As we previously reported here, Christian Louboutin ("Louboutin") filed a lawsuit against Yves Saint Laurent ("YSL") in early April, alleging that YSL and its affiliated companies violated Louboutin's red sole trademark by selling women's shoes with red uppers and outsoles alleged to be virtually identical to Louboutin's red sole trademarks.
YSL is not taking Louboutin's allegations lying down and is fighting back. YSL asserted a counterclaim against Louboutin in its Answer and Counterclaim filed on May 20, 2011, seeking to have the red sole trademarks cancelled and alleging that Louboutin’s red sole trademarks are invalid because, among other things, they were obtained by fraud from the U.S. Patent and Trademark Office (“PTO”). In its cancellation counterclaim, YSL alleged that Mr. Louboutin made fraudulent assertions to the PTO at the time of registration on March 14, 2007 that he had been the “substantially exclusive” user since 1992 of red soles on women’s footwear. YSL claimed that Louboutin was well aware that he was not the only fashion designer to use red soles. on shoes. YSL alleged that Louboutin even personally attended a YSL runway show in 2004, where YSL unveiled its Taï Taï and Lotus models, both of which included several individual styles featuring bright red soles, three years before his registration in 2007. YSL also alleged that Louboutin personally participated in a Vogue magazine fashion portfolio in 2005 in which third-party red-soled shoes were featured.
YSL also sought cancellation of Louboutin’s red sole trademarks based on the marks' lack of distinctiveness, the functional nature of the marks at issue; and its use of ornamental, aesthetic and design elements that do not serve as source identifiers for Louboutin -- all factors that YSL alleged suggest that the red-sole mark was not eligible for trademark protection. In an additional counterclaim, YSL contended that Louboutin tortiously interfered with YSL’s business relations with major third party retailers. YSL specifically alleged that Louboutin pressured retailers to stop selling YSL footwear and to return accused products to the fashion house. It is claimed that Louboutin's conduct led to the return of certain YSL shoe models which are the subject of the lawsuit (Tribute, Tribtoo, Palais, and Woodstock), as well as other YSL shoe models which have not been challenged.
Finally, YSL alleged that Louboutin engaged in bad faith unfair competition. YSL specifically alleged that Louboutin brought the lawsuit as “one part” of an anti-competitive campaign to “monopolize use of a common design feature and thereby inappropriately limit the design options available to competitors.”
In response to YSL’s counterclaims, Louboutin moved to dismiss YSL's Second Counterclaim and asserted affirmative defenses in its Answer to Counterclaims, each filed on June 10, 2011. Louboutin argued that YSL’s claim of fraud upon the PTO at the time of Louboutin’s registration is based entirely on speculation and that YSL has failed to allege sufficient facts to support the counterclaim. Louboutin asserted affirmative defenses for failure to state a claim upon which relief may be granted and failure to allege fraud with the requisite specificity. Further, in its motion, Louboutin cited In re Bose Corp., 580 F.3d 1240, 1245 (Fed. Cir. 2009) (“Bose”), for the proposition that a subjective intent to deceive, not mere negligence, is required to establish fraud on the PTO. Specifically, Louboutin alleged that YSL’s allegations are deficient because they are “merely conclusory statements” about what Louboutin “knew or should have known” when he filed the submissions to the PTO, but do not actually support any claim of fraud with particularity.
In opposition to Louboutin's motion to dismiss the fraud claim, YSL argued that Louboutin's motion confuses YSL's ultimate burden of proof at trial with the pleading standard necessary to state a claim. YSL contended that the Federal Circuit Court in Bose held that to prevail at trial, a plaintiff seeking cancellation of a trademark registration on the basis of fraud must prove that the false statement was made “knowingly.” Notably the court in Bose observed that intent may be inferred from indirect and circumstantial evidence because direct evidence of fraudulent intent is rarely available. Citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), YSL asserted that the relevant question is whether the pleading contains factual allegations which “taken as true, raise a right to relief above the speculative level.” YSL maintained that Louboutin, “who is alleged to have devoted his entire professional life to women’s footwear” knew that his representations to the PTO were false, based not only YSL's past designs, but also “dozens of other third parties” who have designed, produced, marketed and sold women’s footwear with red soles for many years.
Meanwhile, Louboutin also filed a motion for a preliminary injunction on June 21, 2011 pending the outcome of the litigation. The injunction seeks to stop YSL from selling women’s luxury footwear bearing red soles that “infringe, unfairly compete with, and dilute” Louboutin's red sole trademark, including the Tribute, Tribtoo, Palais, and Woodstock YSL shoe models. In their opposition, YSL disputes claims of lost sales and consumer confusion, reiterating that Louboutin's red sole trademarks should be cancelled and that no fashion designer should be able to have a monopoly on any color. YSL contended that it has been using red-sole shoes for decades before Louboutin began using them, as have other designers, causing no harm to Louboutin, and that, while not brand-defining for YSL, red-soles have been an essential design element.
At the preliminary injunction hearing on July 22, 2011, counsel for YSL presented the Court with evidence of a number of red-soled shoes that had been sold in the marketplace and counsel for Louboutin argued that, if a preliminary injunction were not granted, the Louboutin brand would be "irreparably harmed." District Court Judge Victor Marrero indicated that he required more time to make a ruling on the preliminary injunction and would decide as soon as possible.
The court has not ruled on both the motion to dismiss on preliminary injunction, so fashionistas will have to keep their designer shades on and keep watching.