The Vancouver outdoor company Arc’teryx has won a temporary injunction barring Adidas from using the name “Terrex” on a Kitsilano store, in what a judge has described as a David vs. Goliath battle over trademark infringement.
Arc’teryx’s parent company, Amer Sports Canada, filed suit against the international sports apparel giant last year over the signage on its West 4th Avenue store, alleging that Adidas was creating “consumer confusion” with its Terrex-branded shop.
Terrex opened a year ago, just a few doors down from Arc’teryx. Like Arc’teryx, it sells gear meant for outdoor activities like camping and hiking.
The Terrex logo on the sign, according to a new B.C. Supreme Court decision, is preceded by what Adidas calls its “performance bars” — the signature three stripes arranged in a triangle formation, resembling 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 a judgment on Tuesday.
Kent granted an interlocutory injunction that prevents Adidas from using the name Terrex on the West 4th Avenue store until Arc’teryx’s claim goes to trial, saying it appears the branding has caused some confusion for shoppers in the neighbourhood.
The judgment notes 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.
Private investigators documented confusion
According to the judgment, Arc’teryx’s lawsuit alleges that Adidas has infringed on its trademark and wrongfully misappropriated the goodwill and reputation of its brand.
Kent notes that confusion between the two stores was the subject of a number of articles in local publications around the time that Terrex opened.
That includes a Dec. 28, 2022 article from Vancouver Magazine titled “Adidas ‘Terrex’ Store Opens in Same Kitsilano Block as New Arc’teryx Store, Confusing Everyone.”
Arc’teryx 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, according to the judgment.
Adidas, on the other hand, tendered evidence from a marketing research specialist who conducted a survey purportedly showing that consumers were not confused.
In issuing the injunction, Kent says that Adidas deliberately chose not to include its company trademark on the Terrex sign.
“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.
In its affidavits and submissions, Adidas warned that it may be forced to close the Kitsilano store and fire all of its employees if an injunction was granted.
Kent said that seemed a bit excessive.
“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.
Adidas has denied all allegations of trademark infringement in its 31-page response to Arc’teryx’s claim.
Although the merits of the lawsuit have yet to be decided, the judge made it clear there were some issues with Adidas’s response, which he describes as both flawed and “prolix” — in other words, long-winded and tedious.
For example, Kent writes, the section of the document that is meant to set out the defendant’s version of the facts “waxes poetic about the Adidas brand with unnecessary reference in multiple paragraphs to numerous named athletes, professional and amateur leagues/teams and so on.”
None of the allegations have been tested in court. The judgment says the injunction will expire if Adidas is granted the appropriate trademark registration for Terrex.