For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Monday, 14 November 2011

Letter from AmeriKat: Tiffany is blue for Louboutin's red

Usually the AmeriKat has some sort of event or item of note to inform readers about her week, but in the past two weeks the AmeriKat's only main extra-curricular activity have seen her shouting about the merits of London as the seat of the Unified Patent Court (see here and further discussion here). For the AmeriKat, last Monday's Halloween, a big holiday in any American Kat's calendar and the only exciting punctuation during her two weeks, was sadly disappointing; she did not manage to scare anyone, dress up or score a ride on a broomstick. A few pathetic meows later, having been taken pity upon by a kindly senior clerk, she managed to get her paws on her first and only Halloween bounty in the form of a Kit-Kat bar. The rest of the next two weeks were work and rain inundated - so much so, that with all the London-cheerleading she was undertaking she has been feeling distinctly English...(picture, left - the AmeriKat shouting for England)


Tiffany sees blue for Louboutin's red appeal

Another American brand that has been doing a fair bit of cheerleading of late, this time for French company Christian Louboutin, is Tiffany & Company. A couple of weeks ago the iconic American jewellery and luxury brand retailer filed an amicus curaie brief in support Louboutin's appeal against Judge Marrero's decision (here) dismissing its application for an injunction against Yves Saint Laurent for trade mark infringement of its red-soled shoes. Readers may recall that the judge went into lengthy and somewhat overly-zealous reasoning as to why protection of a single-color in the fashion industry -- in this instance the color red on the sole of high-end women's footwear ("the Red Sole Mark") -- was inconsistent with trade mark protection under the Lanham Act. In the US colors per se can be registered as a trade mark if they have acquired a secondary meaning and if they are non-functional. That is to say that if a color acts as a symbol that distinguishes a brand's goods and identifies their source, without serving any other significant function, then the mark is capable of being registered. A defendant can argue that a registered mark is functional as a defence to trade mark infringement.

The single color that Tiffany is known for is the famous robin-egg blue that marks their livery by way of its famous blue box, shopping bags, e-mail alerts and its website. Often referred to as "Tiffany blue", the color has been given its own Pantone number - 1837 - and is a registered color per se on boxes (Reg. No. 2,359,351), shopping bags (Reg. No. 2,416,795) and on the cover of catalogs (Reg. No. 2,416,794). Tiffany also has a registered trade mark for the blue box with white ribbon - a box the AmeriKat would love to see on her desk if anyone is so inclined. It is obvious, therefore, that Judge Marrero's sweeping comments about the registrability of single colors in the fashion industry is of profound concern to Tiffany. Even more so because Tiffany has also begun to use the color, not just on packaging and marketing materials but on jewellery and fashion accessories such as enamel pendants, leather goods and scarves. As such it is the use of a single color on any "fashion item", which Marrero J held was not protectable even where the color has achieved a secondary meaning, that is of paramount concern for brands such as Tiffany.

The Burden of Proof

Tiffany's brief argued that Judge Marrero's blanket rule was unnecessary and sweeping and there was "no need to issue a broad edict forbidding trademark protection for color marks in an entire industry." The District Court, it was argued, did not limit its examination to whether the Red Sole Mark was itself a valid mark as used on Louboutin's shoes but went further and examined the use of a single color in the fashion world generally, and in doing so incorrectly established a blanket per se rule. Indeed the court stated that the protection of a single color "used as an expressive and defining quality of an article of wear produced the fashion industry" was the "narrow question" that was tasked to being decided. But under no interpretation is that a narrow question.

To succeed in a trade mark infringement claim, the claimant must show that it has a valid, legally protectable mark and that the defendants' use of a similar mark is likely to create confusion as to the origin of the products. A trade mark registration is prima facie evidence that the mark is registered and valid (Lane Capital Mgmt v Lane Capital Mgmt (1999)). When a claimant sues for trade mark infringement, the defendant then bears the burden to rebut the presumption of the mark's validity. Where a claimant is successful in showing that the mark is valid and there is a likelihood of confusion, the defendant can still invoke a defence that the mark is functional (Stormy Clime v ProGroup (1987)) and again the burden of proof is on the defendant. Citing McCarthy on Trademarks and Unfair Competition, Tiffany argued that the order which the court has to decide these issues is first and foremost, issues of validity and then likelihood of confusion. Once those are decided and a prima facie case is established does the court proceed to the defense of functionality. The court was also charged with dealing with preliminary injunction issues. Despite these numerous issues that required individual and sequential assessment, Tiffany argued that procedurally the court instead needlessly adopted a broadbrush rule against the protection of color as a trade mark on any "article of wear" in the "fashion industry" - avoiding the detailed assessment.

