Monday, 17 December 2012

‘Red shoe sole’ can constitute a valid trade mark

Author: Agnieszka A. Machnicka (Max-Planck-Institute for Intellectual Property and Competition Law, Munich)

Christian Louboutin SA v Yves Saint Laurent Am. Holding, Inc, US Court of Appeals, Second Circuit, No 11-3303-cv, 696 F.3d 206 (N.Y.) 5 September 2012

Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps182, first published online: December 14, 2012

The US Court of Appeals held the red sole mark registered by Christian Louboutin to be valid and enforceable when limited to a red lacquered outsole contrasting with the colour of the rest of the shoe, but not when applied to a monochromatic red shoe.

Legal context

The issue was considered in the context of validity of single-colour trade marks and the doctrine of aesthetic functionality as developed by the US judiciary in numerous cases. The principal concern was whether, in certain industries (eg the fashion industry), single-colour marks are inherently non-distinctive and consequently invalid due to their hindering effects on competition.

Facts

Christian Louboutin brought an appeal from an order of the US District Court (SDNY, 10 August 2011) denying protection to its registered Red Sole mark in a dispute with Yves Saint Laurent (YSL) fashion house which applied a red sole to an entirely red shoe (discussed in Agnieszka Machnicka ‘Trade marks: Is a ‘red shoe sole’ a valid trade mark?’ (2012) 7(3) JIPLP 157). Louboutin's appeal was based on a claim that the District Court—in spite of having recognized the distinctiveness, fame and registration of the Red Sole mark—committed an error by holding that a single colour cannot constitute a trade mark in association with a fashion item due to its anti-competitive effects. Louboutin's action was supported by the amicus briefs from Tiffany (24 October 2011) and the International Trademark Association (INTA, 14 November 2011). Against that, the amicus brief from (11) law professors (3 January 2012) supported the views expressed by the District Court, in particular its findings about the specific (functional) role that colours play for designers and for consumers in relation to fashion goods.

Analysis

The Court of Appeals, before deciding on the merits of the case, gave an elaborate introductory analysis of two issues relevant to the claim.

First, it considered the matter of single-colour marks. It noticed that, although the early jurisprudence (before the introduction of the Lanham Act) was not always generous to single-colour marks, there were other ways (such as unfair competition principles) through which courts would recognize indirectly the merit of certain signs acquired through secondary meaning. After the adoption of the trade mark statute, colours would gradually be accepted for trade mark registration, and finally the decision in Owens-Corning Fiberglas Corp 774 F 2d 1116 (1985) made it clear that colour marks which were distinctive, ie able to identify the source of the product, could serve trade mark functions. The position of colour marks was strengthened by the Supreme Court's decision in Qualitex Co v Jacobson Products Co 514 US 159 (1995) which confirmed that there is no objection to the use of a colour as a trade mark when it meets legal requirements (ie distinguishing goods and identifying their source ‘without serving any other significant function’).

Secondly, the court addressed the specific problem of functionality of colours in the fashion industry. It traced the development of the doctrine of functionality of marks encompassing traditional ‘utilitarian’ functionality and ‘aesthetic’ functionality (which constitute a defence to a trade mark infringement claim). It is a developed rule that a product feature is functional in a utilitarian sense when it is essential to its purpose or use as well as when it influences its cost or quality (Wallace International Silversmiths, Inc v Godinger Silver Art Co, Inc, 916 F 2d 76, 2d Cir 1990). Further, when a product's aesthetic design purporting trade mark function is not utilitarian, it still can be considered functional if its monopolisation ‘would put competitors at a significant non-reputation-related disadvantage’ (Qualitex; TrafFix Devices, Inc v Mktg Displays, Inc, 532 US 23 2001) or ‘would significantly limit the range of competitive designs available’ (Coach Leatherware Co v Ann Taylor, Inc, 933 F 2d 162, 2d Cir 1991). However, as the court mentioned, the controversial doctrine of aesthetic functionality was not uniformly applied by the circuit courts. Because it can sometimes be difficult to distinguish between source indication (branding success) and aesthetic function of a product design, the analysis of this issue should be ‘highly fact-specific’. Then, based on this analysis, the court examined the rule of functionality of colours in the fashion industry as formulated by the District Court's order under appeal. The judgment evoked Qualitex to state that there is no prohibition of the use of a single colour as a mark in a specific industrial context (hence, including the fashion domain) and no such rule should be created. Rather, an individualized, case-by-case assessment of the aesthetic functionality should be performed.

Finally, the judgment focused on the Red Sole mark. The court found that the mark as broadly defined in a registration claim (ie ‘The colour/s red is/are claimed as a feature of the mark. The mark consists of a lacquered red sole on footwear’) would prevent all uses of red outsoles by competitors and was therefore, not entitled to protection as such. Nevertheless, the mark in question had acquired secondary meaning when used as a red sole ‘contrasting’ with the remainder of the shoe and, consequently, was protected in this modified form only. In other words, the disputed mark did not acquire secondary meaning in relation to a red sole applied to a red shoe. This finding, seemingly inspired by the law professors' amicus brief, was based on a principle that a single colour—usually not inherently distinctive—can in a particular context be so unusual that it becomes a symbol identifying a product's source. The judgment refers to factors through which the mark became a distinctive indication of the Louboutin brand: advertising expenditures, media coverage, sales success, more than 20 years of the mark's use and records of the mark's counterfeiting.

Since the use of a red sole on monochromatic red shoes by YSL did not infringe the Red Sole mark, the court did not consider the issue of consumer confusion.

Practical significance

The most immediate outcome of this anxiously awaited ruling is that the Red Sole mark was indeed protected (subject to 15 USC § 1119) in the territory of the United States. This matter is not undisputed in other jurisdictions. The controversy around the Red Sole mark is well illustrated not only by its registration in some countries and denial in many other, but also by a recent French case in which a dispute over a red shoe sole between Christian Louboutin and Zara culminated in a decision far less generous for the famous shoe designer, rendered by the Cour de cassation on 30 May 2012.

The effects of the court's finding can be examined from different perspectives. First, it expressed a general norm to the effect that (a) a single colour can constitute a valid trade mark, (b) even in the fashion industry and (c) its validity is assessed on a case-by-case basis. Secondly, in relation to the trade mark in question, its legality was definitely resolved by the court having declared it valid as limited to a lacquered red outsole contrasting with the colour of the ‘upper’ shoe. Thirdly, the verdict has also an impact on the availability of the red colour, namely its use is freely allowed for competitors (a) on all fashion items (any part of clothing or accessorise) except shoe soles which contrast in colour with the rest of a shoe, as well as (b) on monochromatic red shoes.

Some uncertainty still remains as regards the use of other, possibly similar colours (eg burgundy) on the shoe outsoles, since the court did not specify what shade of red constitutes the Red Sole mark. This matter may be resolved in a potential dilution dispute (15 USC § 1125) or will remain dormant if competitors simply avoid using all shades close to red in the context of the Louboutin's mark.

It is likely that there will be more attention given to shoe soles and that their colouring becomes a new canon in the fashion domain (ie blue, green or pink—as demonstrated by current records of the USPTO and mentioned in the law professors' amicus brief). Maybe this novel trend should simply be seen as a flattering result of the revolutionary contribution of Christian Louboutin to the development and history of shoe fashion. For the moment it is certain that a flash of a red sole, at least in the US, guarantees genuine ‘Louboutins’.

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