May 11, 2018
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Skechers sues Adidas for false advertising, unfair competition

May 11, 2018

Skechers sued Adidas in federal court this week claiming unfair competition after the brand sent hundreds of thousands of dollars in secret payments to high school and college athletes in return for them wearing Adidas.

A lineup of college basketball uniforms - Adidas

The complaint was filed in California and states, "The market for basketball shoes is driven as much by brand perception, attitude, and style as it is by shoe performance. The ability to develop 'street credibility' by having talented players and trendsetters wear a company's shoes can make or break a brand's reputation."

Skechers is claiming Adidas' payoffs were essentially bribes which prevented the Manhattan Beach, CA-based brand from entering the market. The brand is also accusing Adidas of false advertising by creating a market that would steer consumer preferences towards Adidas.

In its complaint, Skechers says Adidas, "effectively blocked Skechers and other companies from competing on a level playing field for young, NBA-level endorsers, and unfairly bolstered consumer perception of Adidas' overall brand quality and image well beyond the basketball footwear market."

The lawsuit follows a federal indictment last year when 10 Adidas execs were found to be bribing college basketball players who were paid in exchange for signing endorsement deals when the players went pro. That trial between the US government and the 10 Adidas executives is set to occur in October in New York.

Adidas and Skechers have long had a difficult relationship and a court recently found in favor of Adidas in a case where it sued Skechers for copying its Stan Smith design. In a statement, an Adidas spokesperson affirmed, "We will not stand by and allow others to blatantly copy our products and infringe on our valuable intellectual property," calling Skechers infringement the latest iteration of a "pattern of unlawful conduct."

Both Adidas and Skechers trail Nike who remains the top sports brand in the US. According to NPD Group, Nike owns almost 75% of the $1B basketball industry plus another 8% from its subsidiary Jordan Brand. Under Armour holds 12% market share and Adidas only occupies 4% of the market.

Adidas has not yet officially responded to Skechers' lawsuit but according to ESPN, a spokesperson called the suit "frivolous and nonsensical" adding that "it should be summarily dismissed."

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