                  FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


ADIDAS AMERICA, INC., a Delaware          No. 16-35204
corporation; ADIDAS AG; ADIDAS
INTERNATIONAL MARKETING B.V., a              D.C. No.
foreign entity,                           3:15-cv-01741-
                  Plaintiffs-Appellees,         HZ

                  v.
                                            OPINION
SKECHERS USA, INC., a Delaware
corporation,
             Defendant-Appellant.



     Appeal from the United States District Court
              for the District of Oregon
     Marco A. Hernandez, District Judge, Presiding

         Argued and Submitted October 7, 2016
                   Portland, Oregon

                   Filed May 10, 2018

 Before: Diarmuid F. O’Scannlain, Richard R. Clifton,
      and Jacqueline H. Nguyen, Circuit Judges.

              Opinion by Judge Nguyen;
Partial Concurrence and Partial Dissent by Judge Clifton
2            ADIDAS AMERICA V. SKECHERS USA


                          SUMMARY *


           Lanham Act / Preliminary Injunction

    The panel affirmed in part and reversed in part the
district court’s preliminary injunction prohibiting Skechers
USA, Inc., from selling shoes that allegedly infringe and
dilute adidas America, Inc.’s Stan Smith trade dress and
Three-Stripe mark.

    Affirming in part, the panel held that the district court
did not abuse its discretion in issuing the preliminary
injunction as to adidas’s claim the Skechers’s Onix shoe
infringed on adidas’s unregistered trade dress of its Stan
Smith shoe. The panel concluded that adidas was likely to
succeed on the merits of this claim because the trade dress
was nonfunctional, the trade dress had acquired secondary
meaning, and there was a substantial likelihood of confusion
between the parties’ products. In addition, the district court
did not clearly err in finding a likelihood of irreparable harm
to the Stan Smith.

    Reversing in part, the panel held that the district court
erred in issuing a preliminary injunction as to adidas’s claim
that Skechers’s Cross Court shoe infringed and diluted its
Three-Stripe mark. The panel held that the district court did
not err in finding that adidas showed a likelihood of success
on its trademark infringement and trademark dilution claims.
Nonetheless, the district court abused its discretion in issuing



    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
           ADIDAS AMERICA V. SKECHERS USA                  3

the preliminary injunction because adidas did not show that
it would be irreparably harmed from sale of the Cross Court.

    Concurring in part and dissenting in part, Judge Clifton
wrote that the preliminary injunction should be affirmed in
full. Judge Clifton disagreed with the majority’s reversal of
the preliminary injunction as to the Cross Court shoe on the
ground that there was not evidence to support the district
court’s determination that adidas was likely to suffer
irreparable injury.



                        COUNSEL

Jonathan Hacker (argued), O’Melveny & Myers LLP,
Washington, D.C.; Jordan Raphael, Jeffrey A. Barker, Mark
A. Samuels, and Daniel M. Petrocelli, O’Melveny & Myers
LLP, Los Angeles, California; for Defendant-Appellant.

Richard Charles Henn Jr. (argued) and Charles H. Hooker
III, Kilpatrick Townsend & Stockton LLP, Atlanta, Georgia;
Adam H. Charnes, Kilpatrick Townsend & Stockton LLP,
Dallas, Texas; for Plaintiffs-Appellees.
4           ADIDAS AMERICA V. SKECHERS USA


                         OPINION

NGUYEN, Circuit Judge:

     Skechers USA, Inc. appeals the district court’s issuance
of a preliminary injunction prohibiting it from selling shoes
that allegedly infringe and dilute adidas America, Inc.’s Stan
Smith trade dress and Three-Stripe trademark. We hold that
the district court did not abuse its discretion in issuing the
preliminary injunction as to adidas’s claim that Skechers’s
Onix shoe infringes on adidas’s unregistered trade dress of
its Stan Smith shoe. We conclude, however, that the district
court erred in issuing a preliminary injunction as to adidas’s
claim that Skechers’s Cross Court shoe infringes and dilutes
its Three-Stripe mark. Accordingly, we affirm in part and
reverse in part.

                              I.

              FACTUAL BACKGROUND

    adidas is a leading manufacturer of athletic apparel and
footwear. Skechers is a footwear company that competes
with adidas in the active footwear and apparel market.
Skechers has grown to become the second largest footwear
company in the United States, ahead of adidas and behind
only Nike.

    The Stan Smith has become one of adidas’s most
successful shoes in terms of sales and influence since its
release in the 1970s. Deemed “[t]he favorite shoe of
[fashion industry] insiders like designer Raf Simons and
Marc Jacobs” by The Wall Street Journal and the “ultimate
fashion shoe” by i-D magazine, the Stan Smith has received
extensive media coverage and been featured in such print
and online publications as Time, Elle, InStyle, and Vogue.
               ADIDAS AMERICA V. SKECHERS USA                        5

The Stan Smith also has frequently appeared on lists of the
most important or influential sneakers of all time and has
earned industry accolades such as Footwear News’s 2014
“Shoe of the Year.” That same year, adidas announced that
the Stan Smith had become its top-selling shoe of all time,
selling more than 40 million pairs worldwide.

    adidas is also known for its Three-Stripe mark, which has
been featured on its products for many years as part of its
branding strategy and for which it owns federal trademark
registrations. adidas claims to earn several hundred million
dollars in annual domestic sales of products bearing the
Three-Stripe mark. adidas advertises the Three-Stripe mark
in print publications, on television, and in digital media and
promotes it through celebrity endorsements, sporting events
sponsorships, and athletic partnerships.

    The parties have a history of trademark litigation that has
previously resulted in Skechers acknowledging that “adidas
is the exclusive owner” of the Three-Stripe mark and
agreeing not to use it or any other protected mark
“confusingly similar thereto.” Despite the agreement, adidas
has sued Skechers several times in the last twenty years for
infringement of its Three-Stripe trademark. 1




   1
       Skechers’s unopposed motion for judicial notice is granted.
6          ADIDAS AMERICA V. SKECHERS USA


    adidas filed the present lawsuit against Skechers on
September 14, 2015, alleging, among other things, that
Skechers’s Onix shoe infringes on and dilutes the
unregistered trade dress of adidas’s Stan Smith shoe (both
pictured below).




    adidas further alleges that Skechers’s Relaxed Fit Cross
Court TR (pictured below) infringes and dilutes adidas’s
Three-Stripe trademark, in violation of 15 U.S.C.
§ 1125(a), (c).
            ADIDAS AMERICA V. SKECHERS USA                    7

    adidas filed a motion for preliminary injunction to
prohibit Skechers from manufacturing, distributing,
advertising, selling, or offering for sale the Onix and Cross
Court. The district court granted adidas’s motion and issued
the preliminary injunction, finding that adidas established all
the Winter factors. See Winter v. Nat. Res. Def. Council,
Inc., 555 U.S. 7, 20 (2008) (“A plaintiff seeking a
preliminary injunction must establish that he is likely to
succeed on the merits, that he is likely to suffer irreparable
harm in the absence of preliminary relief, that the balance of
equities tips in his favor, and that an injunction is in the
public interest.”).

   Skechers timely appealed.

                              II.

