Balancing Competition and Trademark Infringement

JURIST Guest Columnist Mark Guffanti, Benjamin N. Cardozo School of Law Class of 2013, is a Staff Editor for the Cardozo Arts & Entertainment Journal. He writes on the possible outcome of Yves Saint Laurent v. Louboutin, which is on appeal in the Second Circuit, and its potential impact on the fashion industry...
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Fashion items generally do not have strong protection under trademark law. Rather, the law affords certain "conceivably separable" elements of an item protection under copyright or patent law. For example, a distinctive lace pattern could be copyrighted or a unique design element may fall under the purview of patent law. However, trademark law can be used to protect product packaging. Tiffany's trademark-blue, the Burberry check or the Gucci stripes are all examples of trademarked packaging. Even though trademark rights are limited for fashion items, they do present their holders with a strong legal tool that protects their goods from imitators.

Trademark law ensures that consumers can identify a good's source. In order to qualify for registration, a mark must be distinctive and used in commerce. Under the Lanham Act, nearly anything capable of carrying meaning can qualify as a symbol or device, and thus as a mark. Marks are classified along a continuum as either generic, descriptive, suggestive, arbitrary or fanciful. Generic marks are the only class of marks not protected under trademark law. The red outsoles of the Louboutin shoes qualify as a descriptive mark, as descriptive marks may include shapes, sounds, smells and even colors. Descriptive marks are protectable, but only with proof of secondary meaning. The burden is on the owner of the mark to show that overtime consumers have come to associate a particular color with a particular brand, causing the color to identify the source of the product.

A product feature cannot be registered if the feature is functional. In Qualitex v. Jacobson, the US Supreme Court held that a product feature qualifies as functional if it is essential to the use or purpose of the article or if it impacts the cost or quality of the article. Prohibiting the trademark of functional product features encourages competition by keeping producers from controlling a useful product feature. The Court in Qualitex explained that if functional product features were trademarked, than competitors would be put at a significant non-reputational disadvantage.

The theory of aesthetic functionality states that consumers desire a specific feature that is not part of the use or purpose of the product itself. Aesthetic functionality was at issue in Jay Franco & Sons v. Franek, when the US Court of Appeals for the Seventh Circuit cancelled a federal trademark registration that claimed the circular beach towel. The court held that, "[g]ranting a producer the exclusive use of a basic element [such as color] impoverishes other designers' palettes." The court explained the more basic and general the element "the more likely it is that restricting its use will significantly impair competition."

The US Court of Appeals for the Second Circuit has adopted its own aesthetic functionality test. Under Wallace International Silversmiths v. Godinger Silver Art Co., aesthetic functionality hinges on whether "trademark protection would significantly hinder competition by limiting the range of adequate alternative designs, the aesthetic functionality doctrine denies such protection." The Second Circuit also eliminated a per se rule in Villeroy & Boch Keramische Werke v. THC Systems, which qualified china patterns as aesthetically functional.

Recently, Yves Saint Laurent (YSL) began selling a line of monochromatic shoes, including four styles of an all red shoe with a matching red bottom. As a result, Christian Louboutin filed suit against YSL for trademark infringement, false designation of origin and dilution. YSL counter-claimed for cancellation of Louboutin's federally registered trademark for "lacquered red sole on footwear." Louboutin moved for a preliminary injunction, but was denied by Judge Victor Marrero of the US District Court for the Southern District of New York. He noted that the court would likely find Louboutin's trademark not protectable and subject to cancellation. He held that, "the Court cannot conceive ... recognition of a trademark for the use of a single color for fashion items." The crux in Louboutin v. Yves Saint Laurent is whether or not Louboutin's lacquered red sole is a functional product feature. Judge Marrero opined that because in the fashion industry color serves ornamental and aesthetic purposes, which are vital to competition, it is unlikely that Louboutin will be able to prove that its red outsole is entitled to trademark protection.

It seems unlikely Louboutin will prevail on appeal, so long as no error in the application of law is found. The court will likely cancel Louboutin's broad registration because it poses significant trademark and policy issues. Furthermore, even with no finding of error, it is likely that the Second Circuit will dismiss Judge Marrero's finding that a trademark should never be granted for the use of a single color for fashion items, as a broad per se rule against color trademark in fashion conflicts with Qualitex and contradicts the Trademark Technical and Conforming Amendment Act. If the Second Circuit does find an error in the application of the law, it will still likely rule this case narrowly and require that Louboutin prove his trademark is not overly broad.

