US embassy cable - 04MADRID606

SUCCESS! NIKE WINS IN CONSTITUTIONAL COURT

Identifier: 04MADRID606
Wikileaks: View 04MADRID606 at Wikileaks.org
Origin: Embassy Madrid
Created: 2004-02-20 18:06:00
Classification: UNCLASSIFIED
Tags: KIPR ETRD ECON SP
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS MADRID 000606 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, ECON, SP 
SUBJECT: SUCCESS! NIKE WINS IN CONSTITUTIONAL COURT 
 
REF: A. 2002 MADRID 2134 
     B. 2003 MADRID 780 
 
1. (SBU) SUMMARY: After more than 14 years of court battles, 
Nike has won a major victory in the Spanish Constitutional 
Court that once again allows the company to use its trademark 
(both the name and the swoosh) on apparel sold in Spain.  On 
February 16, in response to Nike's appeal of a negative 1999 
Supreme Court ruling, the Spanish Constitutional Court sided 
with Nike, annulling the other court's decision.  It returned 
the decision to the Supreme Court asking that it revise its 
decision based on the findings of Constitutional Court 
justices.  Nike is hoping that the new Supreme Court ruling, 
expected to be issued within the next 12 months, will be fair 
and objective.  They fear the new decision could be colored 
by an ongoing battle for power between the two Spanish 
courts. END SUMMARY 
 
2. (SBU) For over fourteen years, Nike has been pursuing a 
former Spanish business partner, Cidesport, in court in an 
attempt to gain control of the Nike trademark in Spain.  The 
problem stems from Cidesport's surreptitious acquisition in 
1981 of a trademark containing the Nike name.  Nike neglected 
to register its own trademark at that time.  After several 
unsuccessful attempts to negotiate a settlement, Nike finally 
began litigation at the end of 1989.  Nike was successful 
with a string of lower court case victories, but in 1999 lost 
a decisive appeal in the Civil Chamber of the Spanish Supreme 
Court.  (Note: The court has a Civil and an Administrative 
Chamber.)  The Supreme Court decision allowed the former 
business partner to sell clothing in Spain with the Nike 
name.  Nike was also allowed to sell clothing, however, the 
clothing could not bear the name Nike --- only the swoosh. 
 
3. (SBU) Nike was successful in convincing the Spanish 
Constitutional Court to accept an appeal of the Supreme Court 
decision.  The case had been pending over 3 years -- an 
unusually long wait, partly due to the serious illness and 
subsequent death of the justice assigned to the case.  In the 
interim, the Supreme Court issued other rulings harmful to 
Nike including a 2002 Administrative Chamber ruling that took 
the 1999 decision one step further and gave Cidesport the 
right to use a "Nike Sportswear" logo on both footwear and 
apparel. 
 
4. (SBU) On February 16, 2004, the Constitutional Court 
finally reached a decision favoring Nike.  The Constitutional 
Court annulled the Supreme Court's prior rulings, outlined 
the various legal errors made by the Supreme Court, and sent 
the 1999 decision back to the Supreme Court for a new and 
"properly reasoned" decision.  Industry insiders estimate it 
will likely take a year for the Supreme Court to issue a new 
decision, though some "returned cases" have been considered 
in just a matter of weeks.  In the meantime Nike has regained 
use of its entire logo, both name and swoosh.  Nike lawyers 
and officials are cautiously optimistic.  They say the 
Constitutional Court's decision reflected a good part of the 
reasoning they had used in their legal brief.  They are 
hoping the Supreme Court response will be objective. 
 
5. (SBU) One final twist in the Nike case involves an 
inter-court struggle for power between the Constitutional 
Court and the Supreme Court that has been going on for years. 
 In at least one example in the past few years, the Supreme 
Court took umbrage that the Constitutional Court returned a 
decision for reconsideration.  The Supreme Court revised its 
decision, but did so in a way that met the Constitutional 
Court's requirements, but essentially gutted the victory. 
Tensions between the two courts escalated this month when the 
Supreme Court accused the Constitutional Court of a judicial 
misstep and humiliated the justices by requiring them to pay 
restitution to a local lawyer. 
 
6. (SBU) The 1999 Supreme Court decision barring Nike from 
selling clothes with its logo in Spain has cost the company 
tens of millions of dollars in separate production runs and 
lost sales.  Throughout the legal struggle, the company has 
asked us on numerous occasions to advocate on their behalf to 
various GOS ministries.  While we have not wanted to 
interfere in independent judicial proceedings, we have on 
many occasions spoken and written to various GOS officials to 
underscore the importance of intellectual property rights and 
the negative implications of Nike's ongoing court troubles. 
This week, in view of the latest judicial ruling, we have 
been delicately asking relevant contacts if they believe the 
inter-court feud could prejudice the final Nike Supreme Court 
ruling. 
MANZANARES 

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