Since Christian Louboutin won his first victory in a trade mark infringement dispute five years ago, the famous red sole of his designer shoes has been the subject of many court and patent proceedings in most countries, and has once again become the subject of a battle, this time in the Court of Justice of the European Union (CJEU). For the fashion industry, the "red sole case" is a textbook example of how different jurisdictions approach the issue of color protection.
USA
The first "red sole case" was heard by the U.S. District Court for the Southern District of New York in a lawsuit by Christian Louboutin against the fashion house Yves Saint Laurent to ban the sale of shoes with red soles (Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., S.D.N.Y. 2011). The case raised the question of whether it is possible to establish a monopoly on color in design. According to the court, the Christian Louboutin fashion house failed to prove that the use of red color deserves protection as a trade mark, as color in the fashion industry performs decorative and aesthetic functions necessary for healthy competition (according to the doctrine of aesthetic functionality).
The general doctrine of functionality was developed in American law in order to prevent the registration of functional features of a product or its packaging as a trade mark. The U.S. Supreme Court has explained that a feature of a product is considered functional if it is necessary for the product's use or purpose, or if it affects the product's cost or quality (Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 1982). The doctrine of aesthetic functionality addresses the same issues, but in relation to the artistic or aesthetic characteristics of objects.
The legal position on color as a product characteristic was first established in the Qualitex case. According to this position, a color can only be protected if it serves as a distinctive feature of a product and identifies its origin without performing any function (Qualitex Co. v. Jacobson Prods. Co.). Citing this decision, the court ruled that the red color on the soles of Louboutin's shoes did not meet the necessary criteria for trade mark protection, as it had other functions, such as adding an attractive energy to the product. Protecting it as a trade mark would prevent competitors from using the same color in their products, which could hinder the development of creativity and artistic freedom in the fashion industry. Thus, the court did not recognize Christian Louboutin's exclusive right to use the red sole in the design of his shoes.
The U.S. Court of Appeals for the Second Circuit disagreed with the lower court's decision and provided its own reasoning. As we know, a trade mark is designed to individualize a product, allowing consumers to identify its brand and origin when they see it. In the fashion industry, colors or combinations of colors are often used to differentiate between brands and products. Thus, a trade mark becomes protectable if it is associated in the consumer's mind with a specific product and its manufacturer.
The Court of Appeal noted that at first, the red sole did not indicate the origin of the product, but Christian Louboutin's consistent and continuous use of the red sole in his shoe designs became a symbol of his brand, making the red sole a distinctive trade mark that consumers associated with the designer. According to the Court of Appeal, there is no legal provision that prohibits the use of a single color as a trade mark, and the concept of aesthetic functionality is not universal and should be applied on a case-by-case basis, taking into account all the relevant facts. In addition, the court developed an additional test to determine when a product feature can be considered aesthetically functional. This is possible in three cases: when the feature is essential to the purpose of the product; when it affects the product's cost or quality; and when granting protection to such a feature can significantly limit competition. In these cases, the designation cannot be protected as a trade mark.
As a result, the Court of Appeals upheld the validity of Christian Louboutin's trade mark but limited its application. According to the court, only those shoes whose color contrasts with the red sole have acquired a distinctive character. Monochrome shoes (all-red) do not have such a distinctive character and are not associated with Louboutin, so it is not forbidden for other designers, including the fashion house Yves Saint Laurent, to produce them.
Russia
In Russia, problems with the red sole arose at the stage of national registration of the trade mark. The international registration of the mark was carried out by the International Bureau of WIPO on 03.02.2010 under the number 1031242 for goods of the 25th class of the MKTU (shoes) in the name of the designer himself, Christian Louboutin. The international registration mark is a color Pantone number 18-1663TR designed for the soles of women's shoes.
In 2012, the Federal Service for Intellectual Property, Patents and Trade marks (hereinafter — Rospatent) initially refused to grant the designer legal protection for his trade mark in the territory of the Russian Federation. The basis for making such a decision was the conclusion made based on the results of the examination, according to which the mark cannot be granted legal protection on the territory of the Russian Federation in respect of all goods of the 25th class of the MKTU in accordance with paragraph 1 of Article 1483 of the Civil Code of the Russian Federation, since the claimed designation does not have distinguishing ability. The expert opinion was motivated by the fact that any color or color combination in the design of shoes cannot be the subject of an exclusive right and should be freely used by various manufacturers. However, the designer disagreed with this opinion and decision and submitted the following objections to the Patent Disputes Chamber of Rospatent.
First, despite the fact that there are no restrictions on registering a color as a trade mark in Russian law, in this case, we are not talking about the exclusive right to use the color red in shoes in general, but rather about a trade mark in the form of a specific shade of red on the sole of women's shoes, which is known as a position trade mark. In addition, since the claimed designation is the color of the sole of a shoe, where it does not have any special functional properties and is not commonly used, Rospatent's claim that this color should be freely used by various shoe manufacturers is unsubstantiated.
Secondly, the red sole is a unique and widely recognized distinctive feature of Christian Louboutin's women's shoes, which is associated with his products by consumers worldwide, including in Russia.
After reviewing a large number of materials submitted by Louboutin in support of his position, including expert opinions from prominent figures in the fashion industry, letters from editors of glossy magazines, sales statistics, information about counterfeit products, and a song dedicated to the designer's shoes by Jennifer Lopez, "Louboutins", Rospatent was forced to agree with the designer.
