Seeing Red, Part 2
Last month, we discussed the trademark lawsuit by Christian Louboutin (“Louboutin”) against Yves Saint Laurent (“YSL”). You can read our article here. At that time, the United States Court of Appeals for the Second Circuit was considering an appeal of the decision of the United States District Court for the Southern District of New York denying Louboutin’s motion for preliminary injunction. Louboutin claimed that YSL had infringed Louboutin’s trademark glossy red outsoles on its shoes, and had asked for a preliminary injunction preventing YSL from selling shoes with red soles. In denying the injunction, the District Court held that Louboutin’s signature red sole on its shoes serves an ornamental and aesthetic function, and thus is not entitled to trademark protection. See Christian Louboutin v. Yves Saint Laurent America, 778 F. Supp. 2d 445 (D.C. New York 2011). Since then, the Second Circuit has affirmed in part and reversed in part the District Court’s decision. See Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc., No. 11-3303-cv (2nd Cir. 2012). The Second Circuit framed the question as “whether a single color may serve as a legally protected trademark in the fashion industry and, in particular, as the mark for a particular style of high fashion women’s footwear.” Id. The court held “that the District Court’s holding that a single color can never serve as a trademark in the fashion industry … is inconsistent with the Supreme Court’s decision in Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 162 (1995) (“Qualitex”), and that the District Court therefore erred by resting its denial of Louboutin’s preliminary injunction motion on that ground.”Id. In Qualitex, the Supreme Court held 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. Qualitex, 514 U.S. at 166. Thus, the per se rule of the District Court was in error. The Second Circuit went on to explain that “aspects of a product that are ‘functional’ generally ‘cannot serve as a trademark.’” Louboutin, quoting Qualitex, 514 U.S. at 165. The court noted that there are two types of functionality: traditional or utilitarian functionality and aesthetic functionality. A feature of a product is traditionally functional “if it is (1) essential to the use or purpose of the article, or if it (2) affects the cost or quality of the article.” Louboutin, internal quotation marks omitted. If a feature is traditionally functional, it ordinarily is not eligible for trademark protection. Regarding aesthetic functionality, the court stated that “when the aesthetic design of a product is itself the mark for which protection is sought, we may also deem the mark functional if giving the markholder the right to use it exclusively would put competitors at a significant non-reputation-related disadvantage.” Id. Having rejected the District Court’s per se rule regarding single color marks in the fashion industry, the Second Circuit turned to whether the Louboutin red sole mark merits protection as a trademark. As functionality is a defense, the court considered whether the red sole is a distinctive mark before deciding whether it is functional. The court noted that a mark can acquire distinctiveness in the eyes of the public through use, and held that the red sole mark has done so when the sole contrasts with the color of rest of the shoe. The court held, however, that the record does not support distinctiveness of the red sole when used on a monochromatic red shoe. The court therefore ordered the Director of the Patent and Trademark 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.” Id. Finally, the court held that the YSL shoes at issue, which were monochromatic, did not use the modified trademark since they were red all over. Thus, there was no need for the Second Circuit to consider whether the mark is functional. In short, as it currently stands, the Louboutin trademark is modified to apply to a red lacquered outsole that contrasts in color with the adjoining upper of the shoe. The YSL shoes at issue, which were red all over, did not use this modified trademark since the sole did not contrast with the rest of the shoe. This could be viewed as a win for both sides, as Louboutin keeps its trademark, albeit in modified form, while YSL escapes a preliminary injunction. The case will likely now return to the District Court for further consideration. While the Second Circuit did not address the functionality question, it did lay out the applicable tests that the District Court will need to use in considering the issue. The decision on appeal pertained only to the motion for preliminary injunction; this case will likely continue at the District Court level for a final determination of the issues, which will then be subject to appeal. We will continue to update you on this case as it progresses.