Facing a Wimbledon without players in normal Adidas tennis gear following an ITF dresscode edict, the sportswear multinational sought an injunction suspending the code. What was its legal claim and did it win?
“Competition proves too challenging for the Grand Slam Committee”
Who: High Court
When: June 2006
The High Court granted Adidas an injunction suspending the Grand Slam Committee’s (GSC) dress code. The upshot is that Adidas will be able to include its three-stripe logo on the sportswear of the tennis players it sponsors until the matter is resolved in a full trial scheduled for October of this year. Given that the world will be watching the courts at Wimbledon this month; this is a significant win for Adidas.
The GSC, which includes representatives of the organisers of Wimbledon, the US Open, the Australian Open and the French Open, and the International Tennis Federation (ITF), has designed a dress code restricting the use of the advertiser’s logo on players’ clothing and sports equipment. In particular, the code restricts the size of the “manufacturer’s standard logo”, typically two square inches.
Adidas has always described its three-stripes mark as a “distinctive design element” and not an Adidas logo. The GSC, and later the ITF, amended their respective codes. The three-stripes mark was to be subject to the same size and other restrictions as a manufacturer’s logo. These restrictions would apply from the first day of Wimbledon.
Adidas applied to the High Court for an interim injunction to suspend the application of the ‘manufacturer’s logo’ restrictions to the three-stripe mark. Its main argument centred on competition law and Article 81 of the EC Treaty – the dress code restrictions would put Adidas at a competitive disadvantage, not least because other, comparable marks, such as the Nike swoosh and the Diadora two-stripes, continue to be treated as design elements. As these grand slam events have a considerable impact on the sales of tennis clothing, the restrictions would put Adidas at a significant competitive disadvantage and, as a result, Adidas’ sales figures would be affected.
The High Court granted the injunction and rejected the ITF and Grand Slam organisers’ application to have Adidas’ application struck out. The court held that there was a serious issue to be decided and that Adidas’ argument had a real prospect of success at trial.
Why it matters:
The High Court was not convinced by arguments that the application of the dress code was a sporting activity and not an economic activity and that, consequently, EC competition law was inapplicable. The court was more impressed with Adidas’ argument that the “sporting exception” was irrelevant in this case, as the dress code was concerned with the commercialisation of tournaments, which is a commercial and, therefore, financial activity.
By granting this injunction, the courts have shown a willingness to extend the application of competition law to the regulation of sport. Now that the English courts have acknowledged the financial implications of the decisions of sporting regulators, we could see more of their decisions challenged on the basis of competition law.
Although Adidas has taken the first set, we will have to wait to see whether it is the brand owner or the sports regulator that wins the match.