                STANDARD OF REVIEW

    We review the district court’s issuance of a preliminary
injunction for an abuse of discretion.              See Marlyn
Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co.,
571 F.3d 873, 876 (9th Cir. 2009). “A district court abuses
its discretion in issuing a preliminary injunction if its
decision is based on either an erroneous legal standard or
clearly erroneous factual findings . . . .” Negrete v. Allianz
Life Ins. Co. of N.A., 523 F.3d 1091, 1096 (9th Cir. 2008).
“The legal issues underlying the injunction are reviewed de
novo because a district court would necessarily abuse its
discretion if it based its ruling on an erroneous view of law.”
GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1204
(9th Cir. 2000) (internal quotation marks omitted). By
contrast, the district court’s factual findings are reviewed for
clear error. See Lahoti v. VeriCheck, Inc., 586 F.3d 1190,
1195–96 (9th Cir. 2009).
8             ADIDAS AMERICA V. SKECHERS USA


                                  III.

                             ANALYSIS

    Skechers contests only two of the factors under Winter,
specifically, the district court’s findings that adidas showed
a likelihood of success on the merits and irreparable harm.
Because the analysis for Skechers’s Onix and Cross Court
shoes differ, we take them each in turn.

    A. Skechers’s Onix and adidas’s Stan Smith

         i. Likelihood of Success on the Merits

    Skechers challenges the district court’s finding that
adidas demonstrated a likelihood of success on its claim that
Skechers’s Onix shoe infringes on and dilutes adidas’s
unregistered Stan Smith trade dress.

    “Trade dress protection applies to ‘a combination of any
elements in which a product is presented to a buyer,’
including the shape and design of a product.” Art Attacks
Ink, LLC v. MGA Entm’t Inc., 581 F.3d 1138, 1145 (9th Cir.
2009) (quoting 1 J. Thomas McCarthy, McCarthy on
Trademarks and Unfair Competition § 8:1 (4th ed. 2008)).2
To prove infringement of an unregistered trade dress, “a
plaintiff must demonstrate that (1) the trade dress is
nonfunctional, (2) the trade dress has acquired secondary
meaning, and (3) there is a substantial likelihood of

    2
       adidas defines its Stan Smith trade dress as having: (1) “a classic
tennis-shoe profile with a sleek white leather upper”; (2) “three rows of
perforations in the pattern of” adidas’s Three-Stripe mark; (3) “a defined
stitching across the sides of each shoe,” (4) “a raised mustache-shaped
colored heel patch, which often is green”; and (5) “a flat tonal white
rubber outsole.”
            ADIDAS AMERICA V. SKECHERS USA                   9

confusion between the plaintiff’s and defendant’s products.”
Id. Skechers contests only the latter two elements.

    A trade dress has acquired secondary meaning when
consumers associate the design features with a particular
producer. Fleischer Studios, Inc. v. A.V.E.L.A., Inc.,
654 F.3d 958, 967 (9th Cir. 2011) (citation omitted).
“Secondary meaning and likelihood of buyer confusion are
separate but related determinations . . . .” Levi Strauss & Co.
v. Blue Bell, Inc., 632 F.2d 817, 821 (9th Cir. 1980). Some
of the relevant factors for determining secondary meaning
include the exclusivity, manner, and length of use of the
trade dress, the amount and manner of advertising, the
amount of sales, and proof of intentional copying by the
defendant. Art Attacks, 581 F.3d at 1145.

    The district court’s finding that the Stan Smith has likely
acquired secondary meaning is supported by ample evidence
in the record. The evidence showed that adidas has used the
Stan Smith trade dress exclusively since the early 1970s,
expended considerable capital and human resources to
promote the shoe, and reaped significant but difficult-to-
quantify value from placing the Stan Smith with celebrities,
musicians, athletes, and other “influencers” to drive
consumer hype and recognition of the trade dress—which,
in 2014, became adidas’s top selling shoe of all time with the
40 millionth pair sold.         See Transgo, Inc. v. Ajac
Transmission Parts Corp., 768 F.2d 1001, 1016 (9th Cir.
1985) (finding evidence of sales, promotional efforts, and
duration of exclusive use indicative of secondary meaning).
Also indicative of secondary meaning is the considerable
amount of unsolicited media coverage praising the Stan
Smith’s influence and iconic status as one of the most
famous sneakers of all time. See Golden Door, Inc. v.
Odisho, 646 F.2d 347, 350–51 (9th Cir. 1980) (“The district
10          ADIDAS AMERICA V. SKECHERS USA


court’s finding that a secondary meaning has attached is
supported by evidence of the extensive media coverage
. . . .”).

    Skechers’s own conduct also supports the district court’s
finding. “[P]roof of copying strongly supports an inference
of secondary meaning.” Vision Sports, Inc. v. Melville
Corp., 888 F.2d 609, 615 (9th Cir. 1989). Skechers placed
metadata tags on its website that directed consumers who
searched for “adidas Stan Smith” to the page for the Onix
shoe. “Using another’s trademark in one’s metatags is much
like posting a sign with another’s trademark in front of one’s
store.” Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp.,
174 F.3d 1036, 1064 (9th Cir. 1999). We agree with the
district court that “the only reason ‘adidas Stan Smith’ is a
useful search term is that consumers associate the term with
a distinctive and recognizable shoe made by adidas.”
Therefore, the district court did not clearly err by finding that
the Stan Smith had acquired secondary meaning.

    We turn next to the likelihood of confusion between the
shoes. This factor turns on whether a reasonably prudent
consumer would be confused about the source of the goods
bearing the marks. Dreamwerks Prod. Grp., Inc. v. SKG
Studio, 142 F.3d 1127, 1129 (9th Cir. 1998). “Likelihood of
confusion in the trade dress context is evaluated by reference
to the same factors used in the ordinary trademark context[:]
strength of the trade dress, similarity between plaintiff’s and
defendant’s trade dress, evidence of actual confusion,
marketing channels used, type of goods and likely degree of
purchaser care, and the defendant’s intent in selecting its
trade dress.” Vision Sports, 888 F.2d at 616 (internal citation
omitted) (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341,
348–49 (9th Cir. 1979)). These are commonly referred to as
the “Sleekcraft factors.” We review the district court’s
            ADIDAS AMERICA V. SKECHERS USA                     11

findings on these factors under the clearly erroneous
standard. Id.

    The first Sleekcraft factor is of considerable importance
to the likelihood of confusion analysis, given that “the
greater the similarity between the two marks at issue, the
greater the likelihood of confusion.” GoTo.com, 202 F.3d at
1206. The similarities between the Stan Smith and Onix are
unmistakable. Both shoes share the same white leather
upper, a raised green mustache-shaped heel path, angled
stripes with perforations, the identical defined stitching
pattern around the perforations, and a flat white rubber
outsole. Minor differences, including the use of Skechers’s
logo, do not negate the overall impression of similarity
between these two shoes. See Clicks Billiards Inc. v.
Sixshooters Inc., 251 F.3d 1252, 1259 (9th Cir. 2001)
(“[T]he issue is not whether defendant’s package or trade
dress is identical to plaintiff’s in each and every particular.
Rather, it is the similarity of the total, overall impression that
is to be tested . . . .” (alterations in original) (quoting 1 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 8:2 (4th ed. 2000))).

