In our March 2012 Client Alert, we reported on a controversial trademark law decision issued by the Southern District of New York, which called into question the validity of shoe designer Christian Louboutin's trademark rights regarding its well-known red shoe outsoles. Louboutin appealed the district court ruling to the United States District Court of Appeals for the Second Circuit, which, on September 5, 2012, issued a decision marking the latest development in this catfight between two catwalk heavyweights.
The dispute between Louboutin and fashion empire Yves Saint Laurent ("YSL") has been noteworthy for its potential impact on the law regarding the protectability of a single color as a trademark. Louboutin initiated this dispute in 2011 when YSL debuted a monochromatic red shoe, featuring the color red on all components of the shoe, including the uppers and outsole. YSL’s use of red on the outsole of the shoe was the rub for Louboutin, who, in 2008, obtained a U.S. trademark registration for the color red as used on shoe soles.
Indeed, the signature feature of the high-priced Louboutin shoes for two decades has been the eye-catching, striking red outsole. That unexpected splash of red on the soles was the unique feature that resonated with consumers, propelling Louboutin’s footwear designs to global fame. Losing exclusivity in that signature feature—i.e., Louboutin's trademark—was high stakes for the famous footwear designer. To ward off the perceived encroachment by YSL, Louboutin sued YSL for trademark infringement, but the district court denied Louboutin's request for injunctive relief and granted YSL's motion for summary judgment, which meant the continued production of the YSL red shoe and invalidation of Louboutin's trademark registration. By holding that a color can never constitute an enforceable trademark in the fashion industry, the district court called into question the validity of color trademarks in general. The majority of brand owners, trademark practitioners and the fashion industry alike thought the district court’s opinion went too far, and the appeals court agreed, at least in part.
The appeals court reversed the district court's decision that held that in absolute terms a single color can never serve as a trademark in the fashion industry, and concluded that Louboutin's trademark remains valid – but the appeals court also affirmed the lower court's decision not to enjoin or stop YSL's use of the color red where it is used to cover the entire shoe as opposed to merely the outsole. In doing so, the appeals court "modified" Louboutin's trademark to "uses in which the red outsole contrasts with the remainder of the shoe," in effect limiting Louboutin’s trademark rights. The appeals court based this ruling on finding that Louboutin had established trademark rights only where the red sole contrasts with the upper part of the shoe. Thus, as long as the red sole matches the upper portion of the shoe, there is no trademark infringement.
To prevail on a trademark infringement claim, certain basic elements must be established: the plaintiff holds a valid trademark; the defendant used the mark without authorization; and there is a likelihood of consumer confusion from defendant’s use. In reaching its decision, the appeals court avoided the usual likelihood of confusion analysis and the thorny question of whether Louboutin’s mark was not protectable on grounds that it may be functional. Rather, the appeals court found that YSL’s monochromatic shoe did not actually constitute the requisite use of Louboutin’s now limited trademark. Without use of a protectable mark, there could be no infringement.
While Louboutin avoided the invalidation of its trademark, the decision represents a bittersweet victory considering that YSL is free to continue to produce the very shoes that originally gave rise to the dispute. It remains to be seen whether Louboutin will appeal the court’s monochrome carve-out of his trademark protection, but designers in general can breathe a sigh of relief that color trademarks still exist in the fashion industry.