A small Pennsylvania-based company, Lontex, is taking on Nike over a trademark infringement claim. Lontex specializes in compression technology for sportswear, marketed under the Sweat It Out brand.
They developed a unique line of clothing featuring “Cool Compression” technology, designed to help athletes with muscle recovery. Lontex received three trademark registrations from the USPTO in Class 25 for clothing and Class 10 for compression supports for the mark “Cool Compression” and has found great success with this line of goods.
Great idea, right?
Nike also seemed to think so…
The sportswear giant started selling compression clothing under its “Nike Pro” line and used the term “Cool Compression” to describe it — the same term for which Lontex had registered trademarks for clothing and compression supports. When Lontex caught wind of this, they sent Nike a cease-and-desist letter, but Nike refused to stop using the trademark. So Lontex filed a trademark infringement lawsuit against Nike.
Years later, a jury finally found Nike guilty of infringing on Lontex’s trademark and awarded the small company $791,000 in damages. However, this amount was nothing compared to the estimated $100 million Nike made from selling products using Lontex’s trademark.
‘Bad Faith’ Leads to Big Costs
After the trial, Lontex requested that Nike cover their legal expenses. In trademark infringement cases, it is unusual for the defendant to pay the plaintiff’s legal fees unless there are “exceptional circumstances.” For small companies like Lontex, however, the burden of legal fees can be far more damaging than for corporations like Nike.
After multiple court hearings, the court finally ordered Nike to pay Lontex’s attorney fees, citing Nike’s “bad faith” behavior throughout the legal process. This decision underscores the reality for smaller businesses, where litigation can threaten their financial stability – a challenge Nike is far less likely to face.
Nike’s behavior in this trial has drawn comparisons to previous controversies involving NIke being publicly criticized for its treatment of female athletes, raising broader concerns about the company’s ethical standards and corporate culture. This pattern of behavior — where the company uses its immense market power to dominate smaller competitors, can lead to increased public skepticism.
This case emphasizes how large companies can sometimes act in ways that disadvantage smaller competitors, and the lengths to which a business might – even after being found liable for trademark infringement – go to avoid accountability. Will Nike’s behavior in the Lontex case be a wake-up call for the company to re-examine its public image and consider being a better corporate citizen?