    Other Sleekcraft factors also favor adidas. “Related
goods are generally more likely than unrelated goods to
confuse the public as to the producers of the goods.”
Brookfield Commc’ns, 174 F.3d at 1055 (citing Official
Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1392 (9th Cir.
1993)). “Related goods are those products which would be
reasonably thought by the buying public to come from the
same source if sold under the same mark.” Sleekcraft,
599 F.2d at 348 n.10 (internal quotation marks omitted).
There can be little doubt that the shoes in question here are
similar goods, and that, if the shoes were sold under the same
mark, the public would reasonably think they came from the
12            ADIDAS AMERICA V. SKECHERS USA


same source. This makes the likelihood of confusion greater
here than in other cases. And, as we discussed when
analyzing the Stan Smith’s secondary meaning above,
adidas has presented ample evidence that the Stan Smith has
enjoyed tremendous commercial success and market
recognition. Finally, the evidence supports an inference that
Skechers intended to confuse consumers; it not only created
a nearly identical shoe to the Stan Smith, but then used
metadata tags to direct consumers who searched for “adidas
stan smith” to the Onix web page. 3

    “[O]nly a subset of the Sleekcraft factors are needed to
reach a conclusion as to whether there is a likelihood of
confusion.” GoTo.com, 202 F.3d at 1206. Given the
evidence, the district court here did not clearly err in
concluding that adidas was likely to succeed on its claim that
Skechers’s Onix shoe infringes on adidas’s Stan Smith trade
dress.




     3
        Relying on Multi Time Machine, Inc. v. Amazon.com, Inc.,
804 F.3d 930 (9th Cir. 2015), Skechers argues that its use of metadata
tags clearly identifying the source of the product being sold is indicative
only of an intent to compete, not an intent to infringe. This reliance is
misplaced. In Multi Time, a watch manufacturer brought an action
alleging that an online retailer’s listing of competitors’ products in
response to a search for the manufacturer’s mark constituted trademark
infringement. Id. at 934–35. Because the defendant there did not create
any of the competing products, the use of the metadata was not probative
of its intent to exploit the existing secondary meaning of a competitor’s
mark or trade dress. Id. at 936–37. Here, however, Skechers’s use of
the metadata is probative of its attempt to capitalize on the Stan Smith
by both creating and selling the similar-looking Onix.
              ADIDAS AMERICA V. SKECHERS USA                         13

         ii. Likelihood of Irreparable Harm

    Skechers also argues that the district court’s finding of a
likelihood of irreparable harm to the Stan Smith was
erroneous.

    In Herb Reed Enterprises, LLC v. Florida Entertainment
Management, Inc., we reaffirmed that “[e]vidence of loss of
control over business reputation and damage to goodwill
[can] constitute irreparable harm,” so long as there is
concrete evidence in the record of those things. 736 F.3d
1239, 1250 (9th Cir. 2013). Consistent with Herb Reed, the
district court here based its finding of irreparable harm from
the Onix shoe on evidence that adidas was likely to suffer
irreparable harm to its brand reputation and goodwill if the
preliminary injunction did not issue. adidas’s Director of
Sport Style Brand Marketing testified to the significant
efforts his team invested in promoting the Stan Smith
through specific and controlled avenues such as social media
campaigns and product placement, and he stated that the
Stan Smith earned significant media from various sources
that was not initiated or solicited by adidas. adidas also
presented evidence regarding its efforts to carefully control
the supply of Stan Smith shoes and its concerns about
damage to the Stan Smith’s reputation if the marketplace
were flooded with similar shoes. Finally, adidas produced
customer surveys showing that approximately twenty
percent of surveyed consumers believed Skechers’s Onix
was made by, approved by, or affiliated with adidas. 4



    4
      Skechers’s intent to foment and capitalize on such confusion is
evident from its use of the terms “adidas” and “Stan Smith” in its source
code for the Onix shoe webpage.
14          ADIDAS AMERICA V. SKECHERS USA


    The extensive and targeted advertising and unsolicited
media, along with tight control of the supply of Stan Smiths,
demonstrate that adidas has built a specific reputation around
the Stan Smith with “intangible benefits.” See Regents of
Univ. of Cal. v. Am. Broad. Cos., 747 F.2d 511, 519 (9th Cir.
1984) (internal quotation marks omitted). And, the customer
surveys demonstrate that those intangible benefits will be
harmed if the Onix stays on the market because consumers
will be confused about the source of the shoes. We find that
the district court’s finding of irreparable harm is not clearly
erroneous. See Herb Reed, 736 F.3d at 1250; Rent-A-Ctr.,
Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d
597, 603 (9th Cir. 1991) (noting that harm to advertising
efforts and goodwill constitute “intangible injuries” that
warrant injunctive protection).

     B. Skechers’s Cross Court and adidas’s Three-
        Stripe Mark

       i. Likelihood of Success on the Merits

   adidas alleges that Skechers’s Cross Court shoe infringes
and dilutes its Three-Stripe trademark. The district court
found that adidas showed a likelihood of success on the
merits as to both the infringement and dilution claims.

           a. Trademark Infringement

     To establish trademark infringement, a plaintiff must
show, among other things, ownership of its trademark and a
likelihood of confusion between its and the defendant’s
marks. 15 U.S.C. § 1125(a)(1)(A). Although Skechers
concedes adidas’s ownership of the Three-Stripe mark,
Skechers challenges the district court’s finding that adidas
was likely to succeed in establishing the confusion element
of its trademark infringement claim.
            ADIDAS AMERICA V. SKECHERS USA                   15

    Given our deferential review, we cannot say the district
court clearly erred in its analysis of the Sleekcraft factors.
Both the Cross Court and adidas’s designs have three stripes,
and while there are distinctions between the marks—
including a difference in the thickness of the stripes, the
inclusion of a strip between the three stripes on the Cross
Court, and the fact that the stripes do not continue to the sole
of the shoe—the district court was permitted to discount
these differences in conducting its factual determination
regarding similarity.      See Fortune Dynamic, Inc. v.
Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025,
1032 (9th Cir. 2010) (noting that “similarities are weighed
more heavily than differences” in this analysis (internal
quotation marks omitted)). This is especially true when the
marks are attached to closely related products, as they are
here. See Goss, 6 F.3d at 1392 (noting that a “diminished
standard of similarity is therefore applied when comparing
the marks of closely related goods”); see also supra Part
III.A.i (discussing relatedness).

     Nor did the district court clearly err in finding that the
strength of the registered mark factor weighs in adidas’s
favor. “The stronger a mark—meaning the more likely it is
to be remembered and associated in the public mind with the
mark’s owner—the greater the protection it is accorded by
the trademark laws.” Network Automation, Inc. v. Advanced
Sys. Concepts, Inc., 638 F.3d 1137, 1149 (9th Cir. 2011)
(quoting Brookfield Commc’ns, 174 F.3d at 1058). “Two
relevant measurements are conceptual strength and
commercial strength.” Id. “[A] mark’s conceptual strength
is proportional to the mark’s distinctiveness.” M2 Software,
Inc. v. Madacy Entm’t, 421 F.3d 1073, 1080 (9th Cir. 2005).
“[A]n arbitrary or fanciful mark is the most distinctive.” Id.
(citing GoTo.com, 202 F.3d at 1207). On the other hand,
“[c]ommercial strength is based on ‘actual marketplace
16            ADIDAS AMERICA V. SKECHERS USA


recognition.’” Network Automation, 638 F.3d at 1149
(quoting Brookfield Commc’ns, 174 F.3d at 1058). Evidence
of substantial advertising expenditures can transform a
suggestive mark into a strong mark. Id. The Three-Stripe
mark possesses both conceptual and commercial strength.
Conceptually, it features an arbitrary and distinctive design.
Commercially, the mark enjoys a long history of
marketplace recognition, as well as adidas’s significant
investment of resources to advertise the mark.

