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.
  • Excellent insight and very impressive accuracy in your earlier predictions about this case. I think the court of appeals fairly resolves the core dispute between Louboutin and YSL. The most interesting questions that remain, I think, relate to non-use and aesthetic functionality. For example, I’m wondering whether aesthetic functionality could ever be used as a gateway to a non-use defense for a defendant? What I mean is rather than invalidating a plaintiff’s mark like the district court did, and the court of appeals reversed, could aesthetic functionality ever be used by a defendant to establish non-use of an alleged mark and bar a claim of trademark infringement?

    Because let’s say for example, I am a shoe designer and I want to create a line of shoes in a primary color scheme with each shoe having a different primary-colored sole – one red, one blue, one yellow. And let’s say the uppers of my shoe also rotate along this palate. My red shoes with red soles are fine under this opinion, but several of my shoes happen to be blue with red soles. This contrast, if a trademark, would infringe Louboutin’s mark. But if I can show that my use is merely aesthetically functional as part of a larger collection, could that be a non-use defense and the court can skip a likelihood of confusion analysis? Or is the secondary meaning of Louboutin’s mark automatically attributed to the singular shoe, regardless of the rest of my line and intent, and do we roll directly into likelihood of confusion analysis?

    Once we figure this out, I will ask about my next design for the insect collection – it involves an exaggerated red ladybug pattern with a red sole that sort of contrasts, sort of doesn’t.

  • Kyle Kaiser

    Very good analysis, Steve. I’ve not read the whole opinion, but I feel like this was a very good middle ground analysis that could have veered off to destroy color marks in certain industries or overprotected them in a crowded playing field.

    Re: your questions. I don’t see a copyright claim here at all. I guess if you can copyright a black canvas (I suppose you can, right, though the scope of infringement must be infinitesimally small… http://artintelligence.net/review/?p=497) then maybe you could copyright red shoe bottoms. But they don’t seem to be the same kind of “original works of authorship fixed in a tangible medium of expression”. 17 U.S.C. s. 102. Plus, a “work of visual art” does not include “any merchandising item or advertising, promotional, descriptive, covering, or packaging material or container; (iii) any portion or part of any item described in clause (i) or (ii);” 17 U.S.C. s. 101. I know that’s defining a term for the moral rights provisions of copyright law, but if your red soles aren’t at least a part of a work of visual art, then what are they?

    Re: the panel’s control. I also agree with you. I think the panel knows that this is one of the most important trademark cases in the past 20 years, and they think they know the answer to the important questions posed, and they don’t want the district court–or even other members of CTA2–mucking it up too much. I worked for an appellate court that would often render judgment rather than follow the federal courts’ (and SCOTUS’s) regular approach and simply remand for proceedings consistent with the opinion. It got the court into trouble sometimes (when the judgment they issued wasn’t quite consistent with the opinion) but overall the idea was truly one of economy–if we’ve made this decision, we should just enforce it, plus a mix of skepticism that the lower courts might try to misread the court’s opinion to get to a different outcome than the one intended. I think I see both in the panel’s reasoning.