On April 10, 2008, in a case between Adidas AG and Adidas Benelux B.V. on the one hand, and Marca Mode CV, C&A Nederland CV, H&M Hennes & Mauritz Netherlands BV and Vendex KBB Nederland BV on the other hand, the European Court of Justice ruled that the general interest in leaving certain signs available to all (also known as Freihaltebedurfnis) is not a proper consideration in determining infringement.
The case dates back to 1997, when Adidas sued H&M in Dutch court, alleging that retailer's two-stripe designs infringed Adidas's famous three-stripe trademark. The District Court in Breda ruled in Adidas's favor and issued an injunction. H&M appealed, requesting a declaration of non-infringement, and arguing that because the public views such stripes appearing on garments as purely decorative, they do not establish any link between the various manufacturers who place stripes on their apparel. The Dutch Court of Appeals decided in 2005 that although Adidas's trademark had acquired a high degree of distinctiveness, the difference between the designs, three stripes versus two, eliminated any possibility of consumer confusion. The Court based its decision in part on the concept of Freihaltebedurfnis, ruling that stripes and simple stripe designs are decorative and generally-accepted, and therefore should be available to all.
Adidas appealed the decision to the Dutch Supreme Court, which asked the European Court of Justice (ECJ) whether it is proper to take designers' general need for access to a basic design element, such as stripes, into account when assessing the rights of a trademark owner. The ECJ dismissed the defendants' critical Freihaltebedurfnis argument as irrelevant, and confirmed that the scope of exclusive rights provided a trademark owner is to be based on the public's perception only—whether the average consumer might be mistaken as to the origin of athletic garments bearing stripe designs that are similar to Adidas's famous trademark. For marks with a reputation, Article 5(2) of the Trademarks Directive does not require a likelihood of confusion but merely a link in the minds of the public. The ECJ clarified that whether it is this link or a likelihood of confusion that must be proven, the concept of Freihaltebedurfnis is extraneous to the assessment; whether or not the public perceives the sign as decoration cannot affect the protection conferred to a trademark when the sign is so similar to the trademark that the relevant public is likely to perceive that the goods come from the same source.
The decision does not mean that designers must avoid all stripe motifs, but Adidas's trademark registration does limit its competitors' ability to use stripes in a way that consumers are likely to associate with Adidas. The case will now go back to the Netherlands to allow the court to conduct a standard consumer-confusion analysis.
Vol. 53, June 2010