    The district court also did not clearly err in finding that
Skechers’s intent in selecting its mark weighs in adidas’s
favor. In light of the parties’ litigation history, Skechers
undoubtedly knew of adidas’s Three-Stripe mark when it
conceived of its Cross Court shoe. “When one party
knowingly adopts a mark similar to another’s, reviewing
courts presume that the defendant will accomplish its
purpose, and that the public will be deceived.” Acad. of
Motion Picture Arts & Scis. v. Creative House Promotions,
Inc., 944 F.2d 1446, 1456 (9th Cir. 1991) (citing Sleekcraft,
599 F.2d at 354). This knowledge supports the district
court’s finding that Skechers intended to deceive the public
as to the source of its shoe by using a similar mark.

    Taken together, we cannot say that the district court
clearly erred in evaluating the Sleekcraft factors cited above
in adidas’s favor. 5 Accordingly, we hold that the district

     5
      Skechers argues that the use of its own logo on the Cross Court
negates any confusion arising from its use of a similar three-striped
mark. But a trademark may not be freely appropriated so long as the user
also includes its own logo. See Levi Strauss & Co. v. Blue Bell, Inc.,
632 F.2d 817, 822 (9th Cir. 1980). Whether the likelihood of confusion
persists despite the presence of the alleged infringer’s own logo is a
question of fact, and the district court here did not clearly err in finding
that Skechers’s logo was not sufficiently prominent in comparison to the
               ADIDAS AMERICA V. SKECHERS USA                     17

court did not err in finding adidas showed a likelihood of
success on its trademark infringement claim.

               b. Trademark Dilution

    “Dilution is ‘the lessening of the capacity of a famous
mark to identify and distinguish goods or services,
regardless of the presence or absence of—(1) competition
between the owner of the famous mark and other parties, or
(2) likelihood of confusion, mistake, or deception.’” Nissan
Motor Co. v. Nissan Compt. Corp., 378 F.3d 1002, 1011 (9th
Cir. 2004) (quoting 15 U.S.C. § 1127). To establish dilution,
“a plaintiff must show that (1) the mark is famous and
distinctive; (2) the defendant is making use of the mark in
commerce; (3) the defendant’s use began after the mark
became famous; and (4) the defendant’s use of the mark is
likely to cause dilution by blurring or dilution by
tarnishment.” Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628,
634 (9th Cir. 2008) (citing 15 U.S.C. § 1125(c)(1)). “[T]he
court may consider all relevant factors” to determine
whether dilution is likely, including:

        (i)       The degree of similarity between the
                  mark or trade name and the famous
                  mark.

        (ii)      The degree of inherent or acquired
                  distinctiveness of the famous mark.




three-striped mark to alleviate the likelihood of confusion. See Keds
Corp. v. Renee Int’l Trading Corp., 888 F.2d 215, 222 (1st Cir. 1989)
(rejecting argument that sneaker label negated confusion because “the
impressed words can only be read a few feet away from the eyes”).
18             ADIDAS AMERICA V. SKECHERS USA


       (iii)     The extent to which the owner of the
                 famous mark is engaging in
                 substantially exclusive use of the
                 mark.

       (iv)      The degree of recognition of the
                 famous mark.

       (v)       Whether the user of the mark or trade
                 name intended to create an
                 association with the famous mark.

       (vi)      Any actual association between the
                 mark or trade name and the famous
                 mark.

15 U.S.C. § 1125(c)(2)(B). No one factor is necessarily
determinative. See id.; see also Starbucks Corp. v. Wolfe’s
Borough Coffee, Inc., 736 F.3d 198, 207, 211 (2d Cir. 2013)
(noting that “the importance of each factor will vary with the
facts” and that “the test is not an inflexible one”).

    There is substantial overlap between many of these
factors and the Sleekcraft factors. In challenging the district
court’s determination that these factors weigh in favor of a
likelihood of dilution, Skechers relies on many of the same
objections it made to the district court’s findings regarding a
likelihood of success on the trademark infringement claim.
We reject these arguments here for the same reasons we
rejected them in the infringement context. Skechers’s only
new argument is that adidas failed to produce evidence of
the degree of recognition of the Three-Stripe mark, but this
is simply incorrect. There was substantial evidence from
which the district court could find that the Three-Stripe mark
enjoyed a high degree of recognition. Accordingly, we hold
              ADIDAS AMERICA V. SKECHERS USA                         19

that the district court did not err in finding a likelihood of
success on the merits on adidas’s trademark dilution claim.

         ii. Likelihood of Irreparable Harm

    Skechers next argues that the district court abused its
discretion in issuing the preliminary injunction because
under Winter, adidas has not shown that it will be irreparably
harmed from sale of the Cross Court. We agree.

    Both below and on appeal, adidas advanced only a
narrow argument of irreparable harm as to the Cross Court:
that Skechers harmed adidas’s ability to control its brand
image because consumers who see others wearing Cross
Court shoes associate the allegedly lesser-quality Cross
Courts with adidas and its Three-Stripe mark. 6 Yet we find
no evidence in the record that could support a finding of
irreparable harm based on this loss of control theory.

    First, adidas’s theory of harm relies on the notion that
adidas is viewed by consumers as a premium brand while
Skechers is viewed as a lower-quality, discount brand. But
even if adidas presented evidence sufficient to show its
efforts to cultivate a supposedly premium brand image for
itself, adidas did not set forth evidence probative of
    6
        While there are other ways post-sale confusion could
hypothetically harm a trademark holder, see, e.g., Gen. Motors Corp. v.
Keystone Auto. Indus., Inc., 453 F.3d 351, 358 (6th Cir. 2006); 4 J.
Thomas McCarthy, McCarthy on Trademarks and Unfair Competition
§ 23:7 (5th ed. 2017), adidas has not raised any other theories of harm
here. Unlike the dissent, we hold adidas to its burden of showing a
likelihood of irreparable harm on the theory that it actually raised. See
Dissent at 26–29 & n.2 (outlining how adidas could have suffered post-
sale harm if the Skechers buyer could benefit from others believing she
was wearing adidas shoes).
20            ADIDAS AMERICA V. SKECHERS USA


Skechers’s allegedly less favorable reputation. The only
evidence in the record regarding Skechers’s reputation was
testimony from adidas employees. 7 First, adidas claimed
that “Skechers generally sells its footwear at prices lower
than adidas’s”—how much lower, and for what of any
number of possible reasons other than the quality of its
products, we do not know. This generalized statement
regarding Skechers’s price point does not indicate that
consumers view Skechers as a value brand. Second, one
adidas employee noted that within adidas, Skechers is
viewed as inferior to adidas. Again, Skechers’s reputation
among the ranks of adidas employees does not indicate how
the general consumer views it. Thus, the district court’s
finding that Skechers is viewed as a “value brand” is an
“unsupported and conclusory statement[]” that is not
“grounded in any evidence or showing offered by [adidas].”



     7
      Such employee testimony is hardly the most reliable evidence of
the reputation of a competitor. See Art Attacks Ink, LLC v. MGA Entm’t,
581 F.3d 1138, 1147 (9th Cir. 2009) (holding that a reasonable jury
“could not have found actual confusion” between subject trademarks
based on testimony of three of plaintiff’s employees); Self-Realization
Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902,
910 (9th Cir. 1995) (holding that declarations meant to rebut genericness
of name “had little probative value regarding the assessment of consumer
perception because they were from [plaintiff’s] employees and
wholesalers” and “[t]rademark law is skeptical of the ability of an
associate of a trademark holder to transcend personal biases” (internal
quotation marks omitted)). However, we need not (and do not) rely on
the diminished reliability of employee testimony here, where the
testimony did not demonstrate that Skechers is a lower-value brand—
one of the tenets of adidas’s theory of irreparable harm—anyway. Nor
do we “disregard” it, as the dissent suggests, Dissent at 33–34; we merely
disagree with the dissent about what the testimony actually shows.
              ADIDAS AMERICA V. SKECHERS USA                           21

See Herb Reed, 736 F.3d at 1250 (internal quotation marks
omitted). 8

    Second, adidas’s theory of harm is in tension with the
theory of customer confusion that adidas has advanced to
establish a likelihood of success on the merits. adidas did
not argue in the district court, and has not argued on appeal,
that a Cross Court purchaser would mistakenly believe he
had bought adidas shoes at the time of sale. Indeed, this
argument would be implausible because the Cross Court
contains numerous Skechers logos and identifying features.
Instead, adidas argues only that after the sale, someone else
looking at a Cross Court shoe from afar or in passing might
not notice the Skechers logos and thus might mistake it for
an adidas.

