Wednesday’s second circuit decision accomplished a rare feat in the contentious world of litigation: achieving an outcome that was satisfactory to all parties – or at least one that they could claim satisfaction with.
The judgment overturned an August 2011 ruling by district court judge Victor Marrero invalidating Louboutin’s red sole trade mark on the basis that “a monopoly on the colour red would impermissibly hinder competition among other participants”.
In resurrecting the mark, the appellate court concluded that the red, lacquered outsole had acquired limited secondary meaning “as a distinctive symbol that identifies the Louboutin brand”. However, it restricted Louboutin’s claim to a red sole with a contrasting upper, ruling that YSL had not infringed the mark with its monochromatic red shoe.
The ruling was welcomed by trade mark owners as providing much-needed clarification on the limits of trade mark protection for single colours.
And it was a particular relief for brand owners in the fashion industry, many of whom feared the earlier decision by the district court would have ramifications for their colour-based trade marks. Louboutin’s appeal was supported by an amicus brief from jewellery retailer Tiffany, which is noted for its use of blue presentation boxes.
It was also enthusiastically received by INTA, which had filed an amicus brief claiming the district court had erred in finding the mark invalid under the controversial aesthetic functionality standard.
Reactions from YSL and Louboutin
The Court did not rule on YSL’s counterclaim that the trade mark is invalid because a red sole is a functional element of design and therefore ineligible for protection.
It also did not consider YSL’s counterclaim against Louboutin for tortious interference with business relations, based on allegations that Louboutin used its influence to persuade department stores not to stock YSL’s shoes.
David Bernstein, a Debevoise & Plimpton partner who was part of the team representing YSL, told Managing IP that the company will now pursue those claims.
He described the case as “a total victory” for YSL. “They ruled on an alternative ground, but we are just happy they ruled in our favour,” he said. “It makes it clear that trade marks can’t be used in an anti-competitive way.”
In a statement, YSL said it has been making shoes with outsoles since the 1970s, before the Louboutin brand came into existence.
“YSL is a venerated fashion house with the utmost in creative talent and has no need to trade on the good will of other brands,” it said. “YSL will continue to make fair use of the colour red, along with all the other colours in its designers’ palettes, in the design of its monochromatic shoes.”
Christian Louboutin’s lawyers, Charles Ray and Lee Carl Bromberg of McCarter & English, did not respond to a request for comment. But the company issued a statement, which said: "We are extremely pleased and gratified that the appellate court found our key arguments to be correct: first that color can and does serve as a trade mark in the fashion industry, and that Christian Louboutin's world famous red sole trademark is valid, protectable and enforceable."
Reaction from INTA
In a press release issued on Thursday, INTA said it “applauds” the decision to overrule the lower court’s ruling against single colours as trade marks, which it said is “contrary to settled law and ordinary consumer experience”.
Cooley partner Janet Cullum, who worked on INTA’s amicus brief, said the organisation did not take sides on the issue, but was concerned about the wider implications for brand owners.
“A blanket rule that you never have a single colour as a trade mark would have been a very negative result,” she said.
“A single colour can serve as a trade mark in other industries. To have carved out a rule that says you can’t have that in fashion would have been quite unfair and disadvantageous to brand owners.”
She said it is important for the law to grant trade mark protection for aesthetic innovation “without crossing the line” and allowing a brand owner to monopolise a functional element.
“The court came to this very sensible conclusion that it’s not just the red sole, it’s the contrast of the sole with the upper.”
Reaction from lawyers and the fashion industry
The case has provoked widespread debate among lawyers and brand owners. IP attorney David Jacoby, an IP partner of Schiff Hardin who is not involved in the litigation, described it as “a hot case from the get-go”.
He said the outcome demonstrated that brand owners should think carefully about the possible consequences before initiating litigation.
“If you look at it from where things were on day one, Louboutin wanted to stop YSL from putting out the monochromatic shoe,” said Jacoby. “They have failed in that attempt. They also came within a hair’s breadth of losing their trade mark.”
He said that while “hindsight is a great gift”, another lesson for brand owners – particularly those less famous than Louboutin – is to be less sweeping in their claims when registering a trade mark.
“If you look, for example, at what the Susan G Komen people have done with their pink ribbon, it’s much more specific,” he said.
Jacoby also suggested that brand owners should apply for protection as soon as possible. “Christian Louboutin has been doing the red sole since 1992, and the registration wasn’t sought until 2007,” he said. “Maybe it could have been done earlier.”
With regard to the counterclaims, he said he thought it unlikely that YSL will pursue invalidation of the mark on functional grounds. “They do create designs, so I’m not sure it’s a precedent they want to create because it could come back later and be used against them.”
He said the most likely outcome is that the parties will come to “some sort of quiet resolution” to offset legal fees.
In brief: who gained and who lost from the decision? |
| Following Wednesday's ruling, Managing IP received many opinions from readers via emails, phone calls and thoughtful comments on Twitter. garethdickson [via Twitter]: @ManagingIP It's only a victory if victors end with less than they started with, and don't get what they set out to achieve... AmeriKitten [via Twitter]: @ManagingIP Agree w/ @garethdickson The Louboutin TM was essentially a stick that it used to beat itself with – YSL just watched. Michael Allan, partner of Steptoe & Johnson [via email]: "The decision is particularly interesting in that both Louboutin and YSL will claim victory. Louboutin resurrected a nearly 20 year old trademark through the appeal, but at the same time, YSL avoided infringement of that mark." Ann_ford [via Twitter]: Correct. @ManagingIP Quick scroll through Twitter suggests yesterday's #redshoes decision seen as victory for @LouboutinWorld Judith Roth, partner of Schiff Hardin [via telephone]: "What the second circuit did was give us as trade mark attorneys, for the first time, a pretty good definition of what the standard is when you're dealing with colour as a source of identity." IPisBusiness [via Twitter]: @ManagingIP hollow victory. The orig #YSL #redshoes were w/ red soles & that's still allowed. Still digesting how "contrast" is a colour |
