October 2012 Issue
Christian Louboutin, S.A. v. Yves Saint Laurent Am. Holding, Inc.,
2012 WL 3832285 (2d Cir. Sept. 5, 2012)
Christian Louboutin, S.A. (“Louboutin”), a renowned French designer of high-fashion footwear and accessories, appealed a decision from the U.S. District Court for the Southern District of New York denying its motion to preliminarily enjoin Yves Saint Laurent America Holding, Inc. (“YSL”), a venerated French fashion institution, from selling red shoes with red soles as one color in a monochromatic-colored shoe collection launched early last year. Louboutin originally brought its action against YSL in April 2011, asserting claims under the Lanham Act for trademark infringement and counterfeiting, false designation of origin, unfair competition, and trademark dilution based on its federal registration for the color red for lacquered soles on footwear (the “Red Sole Mark” or “Mark”). In response, YSL asserted counterclaims to cancel Louboutin’s Red Sole Mark, contending that the Mark lacked distinctiveness and/or was merely ornamental or functional. After a limited and expedited discovery process, the district court denied the injunction, holding that Louboutin had not shown a likelihood of success on the merits of its claims because single-color marks in the fashion industry are inherently “functional,” and, therefore, Louboutin’s registered trademark would likely be held invalid. On appeal, the Second Circuit reversed the order of the district court insofar as it held that the fashion industry was “excepted” from the Supreme Court’s holding on the protectability of a single color and thereby denied trademark protection to Louboutin’s use of the Red Sole Mark for contrasting red lacquered soles. The Second Circuit affirmed the district court’s denial to enjoin YSL from selling monochrome red shoes with red soles.
The Second Circuit first focused its review on whether YSL’s affirmative defense of functionality rendered the Red Sole Mark incapable of trademark protection because of the fundamental principle that functional features of goods may only be protected through the patent system. Citing Qualitex Co. v. Jacobson Products Co., 514 U.S. 159 (1995), the Second Circuit noted that 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 industry—including the fashion industry—because an analysis of functionality necessarily requires an individualized fact-based inquiry into the nature of the trademark.
Next, the Second Circuit turned its review toward whether the Red Sole Mark merited protection as a distinctive mark that had acquired secondary meaning. The appeals court was quick to quash the notion of inherent distinctiveness as applying to the Red Sole Mark, reasoning that under Qualitex, a single color, standing alone, could almost never be inherently distinctive because such marks do not automatically tell a customer that it refers to a brand, but rather, over time, customers come to treat a particular product color as signifying a unique source. In analyzing secondary meaning, the Second Circuit considered several types of evidence, including consumer surveys from both parties, as well as Louboutin’s extensive evidence of its advertising expenditures, media coverage, and worldwide sales success from over twenty years of commercial use of the lacquered red color for soles as its signature in women’s high-fashion footwear, to determine that the Red Sole Mark had indeed acquired secondary meaning. Despite finding secondary meaning, the appeals court pointed to Louboutin’s failure to show that the secondary meaning of its Red Sole Mark extended to uses in which the sole did not contrast with the upper part of a shoe (i.e., on monochromatic red shoes). For example, of the hundreds of pictures of Louboutin shoes submitted to the district court, only four were monochrome red. YSL, on the other hand, had produced evidence of its sale of monochromatic red shoes, as well as other monochromatic colored shoes since the 1970s. Based on this evidence, the Second Circuit ordered the PTO to limit Louboutin’s Red Sole Mark to only those situations in which the red lacquered outsole contrasts in color with the adjoining “upper” of the shoe, finding that the Red Sole Mark was valid and enforceable only as modified. This limitation to Louboutin’s registration also disposed of the Lanham Act claims brought by both parties in one clean sweep because the red sole on YSL’s monochrome shoes was neither a use of, nor confusingly similar to, the Red Sole Mark as modified.
This case is one of the few appellate court decisions addressing whether a single color is capable of functioning as a trademark, and more specifically how fashion-industry participants may protect the distinctive features of their designs by establishing secondary meaning, even if the distinguishing feature is just one color.