    The tension between adidas’s consumer confusion and
irreparable harm theories, then, boils down to this: How
would consumers who confused Cross Courts for adidas
shoes be able to surmise, from afar, that those shoes were
low quality? If the “misled” consumers could not assess the

         8
            The dissent criticizes our reliance on Herb Reed. Dissent at
31–32. True, there are more facts in the record here that adidas claims
support a finding of likelihood of irreparable harm than there were in
Herb Reed. See 736 F.3d at 1250 (noting there was only one email in
the record that might support an inference of irreparable harm). The
problem is that none of those facts actually support such a finding. Herb
Reed makes clear that it is the plaintiff’s burden to put forth specific
evidence from which the court can infer irreparable harm. See id. (“The
district court’s analysis of irreparable harm is cursory and conclusory,
rather than being grounded in any evidence or showing offered by [the
plaintiff].”). Regardless of our deferential review, there must actually be
such evidence in the record before we can uphold the district court’s
factual findings.     Id. (overturning the district court where its
“pronouncements [were] grounded in platitudes rather than evidence”).
We simply disagree with the dissent that there is any such evidence
supporting adidas’s theory of irreparable harm on this record.
22          ADIDAS AMERICA V. SKECHERS USA


quality of the shoe from afar, why would they think any
differently about adidas’s products? How could adidas’s
“premium” brand possibly be hurt by any confusion?

    Indeed, such a claim is counterintuitive. If a consumer
viewed a shoe from such a distance that she could not notice
its Skechers logos, it is unlikely she would be able to
reasonably assess the quality of the shoes. And the
consumer could not conflate adidas’s brand with Skechers’s
supposedly “discount” reputation if she did not know the
price of the shoe and was too far away to tell whether the
shoe might be a Skechers to begin with. In short, even if
Skechers does make inferior products (or even if consumers
tend to think so), there is no evidence that adidas’s theory of
post-sale confusion would cause consumers to associate
such lesser-quality products with adidas. And, even if we
agree with the district court that some consumers are likely
to be confused as to the maker of the Cross Court shoe, we
cannot simply assume that such confusion will cause adidas
irreparable harm where, as here, adidas has failed to provide
concrete evidence that it will. See Herb Reed, 736 F.3d at
1250–51.

    As discussed above, adidas presented specific evidence
that its reputation and goodwill were likely to be irreparably
harmed by Skechers’s Onix shoe based on adidas’s extensive
marketing efforts for the Stan Smith and its careful control
of the supply of Stan Smiths available for purchase. Thus,
even post-sale confusion of consumers from afar threatens
to harm the value adidas derives from the scarcity and
exclusivity of the Stan Smith brand. But there was no
comparable argument or evidence for the Cross Court.

    Because adidas failed to produce evidence that it will
suffer irreparable harm due to the Cross Court, we conclude
that the district court abused its discretion by issuing a
            ADIDAS AMERICA V. SKECHERS USA                 23

preliminary injunction for the Cross Court. See Herb Reed,
736 F.3d at 1250.

                         *    *   *

    We affirm the district court’s preliminary injunction
order as to the Onix shoe as likely infringing on, and causing
irreparable harm to, adidas’s Stan Smith trade dress.
However, because we find that there was no evidence in the
record that met the standard outlined in Herb Reed for
likelihood of irreparable harm to adidas’s Three-Stripe mark,
we reverse the preliminary injunction as to the Cross Court
shoe. The parties should bear their own costs on appeal.

   AFFIRMED IN PART, REVERSED IN PART.



CLIFTON, Circuit Judge, concurring in part and dissenting
in part:

    The preliminary injunction entered by the district court
should be affirmed in full. I join with my colleagues in
affirming the preliminary injunction regarding Skechers’s
Onix shoe based on its infringement on the trade dress of
adidas’s Stan Smith shoe and concur in that part of the
majority opinion.

    Where I part ways with the majority concerns the
infringement by Skechers with its Cross Court shoe of the
Three-Stripe mark owned by adidas. The majority holds that
adidas has demonstrated a likelihood of success on the
merits of that claim, sufficiently demonstrating both
trademark infringement and trademark dilution, and I agree.
Nonetheless, the majority reverses the preliminary
injunction as to the Cross Court shoe on the ground that there
24           ADIDAS AMERICA V. SKECHERS USA


was not evidence to support the district court’s determination
that adidas was likely to suffer irreparable injury. As to that,
I disagree. In my view, the majority opinion misunderstands
our precedent, misperceives the means by which adidas will
suffer irreparable injury, and mischaracterizes the evidence
before the district court. As a result, I must, in part,
respectfully dissent.

I. Herb Reed

    The precedent relied upon by the part of the majority
decision in question comes down essentially to a single case,
Herb Reed Enterprises, LLC v. Florida Entertainment
Management, Inc., 736 F.3d 1239 (9th Cir. 2013). That case
involved the “The Platters,” the legendary vocal group that
produced dozens of hits in the 1950s. 1 The band broke up in
the 1960s and “each member continued to perform under
some derivation of the name ‘The Platters.’” Id. at 1242.
Litigation followed, described in that opinion, from which
Herb Reed Enterprises emerged as the legal owner of “The
Platters” name. (Herb Reed was one of the founders of the
original group.) Decades later, Herb Reed Enterprises
sought to prevent the use of that name by another vocal
group. The district court granted a preliminary injunction in
favor of Herb Reed, which this court reversed. We
concluded that the record supported the district court’s
determination that Herb Reed was likely to succeed on the
merits of its trademark claim, but that the record did not
support the finding of a likelihood that Herb Reed


     1As noted in our opinion, The Platters put 40 singles on the
Billboard Hot 100 List, including “Great Pretender,” “Smoke Gets In
Your Eyes,” “Only You,” and “To Each His Own.” Herb Reed, 736 F.3d
at 1242.
            ADIDAS AMERICA V. SKECHERS USA                   25

Enterprises suffered irreparable harm as a result of the
trademark infringement.

    Our decision noted that the legal rule previously was that
“irreparable injury may be presumed from a showing of
likelihood of success on the merits of a trademark
infringement claim.” Id. at 1248–49 (emphasis in Herb
Reed) (quoting Brookfield Commc’ns, Inc. v. W. Coast
Entm’t Corp., 174 F.3d 1036, 1066 (9th Cir. 1999)).
Subsequent Supreme Court decisions undermined that
presumption, however, and in Herb Reed we held that a
plaintiff could not simply rely on that presumption but must
establish irreparable harm in order to obtain an injunction.
We went on to reverse the preliminary injunction that had
been entered by the district court, noting that the finding of
irreparable harm was not “grounded in any evidence or
showing offered by” the plaintiff. Id. at 1250 (emphasis
added). We emphasized that “missing from this record is
any such evidence.” Id. (emphasis added).

