The Bad Boys of Business: Nike Steve Reiter Sep 03, 2009 9:40 am |
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With one of the most recognizable slogans in the history of retail, marketing, and, indeed, the world, Nike (NKE) is instantly familiar worldwide. Couple that with the sleek and simple "swoosh," and you have something very close to brand immortality.
Nike's footwear lines the racks of shoe stores, department stores, and even high-fashion retailers. Its headbands are worn by the greatest athletes in the world; its jerseys by professional and college sports teams alike.
But an empire isn’t built without a little bloodshed.
Along the way, Nike has found itself on the wrong side of a number of lawsuits, and has learned the hard way that a “just do it” attitude in business can land you in scalding hot water. Among its high-profile issues: extensive labor violations, copyright infringement, licensing violations, racial discrimination… The list goes on.
In 1998, San Francisco activist Marc Kasky filed a complaint against Nike alleging that the company made false claims about the treatment of workers at some of its overseas factories (the company had stated in a public relations campaign that conditions were compliant with US working standards). Independent studies revealed major flaws in employee safety and health, along with violations of minimum wage and overtime compensation policies.
The case got the attention of the California Supreme Court, which decided the statements made by Nike were “commercial speech” and could fall into the category of false advertising. The suit became a First Amendment issue when Nike appealed to the US Supreme Court, saying its statements were protected under free speech. But when the high court dismissed the case, saying it should never have reached that level, the California ruling stood. In 2003, Nike settled for a paltry $1.5 million. Human rights activists are undoubtedly still reeling.
Just do it.
As Nike says “just do it” to unsavory and sometimes hostile working conditions, it seems to have the same philosophy regarding patents and copyrights.
Back in 2007, Nike collaborated with Apple (AAPL) to create the Nike+iPod Sports Kit, which synced sneakers to iPods and recorded user's speed and distance while running. Sounds good, except for the alleged violations of four US patents held by Utah-based Leaper Footwear. The company claimed Nike began working on this technology in 2006, disregarding the patent which was acquired in 1998. Just do it.
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