Laura’s Winning Ideas

Sometimes you have to wonder just what these executives are thinking when they cook up stupid stunts like this. . .

Adidas won a Trademark suit this week as covered in The Wall Street Journal here. (available for 7 days from this post, thereafter you’ll have to register in order to access the story)

It seems that Payless Shoe Stores purchased Adidas shoes, sent them to a Chinese manufacturer with instructions to copy but change the three strips to either two or four stripes. They sold approximately $400 million of these knock-offs.

The jury agreed with Adidas, that Payless had infringed the trademark of Adidas with the intention to benefit from knocking off the Adidas shoes. The award of $305 million drove down the stock price by over 16% with the news.

The formula for the award was as follows:

Actual damages = $31 million
Disgorged profits because the jury found willfulness in the defendant’s actions = $135 million
Punitive damages (equal to the disgorged profits) = $135 million
TOTAL VERDICT = $305 million (figures above were all approximate and added up to $305 million)

Payless says they plan to appeal, but they might want to rethink this strategy. The attorney for Adidas acknowledged that the verdict might be reduced on appeal, but it is possible it could be increased because the judge could add plaintiff’s attorney’s fees and may also triple the actual damages portion of the verdict. Add the plunge in stock price to the mix, and this was a very expensive stunt to pull.

Food for Thought

Copyrights and Trademarks are protected property. Next time someone delivers a nifty photo they found on the internet for a proposal, you might want to ask a few more questions before inserting it into your document. And don’t think a quick photoshop “editing” of an image makes it your own, it is merely proof of “willfulness” and expensive when discovered.

If you’ve heard me speak on the topic you know that photographs are exceptionally well protected by copyright law, so don’t think you’ll even get as much grace as the music industry has extended to folks caught downloading music files illegally. (which ain’t much grace if you’ve followed the news.)