    The argument by the Herb Reed plaintiff, as expressed
by the district court in that case, was “the harm to Reed’s
reputation caused by a different unauthorized Platters group
warranted a preliminary injunction.” Id. (quoting from the
district court order). This court “comb[ed] the record” and
came up with only “an email from a potential customer
complaining to [the appellants’] booking agent that the
customer wanted Herb Reed’s band rather than another
tribute band,” which we concluded “simply underscores
customer confusion, not irreparable harm.” Id. There was,
we concluded, no evidence at all to support the proposition
that Reed’s reputation had been harmed. Importantly, the
factual circumstances did not provide support for such an
inference. More than a half century after the real Platters
broke up, a legal claim to the name did not itself differentiate
26          ADIDAS AMERICA V. SKECHERS USA


among the reputations of different tribute bands claiming
tenuous connections with the original Platters through
different performers. If the group that licensed the name
from Herb Reed Enterprises could prove that it lost bookings
as a result, it could claim damages, of course, but we saw no
support for a finding that the reputation of the group
associated with Herb Reed Enterprises had been injured.

    Our decision in Herb Reed did not disclaim the logic that
led to the creation of the now-discarded legal presumption,
however. It is not hard to understand how the presumption
arose. If a plaintiff can demonstrate a likelihood that it will
succeed on the merits of its trademark claim—as adidas
succeeded in establishing that Skechers’s Cross Court shoe
infringed and diluted adidas’s famous Three-Stripe mark, a
conclusion we affirm—it is not a big leap to conclude that
adidas would be injured by that action. The inference might
not always follow, as the facts in Herb Reed illustrate. That
one Platters tribute band might be mistaken for another did
not necessarily establish that the band that had a legal right
to the name suffered an injury to its reputation. But in other
circumstances, including those here, the inference of injury
is logical. As the Third Circuit observed in affirming a
similar preliminary injunction: “Although we no longer
apply a presumption, the logic underlying the presumption
can, and does, inform how we exercise our equitable
discretion in this particular case.” Groupe SEB USA, Inc. v.
Euro-Pro Operating LLC, 774 F.3d 192, 205 n.8 (3d Cir.
2014). Our decision in Herb Reed did not change that.

II. Irreparable Injury

    The district court found that adidas likely suffered harm
as the result of post-sale confusion. The theory of post-sale
confusion in the trademark context provides that “consumers
could acquire the prestige value of the senior user’s product
              ADIDAS AMERICA V. SKECHERS USA                         27

by buying the copier’s cheap imitation,” and that, “[e]ven
though the knowledgeable buyer knew that it was getting an
imitation, viewers would be confused.” 4 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair
Competition § 23:7 (5th ed. 2018). “Thus, the senior user
suffers a loss of sales diverted to the junior user, the same as
if the actual buyer were confused.” Id. In other words, sale
of the Cross Court, which infringed and diluted adidas’s
Three-Stripe trademark, would result in post-sale confusion
and harm adidas, the trademark holder, by threatening to
divert potential customers who can obtain the prestige of its
goods without paying its normal prices. 2 See Rolls-Royce
Motors Ltd. v. A & A Fiberglass, Inc., 428 F. Supp. 689, 694
n.10 (N.D. Ga. 1976) (regarding grill and hood ornament kit
meant to make a Volkswagon look like a Rolls-Royce).

    Post-sale confusion accounts for consumers who buy
imitations of a prestigious senior holder’s brand at lower
prices in the very hope that others will confuse their products
as being manufactured by the senior holder. About thirty
years ago, when I was in private practice, my law firm was
retained by Louis Vuitton to combat the sale of cheaper
imitations.     Some were counterfeits, reproducing the
distinctive “LV” mark and pattern on bags similar to those
actually sold by Louis Vuitton. Others were knock-offs,
such as bags with a similar looking “LW” mark or products
that Louis Vuitton probably wouldn’t dream of making, such
as baseball caps covered with dozens of “LV” marks. Many

    2
       Diversion of customers is a form of irreparable harm. See
McCarthy, supra, § 30:47 (“confusion may cause purchasers to refrain
from buying either product and to turn to those of other competitors. Yet
to prove the loss of sales due to infringement is also notoriously
difficult”); see also, e.g., China Cent. Television v. Create New Tech.
(HK) Ltd., 2015 WL 12732432, at *20 (C.D. Cal. Dec. 7, 2015).
28          ADIDAS AMERICA V. SKECHERS USA


of the items were sold at locations, like swap meets and flea
markets, where few would expect to find real Louis Vuitton
products. Prices were often a tiny fraction of what the real
thing cost, and it was unlikely that the purchasers thought
that they were walking away with genuine Louis Vuitton
merchandise. Leaving the legal arguments aside, it wasn’t a
surprise to me (and still isn’t) that Louis Vuitton was
concerned and was willing to expend considerable effort to
protect its trademark. As Professor McCarthy described, if
the prestige of carrying a bag with the Louis Vuitton
trademark could be obtained at a fraction of the price, and if
viewers could not tell the difference, the value of the
trademark would be in jeopardy. And, if someone did
confuse the cheap imitation for the real thing, the lesser
quality of the imitator could further imperil the perceived
value of the Louis Vuitton products and trademark.

    The Three-Stripe mark owned by adidas is one of the
most famous marks in the world. There is evidence in the
record that it has been heavily advertised and promoted by
adidas for many years, at the cost of millions of dollars each
year. adidas sells several hundred million dollars worth of
products bearing the Three-Stripe mark each year in the
United States and billions of dollars globally. The Three-
Stripe mark is the subject of multiple trademark
registrations, in this country and others. adidas has worked
to protect its mark, including through litigation against
Skechers, and Skechers has acknowledged, as the majority
opinion notes, at 3, that adidas is the exclusive owner of the
Three-Stripe mark and agreed not to use it or any
confusingly similar mark.

    That adidas is concerned about the impact of trademark
infringement and dilution on the Three-Stripe mark, like
Louis Vuitton was, is obvious. The reasons seem pretty
             ADIDAS AMERICA V. SKECHERS USA                         29

obvious to me as well. If a shoe bearing a mark that looks
like the Three Stripes cannot reliably be identified as being
an adidas shoe, available at adidas prices, and made to satisfy
the quality standards of adidas, then that Three-Stripe mark
will lose some of its value and adidas will be harmed.

    The     majority      opinion     describes      this    as
“counterintuitive.” Maj. Op. at 22. It seems logical to me,
and it is well established in the law as a basis for a claim of
dilution.

    The majority opinion attempts to justify its constrained
consideration of the post-sale confusion harm suffered by
adidas on the premise that adidas “advanced only a narrow
argument of irreparable harm” as to the Skechers shoe that
infringed on the Three-Stripe mark, the Cross Court shoe.
Id. at 19. The majority describes the argument as follows:
“that Skechers harmed adidas’s ability to control its brand
image because consumers who see others wearing Cross
Court shoes associate the allegedly lesser-quality Cross
Courts with adidas and its Three-Stripe mark.” Id. 3

    That argument is actually not so narrow. It is remarkably
similar to the explanation provided by Professor McCarthy,
as quoted above, at 26–27, that the majority opinion claims
that adidas did not make: that “consumers could acquire the
prestige value of the senior user’s product by buying the
copier’s cheap imitation,” and that, “[e]ven though the
knowledgeable buyer knew that it was getting an imitation,
viewers would be confused.” McCarthy, supra, § 23:7. It is
also consistent with the definition of “dilution” applied by

    3
      As discussed below, at 37–38, the majority is wrong in concluding
that adidas’s dilution claim depends upon establishing that Skechers is
perceived as a lesser-quality brand.
30          ADIDAS AMERICA V. SKECHERS USA


the district court in its preliminary injunction order: “‘the
lessening of the capacity of a famous mark to identify and
distinguish goods or services’ of the owner of the famous
mark such that the strong identification value of the owner’s
trademark whittles away or is gradually attenuated as a result
of its use by another.” (Quoting adidas-Am., Inc. v. Payless
Shoesource, Inc., 546 F. Supp. 2d 1029, 1060 (D. Or. 2008)
(quoting Horphag Research Ltd. v. Garcia, 475 F.3d 1029,
1035 (9th Cir. 2007) (quoting 15 U.S.C. § 1127)).)

