French footwear designer Louboutin was recently dealt a blow by a French court. Louboutin sued Spanish clothing manufacturer and retailer Zara in 2008 because Zara sold a red-soled shoe. Although the lower court sided with Louboutin, the French appellate court found that customers would not be confused between the designer’s version of red soled shoes and the discount store’s red-soled shoes. Louboutin was even required to pay Zara € 2,000.

Zara is a vertically-integrated manufacturer, meaning Zara controls most of the steps on the supply-chain—designing, manufacturing, and distributing its products. It has been selling a red-soled shoe for € 40. Louboutin alleged that this was a counterfeit product and that Zara was unfairly competing with it.

Following the ruling, Louboutin issued a press release. It wanted to clarify that what has been disputed and canceled was only one French registration of Louboutin’s Red Sole Trademark. Christian Louboutin continues to own valid and enforceable trademark rights in its Red Sole Trademark throughout the world and even has a registration in France.

Color trademarks are controversial. They are nontraditional trademarks and it is more difficult to demonstrate distinctiveness with color trademarks than with word trademarks. Color is especially important when branding a product, especially in the fashion industry. Color trademarks can be registered if they have acquired distinctiveness for goods and are not functional.

Louboutin is still waiting for the Second Circuit to rule on its appeal in its lawsuit against Yves Saint Laurent. As you may recall, DuetsBlog has written numerous posts on this case, for example, here and here. We will see if the American courts are more friendly to Louboutin.