Yesterday the Second Circuit struck a compromise between Louboutin and Yves Saint Laurent in the closely watched case of fashion houses dueling over red-soled high-heeled shoes. The Court held that a single color (in this case, Louboutin’s signature shade of “China Red” glossy lacquer on the soles of women’s high fashion shoes) may indeed serve as a legally protected trademark in the fashion industry. However, the Court also limited the scope of Louboutin’s trademark rights to shoes in which the red sole contrasts with the color of the “upper” (the remainder of the shoe). The Court thereby affirmed the District Court’s denial for a preliminary injunction against YSL’s marketing of monochrome red shoes with red soles. This analysis and decision recognizes the distinctiveness of the Louboutin red outsole, while allowing YSL and other manufacturers to produce monochrome red shoes with red uppers and outsoles without infringing Louboutin’s trademark rights. Thus the ruling also accords with a fundamental policy of trademark law that trademark rights must not be so extensive that they exclude competition within an industry.

The Court made a useful and extensive review of the test for “aesthetic functionality” of trademark design features in trademark law, as articulated by the U.S. Supreme Court in its 1995 Qualitex Co. v. Jacobson Products Co., Inc., opinion, on which both the Second Circuit and the District Court relied (see the earlier practice alert on this case: “Seeing Red,” posted on January 27, 2012). Under this test, a design feature, like a color, cannot serve as a mark or part of a mark if (a) it is essential to the use or purpose of the product, (b) it affects the cost or quality of the product, or (c) it hinders competition. The Second Circuit reversed the District Court’s application of this test in ruling that Louboutin’s red outsoles could not serve as a mark because the red soles are aesthetically functional because it was based not on a detailed factual analysis as required under Qualitex but rather on an odd theory (which the Second Circuit derided as having no authoritative support) that “there is something unique about the fashion world that militates against extending trademark protection to a single color.” The fashion industry has long argued that U.S. law should offer intellectual property protection of fashion design. Citing Qualitex, the Second Circuit said “the Supreme Court specifically forebade the implementation of a per se rule that would deny protection for the use of a single color as a trademark in a particular industrial context” and that “the District Court created just such a rule.”

Although it discussed aesthetic functionality at length, the Court did not apply the aesthetic functionality test in making its compromise ruling; instead, the Court analyzed the facts of Louboutin’s uses of its red outsoles to determine that Louboutin’s color mark, when it contrasted with the color of the remainder of the shoe, had acquired “secondary meaning” as a distinctive symbol that identifies the brand. However, the color mark had not acquired distinctiveness on products on which the uppers of the shoes were also red.

Does this mean fashion houses will start claiming exclusive trademark rights to single colors? Will Dolce & Gabbana stop others from selling black framed sunglasses? Unlikely. The case certainly raised concerns of other “color claimers” like Tiffany & Co. wanting to protect its trademarked “Tiffany blue” packaging and supporting Louboutin’s legal case by submitting an amicus brief. However, as Tiffany’s website notes, “Over time, Tiffany’s devoted clientele came to associate the vibrant blue box with this special relationship and the highest standards of excellence.” (emphasis added). As both Tiffany and Louboutin can attest, getting a color to achieve secondary meaning as a distinctive symbol in the public mind is not achieved quickly or cheaply. As the Court’s analysis points out, Louboutin has been selling red-soled shoes for 20 years and invested significantly in building the brand that has become widely recognizable.

Such brand-building and maintenance takes time and care, both on the macro-marketing level and on the micro-level of an individual pair of shoes, which is why Louboutin’s website provides advice for the care and maintenance of the red lacquer outsoles. Louboutin’s mark is, after all, meant to be worn, and the gritty world under a woman’s feet can be hard on trademarks.