Reposted from DLA Piper’s Law à la Mode Edition 4 – Winter 2011

By:  Michael K. Barron, Sarah Phillips and Nadea Taylor (Boston and London)
“AdWords,” the paid, subscription-based Google referencing service which allows users to advertise their companies alongside Google search results, has recently been the subject of much legal scrutiny.  In late September, the European Court of Justice (ECJ) gave a preliminary ruling on questions referred to it by the English High Court in the case between Interflora and Marks & Spencer (“M&S”), regarding the purchase by M&S of the Google AdWord “Interflora” and other similar AdWords. 
In answering the questions referred to it, the ECJ repeated much of the recent jurisprudence in this area, in particular from the Google France case.  Previous cases established that purchasing a third parties’ trademark as an AdWord would only amount to trademark infringement if such use would have an adverse effect on one of the functions of the trademark.  
The ECJ gave the following guidance on how national courts should assess whether the use by a third party of a sign identical with a trademark in relation to identical goods or services has an adverse affect on one of the functions of the trademark:

By: Radiance A. Walters (Washington, DC)

Red-soled stilettos for only $39.99?  French luxury shoe designer Christian Louboutin continues the fight to protect its iconic “Chinese red” soles.  This past August, a U.S. federal district court denied a preliminary injunction against Yves Saint Laurent (YSL) and issued a decision that questioned the validity of Louboutin’s red-sole trademarkOn October 17, 2011, Louboutin’s lawyers appealed that decision to the U.S. Court of Appeals for the Second Circuit.  Shortly thereafter, premier jeweler Tiffany & Co. filed an amicus brief in support of Louboutin, furthering the fight to protect color as a trademark.  The International Trademark Association (INTA) also filed an amicus brief on November 14, 2011 taking the position that the District Court erred in rejecting the U.S. presumption of validity attendant to Louboutin’s federal trademark registration.  Further, INTA argues that the District Court incorrectly construed the Louboutin’s registration as a broad claim to the color red instead of the narrower claim to “lacquered red sole on footwear,” which is what the registration actually covers.  The Court of Appeals is left with the daunting task of determining whether and when color may function as merely a design element versus a source-identifying trademark.  

Some would argue that over the course of twenty years, Louboutin’s red-sole trademark has become one of the world’s most renowned and internationally recognized brands.  According to Louboutin’s brief, “Louboutin’s 2011 U.S. retail sales projections for its footwear are $135 million.”  The Louboutin mega-million dollar power house has much at stake should YSL’s legal position continue to gain footing.  Others would argue that the nature of color in the fashion industry serves a special function and cannot be relegated to simply designating the source of a product.  Given the arguments on both sides of this issue and the potential for the appellate court decision to have an impact on the industry overall, this will be among the most closely watched U.S. cases in the fashion industry in the coming year.

For starters, this pending decision could change legal precedent regarding the protectability of color as a trademark in the United States.  Under American trademark law, color on a fashion item can serve as a trademark brand so long as it has acquired secondary meaning and is not essential to the use or purpose of the item or affect its cost or quality.  Fashion consumers arguably regularly associate colors with reputable brands, including Hermes’ orange, Burberry’s classic beige plaid and Tiffany’s robin’s egg blue. 

Even so, an unfavorable ruling for Louboutin could severely circumscribe color protection for fashion designers.  Designers already have limited recourse in protecting their valuable apparel and shoe designs, especially in the United States.  Lack of protection of a color scheme itself will become yet another unavailable protective mechanism.

Despite the availability of countless shades of red and other colors for high fashion and as equally not-so-high fashion shoe designers to use on the bottoms of their soles, an affirming decision by the Court of Appeals could, to Louboutin’s dismay, essentially grant opportunists a “license to copy.”  Overzealous competitors would have a license to freely use the color red or another similarly situated color on their shoe bottoms without any sort of ramifications.  In turn, third-party use of the red soles, particularly in the lower end markets, could devalue Louboutin’s brand and the precious notoriety that it has developed over years of marketing and quality production.  The question then is whether Louboutin’s signature red soles still have the same desirable “whip appeal” to celebrities and fashionistas worldwide. 

Regardless of the specific outcome of the Louboutin – YSL shoe saga, this case will have significant implications on competition in the fashion industry.  On the one hand, the district court opined that, “awarding one participant in the designer shoe market on the color red would impermissibly hinder competition among other participants.”  On the other hand, however, Louboutin’s lawyers rebutted in their brief to the Court of Appeals that, “competition has remained vigorous in the designer shoe market throughout nearly twenty years that Louboutin has made substantially exclusive use of the red outsole as a brand identifier.” 

If necessary, Louboutin is prepared to fight all the way up to the U.S. Supreme Court.  Win or lose, Louboutin has undoubtedly influenced how the world perceives and reveres the soles of a sleek pair of stiletto heels.  But will the Court of Appeals render another no-go for Louboutin’s red-sole trademark? Stay tuned . . . as the story continues to develop.