Louboutin & Lessons Learned

[author: Steve Baird] 

As promised, here are some further thoughts, lessons learned, and remaining unanswered questions concerning the recent and long-anticipated decision of the Second Circuit Court of Appeals in Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc.

Lessons Learned for Marketing Types:

• Single color trademarks may be owned, registered, and protected when they are distinctive and have acquired “secondary meaning” — even in the fashion industry.
• Know the inherent or implied limitations in your non-traditional trademark rights and registrations, they may become express limitations when a court gets involved.
• Adopt an intelligent enforcement strategy, especially when it comes to non-traditional trademarks, since there can be a judicial undercurrent of skepticism about the validity of those rights and serious questions about whether granting the requested relief will significantly hinder competition in the relevant market.
• If you own the particular placement and position of a non-traditional trademark on an item, don’t assume it is broad enough to stop all uses across the entire surface of an item.
• While non-traditional trademarks are a wonderful way for brand owners to emotionally engage their consumers and cement strong relationships, it must not be forgotten that your competitors have the same options before them, making critical the need for appropriate due diligence when designing even purely ornamental and aesthetic features of a product.
• Consistent with the importance of adopting an intelligent enforcement strategy, as Catlan wrote last week, pick your enforcement targets carefully, and I’d add: pick your forum carefully, as there continues to be “forum shopping” opportunities given the different legal interpretations of the Lanham Act followed by various courts around the country.

Further Thoughts for Trademark Types:

• While I’m all in favor of formally narrowing the scope of Louboutin’s federal trademark registration to make express the limitation and requirement of visual contrast between the red outsole and the remaining elements of women’s high fashion shoes (a limitation I had argued was implied, given the specimen of record), I’m left wondering whether the direction to the USPTO to implement the limitation under Section 37 of the Lanham Act (15 U.S.C. 1119) should have come from the U.S. District Court, not the Court of Appeals.
• Clearly, the assigned three judge panel of the Second Circuit Court of Appeals (Circuit Judges Cabranes, Straub, and Livingston) has taken a special interest in this case, removing from further consideration by the District Court anything other than Yves Saint Laurent’s counterclaims (discussed below), and directing “[i]n the interest of judicial economy, either party may restore jurisdiction to this Court to consider whatever arguments remain or arise relating to this case by sending a letter to the Clerk of this Court within 14 days of the District Court’s final judgment. Any such proceedings will be assigned to this panel.”
• This panel of the Second Circuit Court of Appeals seemed to go out of its way to prevent the District Court from entertaining any further arguments from Louboutin in pursuing its non-preliminary judgment claims against YSL; why not affirm the denial of the preliminary injunction, set the District Court straight on the law, direct it to have the USPTO amend Louboutin’s registration, but then remand for further proceedings consistent with the order? I’m sensing a trust issue, wearing the clothes of “judicial economy” — what do you think?
• The Court of Appeals disposed of Louboutin’s Lanham Act claims “because the red sole on YSL’s monochrome shoes is neither a use of, nor confusingly similar to, the Red Sole Mark.” — yet, in a couple of places in the decision, it purports to not address and expresses no need to address the ultimate question of likelihood of consumer confusion.
• Deborah Peckham of Lex Indicium writes: “In essence the court is saying that there can be no confusion between use of single color contrasting mark on an outsole and use of the identical color in a monochromatic treatment that includes the outsole.  But do we really know that consumers could not be confused?  Couldn’t they?”
• YSL’s first counterclaim is for cancellation of Louboutin’s red sole trademark registration on three grounds: (a) lack of distinctiveness, (b) functionality, and (c) fraud — based on the Second Circuit’s ruling, presumably it is only leaving the District Court to address functionality and fraud, since it agreed with the District Court on secondary meaning.
• YSL’s second counterclaim is for damages for (a) tortious interference with business relations and (b) unfair competition; it will be interesting to see whether these damage claims were asserted merely for leverage or whether they actually will continue now that Louboutin’s trademark infringement claims are dead.

 Unanswered Questions:

• What will others do with this surprising bit of dicta from the Second Circuit?: “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.”
• Just because an artistic and decorative belt buckle might be conceptually separable from the subsidiary utilitarian function (and thereby subject to copyright protection), doesn’t mean that the placement of a single color on the sole of a women’s shoe is subject to copyright protection, right? I’m not seeing a valid copyright claim, are you?
• When will the Supreme Court decide a case that addresses trademark aesthetic functionality, beyond dicta, so that the growing division among the various circuit courts can be resolved?
• Will the Second Circuit’s reliance on YSL’s failure to use — in its monochrome red shoes — Louboutin’s contrasting red sole mark, encourage other defendants in non-traditional trademark cases to seek early dismissal on a non-use basis, as Google did so successfully, in the early days of the keyword buy cases. If so, will the non-use defense be successful? And, if so, will it be successful long term? By way of example, Google is no longer able to regularly short-circuit the keyword trademark cases with the non-use defense, it is now having to face and address the ultimate question of likelihood of confusion, see Rosetta Stone v. Google.
• Last, what will be the extent of protection available to Louboutin, assuming his registration, now with the built-in color contrast limitation, survives YSL’s counterclaim for cancellation? What if another’s shoe is not 100% monochrome? What if it is almost all red, including on the outsole, but there are some black accents including a black border around the edge of the outsole border — is that enough contrast to warrant relief and protection? It’s one thing to impose a limitation of contrasting color so the red outsole can “pop” — it’s another to predict what the limits on the narrowed right will be and it seems unlikely that the right would or should be limited to purely identical uses, given the ultimate multi-factor test of likelihood of confusion.