Red Shoes diary has a new entry – Louboutin trademark revived

In a reversal of the lower court and its fortunes Christian Louboutin, the Second Circuit reversed the determination of the District Court to hold that the red outsoles flashed by the fashionable does indeed have secondary meaning in the fashion marketplace – at least when used when not matching the color of the uppers.

Writing for the unanimous panel, Judge José A. Cabranes, acknowledged that the Louboutin outsoles have “the requisite ‘distinctiveness’ to merit protection.”

Louboutin’s trademark, consisting of a red, lacquered outsole on a high fashion woman’s shoe, has acquired limited “secondary meaning” as a distinctive symbol that identifies the Louboutin brand. … [W]e limit the trademark to uses in which the red outsole contrasts with the color of the remainder of the shoe. We conclude that the trademark, as thus modified, is entitled to trademark protection.

At the core of the debate is the concept of aesthetic functionality. Purely aesthetic product features can be protected as trademarks if they are source-identifying and non-functional.

Functionality has two definitions: “a functional feature is one the exclusive use of which would put competitors at a significant non-reputation-related disadvantage. … [A] feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device.” (TrafFix Devices, Inc. V. Marketing Displays, Inc. 532 U.S. 23 (2001) (internal quotes omitted)).

Color is generally not functional for a product unless the color changes the effectiveness of the product. So pills can be marketed based on color (e.g. little blue pills) as can home insulation (pink). Like any other trademark, the color identifier is still limited to the specific goods (so pink can also designate cancer-awareness organizations).

In the case of fashion shoes, it has worked. “As a result of Louboutin’s marketing efforts, the District Court found, the “flash of a red sole” is today “instantly” recognizable, to “those in the know,” as Louboutin’s handiwork.”

Nonetheless, the law has long recognized the concept of aesthetic functionality. As the 1938 Restatement of Torts explains, “[w]hen goods are bought largely for their aesthetic value, their features may be functional.” I have elsewhere described the importance of aesthetic value as of the social relevance of a product. Objectively identical items (such as stuffed animals) are subjectively more or less important to the consumer. For example, Elmo is more valuable to a toddler than other puppets. In the absence of copyright protection, trademark should not provide a monopoly over such relevance.

Keeping with this line of reasoning, the Louboutin court updated the aesthetic functionality test by stating “a mark is aesthetically functional, and therefore ineligible for protection under the Lanham Act, where protection of the mark significantly undermines competitors’ ability to compete in the relevant market.”

At the same time, the Louboutin trademark works because of its contrast with the shoe upper. But more importantly, Louboutin cannot own the ability to make red shoes that have matching uppers and outsoles. It has no trademark in such use precisely because other designers need to make monochrome shoes and the public does not identify such shoes from a single source. Matching the uppers and outsoles is a more general style and therefore aesthetically functional.

The approach of the Second Circuit provides a reasonable balance between trademark holders and competitors. It helps the public because it recognizes both the value of the trademarks for the purchasers and the needs for other designers to remain competitive and creative.

The decision will motivate competitors to seek signature colors as yet another tool to separate their products in crowded and competitive marketplaces. Purple tablets, anyone?