Second Circuit: single colours can be trademarks in fashion industry

In Christian Louboutin SA v Yves Saint Laurent America Holding Inc (11-3303-cv, September 5 2012), the US Court of Appeals for the Second Circuit has held that a single colour is protectable as a trademark for fashion items, in appropriate circumstances. The court rejected the lower court’s per se rule of functionality for colour marks in the fashion industry, opining that such a rule would amount to an improper denial of trademark protection to “any deployment of a single colour in an item of apparel”.

Louboutin involved fashion designer Christian Louboutin’s attempt to prevent competitive designer Yves Saint Laurent (YSL) from selling a monochromatic women’s dress shoe. For more than two decades Louboutin had advertised, promoted and sold shoes having a distinctive bright red lacquered outsole, which nearly always contrasted with the rest of the shoe. In 2008 the US Patent and Trademark Office granted Louboutin a trademark registration on the Principal Register for its mark, which was described in the registration as “a lacquered red sole on footwear”.  Louboutin’s substantial effort and investment in its mark have succeeded in making the mark “its signature in women’s high fashion”, such that “in the high-stakes commercial markets and social circles in which these things matter a great deal, the red outsole [has become] closely associated with Louboutin”. Indeed, as recognised by the Appeals Court, “[b]y placing the colour red in a context that seems unusual, and deliberately tying that colour to [its] product, Louboutin has created an identifying mark firmly associated with [its] brand which, to those in the know, instantly denotes its shoes” (citations omitted). 

In 2011 YSL introduced a line of 'monochromatic' shoes in a rainbow of colours, including red. These shoes featured the same colour on the entire shoe, thus, with respect to the red version, a red insole, heel, upper and, importantly, a red outsole. Louboutin objected on the basis of its claimed rights in the red sole and, when YSL refused to remove the shoes from the market, Louboutin initiated legal action and moved for preliminary injunctive relief. After argument (but without an evidentiary hearing), the lower court refused preliminary relief, concluding that, notwithstanding Louboutin’s trademark registration, its efforts to create secondary meaning in the brand, and the reputation associated with its red soled shoes, colour was functional in the fashion industry because “there is something unique about the fashion world that militates against extending trademark protection to a single colour”. Louboutin appealed.

The Appeals Court examined the questions presented by the lower court's opinion in three parts: 

• first, whether a single colour is protectable as a trademark;
• second, whether a single colour mark is “functional” when used in connection with fashion items; and
• third, whether, in light of the foregoing, Louboutin's red sole mark was protectable under the Lanham Act. 

On the first point, relying on the Supreme Court’s decision in Qualitex Co v Johnson Products Co, the Appeals Court had no trouble concluding that a single colour had the potential to function as a trademark. Under Qualitex, a single colour, alone, “at least sometimes can meet the basic legal requirements for use as a trademark”, because in the right circumstances, a colour can become distinctive of one manufacturer’s goods in commerce, thereby serving to identify the source of the products as opposed to the product itself.  

Moving to the second question, the Appeals Court explained that functionality is a defence to a claim of trademark infringement. Trademarks are not intended to protect functional features; rather, such features are more appropriately protected by patent. Further unravelling the functionality question, the court explained the two “types” of functionality - namely “traditional” or “utilitarian” functionality, and “aesthetic” functionality.  Something is functional in a traditional sense when it “essential to the use or purpose of the article” (ie, if the feature is dictated by the functions to be performed), or if it “affects the cost or quality of the article” (ie, permits the article to be manufactured at a lower cost or constitutes an improvement in the operation of the goods). On the other hand, “where the aesthetic design of a product is itself the mark for which protection is sought”, under the doctrine of aesthetic functionality, the mark is functional “if giving the mark holder the right to use it exclusively would put competitors at a significant non-reputation-related disadvantage” (quoting Qualitex). 

The Appeals Court thus explained that, when faced with a potentially aesthetically functional trademark, the analysis first must look at whether the design feature is “traditionally” functional. If it is, the feature is not protectable as a trademark. However, for an aesthetically functional design feature, even where the feature passes the traditional functionality test, the analysis must also examine whether granting one entity exclusivity for that design feature would “significantly undermine competitors’ ability to compete in the relevant market”. If so, trademark protection is inappropriate. 

With that framework in mind, the Appeals Court addressed colour marks in the fashion industry and concluded that, while colour is clearly a “tool in the palette of a [fashion] designer”, the functionality defence is not intended to guarantee a competitor the freedom to do whatever he or she wants. Rather, the purpose of the functionality defence “is to prevent advances in functional design from being monopolised by the owner of the mark, in order to encourage competition and the broadest dissemination of useful design features” (citation omitted). 

Turning to the YSL monochromatic shoe and Louboutin’s allegations of infringement, the court noted that the first step - as in any trademark infringement action - is to assess whether the claimed mark is entitled to protection. Although the court had concluded that a single colour could be a trademark in the fashion industry, the question to be addressed here was whether the red sole mark did, in fact, function as a trademark. 

Louboutin had a federal trademark registration for the red sole mark and was thus entitled to a presumption that the mark was valid, but the court nonetheless looked at the evidence presented in support of the mark’s acquired distinctiveness or secondary meaning. In so doing, it found that the evidence presented established that Louboutin’s use of the red sole mark had been almost exclusively on shoes with a contrasting sole. Thus, while that evidence (which included long-term use, advertising expenditures, media coverage and sales success), demonstrated that Louboutin had created a symbol uniquely associated with the brand (ie, had established secondary meaning), the evidence did not support the conclusion that such secondary meaning extended to shoes where the red sole was not in contrast to the rest of the shoe. It was the “contrast between the sole and the upper that cause[d] the sole to ‘pop’ and to distinguish its creator”. The Appeals Court thus ordered that the Louboutin trademark registration be narrowed accordingly.

In the end, by modifying the Louboutin trademark registration to cover only the red sole of the shoe, the Appeals Court provided itself with an easy way out on the question of functionality of colour as a trademark in the fashion industry. YSL’s monochromatic shoes did not use a contrasting red sole, which was all Louboutin was entitled to claim under its modified trademark. Accordingly, because functionality is a defence that is only addressed after a finding that an accused mark is confusingly similar to the asserted mark, the Appeals Court in Louboutin never had to decide whether an allegation of functionality would have successfully defeated a trademark infringement claim. It remains to be seen whether the functionality defence (and, more particularly, aesthetic functionality) would successfully extricate an infringement defendant accused of using a single colour on a fashion item notwithstanding some degree of market confusion having been demonstrated by the trademark owner.           

Timothy J Kelly, Fitzpatrick, Cella, Harper & Scinto, New York