Nike has long been a powerhouse in the athletic apparel market, celebrated for its innovation and iconic branding. However, the company currently faces a significant legal challenge from Lontex Corp., a competitor in the performance apparel sector. This lawsuit underscores the difficulties brands encounter when protecting their trademarks against larger companies with greater resources. Furthermore, it highlights the implications of such disputes in the competitive world of sportswear.
Photo: Lontex Corporation
The Heart of the Dispute
At the center of the lawsuit lies Nike’s alleged infringement of Lontex’s trademarks through its use of “Cool Compression” technology. Lontex has held trademark registrations for this technology since 2008. In 2015, Nike began incorporating the term “Cool Compression” into its branding for a specific Nike Pro line. Then, in 2016, Lontex responded with a cease-and-desist letter. When Nike failed to comply and refused to negotiate, the dispute escalated to court. In a 2021 verdict, the court ordered Nike to pay Lontex over $700,000 in compensatory and punitive damages, along with more than $4 million in attorney fees. This brought the total to nearly $7 million. On appeal, Nike contested the substantial attorney fees, which prompted a special review.
Court Findings and Implications
The review, conducted by retired Pennsylvania Supreme Court Judge Greenspan, revealed that Nike aimed to pressure Lontex into court to undermine its business through legal costs. While the original payout of $7 million appears significant, it pales in comparison to the estimated $100 million Nike earned from its version of the “Cool Compression” technology and branding. Judge Greenspan criticized Nike’s actions, stating, “Nike’s incivility, bad behavior, blatant willful infringement, and reckless indifference upon notice of the infringement are rare qualities that distinguish this case from the typical case.”
Just Do It Photo: Nike, Inc.
A Cautionary Tale for Corporations
This case serves as a stark warning for large corporations that attempt to infringe on the intellectual property of smaller competitors. Protecting your brand and business is essential; however, legal battles can be lengthy and costly. Fortunately for Lontex, the judicial system recognized the potential overreach of Nike’s tactics. Ultimately, the outcome of the Nike vs. Lontex lawsuit may deter other companies from engaging in similar practices.
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