Adidas Files Lawsuit Against Under Armour - Analyst Blog


Adidas AG ( ADDYY ) entered into a legal tussle with Under Armour Inc . ( UA ) alleging that the latter and its subsidiary MapMyFitness are offering products that directly infringe on10 Adidas patents used in miCoach, the fitness monitoring system provided by the German sportswear maker.

In the complaint filed in the U.S. District Court in Delaware, Adidas accused that products offered by Under Armour's Armour39 such as watches, chest straps coupled with digital products and mobile applications marketed by its MapMyFitness, have violated its patents.

Adidas also indicted that its former senior engineering manager, who is now the director of research at Baltimore-based Under Armour, was well aware of the patents.

With increasing fitness consciousness among people, more and more sports apparel makers are making headway in providing gadgets and other fitness tracking platforms, thus leading to fierce competition.

The acquisition of MapMyFitness in November last year for $150 million by Under Armour was a step forward in this direction. MapMyFitness, which has flagship consumer brands such as MapMyRun, MapMyRide, and MapMyWalk, has 20 million registered users. Nike, Inc. ( NKE ) has also forayed into the fitness market with its Nike+.

Last month, Under Armour came out with its fourth-quarter 2013 results. The quarterly earnings of 59 cents a share surpassed the Zacks Consensus Estimate of 54 cents and increased considerably from 47 cents earned in the year-ago quarter. In the trailing 7 quarters, the company had beaten the Zacks Consensus Estimate by an average of 26.6%.

Under Armour, which competes with Columbia Sportswear Co. ( COLM ), emerged strongly amid an environment where many retailers grappled with aggressive promotional strategies at the expense of margins to gain market share during the holiday season.

Under Armour currently carries a Zacks Rank #2 (Buy), while Adidas holds a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ADDYY , COLM , NKE , UA

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