Seeing Red: When It?s a Trademark and When It?s Not

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[authors: Cornuelle, Kristin S.; Goldman, Beth M.; Lee, Betsy Wang; Richmond, Michael T.]

Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., No. 11-3303-cv, 2012 U.S. App. LEXIS 18663 (2d Cir. Sept. 5, 2012)

Attracting attention in both legal and fashion circles, the Court of Appeals for the Second Circuit reversed the Southern District of New York to rule that a single color can serve as a trademark in the fashion industry.  The court of appeals held that luxury shoe maker Christian Louboutin’s (“Louboutin’s”) celebrated lacquered red sole is protectable as a trademark, but only when it contrasts with the remainder of the shoe.  This decision, rejecting the district court’s blanket rule that a single color cannot function as a trademark in the fashion industry, is welcome news for designers who have created source recognition in their product features.

Facts:

Since 1992, Louboutin has applied red lacquer to the soles of its trendy and high-priced high-heeled shoes.  In 2008, Louboutin obtained a federal registration for the red sole mark, described as “a lacquered red sole on footwear” (the “Red Sole Mark”), and portrayed in the registration as follows:

In 2011, Yves Saint Laurent (“YSL”) prepared to market a line of brightly and uniformly colored high-heeled shoes where even the sole was the same color as the rest of the shoe. One of the colors in the line was bright red with soles colored in a not dissimilar hue to Louboutin’s Red Sole Mark.  In April 2011, Louboutin asked the United States District Court for the Southern District of New York to enjoin the sale of the YSL red shoe (the “YSL Shoe”).  The district court denied the request for a preliminary injunction, holding that because a single color can never be protected as a trademark in the fashion industry, Louboutin’s trademark was not valid and therefore not enforceable. 

The District Court Holding:

The district court’s ruling relied on the functionality doctrine, which states that, “‘a product feature is functional,’ and cannot serve as a trademark, ‘if it is essential to the use or purpose of the article or if it affects the cost or quality of the article,’ that is, if exclusive use of the feature would put competitors at a significant non-reputation-related disadvantage.”  Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165 (1995) (quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850, n. 10 (1982)).  The district court held that “[b]ecause in the fashion industry color serves ornamental and aesthetic functions vital to robust competition … Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection.” Christian Louboutin S.A. v. Yves Saint Laurent Am., Inc., 778 F. Supp. 2d 445, 449 (S.D.N.Y. 2011).  The district court further ordered Louboutin to show cause why its registration for the Red Sole Mark should not be cancelled.  Id. at 458.

Louboutin appealed, arguing that the district court erred in holding, based on the doctrine of aesthetic functionality, that a single color on a product in the fashion industry could not act as a trademark and that the Red Sole Mark was thus not entitled to legal protection.

Court of Appeals Decision:

The Court of Appeals for the Second Circuit reversed the district court’s decision, holding unequivocally that, if secondary meaning has been established, a single color can serve as a trademark in the fashion industry.  The court of appeals stated, “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,” and noted that the district court wrongly “created just such a rule.”  Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., 2012 U.S. App. LEXIS 18663, at *38 (2d Cir. Sept. 5, 2012) (referencing Qualitex, 514 U.S. at 161).  The court of appeals then went on to evaluate whether the Red Sole Mark actually merited protection.

For a mark to be protectable, it must be distinctive.  But distinctiveness can either be inherent or acquired.  While a single color in the fashion industry—or in any other industry for that matter—cannot be inherently distinctive (Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205, 210-11 (2000)), there is no reason a single color cannot acquire distinctiveness.  Therefore, the lacquered red sole can serve as a trademark only to the extent that it has acquired distinctiveness.

The court of appeals found that Louboutin had established secondary meaning in the marketplace, but only when the red sole contrasts with the remainder of the shoe.  The court of appeals therefore limited Louboutin’s trademark rights and its registration “to only those situations in which the red lacquered outer sole contrasts in color with the adjoining ‘upper’ of the shoe.”  Louboutin, 2012 U.S. App. LEXIS 18663, at *54.  As the YSL Shoe was all red, with no contrasting sole, the court of appeals ruled that it could not be an infringing use of the Red Sole Mark.  Therefore, the court of appeals affirmed the district court’s denial of Louboutin’s request for a preliminary injunction.

Aesthetic Functionality:

The court of appeals provided an in-depth discussion of aesthetic functionality—the doctrine that even when a design feature such as a color is not functional in the traditional, utilitarian sense (i.e., it is neither “essential to the use or purpose” nor “affects the cost or quality” of the product at issue), it may still be aesthetically functional, and therefore ineligible for trademark protection, “where protection of the mark significantly undermines competitors’ ability to compete in the relevant market.”  Louboutin, 2012 U.S. App. LEXIS 18663, at *35.  The court of appeals rejected the notion that the red lacquered sole was aesthetically functional, noting this is a highly fact-specific determination, requiring careful weighing of “the competitive benefits of protecting the source-identifying aspects of a mark against the competitive costs of precluding competitors from using the feature.” Id. at *36 (citing Fabrication Enters., Inc. v. Hygenic Corp., 64 F.3d 53, 59 (2d Cir. 1995)).  The court warned against finding that a mark’s very success as a source indicator defeats the owner’s right to protect it.

Observations:

Though its request for a preliminary injunction was denied, Louboutin should be pleased that its rights in the Red Sole Mark are still intact, except for those limited situations where the red sole does not contrast with the rest of the shoe.  Also, fashion designers—and others—who claim trademark rights in a single color will welcome the Second Circuit’s confirmation that such protection is possible.  However, the question remains as to how far Louboutin’s trademark rights can be extended.  Would a dark pink or orange lacquered sole be deemed to cause dilution or be deemed confusingly similar?  We will have to wait and see how court rulings like the one in Louboutin will impact intellectual property protection—and innovation—in the fashion industry in the years to come.