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.
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 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.
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