Judge Cites Store Location on Same Block as Aggravating Factor
Terrex opened a year ago in Vancouver in a carefully calculated move that took into account the city’s legendary obsession with outdoor activities, including kayaking, skiing, snowboarding, hiking, and … well … just about anything else that guarantees you will be both wet and cold. In an interview with the Canadian publication Retail Insider, Adidas Canada VP of Retail Lesley Hawkins said prior to the launch that the location in Vancouver was very deliberate.
“Why Vancouver? Because it is absolutely the home of the outdoors,” said Hawkins. “There are more consumers engaged in the outdoors every day in the Vancouver market, as they enjoy an unbeatable array of amenities including numerous outdoor parks, the mountains and the ocean on their doorstep.”
Unfortunately for Adidas, the launch of the first Terrex store in North America is now threatened by the BC Supreme Court decision. Justice Nigel Kent ruled that the trademark of the Terrex ‘performance bars’ look like the letter ‘A’, followed by the Terrex name. Put together, Kent said the trademark is too close to the design of the Arc’teryx logo, which is also preceded by the letter A.
“When one places an image of the Performance Bars and TERREX trademarks beside an image of the ARC’TERYX trademark, the similarity between the two and the potential for confusion is immediately obvious,” Justice Nigel Kent wrote in his judgement.
Kent granted an interlocutory injunction preventing Adidas from using the name Terrex on the Vancouver store until Arc’teryx’s claim goes to trial, saying there is evidence the branding has caused some confusion for shoppers in the neighborhood.
As well, Kent pointed out that Arc’teryx holds the appropriate trademark for its retail signs in Canada, but Adidas has only applied for trademark registration for Terrex.
Kent said he was persuaded by evidence from an Arc’teryx brand marketing expert who said “distinctiveness, once lost is virtually impossible to regain” and “the impact on loss of emotional brand equity would be extremely difficult to quantify.”
He went on to write that any financial damages that might be awarded if Arc’teryx wins the lawsuit would not be enough to make up for the alleged harm.
“Money may be a poor substitute for the uniqueness or distinctiveness of an original art form, even if the latter was created for commercial purposes. All the more so, perhaps, where, as here, David is pitted against Goliath in an already uneven contest,” Kent wrote.
Included in the evidence in the injunction hearing were a number of media reports about the opening of the Terrex stores. For example, an article in Vancouver Magazine on Dec.28, 2022 was titled, “Adidas ‘Terrex’ Store Opens in Same Kitsilano Block as New Arc’teryx Store, Confusing Everyone.”
But, were the Arc’teryx seeking shoppers really fooled by the trademark? Well, Arc’teryx submitted evidence that many of them were, finding themselves looking at the wrong kind of Gore-tex. The company actually submitted evidence to the court from private investigators who say staff at the Terrex store told them at least 100 people had come into the shop under the mistaken impression it was an Arc’teryx shop!
Adidas countered with evidence from a marketing research specialist who conducted a survey that indicated consumers were not confused by the two logos.
During the hearing, Kent tried to resolve the issue without going to a full trial, suggesting the matter could be resolved by simply adding the regular Adidas trademark on the Terrex sign, but said Adidas refused.
“When questioned by the court during the hearing whether it might be prepared to resolve matters by inserting the trademark ‘ADIDAS’ as part of the storefront banner in order to avoid possible confusion with their competitor down the street, Adidas Canada politely declined,” the judgment says.
Adidas says the ruling has serious ramifications for the company and its local employees, warning it may be forced to close the Kitsilano store and layoff all of its employees if an injunction was granted.
That threat, or warning, did not sway the judge. “Suffice it to say I am not persuaded by the ‘threat’ of the store closing, if that is indeed what the submission was meant to be,” the judge said.
It now appears the issue will proceed to a full trial, and Adidas has denied all allegations of trademark infringement. As well, the judgement says the injunction will expire if Adidas is granted the appropriate trademark registration for Terrex in Canada, although that process could take years in a case where the trademark is disputed by another party.
Warner Bros. Is Recreating the Ready Player One Metaverse, In The Metaverse