District Court's blanket "single color in the fashion industry" rule insupportable

Tiffany also argued that the ruling that use of a single color for fashion items can never be a valid mark was not supported by any legal precedent or by the Lanham Act. The Supreme Court inQualitex v Jacobson (1995) held that a single color can be a valid trade mark "where the color has attained 'secondary meaning' and therefore identifies and distinguishes a particular brand (and thus indicates its 'source')". Although the District Court seemed to have acknowledged that the Red Sole Mark acquired a secondary meaning by stating that the red outsole had become "closely associated with Louboutin", it held that there was "something unique about the fashion world that militates against extending protection to a single color." In holding so, the court did not do what was it charged to decide - to determine whether the Red Sole Mark identifies and distinguishes Louboutin as the source - but instead carved out a one-shoe-fits all exception that a single color for fashion items is never subject to protection. Under Qualitex, the court should have however inquired whether the particular mark at issue has been registered with the USPTO and whether the particular mark has acquired a secondary meaning. Given that the District Court acknowledged that the Red Sole Mark is registered with the USPTO and that it achieved a secondary meaning, it did not need to explore whether any mark and any color could be protectable in the broader fashion industry.

Further, there is nothing from the language of the Lanham Act that carves out from protection the use of a single color that has acquired secondary meaning when used on fashion items. The decision in Qualitex explained that there is a broad "universe of things" that can be protected as a trade mark as long as it indicates the origin of the goods. Section 1127 of the Lanham Act says that trademarks "include any word, name, symbol or device, or any combination thereof". Undersection 1052(f), unless a mark is proven to be functional "nothing...shall prevent the registration of a mark used by the application which has become distinctive of the applicant's goods in commerce." Tiffany argued that this statutory recognition that there is a broad universe of potentially trademark-able matter militates against the court carving out a blanket ruling that protection for single colors for use on fashion items is not available. Tiffany also argued that case-law precedent shows that marks consisting of various colors and combinations of colors have been held to be protectable in the fashion industry. True, says the Amerikat, but not a single color on fashion item .

The Utilitarian Functionality Defense

After examining the validity, the court should have looked at the likelihood of confusion. Despite both parties providing arguments on this point, Judge Marrero skipped over this point and launched into a discussion on the analysis of functionality. The US courts examine functionality in two ways - utilitarian functionality and aesthetic functionality. The former prevents a manufacturer from using trade mark protection to obtain a perpetual monopoly over a useful product feature that should otherwise be protected by a patent. The rationale being that other users should be permitted to use a utilitarian feature that (i) lowers manufacturing costs, (ii) raises quality or (iii) is essential to the products use. (picture, right - Bentham ponders over the utilitarian function of red-soled high-heels...)

Under the first prong, a design feature that affects the cost or quality of an article is "one which permits the article to be manufactured at a lower cost or one which constitutes an improvement in the operation of the goods" (Stormy Cline at 975). The District Court, however, held that the Red Sole Mark made the production of the shoe "more expensive, not less" and as such affected the cost of the Louboutin shoe and was thus functional. However, if the application of the redlacquer increases the costs, it cannot be said that the feature is a functional element whereby the competitors need to use it in order to effectively compete. Indeed, the red lacquer applicationincreases the costs of manufacturing and points to the opposite conclusion.

Under the second prong, Tiffany said that the District Court did not appear to have conducted any examination to whether the application of the red lacquer improved the operation of the Louboutin's shoes and thus quality of the shoes. Red lacquer applied to the sole of a shoe is unlikely to improve the operation of the shoe unless there is some anti-slip compound in the lacquer.

