Sneaker Wars: Converse vs. New Balance
On October 14, 2014, Converse filed 22 separate federal lawsuits against 31 manufacturers, including Tory Burch, Skechers, and Fila. That same day, the company also filed a complaint seeking secondary-meaning protection from the International Trade Commission. “We have big growth plans for the company,” Calhoun says. “And to do that, you have to protect the brand name and stop this infringing behavior.”
At first, some in the sneaker world saw the lawsuits as a marketing ploy. Others saw opportunism. “Whether [the infringement] claims are valid or not,” Bodega’s Gordon says, “it’s a smart move just to flex a little muscle and get people thinking.”
But Converse’s court claims were not without precedent. In 2011, couture designer Christian Louboutin—whose high heels nearly always feature a bright-red outsole—sued rival Yves Saint Laurent for selling copycat shoes, alleging trademark infringement. A year later, the U.S. Court of Appeals Second Circuit held that Louboutin’s signature red sole was a “distinctive symbol” and granted Louboutin the exclusive right to sell shoes with red soles in the United States as long as the shoes themselves were not red. When fashion lawyer Staci Jennifer Riordan learned that her client, H & M, was among the 31 companies Converse had sued, she says her entire office “immediately thought Converse was inspired by Christian Louboutin… Because the fashion industry doesn’t have a lot of intellectual-property protection in the United States, you’re starting to see companies find creative ways to try to secure it.” But Converse faced a tougher road. Whereas Louboutin attacked swiftly, Converse had waited decades. “When you sit on something and you let the industry build up around it, and then you go to war over it,” Louboutin attorney Harley Lewin recently said, “that’s a very hard pill to swallow.”
Converse’s 224-page ITC complaint featured side-by-side comparisons of Chucks and every alleged imitator. Some—such as Esquire Footwear’s high-tops, Ed Hardy’s “Dakota,” and Kmart’s “Joe Boxer” shoes—might have been difficult for the untrained consumer to distinguish from Chucks. Other brands looked like Salvador Dalí versions, too squat or narrow or flimsy to be mistaken for the real thing. The complaint also dug up comments from competitors’ online stores to prove consumers’ confusion. “All good on the knockoff front,” a shopper wrote about Walmart’s “Faded Glory” shoe. “People compliment me on my ‘Chucks.’”
At first, Calhoun’s attack on the fashion industry seemed to work. In January, the ITC found that 36 Ralph Lauren styles infringed on Converse’s trademarks, including its camouflage, western-leather, and bleached-denim shoes. Ralph Lauren agreed to destroy all the offending footwear and paid Converse an unspecified sum. H & M agreed to a similar settlement in February. Within months, 28 companies had settled out of court.
There were still a few holdouts: Walmart, Skechers, and Highline United, which sells shoes under the Ash brand, refused to back down. Walmart, with its deep pockets, vowed to go the distance, blasting the lawsuit as nothing more than Converse’s attempt “to extort monetary settlements.” And then a crosstown rival blindsided Converse with a potential knockout punch.
New Balance was not in Calhoun’s cross hairs when Converse first filed its declarations of war in the federal courts. Inside the legal department at New Balance, though, decision makers feared Converse might attack its PF Flyers sneaker—complete with a toe bumper and a midsole stripe—if the ITC ruled in Converse’s favor. New Balance asked Converse if it would exempt its neighbor. Converse said no.
So New Balance responded with an early Christmas gift: On December 23, 2014, it filed a federal lawsuit assaulting what it called Converse’s “aggressive efforts” to bully imitators. Noting that Converse once owned and then sold the PF Flyers shoe line in the 1970s, New Balance asked the U.S. District Court in Massachusetts to declare that the Flyers do not infringe on the Chuck Taylor trademark—and to go the extra step of canceling the Chuck’s entire trademark, because it contained common ornamental and functional features that should be free for anyone to manufacture. It was a nuclear option, the worst possible scenario: Calhoun had set out to vaporize the competition, but if he lost this lawsuit to New Balance, he’d instead have opened Converse to an endless stream of legal imitators. To no one’s surprise, Calhoun threatened to add New Balance to the ITC lawsuit, but New Balance beat him to the punch by filing a motion to join the case just so it could fight it. Sneaker Town was officially at war.
