Adidas vs Puma A Battle for the Sole

Sportswear rivals Adidas and Puma are locked in a legal battle over a new material both believe is the future of running shoe soles, and huge profits. Puma has won the latest skirmish, but the larger Adidas could yet win the war.
Adidas could do with a legal boost.

The decades-old rivalry between German sporting goods firms Adidas and Puma has long since become legendary, with both companies always keen to get one over their competitor. The battle usually plays out in commercial terms, but now it has spilled over into the courts, and it’s a case of third time lucky for Puma.

Adidas has already twice failed to prevent Puma from selling its NRGY shoes. And on Tuesday, another Adidas injunction claiming the Puma shoe was a copy of its own Boost shoe was kicked out at a court in Düsseldorf.

"This is a very gratifying decision, which is of great economic importance for Puma," company lawyer Neil Narriman told Handelsblatt.

But there is far more at stake than just an athletic shoe collection. The sporting goods makers are arguing over soles made of a new synthetic material, ETPU, and who developed the synthetic damping material first.

Billions in sales are at stake.

There is a good reason why the two sides are jostling over ETPU. "We believe that it could become the new industry standard," said Matthias Hartmann, team leader for material and process development at Puma.

In other words, billions in sales are at stake. Sooner or later, Mr. Hartmann explained, competitors like Nike and Asics will also be using ETPU. But those companies haven't reached that point in their development yet, which, according to Mr. Hartmann, is why it is important for Puma to defend its rights.

There is a long history behind the dispute. In 2009 and 2010, Puma and BASF developed a sole made of ETPU. To manufacture the material, small spheres of plastic foam are glued together to create an end product that resembles Styrofoam. The advantage of the material is that shoes are better cushioned and, at the same time, the sole releases energy when an athlete lifts his or her foot. In the spring of 2011, when the first prototypes were finished, BASF dropped Puma and joined forces with Adidas.

It was a disaster for Puma, the smaller of the two rivals. For years, Puma had successfully dedicated itself to the athletic lifestyle. When the brand fell out of fashion, it had little left to offer soccer players, joggers and fitness nuts, and sales declined.

The new sole could have enabled Puma to reconnect with its desired target group. "We lost more than two years because of BASF's switch to Adidas," said Mr. Hartmann. Nevertheless, Puma did obtain copyright protection for four designs from its joint venture with the chemicals firm.

Meanwhile, Adidas and BASF were stepping on the gas, and the Boost shoes were in stores by the spring of 2013. Developers at Puma quickly recognized that the shoes looked surprisingly similar to their own, protected designs. In the fall of 2013, Puma filed a lawsuit against Adidas in Frankfurt, in which it alleged that the brand had infringed Puma's design patent.

But Puma lost the case after Adidas argued that, for technical reasons, soles made of ETPU look like Styrofoam. The Frankfurt Regional Court agreed and dismissed the lawsuit in June 2015. A design cannot be protected if it is based on technical factors.

By this point, Puma had recovered from the setback and developed its own ETPU sole. The resulting product, the NRGY running shoe, was on shelves in sporting goods stores in the spring of 2015.

This prompted a response from Adidas. The company tried to obtain an injunction from the Düsseldorf Regional Court to force NRGY shoes out of stores. Adidas accused Puma of having copied the Boost sole. This time the judges supported Puma, arguing that NRGY was the company's own development, so that the sole could not be a copy.

Adidas didn't like the court's decision and filed an appeal. The Higher Regional Court in Düsseldorf upheld the ruling on Tuesday. It argued that Puma owned older design rights and had at least developed the technology in parallel with Adidas. An Adidas spokeswoman said she was disappointed and the court's decision was inexplicable. "We are keeping our options open and are now looking into next steps," she said.

In light of the litigation, Puma has kept its NRGY collection on the small side, but now the company wants to greatly expand the number of shoe models it sells with ETPU soles. "It is now clear without a doubt that we did not copy the Adidas Boost shoes," attorney Mr. Narriman stressed.

But the latest ruling has not put an end to the quarrel. Puma has filed an appeal against last year’s ruling in Frankfurt. A court date has been set for October 16.

 

Joachim Hofer covers the high-tech, IT and recreational sectors from Handelsblatt's Munich office. To contact the author: [email protected]