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A single color can serve as a protectable trademark in the fashion industry, however Louboutin's trademark on a red-soled shoe cannot prevent Yves Saint Laurent from making entirely red shoes, the U.S. Court of Appeals for the Second Circuit held Sept. 5 (Christian Louboutin S.A. v. Yves Saint Laurent America Holding Inc., 2d Cir., No. 11-3303-cv, 9/5/12).
The court's opinion--highly anticipated in the fashion industry--essentially split the baby, refusing to invalidate's Louboutin's registered trademark, but also modifying the registration so that it does not foreclose the manufacture and sale of entirely red shoes. Thus, while it disagreed with the district court's broad rejection of single-color marks in the fashion industry, it nevertheless upheld the lower court's refusal to grant Louboutin a preliminary injunction.
“Excuse the pun, but I think this was red letter day for Christian Louboutin,” Susan Scafidi, a law professor at Fordham University, New York, and founder of the Fashion Law Institute, told BNA. “Nearly losing your trademark must be terrifying, it is like losing a piece of your identify, but at the end of the day it looks as if YSL will be celebrating,” Scafidi said.
“I think the court struck a correct and fair balance on the competing interest between encouraging parties to come up with new and commercially successful fashion items, and the ability of competitions to not be unnecessarily harm strung,” Robert W. Zelnick of McDermott Will & Emery, Washington, D.C., told BNA.
The court ducked the aesthetic functionality issue, which the district court had relied on to determine that the trademark was invalid(158 PTD, 8/16/11). Rather, by relying heavily on Qualitex Co. v. Jacobson Products Co., the court said it need not determine whether the mark is functional since in this case YSL's shoes did not infringe Louboutin's trademark, a trademark whose scope the court limited.
Designer Christian Louboutin designed a high fashion high heeled shoe with a an outsole in glossy vivid red, a color he called “Chinese red.”
Over the years, the shoe design became popular and famous in the fashion industry, and in 2008, the Patent and Trademark Office issued a registration for the lacquered red sole shoes. Louboutin sued Yves Saint Laurent, a fashion house founded in 1962, alleging trademark infringement, false designation of origin, and dilution stemming from four shoe models in YSL's 2011 collection. Each of those models bear a bright red outsole as part of a monochromatic design in which the shoe is entirely red.
YSL asserted counterclaims seeking cancellation of the Red Sole mark and damages on the grounds that it is not distinctive, but rather, that it is ornamental and functional, and was secured by fraud on the PTO.
Louboutin sought a preliminary injunction preventing YSL from marketing during the pendency of this action any shoes that use the same or a confusingly similar shade of red as that protected by the red sole mark.
Judge Victor Marrerro of the Southern District of New York declined to issue the preliminary injunction, finding instead that color serves ornamental and aesthetic functions vital to innovation and competition in the fashion industry.
The district court in fact ordered Louboutin to show cause why its mark should not be cancelled.
The court noted that other courts have approved the use of a single color as a trademark for industrial products--such as green-gold for pads used on dry cleaning presses--but, “whatever commercial purposes may support extending trademark protection to a single color for industrial goods do not easily fit the unique characteristics and needs--the creativity, aesthetics, taste, and seasonal change--that define production of articles of fashion,” the court said.
Thus, the district court held that color is not protectable where it is functional, i.e., where the color is essential to the use or purpose of the product or affects the cost or quality of the product.
“Because in the fashion industry color serves ornamental and aesthetic functions vital to robust competition, the Court finds that Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection, even if it has gained enough public recognition in the market to have acquired secondary meaning,” the court said.
Louboutin sought interlocutory review, and the Second Circuit heard oral arguments Jan. 24. A number of interested parties submitted amicus briefs, including Tiffany Inc., which holds a trademark registration on the robin's egg blue color of the boxes that its jewelry is packaged in.
Critics of district court faulted both the district court's reliance on the functionality doctrine, and the broad assertion that a single color could never serve as a protectable mark in the fashion industry(68 PTD, 4/10/12). The appeals court disagreed with, but declined to criticize, the lower court's opinion. The lower court's decision dealt with “a difficult and novel issue of trademark law,” Judge José A. Cabaranes said.
The first issue the court addressed in its abuse of discretion review was whether a single color mark can ever be protected, both in general, and in the fashion industry. It answered both questions in the affirmative.