    The district court went on to observe that “[t]here are two
types of dilution: by blurring and by tarnishment.”
Tarnishment appears to be the only argument the majority
considers. The district court described that form of dilution:
“a famous mark is considered diluted by tarnishment when
the reputation of the famous mark is harmed by the
association resulting from the use of the similar mark.” But
the district court’s order described the blurring form of
dilution as well, recognizing it as part of adidas’s claim, and
defining it as “association arising from the similarity
between a mark or trade name and a famous mark that
impairs the distinctiveness of the famous mark.” The district
court found that adidas has offered sufficient proof to
support a blurring claim. It specifically found that
“Skechers’ infringement undermines adidas’s substantial
investment in building its brand and the reputation of its
trademarks and trade dress” and that “Skechers’ attempts to
‘piggy back’ off of adidas’s efforts by copying or closely
imitating adidas’s marks means adidas loses control over its
trademarks, reputation, and goodwill.” There was nothing
counterintuitive or narrow about the dilution claim presented
by adidas and found persuasive by the district court.
            ADIDAS AMERICA V. SKECHERS USA                   31

III.   Standard of Review

    Before getting to a discussion of the evidence, I note that
the majority appears to ignore the proper standard of review.
Although the majority opinion correctly identifies clear error
as the standard of review that applies to the district court’s
factual determinations, Maj. Op. at 7, it does not actually
refer to or apply that standard in rejecting the finding of the
district court that adidas had produced “sufficient evidence
of irreparable harm.” The failure to apply the proper
standard makes it easier for the majority to substitute its own
evaluation of the evidence for that of the district court. That
is not our role.

IV.    Evidence

    Herb Reed faulted the plaintiff in that case for not
producing “any” evidence in support of its claim of
irreparable injury, as noted above, at 25. The majority
apparently concludes the same to be true here. See Maj. Op.
at 21 n.8, 22–23.

    The district court was aware of Herb Reed. Its order
cited and quoted from our decision in that case: “In
trademark cases, although ‘[e]vidence of loss of control over
business reputation and damage to goodwill [can] constitute
irreparable harm,’ a court making a finding of irreparable
harm must ground its analysis in evidence rather than
conclusory assertions or speculation.” (Quoting Sleash, LLC
v. One Pet Planet, LLC, 2014 WL 4059163, at *6 (D. Or.
Aug. 15, 2014) (quoting Herb Reed, 736 F.3d at 1250).) Yet
the majority opinion neither acknowledges that the district
court cited the relevant precedent nor references the four
pages in the district court’s order devoted to its discussion of
irreparable harm.
32          ADIDAS AMERICA V. SKECHERS USA


    adidas, in contrast to the appellee in Herb Reed, provided
ample evidence of this harm. The record includes the sworn
declarations and live testimony by several adidas employees,
including marketing executives. These employees testified
that adidas has, over decades, established a reputation for
itself as a premium sports brand, whereas Skechers’s brand
perception is as a “value brand” or “lower-end brand.” They
also testified to the particular steps regarding investments in
advertising, promotion, and quality control that adidas has
taken to achieve and maintain this positive reputation. These
steps include taking special care to ensure that the Three-
Stripe mark is always prevalent, whether on a shoe or in a
retail location. In addition, adidas spends millions each year
on promotions and brand advertising on television, in print
publications, and via digital media; sponsorships of sporting
events such as the FIFA World Cup and Boston Marathon;
college sports programs like those at Arizona State, Miami,
Nebraska, and Texas A&M; teams such as the Manchester
United Football Club and the French national basketball
team; professional sports leagues such as Major League
Soccer; and individual professional athletes like NBA player
James Harden and MLB player Kris Bryant. adidas also uses
“influencer marketing,” and works with celebrities like
Kanye West and Pharrell Williams to ensure that they
promote the adidas brand to their fans and followers.

    Skechers did not rebut adidas’s evidence of the brands’
respective reputations, failing to cross-examine the adidas
employees on these issues or to provide any counter
evidence of its own. Nor did it submit any evidence denying
the efforts of adidas to promote and protect the Three-Stripe
mark or the sales of adidas products bearing the Three-Stripe
mark. The majority opinion does not explain why the
evidence of the substantial efforts of adidas to promote its
brand and its Three-Stripe mark was insufficient. Nor does
            ADIDAS AMERICA V. SKECHERS USA                   33

it explain why those efforts do not distinguish this case from
the factual setting of Herb Reed, where the plaintiff failed to
produce “any” evidence.

    The majority asserts that it has not disregarded the
evidence presented by adidas and relied upon by the district
court, contending that it “simply disagree[s] with the dissent
that there is any such evidence supporting adidas's theory of
irreparable harm on this record.” Maj. Op. at 21 n.8. But as
described above, and as will be further described below,
there was lots of evidence to that effect. In a footnote, the
majority opinion acknowledges that there were factual
assertions supported by the record but asserts that none of
those facts “actually support” the district court’s finding. Id.
(emphasis in original). The district court found differently,
however, and nowhere does the majority explain what was
clearly erroneous about the findings of the district court, let
alone why the evidence presented by adidas fell short.

     To the extent that it offers an explanation, the majority
criticizes adidas’s showing by asserting that “[t]he only
evidence in the record regarding Skechers’s reputation was
testimony from adidas employees” and that “employee
testimony is hardly the most reliable evidence.” Id. at 20 &
n.7. It further denigrates that evidence by remarking that
“Skechers’s reputation among the ranks of adidas employees
does not indicate how the general consumer views it.” Id. at
20. To begin with, the majority further illustrates by those
words that there was evidence in the record supporting
adidas’s contentions. The majority has elected to discount
that evidence, by applying its own skepticism toward
employee testimony. But the district court concluded that
the evidence was reliable. The majority simply substituted
its own view of the evidence to disregard it. That is not our
function as a court of appeals.
34            ADIDAS AMERICA V. SKECHERS USA


    The majority cites no authority to support the proposition
that a preliminary injunction can be based only on the “most
reliable” evidence. That is not the law. To the contrary,
Herb Reed recognized that for a preliminary injunction,
courts may even consider evidence that would normally be
inadmissible. See 736 F.3d at 1248–50 & n.5. 4

    More broadly, the notion that the court of appeals can
decide for itself that evidence relied upon by the district
court should be ignored because it was provided by an
employee of a party is both unsupported and badly
misguided. Almost every case involves testimony by a
witness who has a self-interest. We do not automatically
disregard such evidence. The district court, like any trier of
fact, could take that into account, and it could have decided
that the evidence was not reliable. In this case, however, it
concluded that the evidence was reliable. There was nothing
clearly erroneous about doing so, and no legal rule supports
the majority’s rejection of the district court’s finding.

