The red tape surrounding colour trade marks
By Maria Sun, solicitor, Baldwins Intellectual Property
In the trend-dependent world of fashion, having a brand that will command a consumer’s attention long enough to lead to a sale is something well worth defending. This article reports on a recent legal battle between fashion heavyweights, Christian Louboutin (Louboutin) and Yves Saint Laurent (YSL), which has left both parties seeing red.
In 1992, as a tongue-in-cheek attempt to revive a pair of stilettos considered to “lack energy”, Louboutin painted the bottoms with red nail polish. Springboarding from that point, virtually all Louboutin shoes have been similarly gilded, and the shiny red outsoles have metamorphosed into a venerated visual cue of Louboutin.
As endorsement of the reputation residing in the red outsoles, in 2008, the United States Patent and Trade Mark Office (USPTO) granted Louboutin a trade mark registration for “a lacquered red sole on footwear”. In August last year, Louboutin sought to rely upon this registration to injunct YSL from selling monochromatic shoes featuring red outsoles (Louboutin SA v Yves Saint Laurent America, Inc, 778 F Supp 2d 445 (SDNY 2011)). YSL, in turn, counterclaimed for the cancellation of Louboutin’s trade mark registration.
Round one of the case was heard before Judge Victor Marrero of the New York District Court. Marrero conceded that upon seeing the red outsole, “cognitive bulbs flash to associated ‘Louboutin’”. Yet, despite the acknowledged visual association, Marrero considered the use of colour in fashion to be “aesthetically functional” in nature and therefore incapable of appropriation as a trade mark (at 449):
“Because in the fashion industry color serves ornamental and aesthetic functions vital to robust competition, the Court finds that Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trade mark protection...”
Marrero surmised that because the fashion industry is “dependent on colours”, Louboutin’s registration would deplete other competitors of a limited resource (at 454):
“Louboutin’s claim would cast a red cloud over the whole industry, cramping what other designers would do, while allowing Louboutin to paint with a full palette.”
The doctrine of aesthetic functionality and the colour depletion theory
In order to fully comprehend Marrero’s judgment, it is necessary to take a step back and briefly consider the doctrines being relied upon.
If a trade mark is aesthetically functional, it cannot be a trade mark. The fact that it is functional means that others are likely to want to use it and it should not be monopolised.
An offshoot of the aesthetic functionality doctrine is the ‘colour depletion theory’. This reflected the concern that since the number of colours in the world is arguably finite, to grant exclusive rights to a colour would deplete the available stock and deprive another trader from using the same or similar colour. It was therefore standard practice for the USPTO to decline single colour marks.
Following years of inconsistent practice around the protectability of colour marks, the colour depletion theory was finally examined and rejected by the US Supreme Court in Qualitex Co v Jacobson Products Co, 514 US 159 (1995). In that case, the Court accepted that colours can and do play an important part in a brand’s identity. While a single shade of colour was unlikely to be inherently distinctive, it was acknowledged that distinctiveness can be acquired by consistent and sustained use. The Supreme Court concluded that colour marks and their validity should be based upon individual, fact-based examinations of the function that the colour serves and not from the viewpoint of incremental depletion.
The counterclaims – why the colour depletion theory is flawed
It appears that Marrero’s reasoning has deviated from the accepted law in Qualitex by perpetuating a theory that imposes an unreasonable restriction on the acquisition of trade mark rights.
Incorrect application of facts
Marrero erroneously construed Louboutin’s registration as “a claim to the colour red”. This is not the case, and as Louboutin rightfully asserts, he does not own a colour per se. What he owns is a specific colour in a specific place. By expanding Louboutin’s claim to “red”, Marrero fails to acknowledge that Louboutin’s mark is unusual both in its placement and hue. While the outsole of a shoe itself is indisputably a functional thing, once coated in a bright and unexpected colour, it takes on a decorative mantle, becoming an object of distinction.
Ultimately, to be eligible for protection, a mark must be capable of distinguishing the products it marks from those of others. To prohibit a visually appealing mark on the basis of its aesthetic success cuts against trade mark law’s ultimate goal of consumer protection (see Au-Tomotive Gold, Inc v Volkswagen of America, Inc., 457 F 3d 1062, 1074 (Ninth Circuit, 2006)). In Au-Tomotive, the US Court of Appeals noted that an appealing trade mark that performs source-identifying functions is not rendered unprotectable simply because it is the element of value itself. To hold otherwise, said the Court of Appeals, would mean that simply because a consumer likes a trade mark or finds it aesthetically pleasing, a competitor could adopt and use the mark on its own products.
By pre-emptively placing a blanket ban on colour marks in fashion, Marrero has put the cart before the horse. If consumers are purchasing YSL’s shoes in the mistaken belief that the shoes are Louboutin’s, then this demonstrates that (a) Louboutin’s trade mark is fulfilling its function, and (b) that YSL is infringing Louboutin’s trade mark.
