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Under Armour (UA) Sues NIKE, Inc. (NKE): Is it Worth it?

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If you ever had any doubt that mid-cap athletic apparel specialist Under Armour Inc (NYSE:UA) was at war with NIKE, Inc. (NYSE:NKE), consider this your proof.

According to an AP report Friday afternoon, Under Armour has filed a trademark infringement suit against the industry behemoth, claiming that Nike has tried to create confusion by illegally using variations of Under Armour’s “I will” catchphrase.

Under Armour Inc (NYSE:UA)Not-so-flattering imitation
To be sure, Nike recently launched advertising campaigns which use phrases including “I will finish what I started,” and “I will protect my home court.”

Sound familiar? That’s because both statements are eerily similar to Under Armour’s well-known slogan which reads, “Protect this house. I will.” In fact, according to the complaint, Under Armour has been using the “I will” phrase on its products, and in its marketing campaigns, since 1998 — long before the company was a visible threat to Nike’s empire.

That’s why Under Armour is not only asking for a permanent injunction to prevent Nike from using the trademarked words, but is also seeking to recoup damages. It is asking Nike to “destroy all products, packaging, and signs that use the tag line [and] pay Under Armour all profits arising from the use of the phrase.”

Is it worth it?
But at a tenth of the size of Nike, is Under Armour in over its head? Nike’s $3.5 billion in cash at the end of last quarter represents more than 70% of Under Armour’s entire market capitalization, so we know Nike’s capable of buying plenty of time to defend itself.

Heck, Nike might even see this as a perfect way to slow Under Armour’s progress in encroaching on its turf. After all, in its most recent quarter, Under Armour proved that it’s finally gaining traction overseas, as it saw international revenue increase 30% year over year. In addition, Under Armour’s fourth-quarter footwear revenues gained 43% from the year-ago period, to $45 million. While that’s still barely a sliver of the $3.3 billion Nike pulled in from footwear last quarter alone, every incredible growth story has to start somewhere.

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