Though red-soled shoes almost instantly conjure up the name "Louboutin" for casual fashion consumers, a broad prohibition against red would be anti-competitive. Louboutin identified his signature color as Pantone No. 18-1663 TP or "Chinese Red." And while YSL allegedly has never used this particular color on its outsoles, without a narrow description of what the trademark protects, Louboutin, and more importantly the courts, cannot determine where the line of infringement ends and competition begins. Without a narrow construction, Louboutin would hold a monopoly on shoes with red outsoles. Louboutin incorrectly asserted on his trademark registration that only he uses red on the soles of shoes. However, as YSL pointed out, red has been used on shoe soles for centuries. Furthermore, both YSL and Valentino have used red for shoe soles in the past.

If the court establishes that Louboutin has a valid and protectable trademark, it will rely on the factors identified by the Second Circuit in Polaroid Corporation v. Polarad Electronics Corporation to determine whether YSL infringed the trademark. The Polaroid factors only apply in the Second Circuit, though other circuits have similar variations. The factors include:

  • the strength of plaintiff's mark;
  • the degree of similarity between the products;
  • the proximity of the products or services;
  • the likelihood that plaintiff will bridge the gap;
  • evidence of actual confusion;
  • the defendant's good faith in adopting the mark or lack thereof;
  • the quality of defendant's product or service;
  • and the sophistication of the buyers.
Of the eight factors, none alone are dispositive. The flexible nature of the factors permits courts significant discretion in applying them. Therefore, most factors can be construed to favor one party or another. Though the court has significant discretion, Louboutin has persuasive factors in the strength of its marks and the degree of similarity between the products.

In order to receive broad protection, Louboutin should have waited for an imitator to use a red-sole with a contrasting shoe color. By bringing the suit against YSL's monochromatic shoes, Louboutin forced the court to address aesthetic functionality as to whether or not other companies can fairly and effectively compete for prospective consumers without using red on their shoes. This forced the court to opine that in fashion a depletion of colors would be anti-competitive in nature, and thus impermissible. The manner in which Louboutin framed the issue by pursuing a monochromatic shoe may lead the court to afford a much narrower protection to Louboutin than an action against a closer imitation of a Louboutin shoe.

There may be some concern that Louboutin could endanger itself by becoming a generic mark. Both The New York Times and New York Post have published highly publicized articles on the emergence of cobblers painting their customers' shoes red and nail salons offering a "Louboutin" treatment by painting the underside of customers' nails red. The continuing reference to anything with red on the underside should be of significant concern to Louboutin.

The Louboutin case demonstrates both the best and worst of trademark law. On one hand, trademark law should have rewarded Louboutin for the effort expended in building his brand and achieving secondary meaning. The decision also reflects that trademark law has been contextual. Though people can cite the various single color trademarks, including brown for UPS trucks and Tiffany's blue product packaging, fashion presents a position where courts should consider the depletion theory.

The Second Circuit should provide a narrow protection for Louboutin. He did not exert significant effort in attempting to create a recognizable trademark; rather he was attempting to create something aesthetically pleasing. It would be detrimental for fashion if designers could not create monochromatically red shoes or red-soled shoes without the fear of litigation. Ultimately, the court must determine whether the competitive disadvantages of enforcing this trademark will outweigh the advantage of reinforcing both Louboutin's registered mark and the effort exerted by Louboutin in achieving secondary meaning.

Mark Guffanti attended Fordham University where he studied political science. He also studied international and comparative law at the Université Paris I Panthéon-Sorbonne Summer Institute.

Suggested citation: Mark Guffanti, Balancing Competition and Trademark Infringement, JURIST - Dateline, Nov. 18, 2011, http://jurist.org/dateline/2011/11/mark-guffanti-trademark-law.php.



This article was prepared for publication by Elizabeth Imbarlina, an assistant editor for JURIST's student commentary service. Please direct any questions or comments to her at studentcommentary@jurist.org

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