Lawsuit called another 'skirmish' as Under Armour takes aim at Nike

Nike started with running shoes and Under Armour with undershirts.

Both stories begin with dissatisfaction. While trying to sell a Japanese manufacturer's shoes, Phil Knight sent some to his former coach, who modified them, using, among other things, a waffle iron. Tired of undershirts that didn't dry quickly enough beneath the pads he wore as a football player, Kevin Plank set about experimenting with new materials.


In 1964, Knight hawked his goods from the trunk of a car. In 1996, Plank did the same.

But Nike served as a model and a goal for Under Armour. And Plank has made no secret of gunning to topple Nike as the nation's leading sports apparel brand. The latest skirmish in their growing competition opened Thursday when Under Armour moved to protect its brand and sued Nike over advertisements using the trademarked phrase "I will."


While Nike has deep pockets to defend itself, observers say Under Armour has a chance to make its case and force Nike to pull the offending ads. Whatever happens in court, it represents a confident right hook aimed at Nike by the sporting goods maker whose headquarters overlooks Baltimore's Inner Harbor.

With revenue of $24 billion last year, Nike dwarfs Under Armour, which brought in $1.8 billion. But the faster-growing Under Armour is chasing hard, launching a footwear division several years ago to target Nike's bread and butter and working to increase its global appeal. The company that built itself on football now sponsors Tottenham Hotspur, one of the top English Premier League soccer teams.

Nike isn't ignoring its East Coast rival.

"Nike likes to tweak competitors," said Matt Powell of SportsOneSource. "I can't say for sure that's the case here. But they certainly see Under Armour as a legitimate threat."

On one level, Nike should thank Under Armour, which helped create a vibrant market for sweat-wicking undergarments. With brand recognition and distribution networks across the world, Nike was able to quickly and efficiently leverage that new market, said Jim Duffy, managing director of Stifel's sports and lifestyle equity research division.

Nike built its business not around the quality of its products but the relentlessness and efficiency of its marketing, Powell said. Nike rewrote the game plan for building and protecting a brand identity, starting with the signing of Michael Jordan in 1984 and moving through the use of the "Just do it" slogan later in the decade. It knows how important a clear, emotional connection to consumers can be for a company catering primarily to young athletes with big dreams.

"There's no way in the world a company like Nike, which is actually a branding company, didn't know that a competitor had the slogan 'I will,'" said Jim Astrachan, a longtime Baltimore intellectual property lawyer. "Nike knew what it was doing. This is not an accident. This is the sharp end of a stick in the eye."

Nike spokesman Brian Strong said Friday that the Beaverton, Ore.-based company had no comment.

Plank spent the day with investors and analysts, his spokeswoman said, and attended the Cal Ripken Sr. Foundation Aspire Gala at night but declined to discuss Nike.

Astrachan said a judge will likely decide within 40 to 45 days whether Under Armour has grounds to request an injunction against Nike. It will have to prove that some consumers were confused about the origin of the "I will" mark, which Under Armour says it has used since 1998 and trademarked in 2000.

Last week, the company launched a new global marketing campaign built around the phrase, which analysts said would help broaden the brand's appeal. In May, it applied for seven new patents to prepare for the campaign.

Nike began running its "I will" campaign primarily through social media in late December. The company spent $800 million in 2010 on nontraditional advertising, particularly online.


Under Armour's D.C.-based law firm likely will have to conduct a survey to determine whether consumers were confused by Nike's ads before a judge would grant the injunction, Astrachan said. Persuading a judge to award damages would require that Under Armour prove it had lost sales to Nike, which Astrachan said would be difficult.

Still, Astrachan said, he believes Under Armour has a strong chance to win the suit and at least force Nike to pull its "I will" ads.

But winning or losing might not mean much for Nike. Pushing its rival into court — even if just for a short, rancorous battle over a minor campaign — was likely part of Nike's plan, Duffy said.

"They're trying to get under somebody's skin," he said. "Nike has the budget to fight a legal battle without much trouble. It's obviously a greater expense as a percentage of sales for Under Armour, so Nike wants to see how far they'll go."

John Horan, publisher of Sporting Goods Intelligence, said he was not surprised to hear of the legal action but that it amounted to posturing on both sides.

"Just another skirmish in what is going to be a long, long battle," he said.

Powell says any fight waged over a simple, charged phrase might be beside the point.

"I'm not sure how much slogans mean in the marketing world anymore," he said. "We've moved beyond that having resonance with a consumer. There are so many others ways to reach out right to a consumer, and then it's not about convincing but about authenticity and connecting them to that experience."

Under Armour's suit also alleges that Nike tried to replicate the mood of its commercials but necessarily focuses on the matching use of the phrase "I will" because it would be easier to prove in court, Astrachan said.

He said Nike's defense likely will focus on the fact that it does not use "I will" in a stand-alone fashion but follows it with proclamations such as "do it for my team" or "protect my home court."

"I like Under Armour's position a lot better than Nike's," the attorney said. "Nike is being too cute by one-half. They're attempting to come very, very, very close to what Under Armour has done and saying they didn't go all the way. I don't think it's a very good defense."


Recommended on Baltimore Sun