Emily Chow is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.
On June 10, 2022, Adidas launched its first federal lawsuit against its main competitor, Nike, at the US District Court in Eastern Texas. Demanding a jury trial, the 62-page complaint alleges that Nike has conducted nine counts of patent infringement relating to Adidas’ GPS, sensor and wearable technologies.
Both retailers are at the forefront of the sportswear/sporting goods industry, although Nike substantially exceeds Adidas in global sales with a profit of $40.78 billion USD in 2021 compared to Adidas’ $25.12 billion. The next closest competitors are Puma ($5.72B), Under Armour ($5.22B) and Lululemon Athletica ($3.75B).
The global sneaker industry, valued at $78.8 billion USD in 2020, is expected to reach $128.1 billion by the end of 2027. According to Statista, a large proportion of Nike’s income comes from footwear, with an estimated revenue of $28 billion USD in 2021 compared to Adidas’ $12.84 billion.
In its complaint, Adidas claims that Nike “knowingly and intentionally” induced infringements of nine patents through their development of the Nike Run Club, Nike Training Club, and SNKRS mobile applications. Adidas also takes issue with Nike’s Adapt shoe line, which launched in 2016 and features self-tightening laces according to the wearer’s foot. The company claims that this is an infringement of Adidas’ existing patent for an “intelligent footwear system” that senses and adjusts the comfort of the shoe when worn. Adidas_1 was announced in 2004 and released in 2005, touted as the world’s first intelligent running shoe.
In addition to selling sneakers, Adidas and Nike have both developed various mobile applications and exercise companions. According to Adidas, features of Nike’s apps – such as location-based GPS run tracking, the creation of training plans, audio feedback, and integration with third party devices – are direct infringements of Adidas’ intellectual property and its Runtastic app.
Furthermore, Adidas points to similarities between its Adidas Confirmed app, launched in February 2015, and Nike’s SNKRS, introduced a few days later. Both apps claim to make buying exclusive products easier and fairer for users, free from bots. The patented technology in question is US Patent No. 10275823, “systems and techniques for computer-enabled geo-targeted product reservation for secure and authenticated online reservations,” which allows Adidas to confirm a potential buyer’s authenticity and prevent a bot from reserving the product in advance of the launch.
Adidas seeks a declaration from the court that Nike has infringed its patents, a permanent injunction, and compensatory damages, claiming that “unless enjoined by this Court, [Nike’s] acts of infringement will continue to damage adidas irreparably.”
This new lawsuit comes at the heels of a complaint filed by Nike to the International Trade Commission in Washington and corresponding lawsuit filed in Oregon in December 2021. Nike sought to ban the import of Primeknit shoes, accusing Adidas of appropriating Nike’s patented FlyKnit technology – a special knit weave made up of recycled and reclaimed yarn that creates a sock-like fit for the wearer.
The International Trade Commission (ITC) in Washington is often a popular forum for companies competing in the global market. Given the ITC’s relatively faster decisions – 15 to 18 months – and its ability to freeze sales of products already imported into the US, the ITC offers an expedited, comprehensive mechanism for addressing patent infringements.
Back in 2005, Nike also sued Adidas in East Texas. However, the companies entered an agreement to drop the case in 2007. It will be interesting to see how the ITC and Oregon verdicts will affect both companies’ strategies moving forward.