As a result, the Patent Disputes Chamber of Rospatent came to the following conclusion: since red color does not perform any function and is an element of design, assigning the rights to use it in the sole of shoes to one manufacturer will not infringe the rights of other manufacturers of women's shoes. Thus, this mark was granted legal protection for all goods of the 25th class of the International Classification of Goods and Services in Russia.
The European Union
The European path of shoes with red soles is particularly challenging and complex. The designer's first defeat occurred in France, where he was involved in a dispute with the Spanish company ZARA, which released a similar model of red-soled sandals in 2011.
The French court ruled in favor of ZARA, citing the fact that Christian Louboutin's trade mark was too "vague" due to the lack of a specific shade of red in its registration. Additionally, the court determined that the plaintiff had not proven the risk of misleading consumers into confusing the two brands and their respective footwear products.
After correcting his mistakes, Christian Louboutin refined his French trade mark application and added a specific shade of red to the Pantone system (18-1663TP, Chinese Red). However, in 2016, he faced another disappointing setback when the Swiss Federal Court deemed the iconic red sole to be a "decorative element" rather than a "product origin designation". In order to be protected as a trade mark, a color must identify a specific brand, rather than simply serve a decorative purpose. The court specifically noted that granting protection to Christian Louboutin's trade mark in the United States, Russia, China, and Australia does not necessarily mean that the designer can expect the same level of protection in Switzerland.
However, in the context of the formation of a European approach to the issue at hand, the main role today is played by the expected decision in the case of Louboutin against the Dutch shoe retailer Van Haren (Christian Louboutin and Christian Louboutin SAS v Van Haren Schoenen BV, C-163/16). In 2010, Christian Louboutin registered his trade mark in the Benelux countries for goods of class 25, namely shoes (excluding orthopedic shoes). In 2013, the application was amended by specifying that the product only includes high-heeled shoes (excluding orthopedic shoes). The mark is described as a red color (Pantone No. 18-1663TR) applied to the sole of the shoe.
In 2013, Louboutin filed a lawsuit with the District Court of The Hague, demanding that Van Haren stop selling the red-soled, stylized shoes from their collaboration with American actress Halle Berry, the "5th Avenue by Halle Berry" collection. The court found a trade mark infringement and ordered the Dutch brand to stop producing black and blue shoes with red soles, as it agreed that the public associates the red sole with a specific brand (i.e. the "Christian Louboutin" brand), and the shoes produced by Van Haren thus mislead most people.
Disagreeing with this decision, the Dutch retailer decided to challenge the validity of Christian Louboutin's trade mark altogether. According to Van Haren, the trade mark is a two-dimensional mark (red color) that, when applied to the sole of a shoe, corresponds to its shape and adds significant value to the product, which, under Article 3(1)(e)(iii) of Directive 2008/95/EC (the Directive), is not subject to protection. Not wanting to take responsibility, the Court of The Hague suspended the process and requested clarification of the legislation from the Court of Justice of the European Union (CJEU).
According to Article 3(1)(e)(iii) of the Directive, marks that consist solely of a form that gives the product significant value are not subject to registration, and any existing registration must be invalidated.
The main question raised by the Dutch court was whether the term "shape" used in Article 3(1)(e)(iii) of the Directive applies only to three-dimensional characteristics of goods, such as contour, dimensions, and volume, or also includes other (non-three-dimensional) characteristics, such as color. By the way, in accordance with Article 4(1)(e) of the new Directive of the European Parliament and of the Council of 16 December 2015 No. 2015/2436 on the approximation of the laws of the Member States of the European Union relating to trade marks (new edition), the registration of any trade marks consisting solely of a shape or other characteristics that give a product significant value is prohibited (the deadline for adoption by countries is January 14, 2019).
In June 2017, the Opinion of Advocate General Szpunar (Opinion of Advocate General Szpunar, delivered on June 22, 2017, Case C-163/16) was published on this issue, which can be summarized as follows. The fact that the mark was registered as a figurative mark does not mean that other classifications are impossible, and the classification of the disputed trade mark as a position mark, which does not have any legal consequences, does not prevent the same mark from being a form of a product.
In fact, the court needs to consider whether the trade mark in question is being protected for a specific color that is not spatially limited, or whether it is being protected in combination with other characteristics related to the shape of the product. In other words, the court needs to determine whether the distinctive feature of the trade mark comes from the color that is being protected, or from the precise placement of that color in relation to other elements of the product's shape.
Mr. Szpunar himself is inclined to believe that the contested Christian Louboutin mark falls into the category of those that combine the color and shape of a product, which means that it may be subject to the restrictions imposed by Article 3(1)(e)(iii) of the Directive. Accordingly, he recommended that the CJEU answer the question as follows: the provisions of Article 3(1)(e)(iii) of the Directive may apply to marks that indicate the shape of a product and seek protection for a specific color. The concept of "a form that gives substantial value to goods" in the context of the meaning of this provision refers only to the intrinsic value of the form and does not preclude the possibility of taking into account the reputation of a particular brand or its owner.
On November 14, 2017, the CJEU held a hearing on this case, but a decision on the proper interpretation of Article 3(1)(e)(iii) of the Directive has not yet been made. The CJEU and the District Court of The Hague, which is hearing the main dispute, may not only be bad news for Christian Louboutin, but also potentially create uncertainty regarding the registration of all other non-traditional trade marks in the EU.
The article was published in the Legal Insight magazine No. 1, 2018.