    Indeed, this court recently affirmed a preliminary
injunction that relied on similar evidence by an employee of
one of the parties. In Disney Enterprises, Inc. v. VidAngel,
Inc., we held that the evidence—the unrebutted declaration
of an employee of one of the plaintiffs which stated that the
defendant’s infringement interfered with their right to
control how consumers viewed the plaintiffs’ copyrighted
works—was sufficient to establish the likelihood of

     4
      The cases cited in the majority opinion are easily distinguishable.
See Maj. Op. at 20 n.7. Art Attacks Ink, LLC v. MGA Entm’t, 581 F.3d
1138, 1147 (9th Cir. 2009), was an appeal of a jury verdict, and the
appellant in Self-Realization Fellowship Church v. Ananda Church of
Self-Realization, 59 F.3d 902 (9th Cir. 1995), challenged the dissolution
of a preliminary injunction that the district court based upon its
invalidation of claimed trade names and marks.
            ADIDAS AMERICA V. SKECHERS USA                 35

irreparable harm. 869 F.3d 848, 865–66 (9th Cir. 2017).
The defendant there made essentially the same argument that
the majority makes here, “that once the district court
concluded the [plaintiffs] were likely to succeed on their
copyright infringement claim, it relied on a forbidden
presumption of harm rather than ‘actual evidence.’” Id. at
866. However, the district court rejected this contention, and
found that the sworn testimony of the plaintiffs’ employee,
even without corroborating evidence, was sufficient
evidence of irreparable harm. Id. Our court’s decision,
affirming the district court, concluded that Herb Reed
permitted the district court to rely on such evidence to find
irreparable harm. The decision of the majority in this case
to disregard employee evidence conflicts with our precedent.

     The majority attempts to back away from the
implications of its negative characterization of the evidence
provided by adidas employees, by denying in a footnote that
it relies on what it calls the “diminished reliability of
employee testimony here.” Maj. Op. at 20 n.7. But,
tellingly, its statement to that effect in a footnote does not
withdraw the denigration of that testimony in the text of its
opinion. And if that evidence is not discounted based on its
source, it is unclear how the majority can assert, as it does
on 21 n.8, that there is no evidence in the record supporting
adidas’s theory of irreparable harm.

    Besides, the majority is factually wrong about the source
and substance of the evidence in the record. It was not just
“testimony from adidas employees” regarding “Skechers’s
reputation among the ranks of adidas employees.” A
marketing professional has to be knowledgeable about
consumer perceptions of his own brand, in this case adidas,
and also of competitors, including Skechers. The evidence
presented by adidas included evidence of what customers
36          ADIDAS AMERICA V. SKECHERS USA


thought. The record shows that adidas employees, as a
normal part of their jobs, obtained and reviewed focus group
research to understand “retail and consumer perceptions” of
adidas products. See Barthelemy v. Air Lines Pilots Ass’n,
897 F.2d 999, 1018 (9th Cir. 1990) (holding that witnesses’
personal knowledge may be “inferred from their positions
and the nature of their participation in the matters to which
they swore”). The evidence included testimony that
consumers as well as adidas viewed Skechers as a lower end
value brand: “Where our consumer and, in my opinion,
where we see Skechers is a lower end value brand.”
(Emphasis added.) Contrary to the characterization in the
majority opinion, that statement expressed more than a
statement by adidas employees of their personal opinions
regarding Skechers’s reputation.

    The record also includes evidence that adidas products
were generally priced above comparable Skechers products.
There was testimony by an adidas employee that “Skechers
generally sells its footwear at prices lower than adidas’s.” It
would be expected that a company would be aware of
relative pricing by competitors. Skechers never disputed the
competence of that testimony or provided evidence to the
contrary. Beyond that, the record also contains evidence that
specific adidas products sold at higher prices than their
alleged Skechers’s counterparts. For example, the record
contains proof that the standard version of the adidas Stan
Smith retailed between $85 to $75, whereas the Skechers
Onix was priced at $65. The adidas Supernova was priced
between $130 to $95, whereas the Skechers Supernova was
$70. There is no reason why this evidence of the prices of
other shoes could not be relied upon by the district court to
corroborate the statement by adidas’s employee that
Skechers generally sold its shoes at a lower price. Again,
            ADIDAS AMERICA V. SKECHERS USA                  37

Skechers did not contest the relative prices of the brands’
shoes, leaving the evidence of its lower pricing unrebutted.

    In sum, based on the record before it, the district court
was well within its discretion to infer that confusion between
Skechers’s “lower-end” footwear and adidas’s footwear was
likely to harm adidas’s reputation and goodwill as a
premium shoe brand. This is precisely the type of harm that
is “irreparable” insofar as it cannot be adequately
compensated for by money damages. Rent-A-Center, Inc. v.
Canyon Television & Appliance Rental, Inc., 944 F.2d 597,
603 (9th Cir. 1991). It was simply not the case, as the
majority opinion asserts, that “the testimony did not
demonstrate that Skechers is a lower-value brand.” Maj. Op.
at 20 n.7. The findings by the district court were not clearly
erroneous.

    Finally, the district court’s determination did not even
depend on adidas’s testimony regarding Skechers’s
reputation as a lower quality brand. The premise of the
majority opinion that adidas had to establish that difference
in reputation, stated multiple times, see, e.g., Maj. Op. at 20
& n.7, is wrong. Instead, the loss by adidas of control over
its mark was by itself irreparably harmful. “A trademark
carries with it a message that the trademark owner is
controlling the nature and quality of the goods or services
sold under the mark. Without quality control, this message
is false because without control of quality, the goods or
services are not truly ‘genuine.’”           1 McCarthy on
Trademarks and Unfair Competition § 3:11 (5th ed. 2018).
“One of the most valuable and important protections
afforded by the Lanham Act is the right to control the quality
of the goods manufactured and sold under the holder’s
trademark. . . . For this purpose the actual quality of the
goods is irrelevant: it is the control of quality that a
38          ADIDAS AMERICA V. SKECHERS USA


trademark holder is entitled to maintain.” Id. (quoting El
Greco Leather Prods. Co. v. Shoe World, Inc., 806 F.2d 392,
395 (2d Cir. 1986)). Accordingly, irreparable harm exists in
a trademark case when the party seeking the injunction
shows that it will lose control over the reputation of its
trademark. See, e.g., La Quinta Corp. v. Heartland Props.
LLC, 603 F.3d 327, 343 (6th Cir. 2010) (explaining that a
plaintiff who loses “the ability to control its brand image and
reputation” loses an “intangible, but valuable . . . asset[].”).
There was substantial evidence in the record regarding the
value of adidas’s mark and its management of the mark
through investment and quality control over its products.
Though the majority ignores that evidence, it was there and
could properly be relied upon by the district court to support
its finding of irreparable harm.

V. Conclusion

    In reviewing a preliminary injunction, the scope of our
review “is limited and deferential.” Guzman v. Shewry,
552 F.3d 941, 948 (9th Cir. 2009) (citation omitted). Herb
Reed reiterated that “limited and deferential” standard.
736 F.3d at 1247 (citation omitted). Moreover, Herb Reed
instructed us to afford district courts wide discretion to make
a finding when there is supporting evidence, and
acknowledged that, “we will reverse only if the court’s
decision resulted from a factual finding that was illogical,
implausible, or without support in inferences that may be
drawn from the facts in the record.” Id. (internal quotation
marks omitted). Based upon the record and adidas’s
unrebutted evidence, it is clear to me that the district court
did not abuse its discretion, and that the preliminary
injunction should be affirmed in full. I respectfully dissent.
