In a case captivating the fashion world, the U.S. Court of Appeals for the Second Circuit has issued an important trademark ruling in a case involving high-end luxury women’s shoes.  Holding that the district court erred in resting its denial of the plaintiffs’ requested preliminary injunction on the ground that a single color cannot serve as a trademark in the fashion industry, the Second Circuit determined that French shoe designer Christian Louboutin is entitled to trademark protection for its red lacquered sole on footwear, except where the remainder of the shoe itself is red.  Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., Case No. 11-3303-cv (2d Cir., Sept. 5, 2012) (Cabranes, J.).

French shoe designer Christian Louboutin sells high-fashion women’s footwear that cost anywhere from about $700 to several thousands of dollars a pair.  Predominantly focused on sky-high, high heels, Louboutin has stated that, “I would hate for someone to look at my shoe and say, ‘Oh my God! That looks so comfortable!’ That’s not what I want to project … comfort is not part of my creative process.”  For 20 years, the brand has used a high-gloss, red-colored bottom (outsole) for the majority of its shoes, which fashionistas and others worldwide have come to associate exclusively with Louboutin.  The eye-grabbing cherry red finish easily captures the attention of those viewing a woman in coveted Louboutin heels.  Louboutin has explained, “The shiny red color of the soles has no function other than to identify to the public that they are mine. I selected the color because it is engaging, flirtatious, memorable, and the color of passion.”  Louboutin obtained a federal trademark registration for a red lacquered sole on “women’s high fashion designer footwear” in 2008.

In 2011, fashion atelier Yves Saint Laurent (YSL) prepared to market a line of monochromatic women’s shoes in the colors of purple, green, yellow and red, where each portion of a particular shoe would use the exact same color.  Four different styles used a monochromatic red theme, using a red insole, outsole, upper and heel.  Believing that YSL’s monochromatic red shoes would infringe the Louboutin red-sole trademark, Louboutin requested YSL remove them from the market.  After informal negotiations failed, Louboutin filed an action in the U.S. District Court for the Southern District of New York alleging claims for  trademark infringement and counterfeiting; false designation of origin and unfair competition; and trademark dilution, as well as related state law claims.  Louboutin also sought a preliminary injunction preventing YSL from marketing, during the pendency of the lawsuit, any shoes, including red monochromatic shoes, in a shade of red identical or confusingly similar to Louboutin’s red sole mark.  YSL counterclaimed, in part to cancel Louboutin’s federal trademark registration covering a red lacquered sole, alleging that the mark was invalid as merely ornamental and functional based on the doctrine of aesthetic functionality.

The district court denied Louboutin’s requested injunction, holding that in the fashion industry single-color marks are inherently “functional” and adopted a per se rule that a single color can never serve as a trademark in the fashion industry.  Under the district court’s per se rule, Louboutin was unlikely to prove that its red sole mark was eligible for trademark protection.  The district court opined that Louboutin’s claim to the color red was overly broad, explaining that “Louboutin’s claim would cast a red cloud over the whole industry, cramping what other designers could do, while allowing Louboutin to paint with a full palette,” and reasoned that “there is something unique about the fashion world that militates against extending trademark protection to a single color.” Further, the district court issued an order to show cause why the court should not cancel Louboutin’s federal trademark registration. 

On appeal, the 2d Circuit found that the district court erred by holding that a single color can never serve as a trademark in the fashion industry, based on a misunderstanding of the aesthetic functionality doctrine.  The doctrines of “utilitarian” functionality and “aesthetic” functionality both serve as an affirmative defense to trademark infringement.  A product feature is considered to be “functional” in the utilitarian sense and thus not eligible for trademark protection of it is “essential to the use or purpose of the article” or if it “affects the cost or quality of the article.”  The 2d Circuit explained that a mark is aesthetically functional, and thus ineligible for trademark protection, “where protection of the mark significantly undermines competitors’ ability to compete in the relevant market.”  Acknowledging that special concerns exist in the fashion industry concerning trademark protection given that color can be used both as a branding tool as well as for mere ornamentation, the 2d Circuit nonetheless reasoned that Supreme Court precedent did not support a per se rule that would deny protection for the use of a single color as a trademark in the fashion industry or any other industry.  “The functionality defense does not guarantee a competitor the greatest range for his creative outlet,” the court explained, “but only the ability to fairly compete within a given market.” 

Rejecting the district court’s finding that Louboutin’s red sole mark was not entitled to trademark protection based on its erroneous per se rule, the court determined that Louboutin’s mark did in fact merit protection.  The evidence showed that Louboutin’s lacquered red sole, as applied to a shoe with an upper portion in a different color, had come to identify and distinguish the Louboutin brand and is therefore a distinctive symbol qualifying for trademark protection.  The court determined that the evidence did not show, however, that the secondary meaning of Louboutin’s red sole mark extends to uses on shoes where the red sole does not contrast with the upper portion of the shoe—i.e., Louboutin was not entitled to trademark protection for uses of a red sole mark on a monochromatic red shoe like it sought to enjoin YSL from producing. 

Accordingly, the court directed the U.S. Patent and Trademark Office (USPTO) to limit Louboutin’s trademark registration to only those situations in which the red lacquered outsole is used with an adjoining upper of the shoe that contrasts in color and held Louboutin’s mark to be valid and enforceable as so modified.  Its holding disposed of both parties’ Lanham Act claims, the court explained, because “the red sole on YSL’s monochrome shoes is neither a use of, nor confusingly similar to, [Louboutin’s] Red Sole Mark.” The court also affirmed the district court’s refusal to enjoin YSL from selling its monochromatic red shoe because the shoe was not a use of Louboutin’s mark, as modified.  Due to that finding, the court did address whether Louboutin’s mark, as modified, was functional, or whether YSL’s use of a red outsole causes impermissible consumer confusion with Louboutin’s modified mark. The court remanded the case for the district court to consider YSL’s counterclaims.