Stilettos are alluring, and they oftentimes ignite a colorful gait in our step. Close to being a woman’s best friend, they are essential. To us, a row over whether a stiletto designer can exclusively churn out those fun party pumps without interruption matters. The U.S. Court of Appeals for the Second Circuit recently reversed a lower court’s ruling, and decided that French designer Christian Louboutin’s wildly popular red sole feature on his high-end stilettos was entitled to limited trademark protection. Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc., 696 F.3d 206 (2d Cir. 2012).

Intellectual Property and the Fashion Industry

The Louboutin decision is significant for two reasons. First, while the U.S. Supreme Court has held in other contexts that color is protectable, this case marked the first time a court has addressed whether color within the context of fashion can be protected as a trademark. Second, the Louboutin court clarified the doctrine of “aesthetic functionality,” an elusively obscure test that requires an individualized, fact-based inquiry into the nature of any trademark.

YSL and Monochrome Soles

In 2011, Yves Saint Laurent (YSL) prepared to market a line of “monochrome” shoes in various colors, including red. For example, the red version would include a red insole, red heel, red upper, and red outsole. According to YSL, the company had sold such shoes since the 1970s, well before Louboutin’s existence in fashion. To prevent YSL from marketing those monochrome shoes bearing a red sole similar to his trademarked red sole, Louboutin brought claims under the Lanham Act for trademark infringement, false designation of origin and unfair competition, and trademark dilution, as well as state law claims for trademark infringement. The Second Circuit’s decision centered on YSL’s petition to cancel Louboutin’s red sole trademark on the grounds that it was not “distinctive” and was merely “functional.”

The U.S. District Court for the Southern District of New York denied Louboutin’s injunction, finding that Louboutin’s claim to the color red is “overly broad and inconsistent with the scheme of trademark registration established by the Lanham Act.” See Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 454 (S.D.N.Y. 2011). By the court’s estimation, allowing Louboutin the exclusive right to usurp the color red would effectively stifle competition among other fashion designers.

Color as a Protectable Trademark

Intellectual property rights in product designs have considerable ramifications over fair competition. Some argue that the ability to copy is essential to advance the creative process and fosters expanding the industry of design. This is true. There is always an origin, and the derivative should be free to borrow from the original so long as the borrower’s expression is decisively novel, refined or improved in some form. But this is a conversation within the realm of copyrighted works. Laying claim to a single shade of color without any sense of diligent expression incorporating that color does not comfortably fit within the copyright discourse. Trademarks, on the other hand, last forever, never expire and can never be borrowed barring a legitimate license. They exist in perpetuity, and this drives a hard-wired hustle for any innovator to acquire a faithful following. Competition spurs even more innovation, and trademark law, in principle, prevents others from copying a source-identifying mark, thereby assuring a producer that “it will reap the financial, reputation-related rewards associated with a desirable product.” See Qualitex v. Co. v. Jacobson Prods. Co., 514 U.S. 159, 163, 164 (1995).

Prior to the passage of the Trademark Act of 1946, 15 U.S.C. §1051 et seq., also known as the Lanham Act, color alone could not be registered as a trademark. The principal purpose of the Act was to modernize trademark law, to facilitate commerce and to protect the average consumer. Park N’ Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189 (1985). This underlying tenet is apparent from the legislative history of the Act: “To protect trademarks is to protect the public from deceit, to foster fair competition, and to secure to the business community the advantages of reputation and good will by preventing their diversion from those who have created them to those who have not.” S. Rep. No. 1333, 79th Cong., 2d Sess., 4, reprinted in 1946 U.S. Code Cong & Ad. News 1274, 1275.