Under the third prong, the question is whether the particular feature claimed by the trade mark, i.e. the red soles, is "essential to the use or purpose" of the particular product, i.e. the Louboutin shoes on which it appears. A design feature is essential to the use or purpose only if the feature is dictated by the functions to be performed, it cannot just accommodate the function. (LeSportsac, Inc v Kmart Corp (1985). Tiffany again cites McCarthy which states that
"the true test of functionality is not whether the feature in question performs a function, but whether the feature is dictated by the functions to be performed"
Tiffany argued that the District Court did not analyze whether the Red Soel Mark was essential to the use and purpose of Louboutin's shoes, nor did it address how the function of a shoe "dictates" that the sole be covered entirely in red lacquer. It is clear, says Tiffany and the AmeriKat, that it would be a stretch for a court to hold that the red sole is dictated by the Louboutin shoe (some owners of the shoe may think this is now a chicken-egg type question).

The Aesthetic Functionality Defense

The aesthetic function test asks whether an aesthetic feature of a product is functional because it is "essential to effective competition." Tiffany's brief argued that although the District Court did not refer to the aesthetic functionality defense by name the court nevertheless stated that the general use of color in the fashion industry serves "aesthetic functions vital to robust competition." Under Wallace International Silversmith v Godinger Silver Art (1990), the test for aesthetic functionality in the Second Circuit is
"[W]here an ornamental feature is claimed as a trademark and trademark protection would significantly hinder competition by limiting the range of alternative designs, the aesthetic functionality doctrine denies such protection."
This echoes the Supreme Court's dicta in Qualitex which states that
"[I]f a design's 'esthetic value' lies in its ability to 'confe[r] a significant benefit that cannot be practically duplicated by the use of alternative designs, ' then the design is 'functional.'"
If it is necessary for competitors to use the color red on soles of footwear in order to compete effectively and, in the Second Circuit, there are no alternatives, then this points to the Red Sole Mark being functional. InVilleroy & Boch Keramische Werke v THC Systems (1993) the defendant failed to show that it needed to copy the claimant's design in order "to compete in the market for hotel china" or that it was "at a significant competitive disadvantage" without using the claimant's pattern. However, the District Court in Louboutin failed to examine whether Yves Saint Laurent needed to copy the Red Sole Mark in order to compete in the market for designer footwear or whether the Red Sole Mark would foreclose competitors from developing alternative non-infringing applications for soles. Instead, Tiffany argued that the court merelyinvoked "sweeping generalities about the fashion industry as a whole" arguing that because the fashion industry is dependent on color which as a whole is a medium that should be available for all to paint with as tastes, idiosyncrasies and moods change. The question is much narrower than whether fashion designers in general should be allowed to use any color on any product, but whether Louboutin's competitors need to use red soles to compete effectively.

Tiffany's main criticism is that the court should not be drawing sweeping bright lines for what can and cannot be protectable trade marks in the fashion industry (namely no single color marks for fashion items) nor should it be relying on such bright lines to avoid the proper analysis of the various elements in a trade mark infringement claim. The AmeriKat agrees that the District Court ruling does send a dangerous precedent for the industry in general, but even Tiffany's brief did not go so far as to be supporting Louboutin's argument in every respect but just far enough to protect it's own interests. Indeed one of Tiffany's lawyers told WWD that it
"is not taking sides in this dispute. We are only trying to assure that this area of the law is not disturbed by an overbroad decision in the lower court."
The Wall Street Journal reports that INTA will be filing its own amicus brief today.

In the meantime, the AmeriKat is struck by the aesthetic functionality test. Does YSL need to use red soles in order to compete effectively in high-end womens' footwear? On one view, of course it does not. It can use other shades on its shoe - the shoe design itself will still be open to YSL to design how it sees fit, the only prohibition is using red on the sole (what red, of course, is still a live point in this case and wisely not one Tiffany touched on). However, from an industry standpoint, why should YSL be prevented from marketing a monochrome red shoe as part of its monochrome footwear collection? But perhaps, this is where the unexplored confusion test may rescue YSL and this type of usage?

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