AEO Wins Injunction Against Payless

NEW YORK — American Eagle Outfitters Inc. won an early round in its legal match with Payless ShoeSource Inc. last week when a federal court granted a preliminary injunction against the discount shoe retailer.

A judge in the U.S. District Court for the Eastern District of New York in Brooklyn issued the injunction on July 7, requiring Payless to include a clear disclaimer stating that goods in its American Eagle by Payless line are not affiliated with American Eagle Outfitters.

Pittsburgh-based American Eagle Outfitters filed the lawsuit, which alleges trademark infringement and unfair competition, in April 2007. The legal fight between the two firms dates to May 2006, four months after the discount shoe giant acquired the American Eagle footwear brand from Jimlar Corp. The Great Neck, N.Y.-based footwear wholesaler had produced the American Eagle footwear line for sale in department and specialty stores for about 20 years at the time of the acquisition.

According to court documents, Jimlar had entered into an agreement with American Eagle Outfitters to maintain different brand identities and distribution channels.

American Eagle Outfitters alleges that after Payless acquired the brand, it began a sales and marketing campaign trading on the teen apparel retailer’s commercial magnetism and goodwill.

On Wednesday Payless said that it would abide by the ruling in its continued use of the American Eagle mark.

“Payless ShoeSource alone has the right to use the American Eagle trademark for footwear and select accessories,” said Mardi Larson, a spokesperson for Collective Brands Inc., the Topeka, Kan.-based parent company of Payless, who noted the preexisting agreement between the brands. “The result is that PayLess ShoeSource will continue to market its American Eagle products along with the disclaimer where required.”

Access exclusive content