The Second Circuit’s recent decision in Christian Louboutin S.A., v. Yves Saint Laurent America Holding, Inc., et al (Docket No. 11-3303-cv) answered several questions both the apparel industry and brand owners have been waiting for since Judge Marrero’s decision in the Southern District of New York denied Louboutin’s motion for a preliminary injunction against its competitor, Yves Saint Laurent (“YSL”).

By way of brief background, Louboutin is a maker of high-end women’s shoes, whose high heel designs are immediately identified by a bright red sole, which almost always contrasts with the rest of the shoe, or the “upper.” YSL is also a maker of women’s shoes in the same market and offered a red shoe for sale, which contained both a red lacquered sole and an “upper” in the same color. Louboutin sued YSL for a preliminary injunction after the YSL monochromatic red shoe was offered for sale. Louboutin, prior to filing suit, had obtained a U.S. trademark registration for the configuration of a women’s shoe with a red sole.

To Louboutin’s dismay, the District Court, in August 2011 found that his registered trademark for the color red for the outsoles of shoes was likely not enforceable and denied the preliminary injunction against YSL.

That decision had many in the apparel and other industries confused as to the state of protection of the use of a single color as a trademark. A 1995 decision, Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, clearly indicated that a single color was protectable as a trademark. Further scuffing Louboutin’s pride is the fact that Louboutin is not the only company that owns a single color as a trademark. Tiffany owns the U.S. trademark registration for “Robin’s egg blue” for its boxes, bags and mail order catalogues and the United Parcel Service (UPS) owns the U.S. trademark registration for the color brown for the transportation and delivery of personal property.

In reviewing the District Court’s decision, the Second Circuit assessed whether the red sole trademark was functional (thus not protectable through trademark law) and discussed the doctrine of aesthetic functionality. If the Red Sole Mark was considered aesthetically functional, then it could not be protected under trademark law (since functional aspects of designs come under the exclusive domain of patent law).

The Court announced a threefold test for aesthetic functionality. It used the two-prong test from Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844 (1982): 1) whether the product feature was “essential to the use or purpose of the article;” or 2) if it “affects the cost or quality of the article.” Only if the design feature passed the two prongs of Inwood, need the Court consider the third prong (or the “competition inquiry” from Qualitex): whether the design “would put competitors at a significant non-reputation–related disadvantage.” If the design were to put a competitor at a significant non-reputation disadvantage, then it would be considered functional, fail the test for functionality, and not be entitled to trademark protection.

Put differently, if a design feature is either “essential to the use or purpose” or “affects the cost or quality” of the product, then it is functional and fails the Inwood test and the inquiry goes no further. Even if the design is not functional from a “traditional” perspective under the Inwood test, it still must pass the Qualitex test and be shown not to have a significant effect on competition.

The Second Circuit ultimately found that there was an issue with granting an exclusive right in the color red for the outsole of Louboutin’s Red Sole mark that was not tied to contrast, and reversed the District Court’s order that denied Louboutin trademark rights in the use of contrasting red lacquered outsole.

Is a Single Color Protectable as a Trademark in the Fashion Industry?

The Second Circuit was unambiguous that the District Court’s per se ban on single color as a trademark was wrong. It wrote that the Supreme Court had already laid down the rule in Qualitex that there could be no per se rule which precluded the use of a single color as a trademark in a specific industry. Instead, the Second Circuit stated that a “individualized, fact-based inquiry” into the nature of the trademark must be performed. Specifically, it held that it was an error for the District Court to hold that the Red Sole Mark was ineligible for protection for the reason that a single color can never achieve protection in the fashion industry.

The Court held that the Red Sole Mark is ineligible for protection (as it stands) only because it would preclude a competitor’s use of red outsoles in all situations, including the monochromatic color scheme utilized by YSL. Nonetheless, the Court still concluded that Louboutin’s Red Sole Mark has acquired secondary meaning, thereby recognizing that it has attained the precious acquired distinctiveness to justify trademark protection when used as a red outsole that contrasts with the remainder of the shoe. Opinion at 25 (emphasis added).

The importance of the last sentence cannot be overstated. The Second Circuit made clear that the use of a red lacquer on the outsole of a red shoe of the same color is not use of the Red Sole Mark (thus not subject to protection), but that use of a red lacquer on the outsole when the upper is in a contrasting color would be trademark infringement.

Accordingly, the Second Circuit directed the USPTO to limit the registration of the Red Sole Mark only to those situations where the red lacquered outsole contrasts in color with the “upper” of the shoe.

Though the Court ultimately found that Louboutin’s mark could not be asserted against YSL in this case (since the YSL shoe was monochrome red), the decision is still a victory for Loubouton as the Court has clearly signaled that a single color can function as a trademark and that Louboutin’s Red Sole Mark, when used with a contrasting color, is valid and protectable.

The consequences to the fashion industry and other brand owners who seek to protect color as a trademark as a result of this opinion will slowly unveil themselves as brand owners react to this decision.

Some important take-aways from the opinion:

  • A single color of an article can be protected as a trademark, but evidence of secondary meaning (consumer recognition) is essential.
  • The more specific a description of a color mark, the more likely it will be held enforceable. Here, the Court swooped in and directed the USPTO to limit the Red Sole Mark’s validity only when it appears in a contrasting color on a shoe.
  • When enforcing trademarks, make sure to do so with a good set of facts. Here, Louboutin sued on the YSL monochromatic red shoe, but the issue would have been a bit less tangled if there was an opportunity for Louboutin to sue on a YSL shoe with a red sole and a contrasting color.