Throughout it all, Calhoun has remained diplomatic about the ongoing feud. When asked about New Balance, he says, “If somebody said, ‘Hey, would you want them to go away?’ Actually, no. We’re both trying to make meaningful differences in consumers’ lives, and they keep us better. But I think we can respectfully disagree.”
The ITC trial began on August 4 at the commission’s main hearing room in Washington, DC. For five days, 24 attorneys for Converse and another 18 for the competition pored over accusations, witness testimony, and enough sneakers to make Kanye go barefoot for a month. Team Converse illustrated the “iconic,” “timeless” look and appeal of Converse, citing its 40 million Facebook followers, more than any other brand on the planet. “Children take their first steps in them, teens wear them to prom and to graduate, adults get married in them,” Converse attorneys said, highlighting the public’s near-universal recognition of the brand.
Team Skechers-Walmart-New Balance-Highline fired back. New Balance attorney Mark Puzella called Calhoun to the witness stand and tried to make him look like a fool. Puzella displayed a page from Converse’s 1983 annual report that said the brand’s “most significant trademarks are…the Converse logo consisting of the name Converse in combination with the star design,” and asked Calhoun to verify that the report made no mention of a midsole stripe. The attorney also asked why Converse had waited 31 years to take action. Skechers’ lawyer didn’t miss a beat, asserting that “Converse, after being purchased by Nike, the biggest shoe company in the world, decided it wanted to own the entire product category. And it would be as if Ralph Lauren was bought by a very large company and said, ‘I want to own polo shirts’ and kick everyone else out of the market.” He also displayed pairs of Keds and other sneakers predating the Chuck with a similar toe, sole stripe, and heel combination. Quoting Coco Chanel’s famous line, “Only those with no memory insist on their originality,” the attorney concluded, “Nike and Converse appear to have no memory.”
During the first day of hearings, an ITC attorney said she expected Converse to fail to establish a secondary meaning. If she was right, it would hand Calhoun the first of what could be a series of defeats in federal court. Not only will the ITC ruling heavily influence the district courts’ decisions in the individual lawsuits Converse still has against Walmart, Skechers, and Highline, but it might also jeopardize the existing settlements with companies such as Ralph Lauren and H&M. Many of these deals may have “contingency provisions,” says H&M attorney Riordan, meaning that if the ITC invalidates the Chuck trademark, the 28 companies that settled might be able to reboot their factories and get away with selling Chuck knockoffs scot-free.
On November 19, the ITC lawyer’s prediction appeared to come true when Skechers issued a press release saying that the commission’s chief administrative law judge ruled against Converse, stating that the Chuck’s midsole stripe held no secondary meaning. The judge also ruled that Skechers’ popular “Twinkle Toes” and “BOBS” sneakers were distinctive enough not to infringe on Converse’s registered trademarks. Calhoun declined to comment.
Still, Converse and Calhoun have plenty of reasons to remain upbeat. Despite the ruling against Converse concerning secondary meaning, Converse fired off a victory dance and its own press release, saying that the judge also ruled Converse’s opponents violated the Chuck’s registered trademarks. The judge’s decisions are only initial determinations and the entire ITC commission won’t deliver its final resolution until early 2016. If the ruling on the registered trademark violations is upheld, the respondents can appeal in federal court.
As Converse has proved, though, it doesn’t need to enforce its registered trademark to make more money than ever. In the past four years, Calhoun has expanded Converse’s retail presence in the United States, China and Australia and pushed sales to 270,000 pairs of Chucks a day worldwide. Converse even earned bragging rights over its big brother: Since 2003, while Nike’s revenue has merely tripled, Converse’s had grown tenfold. Calhoun “has taken Converse to the next level,” Abel says, by “being super smart and globally minded while managing to stay cool.”
No matter how the lawsuits end, the company knows its success will breed imitators—whether of its shoes or its innovative approach to marketing. “The bigger we get,” Calhoun tells me, the more “we’re drawing a bigger crowd trying to take a piece of us.”
Editor’s Note: This story that originally appeared in the January issue of Boston magazine has been updated to reflect the latest court ruling.