Sneakernomics: EKN Settles Lawsuit

 Nike via U.S. Patent and Trademark Office

(source PBJ)

Nike Inc. has settled a contentious and high-profile lawsuit against three former shoe designers just as the case entered the critical discovery phase.

Terms of the settlement were not disclosed. Neither side got attorneys fees, according to a court record.

“The case was resolved through a confidential settlement,” said Markowitz Herbold attorney Matt Levin, who represented the designers.

 Nike did not immediately return an email. Adidas, which was not a party in the lawsuit, declined comment.

The settlement appears to have been reached somewhat suddenly.

The case was in the middle of a grueling stretch of discovery and depositions. The designers filed an amended response to Nike's original lawsuit this week, a filing that seems unlikely amidst protracted settlement talks.

Nike filed the lawsuit in December against former designers Denis Dekovic, Marc Dolce and Mark Miner and alleged the trio "conspired" to steal trade secrets, strategic plans and product designs and convinced Adidas AG to hire them to build a facsimile of Nike's famed innovation lab, known as the Kitchen.

The lawsuit asked for $10 million in damages and the immediate return or destruction of Nike trade secrets.

About the time of the lawsuit, Adidas had slipped to No. 3 in U.S. sales behind Under Armour. An analyst had called the hiring of Dolce, Dekovic and Miner a "key step" in Adidas' effort to make up lost ground.

The designers fired back and denied the allegations in March, saying Nike's "corporate culture was stifling their creativity." They filed a counter lawsuit alleging Nike violated their privacy, including improperly accessing social media accounts.

Nike took the rare step of publicly responding to the counter lawsuit, a sign that the case was likely being monitored at the highest levels of the company.

The case had become even more contentious in recent months, with both sides seeking testimony from high-ranking executives.
The shoe designers recently asked the court for permission to take a video deposition of Nike CEO Mark Parker and other high-level Nike executives, including global creative director Martin Lotti. Parker's deposition was scheduled for June 10. It's unclear if the court had ruled on the deposition request.

Nike's attorneys called the requests "overbroad, unreasonable, and unduly burdensome" and specifically tried to shoot down the deposition of Parker, saying in a motion filed May 1 that it was meant "solely to harass Nike's highest-ranking executive."

Nike was just as aggressive in its attempts to get information.

Although Adidas was not a party in the lawsuit, Nike subpoenaed several top global executives for Adidas, including North America head Mark King and executive board member Eric Liedtke.
Seven Adidas executives were subject to subpoenas which, if approved by a judge, would have required them to give sworn depositions and provide documents, such as emails about the former Nike designers.

Barran Liebman partner Paula Barran, who represented the Adidas executives, asked the court to reject the subpoenas because they would have imposed an "undue burden or expense" on the company. She said Adidas had provided more than 1,500 pages of records, according to an earlier filing in the case.

In April, a lawyer for the designers also claimed Nike had no proof the designers shared Nike trade secrets.

"After examining 27 electronic devices and after the designers produced over 69,113 pages of information in discovery, Nike still has no evidence of any actionable misappropriation of trade secrets," said Levin, in an earlier motion.

Nike's lawyers argued the lack of proof was because Adidas abused its right to redact confidential information in documents provided through discovery, including "evidence that proves the (three former Nike shoe designers) have breached their Nike contracts."

Nike claimed Adidas classified critical records as "attorneys' eyes only" in order to hide information.
The company also claimed Adidas provided scanned PDFs of records that didn't include digital information such as when documents were created and modified.

Adidas said it provided documents in accordance with the instructions of a court order.