After taking an in-depth look at the history of the aesthetic functionality doctrine, focusing considerable attention on the Supreme Court's decisions in Qualitex Co. v. Jacobson, 514 U.S. 159, 34 USPQ2d 1161 (1995) and TrafFix Devices Inc. v. Marketing Displays Inc., 532 U.S. 23, 58 USPQ2d 1001 (U.S. 2001), the court concluded:
[A] mark is aesthetically functional, and therefore ineligible for protection under the Lanham Act, where protection of the mark significantly undermines competitors' ability to compete in the relevant market.
Moreover, in Qualitex, the Supreme Court “concluded that 'color alone, at least sometimes, can meet the basic legal requirements for use as a trademark. It can act as a symbol that distinguishes a firm's goods and identifies their source, without serving any other significant function,' ” the court said, adding emphasis to the high court's decision.
In addition to explicitly recognizing that color marks can be protected, the Supreme Court in Qualitex also said that there is “no special legal rule [that] prevents colors alone from serving as a trademark.”
In other words, the Supreme Court specifically forbade the implementation of a per se rule that would deny protection for the use of a single color as a trademark in a particular industrial context. Qualitex requires an individualized, fact-based inquiry into the nature of the trademark, and cannot be read to sanction an industry-based per se rule. The District Court created just such a rule, on the theory that “there is something unique about the fashion world that militates against extending trademark protection to a single color.”
Finding fault with the district court's per se rule against colors serving as protectable trademarks, the court turned its attention to the red sole mark in question.
Even the district court acknowledged that Louboutin had created a “brand with worldwide recognition” through the marketing and sale of its iconic red sole shoes. This finding was made irrelevant by the district court's determination that single colors could never receive trademark protection in the fashion industry. While the latter conclusion was in error, the appeals court agreed with the former.
We hold that the lacquered red outsole, as applied to a shoe with an “upper” of a different color, has “come to identify and distinguish” the Louboutin brand, Qualitex, 514 U.S. at 163, and is therefore a distinctive symbol that qualifies for trademark protection.
However, “the record fails to demonstrate that the secondary meaning of the Red Sole Mark extends to uses in which the sole does not contrast with the upper--in other words, when a red sole is used on a monochromatic red shoe.”
Because we conclude that the secondary meaning of the mark held by Louboutin extends only to the use of a lacquered red outsole that contrasts with the adjoining portion of the shoe, we modify the Red Sole Mark, pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119, insofar as it is sought to be applied to any shoe bearing the same color “upper“ as the outsole. We therefore instruct the Director of the Patent and Trade Office to limit the registration of the Red Sole Mark to only those situations in which the red lacquered outsole contrasts in color with the adjoining “upper” of the shoe.
In this case, YSL's shoes were monochromatic, and thus Louboutin had failed to demonstrate that it was entitled to a preliminary injunction, the court said. The court affirmed the district court's rejection of a preliminary injunction, reversed the determination that Louboutin's mark was not entitled to any protection, and remanded for proceedings with regards to YSL's counterclaims.
“This decision should reinforce to the [fashion] industry that it is going to be easier to protect a color combination than it is to protect a single color,” Zelnick said.
Although the court ultimately did not determine whether the red sole mark was aesthetically functional, “I think it still provided good guidance on this obscure, seldom invoked doctrine,” Scafidi said. In any event, she was relieved that the court “felt the need to reel Marrerro back in” by rejecting his per se rule.
“This decision is a good thing for the designer, and it is a very good thing for the fashion industry,” Scafidi said.
The court, in a footnote, said, “It is arguable that, in the particular circumstances of this case, the more appropriate vehicle for the protection of the Red Sole Mark would have been copyright rather than trademark.” For support of this assertion the court pointed to Kieselstein-Cord v. Accessories by Pearl Inc., 632 F.2d 989, 208 USPQ 1 (2d Cir. 1980), which held that an ornamental belt buckle that had separable artistic elements was entitled to copyright protection.
“However, because Louboutin has chosen to rely on the law of trademarks to protect his intellectual property, we necessarily limit our review to that body of law and do not further address the broad and complex issue of fashion design protection,” the court said.
Judges Chester J. Straub and Debra Ann Livingston joined the decision.
Louboutin was represented by Harley I. Lewin of McCarter & English, New York. YSL was represented by David H. Bernstein of Debevoise & Plimpton, New York.
Opinion at http://pub.bna.com/ptcj/113303Sept512.pdf
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