By Lucy Rana and Priya Adlakha
Multinational sportswear giant Nike earned a restraining order in its favour in a lawsuit against a Brooklyn based art collective, MSCHF on April 2, 2021. Just a week later, Nike and MSCHF entered into a settlement agreement, wherein MSCHF nodded on Nike’s Conditions. Nike in the lawsuit had claimed trade mark infringement stating that the Defendant did not take any prior permission or authorization before launching the product. To point a fact, although it appears like a simple infringement case but a lot of controversy is attached to it. Let’s explore why!
TRADEMARK INFRINGEMENT- NIKE v. MSCHF
Brands often come up with innovative ideas to lure customers into purchasing their products. Some confine to simple methods while others take a gutsy step forward. A few weeks ago, MSCHF in collaboration with the rapper Lil Nas X came up with a modified version of Nike Air Max 97s shoes. Much to everyone’s surprise, 666 pairs of shoes were sold out within a minute. The spotlight being that the bubble cushioned shoes contained 2.03 fluid ounces of red ink along with a drop of human blood in it. Additionally, the much expensive trainers featured an inverted cross and a bronze pentagram with the word “Luke 10:18” referencing a bible verse that simply translates to “Satan falling from heaven”.
This bold move received mixed reactions. Whilst the modern-day change-makers supported the launch, the traditionalists took it as an ethical blow. ‘Satan shoes’ were a follow up launch of MSCHF’s ‘Jesus Shoes’ that on the contrary had holy water in the sole.
The Trade Mark infringement lawsuit was filed before the US District Court for the Eastern District of New York wherein Nike alleged:
- MSCHF’s ‘Satan Shoes’ launch implied an authorization or permission from Nike owing to representation of their trademarked ‘swoosh’ symbol.
- There is an apparent confusion and deception as regards to the origination of ‘Satan shoes’.
- This resulted in a serious blow to Nike’s well established goodwill with angered customers calling Nike against the release and boycotting its original products.
- The use of Nike’s Trade Mark resulted in dilution, thereby inflicting losses both monetarily and in terms of Nike’s
- MSCHF through launch of its customized shoes attempted to capitalize on Nike’s invaluable goodwill and reputation.
- A permanent injunction order pertaining to manufacturing, transporting, promoting, advertising, publicizing, distributing or selling of Satan shoes bearing Nike’s well-established ‘Swoosh’ trade mark.
- An order to deliver all the products in controversy “to Nike for destruction” thereof.
- An order of damages suffered by Nike during trial proceedings.
- An order of profits collected by MSCHF on sale of ‘Satan Shoes’
- Statutory and additional damages including costs, expenses and attorney fees.
TRADE MARK INFRINGEMENT: UNITED STATES OF AMERICA
The Lanham Act of 1946 is a federal statute governing Trade Mark law in the United States of America. Following are the requisite statutory provisions envisaging regulations as regards to Trade Mark infringement in the country:
|What it provides for
|§ 32 (15 U.S.C. § 1114) Remedies; infringement; innocent infringers
|1. Anyone who without obtaining prior consent of the registrant-
· Reproduce, counterfeit, copy or imitate a registered mark for the purpose of sale, offering for sale, distribution or advertisement of respective goods and services in a way that it is likely to cause confusion/ deception.
· Reproduce, counterfeit, copy or imitate a registered mark and apply it to labels, signs, prints, packages, wrappers, receptacles or advertisements in commerce to promote confusion/ deception.
Shall be liable for a civil action and the Registrant shall have the right to exhaust a number of remedies.
|§ 43 (15 U.S.C. § 1125). False designations of origin; false description or representation
|1. Any person who makes use of any word, term, name, symbol or device or any combination or false designation of origin or description or misleading representation of fact such that it:
· has likelihood to cause confusion /mistake/ deception as to affiliation/ connection/ association with another person
· misrepresents the nature/ characteristics/ qualities/ geographical origin of another person’s goods, services or any commercial activity thereof
Shall be sued by any other person who has a reason to believe that rights of his/ her shall be affected by such an act.
|§ 34 (15 U.S.C. § 1116) Injunctions; enforcement; notice of filing suit given Director
|§ 35 (15 U.S.C. § 1117)
Recovery of profits, damages, and costs
|36 (15 U.S.C. § 1118) Destruction of infringing articles
(The defendant may be required to submit a report representing his/ her compliance with the injunctive order both to the Court and the plaintiff)
|In case of a violation under Section 1125, the plaintiff shall be entitled to:
· Profits accrued to defendant from sales
· Damages sustained to plaintiff (not exceeding three times the actual damages)
· Costs of proceedings (Attorney fees in exceptional circumstances)
|· Order for destruction of all labels, signs, prints, packages, wrappers, receptacles and advertisement bearing the impugned mark.
· Additionally, in case of willful violation through reproduction, counterfeiting, copy and wrongful imitation, an order of delivery off and destruction shall be passed by the Court.
- On April 02, 2021, the Federal Judge sided with Nike and issued a temporary injunction order against MSCHF restraining them from manufacturing or marketing their controversial ‘Satan Shoes’ bearing Nike’s Trade Marks.
- On April 9, 2021, Nike initiated a settlement E-mail in favour of MSCHF, to which MSCHF agreed. The terms of settlement included full refund of original retail price of ‘Satan Shoes’ together with shipping costs to the purchasers. Additionally, MSCHF shook hands on recalling each pair of ‘Satan Shoes’ and putting a stop on further manufacturing and circulation of the same.
Innovation and creativity bear no end. They are the roadways to profits and better goodwill. Nevertheless, a limitation must be set up to keep the doors of imagination within ethical barriers, to ensure the greater good of both the customers and the brands. The Nike-MSCHF case is a perfect example creating a diversion between the traditionalists and the progressivists as regards to modern-day acceptability norms.
Trademark Protection in USA