On June 22, an advocate general at the Court of Justice of the European Union (“CJEU”) issued an opinion indicating that Christian Louboutin S.A.’s signature red sole might be a protectable trademark — or it might not be — depending on whether the protection of the shape in combination with color would afford the mark owner a “monopoly on technical solutions or functional characteristics of a product which a user is likely to seek in the products of competitors.” CJEU Case C-163/16, Opinion Delivered 22 June 2017 at ¶¶ 46, 53.
The opinion was issued in an ongoing case brought by Louboutin against Dutch footwear brand Van Haren, alleging Van Haren’s use of a red sole on blue shoes infringes the Louboutin trademark. Id. Louboutin has owned a registered Benelux trademark for the red sole since 2010, and in 2013, the registration was amended to limit the goods covered to “high-heeled shoes (other than orthopedic shoe”). Id. at ¶ 10. Following judgment against Van Haren, the Haag Court of Appeals referred the case to the CJEU for a preliminary ruling to clarify the scope of the grounds for refusal within the meaning of the EU Directive 2008/95, which bars registration of functional marks comprised exclusively of “the shape which gives substantial value to the goods.” Id. at ¶ 18; Article 3(1)(e)(iii) of the Directive 2008/95/EC. The specific question is whether a “shape” for purposes of this Directive, includes only three-dimensional properties, such as contours and volume, or whether it includes non three-dimensional features such as color. Id.
The opinion notes that the Directive barring functional marks could be applied to marks comprised of both shape and color elements, but not one comprised of color only, and, therefore, a mark “consisting of a colour per se” could “acquire distinctive character through . . . use . . . .” Id. at ¶ 46. In the same paragraph, however, the Opinion puts a limitation on this point by noting that “in relation to signs which are indissociable from the appearance of the goods, registration must be considered in the light of the same factors as underpin that provision.” Id. In other words, where the color sought to be protected is “indissociable” from the appearance of the goods, the same functionality analysis applicable to shape-protected designs must apply to the color at issue. This aspect, however, is not of primary relevance for the assessment of the case, because the advocate general comes to the conclusion that the contested mark should be equated with one consisting of the shape the goods and seeking protection for a color in relation to that shape, rather than one consisting of color per se. Id. at ¶ 41.
The opinion also advises that the Directive should only bar the red sole mark if the “intrinsic value” of the shape “affect[s] the attractiveness of the goods to such an extent that the reservation thereof to a single undertaking would distort competition on the market” and “must take no account of attractiveness of the goods flowing from the reputation of the mark or its proprietor.” Id. at¶¶ 69-70. As such, the District Court should only find that the red sole mark is functional if the red color on a shoe sole is objectively and inherently attractive, versus attractive by virtue of its connection to Christian Louboutin’s reputation. Id. Thus, in order to succeed, Louboutin will need to show that its use of the color red on the sole of high-heeled shoes does not provide it technical solutions or functional characteristics of products “which a user is likely to seek in the products of competitors.”
This is not the first time that Louboutin has defended its trademark against functionality allegations. In 2011 Christian Louboutin sued Yves Saint Laurent for trademark infringement after YSL released a line of high heels featuring soles that matched the shoe upper—including a red shoe with a red sole. Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 447-48 (S.D.N.Y. 2011). YSL counter claimed that Louboutin’s red sole trademark registration with the USPTO should be cancelled because in the context of the fashion industry and wearable goods, single colors marks are inevitably “aesthetically functional,” and therefore cannot function as trademarks. Id. The trial court agreed, holding that single-color marks are necessarily functional in the fashion industry, and denying Louboutin’s request for a preliminary injunction. Id. at 457.
On appeal, the Second Circuit reversed the trial court’s holding on this point, clarifying that aesthetic functionality under the Lanham Act applies “where protection of the mark significantly undermines competitors’ ability to compete in the relevant market” and stating that “no special legal rule prevents color alone from serving as a trademark” even in the fashion industry. Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc., 696 F.3d 206, 222-23 (2d Cir. 2012). Although this standard appears very similar to the standard set forth by the AG CJEU in its recent opinion, the Second Circuit never determined whether the red sole mark is functional because it resolved the case on a separate issue, finding that the mark was valid, but that YSL’s use did not warrant a preliminary injunction and the case was ultimately dismissed.
Given the perceived similarity of the functionality bar under the EU Directive and the Lanham Act, the District Court of The Hague’s ruling could have implications for Louboutin’s defense of its mark in the US.