During its 50-year history, adidas had spent heavily to establish its three-stripe logo as a symbol for athletic achievement. When value-priced shoe retailer Payless ShoeSource started selling athletic shoes with two or four vertical stripes, adidas brought an action against Payless. adidas claimed Payless' lower-cost athletic shoes could dilute its famous logo in the minds of consumers and tarnish its brand by association with a lower-quality product. In 2008, the jury found in favor of adidas, awarding $305 million, believed to be the largest verdict in a trademark case. In this case students examine the histories and brand status of adidas and Payless as well as both companies' legal arguments before discussing consumer psychology, branding, and whether the jury made the right decision.

Case id: 090520
Supplemental Materials: Teaching Note, Teaching Slides