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Hanesbrands Inc. has agreed to pay $90 million to acquire the Champion trademarks for footwear in the U.S. and Canada from Keds LLC.
Hanesbrands Inc. has agreed to pay $90 million in cash to purchase the Champion brand trademarks for footwear in the United States and Canada.
The transaction settles a legal dispute that began in July 2020 between Hanesbrands and Keds LLC over the use of the Champion brand for footwear.
Hanesbrands said in a statement Friday that the trademark acquisition “marks another step forward in the company’s Full Potential plan, which calls for growing the global Champion brand.”
Wolverine World Wide Inc., the parent company of Keds, said in a news release that it “retains a perpetual license to continue using the Champion trademark on certain footwear, including the Keds Champion sneaker that has been a mainstay of its Keds brand for decades.”
“The transaction also successfully resolves outstanding litigation between the parties.”
Brendan Hoffman, Wolverine Worldwide’s president and chief executive, said that “by retaining a perpetual license, our Keds brand will continue to market and sell the iconic Keds Champion sneaker that its consumers have worn and loved for generations.”
“This transaction represents a unique opportunity to simplify our business model, while at the same time securing a significant amount of cash at a meaningful multiple of future expected royalty streams.”
Hanesbrands has licensed the Champion mark for footwear in the United States, Puerto Rico and Canada since 1987. It also markets Champion footwear in Australia, Asia and Europe. The settlement does not affect those markets.
Before the settlement agreement was reported, there had been no movement in the legal dispute since March.
In May 2021, a federal judge in Massachusetts dismissed Hanesbrands’ trademark infringement lawsuit against Keds.
Hanesbrands and its HBI Branded Apparel Enterprises LLC subsidiary sued Keds and SR Holdings LLC in July 2020.
In September 2021, Keds sued the apparel manufacturer for breach of contract. Hanesbrands’ dismissal request filed in November claimed Keds failed to prove breach of contract.
According to court documents, the partnership between Champion and Keds goes back to the 1930s.
Before the settlement agreement, Keds had owned the Champion trademark for casual footwear in the U.S. and Canadian markets.
In 1987 — two years before Sara Lee Corp. paid $320 million in cash for Champion Products Inc. — Keds granted Champion the right to use the Keds Champion trademark for a “high-performance athletic shoes” line in the two countries.
Champion and Hanesbrands were not allowed to use the brand to market casual, street or playtime wear, or footwear designed for walking and for general purposes.
However, the licensing agreement does not prevent Hanesbrands from using Keds Champion “in any country where Keds does not have rights in the mark and where Hanesbrands may have acquired or will acquire superior rights in the trademark for athletic shoes.”
The licensing contract has been subject to five-year renewals, the last of which occurred on Jan. 1, 2017.
Where the dispute comes in is that Hanesbrands alleged Keds “deliberately expanded its use of the Champion trademark in connection with the marketing and sale of its shoes in foreign territories, including through more prominent use of the Champion mark itself.”
The lawsuit cited Austria, South Korea and Taiwan as affected markets.
Hanesbrands said it tried unsuccessfully in April 2018 and May 2019 for an outright purchase of Keds’ rights to the Champion trademark.
The judge ruled that “Keds, not Hanes, owns the federal Champion workmark for shoes” and that “Keds, not Hanes, has a protected federal interest in the mark.”
The judge dismissed Hanesbrands’ claim of potential consumer confusion in the U.S. marketplace by ruling that “Keds may lawfully sell its Champion-branded shoes in the United States. There is no risk of confusion here.”
“To the extent that Hanes is attempting to enforce its foreign trademark rights against Keds in foreign jurisdictions, the courts of those jurisdictions have the interest and expertise to adjudicate those disputes.”
Hanesbrands projects its Full Potential initiative will generate an additional $1.2 billion in revenue by fiscal 2025. That would put Hanesbrands at $7.4 billion in annual revenue, up from $6.2 billion projected for fiscal 2021.
At the heart of the initiative is what Hanesbrands considers as its core strengths: its globally recognized basic apparel brands; domestic, Central and Latin America and Asian supply chain; “deep consumer loyalty”; broad channel distribution; and global footprint.
“The plan drives rapid growth of the Champion brand by investing in key geographic markets, expanding into women’s and kids’ apparel and casual footwear, and creating a premiere online experience at Champion.com,” the company said.
Keds said in its complaint that as part of Full Potential — which it referred to as an “aggressive, multi-billion-dollar growth plan” — “Hanes decided to take things into its own hands.”
Keds called Hanesbrands’ lawsuit “a deliberate breach of the express terms of the license agreement. ... Hanes’ scheme is a quintessential unfair and deceptive practice.”
Hanesbrands made six federal and state law claims in its complaint against Keds that also included: unfair competition and false association; trademark dilution; actual and anticipatory breach of contract; breach of the implied covenant of good faith and fair dealing; and unfair and deceptive trade practices.
Hanesbrands requested preliminary and permanent injunctive relief against Keds, to halt its use of the Champion trademark on all apparel, compensatory damages, interest and attorney fees.
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Hanesbrands Inc. has agreed to pay $90 million to acquire the Champion trademarks for footwear in the U.S. and Canada from Keds LLC.
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