The critical assessment is not whether Louboutin’s registration deprives the fashion industry of the use of the colour red but rather if other shoe designers would be unable to compete effectively without that extra ornamental finish on their shoes.
Incorrect application of the colour depletion theory
Marrero draws parallels between fashion and art and posits that just as an artist requires free access to all colours for creative expression, so too does a fashion house for its designs. Colours are per se aesthetically functional and allowing a monopoly over colour, at least with the fashion industry, would be anticompetitive.
After delineating fashion as a unique trade dependent on colour, Marrero anachronistically reconjures the colour depletion theory (at 454):
“Awarding one participant in the designer shoe market a monopoly on the color red would impermissibly hinder competition among other participants. YSL has various reasons for seeking to use red on its outsoles...”
The colour depletion theory relies on the tenuous assumption that shades of colour are inherently more difficult to differentiate than words, graphics, or shapes. This theory underestimates the capabilities of the average consumer to discern these subtleties of colour and the purchasing power they portray.
As noted by Tiffany & Co. (owners of the famous “robin’s-egg blue” in connection with jewellery and tableware) in its evidence filed in support of Louboutin, Marrero had adopted a sweeping and unprecedented per se rule against granting trade mark protection to any single colour that is used on a ‘fashion item’ even where the colour has achieved ‘secondary meaning’ and is associated with a single brand.
There is no basis for presuming that a consumer’s judgement call on difference in shading would be compromised because it is being applied to fashion. In reality, while fashion designers may share a closer working relationship with the medium of colour, the degree to which two colours are confusingly similar should not vary from one industry to the next. One can even argue that given the seasonal nature of the industry and the pervasive use of colour, fashion designers face an even more arduous threshold of acquiring distinctiveness. Customers of clothing and footwear are not accustomed by nature to making an assumption about the origin of goods on the basis of a single colour in the absence of a graphic or textual element. The fact that Louboutin has been able to foster such recognition for its red outsoles is testament of its investment to the colour.
Colour serves as a powerful insignia of trade origin. It would be difficult to argue that consumers would not recognise the industry specific hues of the New Zealand Post Red, the Coca Cola Red, the Westpac Red, or the Vodafone Red. When properly recognised by the consumer, a colour provides powerful shorthand of trade origin. Recognition of the source also conveys related information about the characteristics and quality of the product produced by the source.
What’s to stop others invoking the depletion theory in any future litigation involving other limited elements? After all, the same scarcity concerns arguably apply to letters of the English alphabet, Arabic numerals, Roman numerals, and descriptive words. Determining the likelihood of confusion among colour shades should be no different or difficult than the context of letters or descriptive words.
As with any other trade mark infringement test, the Court must apply a holistic test and consider a plethora of factors to assess likelihood of confusion between the marks. To paraphrase a pertinent observation from Qualitex: there is no rule absolutely barring the use of colour alone as a trade mark – so long as the colour mark meets the ordinary requirements of trade mark law, including use in commerce, acquired distinctiveness, indication of source and non-functionality, there is no per se bar to registration.
Room for improvement – New Zealand laws provide more certainty
I disagree with the blanket exclusion imposed by Marrero on the registrability of colour in fashion. However, there is merit in the argument pressed by YSL that Louboutin’s current registration for a “lacquered red sole” is unduly broad and unclear. By virtue of its registration, it is possible for Louboutin in theory to prevent competitors from using a broad spectrum of red hues. Or what about pink, for example? Nevertheless, this lack of clarity is not limited to the fashion industry, or even just colours. The question of what is a similar trade mark is usually a vexed question.
The New Zealand definition of a trade mark expressly extends to singular shades of colour. However, before a colour mark is acceptable for registration, an applicant must file a representation of the precise colour or a written description of the mark. The most common description utilised is the number specified under the Pantone indexing system. In practice, the application must further include an explanation of how the mark is applied to the goods and/or services or interest. If Louboutin were required to provide initial specificity of its mark’s Pantone shade (the exact shade of Louboutin’s red is Pantone 18.1663 as indicated by the corresponding European Union registration), this would strike a viable balance between protection of source-identifying elements and certainty as to the breadth of protection.
The next round
Once, in an interview with the New Yorker, Louboutin quipped that “the shoe is very much an x-ray of social comportment”. Fittingly, his gorgeous shoes have now radiated attention to an uncertain segment of intellectual property law.
Louboutin vehemently disagreed with Marrero’s decision and has appealed to the US Court of Appeals for the Second Circuit. The requested cancellation of Louboutin’s mark has accordingly been deferred until a ruling is made on the injunction. Just how the Court of Appeal will rule on the relevancy of the colour depletion theory is shading up to be a very important decision.
NZLawyer \\ issue 192 \\ 7 September 2012