Both Christian Louboutin and Yves Saint Laurent have claimed victory in the Second Circuit's much anticipated decision in Christian Louboutin SA v. Yves Saint Laurent America Holding Inc., decided on September 5, 2012. And in fact, the Second Circuit's decision offered something to each side in the case. While affirming the lower court's decision not to enjoin YSL from using a red sole on a monochromatic red shoe, the Court also held that Louboutin's Red Sole Mark, with some slight modifications, was enforceable and valid. Moreover, in a victory and sigh of relief for many in the industry, the Court reversed the lower court's per se rule that a single color could never serve as a trademark in the fashion industry. The decision also shed some light on the often confusing doctrine of aesthetic functionality.

The Second Circuit disposed of the industry-specific per se rule as contrary to the Supreme Court's holding in Qualitex Co. v. Jacobson Products Co., Inc, in which the Supreme Court ruled that the Lanham Act permits the registration of a color as a trademark. In doing so, the Second Circuit engaged in a comprehensive discussion of the history of single-color marks and the aesthetic functionality defense. Noting the wide range of views on the aesthetic functionality defense among various circuits (ranging from an outright rejection of the doctrine in the Fifth Circuit to a liberal adherence that "[f]ashion is a form of function" in the Seventh Circuit), the Court clarified its three prong test, which requires a fact-intensive inquiry balancing a mark owner's rights with the public's right to a competitive market.