The sunset of Adivon

2013/8/22By Doris Li, China IP,[Trademark]

The 5-year trademark dispute between sportswear giant Adidas and local brand Adivon has finally come to an end with a settlement in May 2013. Adivon, the arguable copycat of Adidas, is to transfer its triangle logo and Chinese trademark with “阿迪王”(Adivon in Chinese) to Adidas for free, and to stop using them in any brand touch points. It is reported that two main aspects were provided in the settlement agreement as follows: firstly, Adivon (including its distributors, regional agents and franchises) cannot use the triangle logo and Chinese trademark with “阿迪王” on the products, packaging and promotion materials; secondly, from April 7th 2013, all Adivon stores cannot use the triangle logo and Chinese trademark “阿迪王.”

Free riding phenomenon is not rare in China, and many cases involving free riding were made public in recent year. In the meantime, another phenomenon is getting attention: there are certain enterprises starting business by producing copycat products, and they have made great profits after years of operation and accumulation; however, they have also experienced embarrassing moments on the way of development, and they get used to be defendants. Whether these kinds of enterprises can exist remains a problem. Adivon is one of them.

Adivon’s low end strategy

Founded in 2006, Adivon opened over 3000 stores so far and the profits were growing year by year. When Adivon started business, the overall sporting goods market was overwhelmed by various of famous brands. Adivon set its brand position in tier 3 and tier 4 cities with sports shoes as main products, meanwhile also sold sportswear, the prices of these products were around 100 yuan, which were much cheaper than products of other Chinese native sportswear brands, not to mention the products of international brands price at thousands yuan.

As can be seen from Adivon’s market orientation, the enterprise probably noticed the economic level of lower tier cities and their citizens’ low sensibility over famous brands. Adivon made great achievements by grasping the essentials; but in the meantime, the enterprise’s free riding acts set itself potential danger which finally leads to the current situation.

It is reported that on May 3rd 2013, the dispute between Adidas and Adivon was finally solved with a settlement. Adivon transferred its Chinese trademark “阿迪 王” and the triangle logo to Adidas for free, the trademark and the logo would not be allowed to use in stores after settlement. Therefore, Adivon was exempted from billions of compensation.

On the same day, Adivon delivered A Notice on Trademark and Enterprise Name’s Use (Notice) to its agents and franchises. According to the Notice , the triangle logo, Chinese trademark “阿迪王” and any related trademark combinations cannot be used in the new products, promotional materials, packaging or store decorations starting from May 3rd 2013.

Adivon also required its agents to sell out all products and accessories in stock before April 6th 2017, and the store decoration can be used until the same day based on the contracts signed between Adivon and its agents and franchises.

Case review

On April 21st 2008, Adidas filed a law suit against Adivon, Huazhu Shoes Co., Ltd. and its distributors at Yingkou Intermediate People’s Court of Liaoning Province for trademark infringement and unfair competition.

On July 21st 2009, Adidas filed another law suit against Adivon, Huazhu Shoes Co., Ltd. and its distributors at Wuhan Intermediate People’s Court of Hubei Province for trademark infringement and unfair competition based on the same grounds.

Because the objection of jurisdiction of the court filed by Adivon regard to the suit filed in Liaoning, the case had been transferred to Dalian Intermediate People’s Court of Liaoning Province and was heard on October 20th 2009. The court rejected Adidas’ all appeals in April 2010.

The latest litigation was on March 15th 2013. Adidas sued the Trademark Appeal Board (the TAB) at court, claiming that Adivon’s trademark was similar to Adidas’ trademark, which was against the Trademark Law; Adivon misled the public by imitating Adidas’ trademark and therefore infringed Adidas’ right to trade name. Adidas also held that it has pumped money in trademark promotion in China’s market, including “Adidas” and “阿迪达斯” trademark. Its trademarks were already well-known trademarks and should be protected by the TAB. Therefore the TAB should not grant registration of the disputed trademark, i.e. Adivon’s trademark. The case was heard by Beijing First Intermediate Court, Adivon presented the hearing as a third party defendant.

The TAB argued that it did not violate the Trademark Law since the trademark of Adivon was not similar to the trademark of Adidas, and Adivon did not infringe Adidas’ right to trade name.

Adidas believed that whe