May 6, 2008

Adidas wins $137 Million in Punitive Damages from Payless for Trademark Infringement

The Portland Business Journal reports that "A Portland jury awarded Adidas America Inc. nearly $305 million in a trademark infringement case late Monday. 'It's my understanding that, if it's not the largest, it's one of the largest trademark infringement verdicts ever,' said Stephen Feldman, an attorney with Perkins Coie who helped represent Adidas. In the case, Adidas alleged that Payless infringed on its patented three-stripe design. The verdict included $30.6 million in actual damages, $137 million for willful infringement and an additional $137 million in punitive damages. 'The company is reviewing the verdict and assessing its impact,' Topeka, Kan.-based Collective Brands, owner of Payless, said in a statement. 'The company believes that the verdict was excessive and unjustified.' 'The company will ask the court to set aside the verdict and, if it is not granted, intends to take all necessary steps to overturn it.'"

It seems likely that reduction in the punitive damage award must occur because with a substantial compensatory damage award, a one-to-one ratio of punitive to compensatory damages is the upper end that should be permitted. Arguably, the $137 million for willful infringement should further reduce the punitive damage award as that already includes a significant penalty component.