A mark merits protection when it is “distinctive,” and not “generic.” Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 143 (2d. Cir. 1997). Distinctiveness turns on whether the mark’s “intrinsic nature serves to identify a particular source.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 768 (1992). Where not inherently distinctive, it may acquire distinctiveness by developing “secondary meaning” in the public mind. Inwood Labs, Inc. v. Ives Labs, Inc., 453 U.S. 844, 851 n.11 (1982). The “secondary meaning doctrine” requires that the public primarily identifies the “source of the product rather than the product itself.” The affirmative defense of “functionality,” however, will render a mark ineligible for trademark protection. “Utilitarian functionality” establishes that the potentially protected feature is essential to the use or purpose of the product or affects the cost or quality of the product. “Aesthetic functionality” rests on whether protection of the mark will have a significantly adverse effect on competition.

Click here to view the picture.

As novel issues and concepts arose, evolution of courts’ interpretation of the Lanham Act was necessary. Courts began to recognize that color, standing alone, can in some limited circumstances, acquire “secondary meaning” in the minds of consumers. Color, under fact-intensive circumstances, is capable of being or becoming distinctive. In re Owens Corning Fiberglass Corp., 774 F.2d 1116, 1123 (Fed. Cir. 1985)(holding use of the color “pink” as a trademark for fibrous glass residential insulation acquired secondary meaning in the mind of consumers, and did not confer a monopoly or act as a barrier to entry in the market); Qualitex, 514 U.S. at 163 (manufacturer of dry cleaning press pads was permitted the exclusive use of a special shade of green-gold after customers identified the color as the manufacturer’s).

Contrasting Perspectives

According to the Second Circuit in Louboutin, the District Court missed the mark. Judge Victor Marrero’s wittily-penned opinion surprised even the more ardent literary canon enthusiasts among us. Equating the whims of fashion with the brushstrokes of Picasso, quoting the likes of Walt Whitman’s “Leaves of Grass” and Jennifer Lopez’s “Louboutin,” Judge Marrero sought to underscore the notion that fashion has a dependence on color as an “indispensible medium.” In fashion, he reasoned, color is always functional because it serves as a useful aesthetic feature of design, an essential element of creation. Its functionality, therefore, impedes trademark protection.

The Second Circuit, in contrast, placed great emphasis on Louboutin’s stalwart reputation as an industry trailblazer. He spent significant time and capital marketing the China red sole as his own cultural indicia, successfully transforming the flighty world of high fashion into perpetually adoring sycophants. But the conversation does not end there. The crucial matter of “aesthetic functionality” remained at stake – was there a competitive need for the color “red” to remain available in the industry? The red sole had become Louboutin’s symbol. Having developed secondary meaning, for consumers immediately associate the red sole with Louboutin, the red sole identifies the shoe’s source. And, it serves no other function than revitalization of an otherwise practical and unremarkable pair of heels. Red soles merely act as a distinctive accessory to high fashion footwear. The color spectrum, even if limited to the red family, is undeniably broad, vivid and virtually unlimited, and designers are free to play with any other color, should they so desire.

The Second Circuit ultimately declared that Louboutin retains the exclusive right to red soles, so long as the color of the outer portion of the shoe contrasts with the red sole. It is this contrast that causes the red sole to “pop” and distinguishes its creator. This is the extent of his mark’s protection. While YSL has elected to dismiss its counterclaims against Louboutin, the issue of likelihood of consumer confusion in this particular context, which the court declined to address, remains unresolved. According to the Second Circuit, the red sole on YSL’s monochrome shoes is neither a use of, nor confusingly similar to Louboutin’s red sole mark.

Potentially Muddy Waters

The grant of a monochromatic outsole “license” to YSL and other designers may have muddied the waters. Do we really know that consumers will not be confused about the source of a pair of red-soled monochrome heels? Nevertheless, while not a decisive triumph in Louboutin’s favor, it is a tremendous win for Louboutin. Other designers are essentially stuck in the one-trick-pony scheme of monochrome styles, which at some natural point in time, will tire the intrepid consumer. Louboutin, however, may freely craft the fanciful, whimsical and the daring. The money-making, albeit contrasting, red sole stays in the picture.