Adidas is world-famous for its 'Three Stripes' and 'adidas' word marks. In trademark protection, it obtained punitive damages against repeat counterfeiters in China on the one hand, while its 'Three Stripes' position mark registered in the EU was declared invalid by the General Court of the EU on the other. The two opposite outcomes trace two distinct legal lines: the application of punitive damages, and the distinctiveness of a single-form mark.
Case Overview
China case: Adidas owns the 'adidas' series of marks with high fame. Zhengbang Company, founded with investment by Ruan Guoqiang and others, was caught three times between 2015 and 2017 by administrative authorities for shoe uppers infringing the 'adidas' series, was administratively penalized each time, and involved more than 17,000 pairs of infringing products in total. Adidas filed a civil action requesting punitive damages of RMB 2,641,695.89.
EU case: after Adidas obtained an EU registration for its 'position mark' consisting of three parallel stripes, a third party applied to invalidate it, and the case was appealed to the General Court of the EU.
Issues in Dispute
The China case had three focal points: whether multiple administrative penalties can be deemed 'serious circumstances'; how to calculate the base for punitive damages; and whether losses could be computed at the genuine shoe price when the infringing goods were shoe uppers (semi-finished products) rather than finished shoes.
The EU case focused on whether a position mark consisting solely of three parallel stripes has inherent distinctiveness, and whether it could acquire distinctiveness through use across the entire EU.
Judgments and Case Numbers
China case: the Wenzhou Intermediate People's Court of Zhejiang Province, in judgment (2020) Zhe 03 Min Zhong No. 161, held that Zhengbang's subjective malice was evident, that the accused infringement lasted long with grave consequences, and that it constituted serious circumstances. The court selected the genuine shoe unit price of RMB 189 per pair as the basis, adopted the 50.4% gross margin shown in Adidas's 2017 financial statements, used the 6,050 pairs of uppers seized in the third enforcement action as the sales volume, further reduced the amount by 40% considering that the accused products were uppers not yet directly usable in the consumer market, and finally set damages at three times Adidas's economic loss of RMB 345,779.28, totaling RMB 1,037,337.84. The case was selected into the 'Typical Cases on the Application of Punitive Damages in Civil IP Infringement Cases' released by the Supreme People's Court on March 15, 2021 (source: official website of the Supreme People's Court).
EU case: on June 19, 2019, the General Court of the EU issued judgment T-307/17, upholding the EUIPO's decision invalidating the 'Three Stripes' position mark, holding that the mark lacked inherent distinctiveness and that acquired distinctiveness through use across the entire EU had not been proven (source: CURIA press release, case T-307/17).
Key Takeaways
- Repeat infringement is a hard indicator of 'serious circumstances': having been administratively penalized three times and still continuing production, the court directly found evident subjective malice—the most important trigger for punitive damages;
- The base can be converted proportionally: genuine unit price × gross margin × sales volume, further reduced by 40% because the products were semi-finished—showing the base is not all-or-nothing and courts adjust to the facts;
- Semi-finished goods can still infringe: although unformed, the uppers already bore the infringing labels and constituted infringing goods;
- Distinctiveness cannot rest on fame alone: the EU case shows that even a globally famous brand seeking exclusive protection for a single form (stripes) must prove acquired distinctiveness through use across all relevant territories.
Lessons for Businesses
For manufacturers, this case is a clear warning: administrative penalties are not the end—penalty and seizure records become direct evidence of 'malice' in later civil punitive damages cases. For brand owners, form marks with weak distinctiveness (colors, stripes, patterns) are often hard to monopolize; file word marks in parallel and keep long-term, wide-ranging, quantifiable evidence of use, rather than betting all protection on a position mark vulnerable to invalidation.
To engage the services described above, you may submit a trademark monitoring request on MyTMBee, and a filed trademark agent will follow up.