipments of such footwear to other markets from the U.S. As such a ITC decision impacts the importation and exportation of shoes infringing the Designs, it arguably has more cross-border benefits as it could effectively provide Converse trademark protection across multiple markets through one legal action.
What’s The Takeaway?
If successful in both its federal and ITC actions, Converse may obtain substantial financial recovery and injunctive relief to prevent imitators from selling their shoe designs in the U.S. and potentially other markets. More broadly, a favorable ITC ruling for Converse would provide Converse the tools to protect its Designs and control the flow of goods infringing such Designs across markets, a strategy that commentators have reported is overlooked, but has the potential to provide enhanced cross-border trademark protections.
Earlier this month, a number of international news outlets reported about Canadian clothing manufacturer Canada Goose who filed a trademark and trade dress lawsuit in Canadian Federal Court against Sears’ Canadian subsidiary (Sears Canada). The suit alleges that Sears Canada was selling knock-off versions of Canada Goose’s well-known parkas. In a statement of defense to Canada Goose’s lawsuit, Sears Canada claimed that Canada Goose’s lawsuit claims were not only unfounded, but that they were intended to bully retailers and control pricing. As reported in The Globe and Mail, the statement stated “the real purpose of Canada Goose’s campaign of intimidation is to attempt to prevent or lessen sales in the marketplace of less expensive winter jackets” and “to preserve its temporary ability to sell its garments at a huge markup to the public.”
Although Sears Canada’s comments are by no means unique for a defendant in such a trademark lawsuit, the reporting of the comments in several news outlets has significant public relations (PR) implications. By claiming that Canada Goose is using trademark laws to bully retailers and control prices, Sears’ comments inevitably impact the ways retailers and the general public perceive Canada Goose and its parka jackets. Negative public perceptions about a business’ IP enforcement actions can tarnish a business’ brand and hinder its domestic and foreign market opportunities—just like the counterfeit goods that it tries to protect itself against.
As I read multiple stories about Sears’ comments, I could not help but to think that Canada Goose did not effectively counter Sears’ accusations in the public forum. Many major international clothing manufacturers such as Gucci and Burberry pursue similarly proactive cross-border trademark enforcement strategies as Canada Goose. Yet, few of the reporting news outlets carried the comments of Canada Goose’s spokespersons who gave justifications for the lawsuit against Sears Canada. In fairness, claims of bullying are likely more sensational than justifications for brand protection. However, emerging global companies like Canada Goose must ensure that they effectively communicate to the public the justifications behind their IP enforcement actions. As growing businesses set their sights on international expansion, PR becomes nearly as valuable as trademark protection to ensure that they can take advantage of domestic and foreign market opportunities.
What’s The Takeaway? Businesses who seek legal protections for their brands need to consider the PR implications of their enforcement actions. This is even more important in an international context. As many countries and cultures have negative perceptions towards litigation, businesses need their legal counsel and public relations professionals to collaborate to ensure that the public is educated about their global IP enforcement activities. Doing so can help to prevent the unintended PR consequences that global IP enforcement can bring.
What PR issues does your business face in international IP enforcement?