Adidas has waged a newly amended complaint in its latest clash with Aviator Nation. In the second amended complaint that it lodged with a federal court in Oregon on December 6, adidas claims that Aviator Nation “repeatedly has ignored” its rights in the readily-recognizable three-stripe trademark, requiring adidas to “object to [its] sale of infringing sweatshirts, sweatpants, hoodies, shorts, and related apparel featuring parallel-stripe designs that are confusingly similar to [its] three-stripe mark.” While the parties have settled such disputes in the past, they have, nonetheless, landed back in court, with adidas arguing that Aviator Nation has breached their settlement agreements and actually increased its use of “confusingly similar” marks on sportswear.
A Bit of Background: Adidas alleges that Aviator Nation makes use of four- and five-stripe designs on apparel items, thereby, infringing its iconic “three-stripe mark” in violation of settlement agreements that they entered into in 2012, 2013, and 2022. The German sportswear titan also maintains that Aviator Nation founder and CEO Paige Mycoskie, herself, ran afoul of the confidentiality provisions in those settlements, which requires the parties to keep the contents of the agreements strictly confidential. “Notwithstanding these confidentiality provisions,” adidas claims that Mycoskie appeared on NPR’s “How I Built This” podcast in January, and “publicly disclosed and misrepresented the parties’ prior disputes and key terms of their 2022 settlement agreement.”
For its part, Aviator Nation claims that adidas has violated the settlement agreements by filing suit against it, which it warranted not to do. In its defense, the California-based company, which is known for its $160-plus sweatshirts and sweatpants, also maintains that it is not selling garments that “infringe, unfairly compete with, or otherwise dilute” adidas’ three-stripe mark, as its use of stripes is distinct from adidas’ trademark rights.
Another Amended Complaint
At the heart of adidas’ newly amended complaint are two key additions: (1) adidas’ claim that Aviator Nation has further breached the parties’ settlement agreements by contesting adidas’ rights in its three-stripe trademark; and (2) adidas’ addition of a Breach of Duty of Good Faith and Fair Dealing cause of action against Aviator Nation.
Contesting adidas’ rights: Primarily, adidas maintains that despite agreeing in the 2022 settlement agreement not to contest its rights in the three-stripe trademark, Aviator Nation did just that in its answer to adidas’ first amended complaint, in the parties’ Joint Rule 26(f) Report, and in Aviator Nation’s written discovery responses. Specifically, adidas asserts that Aviator Nation contested its rights in the three-stripe mark by denying its rights in the mark and by asserting that the mark is “functional, aesthetically functional, or merely ornamental” in furtherance of a “Classic Fair Use; Utilitarian and/or Aesthetic Functionality” affirmative defense.
Aviator Nation further breached the 2022 agreement in its written discovery responses, adidas argues, in which the company “repeatedly contested adidas’s rights associated with the three-stripe mark, including by asserting that the three-stripe mark is not distinctive.”
Breach of Duty of Good Faith and Fair Dealing: In addition to waging trademark infringement, dilution, unfair competition, unfair and deceptive trade practices, and breach of contract claims, adidas adds a new cause of action to its amended complaint, arguing that Aviator Nation’s execution of the 2022 settlement agreement subjected it to an implied duty of good faith and fair dealing. Adidas contends that Aviator Nation “willfully breached the 2022 Agreement” – and its duty of good faith and fair dealing, as well – when it “manufactured, offered for sale, and/or sold the Infringing Apparel bearing stripe designs that are confusingly similar to adidas’s three-stripe mark, including designs that are indistinguishable from the exact designs Aviator Nation agreed to stop selling pursuant to the 2022 Agreement.”
Inching into Sportswear
In what might be the most intriguing aspect of the amended complaint is a relatively brief – but undoubtedly important – allegation about Aviator Nation’s increasing focus on sportswear, as distinct from its prior focus on loungewear. In addition to “display[ing] its infringing apparel in ways that emphasize three of the stripes on the infringing apparel, even if the apparel features additional stripes,” adidas argues that Aviator Nation, which generated revenues of $130 million in 2022, is making things even worse by marketing its products “with a focus on sports and athletics.”
For example, adidas points to Aviator Nation’s recently opening of “a fitness studio offering spin, boxing, and other classes called ‘Aviator Nation Ride,’” in connection with which it has advertised apparel that appears to bear three stripes.
If this sounds familiar, it may be because a growing focus on sportswear is also an issue at the heart of adidas’ ongoing clashes with Thom Browne. In those cases, the sportswear giant has argued that Thom Browne’s use of an allegedly confusing four-stripe design is made worse by the fact that the high fashion company has breached out in activewear, making it more likely that consumers will be confused about its use of a multi-stripe mark. While that argument did not ultimately sway a New York federal jury, which sided with Thom Browne in January 2023, it will be interesting to see how it plays out here, particularly as companies across industries continue to blur the lines between previously distinct market segments to reach more consumers and generate greater revenues.
The case is adidas America, Inc. v. Aviator Nation, Inc., 3:24-cv-00740 (D. Or.).
