Put your best foot forward (or somebody else’s)…
Shoes, business, and intellectual property came together recently when German footwear brand Birkenstock lost a legal battle to protect its iconic sandal designs from imitation. Germany’s highest court, the Federal Court of Justice, ruled that Birkenstocks are not “works of applied art” and therefore are not protected under copyright law. This case serves as an important lesson for business students on intellectual property rights, brand value, and the challenges of fighting counterfeit products in a globalized market.
The Rise of Birkenstock: From Functionality to Fashion Statement
Founded in 1774 in Germany, Birkenstock was initially known for its orthopaedic footwear. However, over time, the brand transitioned from a purely functional shoe to a high-fashion statement. Worn by celebrities such as Heidi Klum, Katy Perry, and Margot Robbie, the brand gained further prominence when its Arizona sandal was featured in the 2023 Barbie movie. The once humble sandal became an aspirational product, sought after not only for comfort but for style.
The Legal Battle: What Was at Stake?
In an effort to protect its brand and designs, Birkenstock took legal action against German retailers Tchibo and shoe.com, as well as Danish retailer Bestseller, accusing them of selling copycat versions of its most popular sandals. The company argued that these knockoffs were unfairly benefiting from Birkenstock’s brand equity and product design.
However, the court ruled against Birkenstock, stating that its designs do not meet the criteria for copyright protection. The decision is a setback for the company, which has long fought against counterfeits, arguing that product piracy is a billion-euro industry that damages legitimate businesses and exploits vulnerable workers in unregulated factories.
Lessons in Intellectual Property for Business Students
1. Understanding Intellectual Property Protection
There are various forms of intellectual property (IP) protection, including patents, trademarks, copyrights, and design rights. Birkenstock’s failure to secure copyright protection highlights the importance of choosing the right IP strategy. While copyright law protects artistic and creative works, industrial designs like footwear often require protection under design patents or trademarks instead.
2. Brand Equity and Consumer Perception
A strong brand goes beyond just legal protections—it relies on consumer perception. Birkenstock has built a reputation for quality and comfort over centuries. Even though imitation products may enter the market, strong branding helps maintain customer loyalty and allows the company to charge premium prices.
3. The Global Challenge of Counterfeiting
Counterfeiting is a significant challenge for global brands. Birkenstock’s spokesman, Jochen Gutzy, described counterfeit production as an industry with profit margins higher than arms and drug trafficking. Brands must invest in anti-counterfeiting measures, including market surveillance, legal battles, and consumer education to differentiate authentic products from fakes.
4. The Role of Ethical Manufacturing
Beyond profits, Birkenstock has also raised concerns about the unethical practices in counterfeit manufacturing, including child labor and unsafe working conditions. This highlights the importance of corporate social responsibility (CSR) in maintaining an ethical supply chain and ensuring that brand integrity is not only about financial value but also about ethical business practices.
What’s Next for Birkenstock?
Despite the setback, Birkenstock has vowed to continue its legal fight in multiple countries, including France, the Netherlands, Denmark, and Switzerland. The company is also leveraging its brand strength and collaborations with luxury labels like Dior to maintain its market dominance.
For business students, this case underscores the importance of legal foresight in brand management. Companies must be proactive in securing their intellectual property rights and ensuring their business strategies can withstand the challenges of counterfeiting and market competition.
Ultimately, the battle over Birkenstock’s iconic sandals is not just about footwear—it’s a valuable case study in how businesses protect their innovations in a complex legal and global marketplace.
