Adidas Plays on Hard Mode
The 3 stripes of Adidas are instantly recognizable around the world, or are they? Angle them in any direction, and a European court is not so sure. Within Europe, the German fashion giant has been denied a trademark for such a design.
Investors see trademarks as a tremendous competitive advantage, keeping rivals away from iconic brand elements. All 3 of the stripes in the Adidas design are completely trademarked. So what’s the fuss? Adidas of all companies does not stand still. Future products need modernizing, including the famous design. In an abrupt setback, the general court of the EU isn’t convinced that the new visual will be easily recognizable to Europeans.
Adidas charges premium prices on the back of the trademarks it holds, ultimately deriving a third of its business from Europe. That’s why a future without protection privileges makes investors shiver. Imitators of the design could force down those premium prices, leading to fewer returns that squeeze the value gap between profits and the cost of going after them. The stock lost almost 2% yesterday, leaving the investors that remain with a European puzzle to solve.
Luckily, European court judges only represent a small number of Adidas customers. Millions of consumers still know the brand when they see it, and the industry is dominated by only a few players who don’t want to be Adidas lookalikes anyway. Investors will hope these factors can bail out the company from competitive attack. After all, it’s not “your look” until you’ve got the trademark to prove it!