Converse: Back In The Game With A Putback
It’s 1976 and “Dr. J”, Julius Erving, is lacing up his sneakers, getting ready to cement himself as one of the greatest dunkers in basketball history. He’s got on a pair of black and white All-Star’s with the Converse star on either side and is about to take off from the free-throw line for one of the most memorable jams in Dunk Contest history (sorry, MJ). It was an indelible mark in basketball history and, for Converse, one of the peak moments during its rise to stardom.
From its inception in 1917 and subsequent re-design in 1922 (at the behest of Charles “Chuck” Taylor), the shoe’s popularity skyrocketed, ultimately reaching upwards of 80% market share in the basketball world in the 70’s. Over the years, Converse and the Chuck Taylor shoe have morphed from an industry standard within the basketball world to a global icon. The company transitioned to a wider-more appealing lifestyle brand worn by people of all ages for just about anything, not just hustling up and down the court. Now, Converse finds themselves in a different arena this time around, rather battling it out in court instead of on one.
Back in October of 2014, Converse filed lawsuits against 31 retailers within the shoe industry, alleging trademark infringement on parts of their signature shoe brand design including what the now Nike-owned sneaker company argues are some of its most recognizable parts in the toe cap, toe bumper and striping on the midsole of the shoe. Fast-forward several years and most of the originally listed parties have now settled, leaving a handful of deep-pocketed opponents in the way of Converse, including Sketchers, Wal-Mart, and New Balance. In late 2015, Converse scored what it hoped was a major victory, with an International Trade Commission judge ruling in favor of the popular brand on the three distinct marks it originally sought to protect. However, during the full ITC review in 2016, this win was overturned and deemed the three previously protected marks as invalid. The ITC opined that Converse lacked trade dress rights (the characteristics of a product that instantly show the consumer who made it), which lined up with a previous Supreme Court ruling in that shoe designs are inherently distinctive and without the necessary secondary meaning (in layman’s terms, how it’s viewed by the public), those designs can’t be protected. Despite the overall loss for the Nike-owned brand, they did come away with a few victories, including the upholding of one important trademark on the diamond design of the front toe bumper on their Chuck Taylor designs and the admittance of possible infringement had the other marks been upheld.
APPEAL IN THE FEDERAL CIRCUIT
As to be expected, Converse set out to appeal the 2016 ITC ruling, this time in the D.C. Federal Circuit. After reviewing the ITC’s decision, the 3-judge panel voted 2-1 in favor of overturning the original decision. In its decision, the Court surmised that the ITC had applied the incorrect standard to their ruling against the Converse marks. The court provided the test that the ITC should have used instead, which included the following factors:
(1) Association of the trade dress rights with a particular source by actual purchasers (typically measured by customer surveys;
(2) Length, degree, and exclusivity of use;
(3) Amount and manner of advertising;
(4) Amount of sales and number of customers;
(5) Intentional copying; and
(6) Unsolicited media cover of the product embodying the mark.
They also stated that the entirety of these factors had to be weighed together to determine if secondary meaning exists. In addition to the error in application of secondary meaning, the court found that the ITC did not compare designs that were “substantially similar” in their test of likelihood of confusion.
WHAT DOES THIS MEAN?
First and foremost, the victory for Converse and the Chuck Taylor shoe line means that they are right back in the game. With the new set of guidelines set forth by the Federal Circuit, the ITC is going to have a much narrower scope on how to proceed in their rulings. Despite that, the iconic brand and their All-Star shoes will be at the mercy of an agency that has already once ruled heavily against them. This has the chance for a several more lead changes along the way, but Converse must be thrilled with their 4th quarter putback.
In addition, it is important to note, especially in situations like the one Converse finds itself, that the totality of the circumstances needs to be observed. Certain questions need to be asked, including finding if your product, if similar in design, services the same target market/consumer base as your competitor. Also, is media coverage more prominent with one product versus the other? Taking the time to diligently answer these questions will go a long way. And remember, just because the design of a product may be similar, doesn’t automatically mean that there is a likelihood for confusion.