Adidas v. Thom Browne — Second Circuit Rules ‘Misconduct’ Under Rule 60(b)(3) Requires More Than Mere Negligence, Refuses to Reopen Trademark Verdict

Background

Adidas sued Thom Browne in 2021 over the luxury fashion brand’s use of its “Four-Bar Signature” (four wide horizontal bars) and “Grosgrain” (a red, white, and blue stripe pattern) on a new line of activewear. Adidas claimed these designs were confusingly similar to its famous Three-Stripe Mark and sought approximately $8 million in damages for trademark infringement, dilution, and unfair competition.

After a trial before Judge Rakoff in the Southern District of New York, the jury found Thom Browne not liable on all counts. The Second Circuit affirmed on direct appeal in May 2024. But while that appeal was pending, something unexpected happened: in separate litigation between the same companies in the United Kingdom, Thom Browne produced four internal emails that had never been turned over during U.S. discovery.

The emails were damaging. In one, a Thom Browne senior account manager wrote that “[w]e try to avoid rows of 4 bar armband on the racks so as to not look like Adidas.” In another, the company’s head of menswear warned Mr. Thom Browne himself that “our 4bar in white [will] be read as adidas stripes, especially on accessories.” Mr. Browne responded that they should stop using the four-bar because of Adidas and focus on the red-white-blue stripe instead. The emails had slipped through discovery due to a chain of e-discovery failures: a paralegal’s mass edit to document coding, a vendor’s saved search that excluded the edited documents, and a quality-control review that was never actually performed.

The Court’s Holding

The Second Circuit affirmed denial of Adidas’s post-trial motion on both grounds.

Newly Discovered Evidence (Rule 60(b)(2)): Under this rule, Adidas had to show the emails “probably would have changed the outcome” of the trial. The court found no abuse of discretion in denying relief. The emails reflected executives’ subjective opinions about potential confusion, but likelihood of confusion under trademark law is an objective standard analyzed through the Polaroid factors. The jury had already rejected more direct evidence of consumer confusion—including Adidas’s consumer survey—so these internal emails were unlikely to have tipped the scales. Moreover, the emails concerned formalwear and accessories for FC Barcelona, not the activewear products actually at issue.

Misconduct (Rule 60(b)(3)): This was the headline ruling. The Second Circuit addressed for the first time whether “misconduct” under Rule 60(b)(3) requires more than mere negligence. It held that it does. The court reasoned that Rule 37 already requires heightened culpability for the most severe discovery sanctions (like dismissal or adverse inference instructions), and vacating a final judgment is comparably drastic. It would be anomalous if a party could use Rule 60(b)(3) to get a new trial for conduct that wouldn’t even support severe sanctions under the discovery rules. Historical evidence confirmed this reading: the Advisory Committee proceedings from 1945-46 show that Rule 60(b)(3) was meant to address “tricks played by one party upon the other” and “deceit practiced on a party.”

Applying this standard, the court found that while the law firm’s e-discovery failures were indeed negligent—disagreeing with Judge Rakoff’s finding to the contrary—the conduct “was not worse than that.” The firm took the recognized step of reviewing responsive documents; it simply executed that step poorly. This fell short of the recklessness or intentional wrongdoing needed for “misconduct.”

Key Takeaways

• First impression in the Second Circuit: “Misconduct” under Rule 60(b)(3) requires more than mere negligence—this standard may insulate parties from post-judgment relief even when discovery failures are proven, as long as the failures were not reckless or intentional.
• E-discovery cautionary tale: Mass edits to document coding, miscommunications between paralegals and vendors, and quality-control reviews that are “intended” but never performed can cause serious discovery failures—even if they ultimately fall short of misconduct.
• Subjective confusion evidence has limited value in trademark cases: Internal emails expressing concern about brand confusion carry less weight than objective confusion evidence like consumer surveys, particularly when the jury has already rejected such direct evidence.
• Cross-border litigation risk: These emails surfaced only because of parallel UK litigation—a reminder that multinational trademark disputes can produce document surprises across jurisdictions.

Why It Matters

This decision will shape how post-trial discovery disputes are litigated in one of the country’s most important commercial circuits. By requiring more than negligence for “misconduct” under Rule 60(b)(3), the Second Circuit has raised the bar for parties seeking to reopen final judgments based on discovery failures. For litigation teams, the message is that negligent e-discovery mistakes—while potentially sanctionable under other rules—will not justify the extreme remedy of vacating a jury verdict. For brand owners specifically, the case underscores that even highly suggestive internal communications about brand confusion may not be enough to overcome a jury’s adverse finding when objective confusion evidence has already failed to persuade.