Adidas AG & another v Pepkor Retail Limited

Adidas AG (first appellant), a German corporation and parent of the Adidas group, and Adidas International Marketing BV (second appellant), a Netherlands corporation and wholly-owned subsidiary, brought an application against Pepkor Retail Limited (respondent) in the Western Cape High Court. The appellants alleged that the respondent infringed the first appellant's rights in four well-known registered three parallel stripe trademarks (registered since 1949) by using two and four parallel stripes on sporting footwear sold through its Ackermans and Pep Stores divisions. The appellants also alleged passing off. The respondent denied infringement and passing off, arguing inter alia that the stripes were decorative embellishment, not trademark use, and that the appellants' three-stripe marks were so famous that consumers would not be confused by two or four stripes. The respondent also brought a counter-application for entry of disclaimers. The court a quo (Allie J) dismissed both the application and counter-application. The appellants appealed with leave.

• Whether the respondent's use of two and four parallel stripes on sporting footwear constituted trademark use or mere decoration/embellishment
• Whether the respondent's use of four parallel stripes on certain footwear infringed the first appellant's registered three-stripe trademarks under s 34(1)(a) of the Trade Marks Act 194 of 1993
• Whether the respondent's marks so nearly resembled the registered trademarks as to be likely to deceive or cause confusion
• Whether the fame and distinctiveness of the appellants' three-stripe trademarks eliminated or increased the likelihood of deception or confusion
• Whether the respondent's get-up incorporating four stripes constituted passing off
• What relief was appropriate for trademark infringement and passing off

The appeal was upheld with costs, including costs of two counsel. The court a quo's order dismissing the application was set aside. The respondent was interdicted from: (a) infringing the registered trademarks by using four parallel stripes as depicted in annexures TB8 and TB9 or any similar mark; (b) passing off its footwear using get-ups depicted in TB9, TB10 and TB11. The respondent was directed to remove infringing marks or deliver inseparable footwear to the first appellant. Enquiries were directed to determine damages or reasonable royalty for both trademark infringement and passing off. The respondent was ordered to pay costs of the application, including costs of two counsel.

The binding legal principles established are: (1) Marks applied to goods for purposes of distinguishing them constitute trademark use even if also serving a decorative function, and the use of additional trademarks does not negate trademark use. (2) Under s 34(1)(a) of the Trade Marks Act 194 of 1993, infringement occurs when a mark so nearly resembles a registered trademark as to be likely to deceive or cause confusion, assessed by comparing the sense, sound, appearance and overall impression of the marks. (3) The fame, distinctiveness or reputation of a registered trademark increases rather than decreases the likelihood of deception or confusion when similar marks are used on competing products, as consumers familiar with the famous mark are more likely to assume association. (4) Likelihood of confusion must be assessed globally based on overall impression and first impression, not detailed side-by-side comparison, and must account for imperfect recollection by the notional average purchaser of ordinary intelligence and caution. (5) In passing off, the distinctiveness and reputation of a get-up increases the likelihood that use of similar get-up will confuse or deceive consumers into believing products originate from or are connected with the owner of the distinctive get-up.

The Court made several non-binding observations: (1) It noted that modern South African consumers are exposed to various manufacturers using stripes of different numbers on sporting footwear and must distinguish between these products. (2) The Court observed that the absence of evidence of actual deception or confusion is not determinative, as likelihood of confusion is for the court to decide based on the comparison of marks. (3) The Court commented that difficulties exist regarding admissibility and weight of evidence of actual confusion. (4) The Court noted that the respondent's argument about different markets and price points did not establish watertight compartments preventing consumer exposure to both product ranges. (5) The Court observed that while the law of passing off does not confer monopolies on successful get-ups and permits some copying, traders who copy risk liability unless they make perfectly clear that their products are not those of the rival manufacturer. (6) The Court dismissed without detailed consideration the respondent's unfounded contention regarding acquiescence to other manufacturers' use of two and four stripes.

This case is significant in South African trademark law for several reasons: (1) It confirms that the fame and distinctiveness of a registered trademark increases rather than decreases the likelihood of confusion when similar marks are used on competing products; (2) It reinforces that marks applied to goods for identification purposes constitute trademark use, not mere decoration, even when other trademarks also appear on the goods; (3) It demonstrates that numerical differences (three vs four stripes) do not necessarily prevent a finding of confusing similarity where the overall configuration and impression are similar; (4) It applies the Plascon-Evans principles for comparing marks in the context of stripe marks on sporting footwear; (5) It confirms that protection under s 34(1)(a) extends beyond identical marks to those "so nearly resembling" the registered mark; (6) It provides guidance on the intersection between trademark infringement and passing off in relation to product get-up. The case follows and applies the earlier Adidas v Harry Walt decision regarding stripe marks on sporting footwear.