An Analysis of the CJEU’s Louboutin Judgment (C-163/16)
French footwear designer, Christian Louboutin, initiated trade mark infringement proceedings against Dutch footwear retailer, Van Haren, after the latter’s decision to emulate the former’s signature red-soled high-heeled shoes, in a long-running legal battle which eventually ended up before the Grand Chamber of the Court of Justice of the European Union (CJEU).
Louboutin had registered the trade mark for “footwear” in the Benelux in 2010, describing it as consisting “of the colour red applied to the sole of a shoe”, specifying therein that the contours did not form part of the trade mark but were merely intended to define the positional delimitation of the mark. The mark was subsequently limited to high-heeled shoes in 2013.
Louboutin brought an action before the court in The Hague claiming trade mark infringement. However, Van Haren rebutted this claim by submitting that the mark at issue was invalid, as it was not capable of trade mark protection.
The Dutch court decided to refer the matter to the CJEU, in order to determine whether the mark fell within the criteria for refusal or invalidity set forth in the EU Trade Marks Directive (Directive 2008/95). Specifically, whether the notion of “shape” in Article 3(1)(e)(iii) of the Directivewas limited to the three-dimensional properties of the goods, such as contours, measurements and volume, or whether it could also include other (non-three dimensional) properties of the goods, such as their colour.
Relevant Legal Provisions:
The grounds for refusal or invalidity contained within Article 3(1) of the Directive 2008/95, include inter alia:
(b) trade marks which are devoid of any distinctive character;
(e) signs which consist exclusively of:
(i) the shape which results from the nature of the goods themselves;
(ii) the shape of goods which is necessary to obtain a technical result;
(iii) the shape which gives substantial value to the goods;
Also relevant to the case being discussed is the proviso contained in Article 3(3) of the same which states that:
“A trade mark shall not be refused registration or be declared invalid in accordance with paragraph 1(b), […] if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character”
AG Szpunar’s Opinions
In his two comprehensive non-binding opinions, Advocate General Szpunar preliminarily noted from the outset, that the mark in question could not be considered exclusively as a colour mark.
AG Szpunar considered that the mark in question could potentially be a position mark as defined in Article 3(3)(d) of Implementing Regulation 2017/1431 or a hybrid mark having characteristics of various different types of marks listed within the same Regulation.
The main argument brought forward by Louboutin was that, since the mark in question was more akin to a hybrid mark consisting of the application of the colour (red) within a certain position in the product and within a particular spatial delimitation (the shoe’s sole), article 3(3)(e)(iii) should not apply, as it did not constitute a sign which consisted exclusively of the shape.
Notwithstanding the wording of the Directive, AG Szpunar opined that there is “no need for the sign to consist of the ‘shape’ to be caught by the ground for refusal or invalidity corresponding to the ground laid down in Article 3(1)(e)(iii)” and that ultimately this article “is to be interpreted as being capable of applying to a sign consisting of the shape of a product and seeking protection for a certain colour,” since the shape also encompasses signs representing a part or an element of the goods in question, including inter alia the use of certain colours in relation to such shape.
AG Szpunar also delved into the issue of whether the mark has the effect of giving “substantial value to the goods” in question, as provided by article 3(1)(e)(iii).
In this regard, he noted that “account must be taken both of the perception of the sign at issue by the relevant public and the economic effects which will result from reserving that sign to a single undertaking.”
The rationale underpinning this ground for invalidity is to ensure that such characteristics giving a substantial value to goods remain “available for all market participants", thereby ensuring that an operator is not granted a monopoly over such characteristics, and ensuring that such characteristics remain in the public domain, and thus available to all competitors within that particular sector.
However, he then introduced an important caveat, by stating that “the fact that the characteristics giving substantial value to the goods are, in part, determined by the public’s perception does not,[…] mean that account may be taken of the reputation of the trade mark or its proprietor as part of the assessment to determine whether the shape at issue ‘gives substantial value to the goods’.”
Another consideration outlined by AG Szpunar was the issue of “distinctiveness” within the context of Articles 3(1)(b) and 3(3) of the Directive. In this regard, he found it pertinent to refer to CJEU case-law on three-dimensional signs, where distinctiveness is considered to be present only where signs depart significantly from the sectoral norm or customs. By way of example; in the case of footwear, shades of black, grey and brown would be completely devoid of distinctive character, owing to their regular use by market operators within this sector.
He pointed out that unlike the issue of “substantial value”, the issue of not restricting a characteristic for other market operators is “open to derogation where the sign has acquired a distinctive character following a normal process of familiarisation of the public concerned.”
The CJEU’s Grand Chamber did not delve into the issues of distinctiveness and substantial value assessed by AG Szpunar, and instead limited its analysis as to whether the mark at issue fell within the ground of invalidity contained in article 3(i)(e)(iii) and thus whether the fact that a particular colour is applied to a specific part of the product concerned, results in the sign at issue consisting of a shape within the meaning of this article. In this sense the court departed from AG Szpunar’s opinion and instead took a more conservative approach by limiting itself to the content of the preliminary reference instead of its wider implications and held that the application of a certain colour to the sole of a high-heeled shoe, does not consist exclusively of a ‘shape’.
Directive 2008/95 is set to be replaced by Directive 2015/2436; which must be transposed by the 14th January 2019. Article 3(1)(e)(iii) will be reworded and the corresponding provision, Article 4(1)(e)(iii) of Directive 2015/2436, will include “signs which consist exclusively of ‘the shape, or another characteristic, which gives substantial value to the goods’".
While trade marks registered under the former system should not be caught by the extended scope of the prohibition laid down in the new Directive, it appears that the conclusion reached by the CJEU in the Louboutin case would have been considerably different if the new Directive were in force at the time of registration.