The French Cour de cassation ruled on 30 May 2012 that the trademark representing a red sole on Louboutin’s high-heeled shoes should be cancelled. The Court thus confirmed the judgment of the Paris Cour d’appel of 22 June 2011. Louboutin is also waging a judicial war in the U.S., and it did not fare well in the first round, on August 2011, when the District Court for the Southern District of New York ruled that Louboutin’s red sole mark warrants cancellation. The appeal before the U.S. Court of Appeals for the Second District is pending.
If the appellate court in the U.S. confirms the decision of the first-instance court, there will be no uncertainty left as to whether Louboutin can prevent others from producing and advertising high-heel shoes with red soles (it cannot). In the French court, the Spanish fashion giant Zara was the other; in the U.S. case, it is Yves Saint Laurent America (YSL). Both Zara and YVS have been producing shoes with red soles, and Louboutin sued them for trademark infringement. They counterclaimed and their arguments prevailed.
Although the factual background in the two cases is similar, there are noteworthy differences in the way in which the courts in Paris and New York, respectively, handled the matter and reached decisions which were unfavorable to Louboutin.
In the U.S. case, the only issue the court in New York addressed was aesthetic functionality: whether Louboutin’s use of a “lacquered red sole” as a mark has aesthetic appeal and, if so, whether it hinders competition in the market for consumers who want red shoes. In the French case, the judgment of the Cour d’appel refers to aesthetic functionality only obliquely, whereas the Cour de cassation disregards the issue altogether. The Cour d’appel and the Cour de cassation do fault Louboutin’s French mark with the other, and more frequently present, type of functionality – the “utilitarian” one – which the New York court does not identify as an issue. Finally, the French courts place a major emphasis on the intrinsic non-distinctiveness of Louboutin’s mark, an issue not addressed by the New York court. The latter court does refer to another type of distinctiveness – the acquired one – only to dispel that issue at the outset, having restated the rule that an (aesthetically) functional mark cannot be protected even if it acquires distinctiveness.
There is, also, a difference of style. The opinion written by Judge Victor Marrero, in New York, bursts with sparkling insights – as, one is tempted to say, it befits a case dealing with a subject such as high-heeled shoes dominated by a stark red color. The judgments in France, in contrast, are written in a rather flat way.
More importantly, the French judgments – and that of the Cour de cassation in particular – state the arguments in a most cursory way. This is unfortunate, especially with regard to the analysis of functionality of a sign. While the issue is important and much written about, the case law in Europe on the concept of trademark functionality, and of the aesthetic functionality in particular, has been scarce. (The terms “functionality” and “aesthetic functionality” make part of the U.S. legal parlance, but the concepts exist in the laws and case law in Europe as well).
To understand the judgments of Cour d’appel and the Cour de cassation in the Louboutin case, one should keep in mind the provisions in the French Intellectual Property Code concerning graphic representation, distinctiveness and functionality:
Article L711-1
(1) A trademark or service mark is a sign capable of graphic representation which serves to distinguish the goods or services of a natural or legal person.
…
Article L711-2
(1) The distinctive nature of a sign that is capable of constituting a mark shall be assessed in relation to the designated goods or services.
(2) The following shall not be of a distinctive nature:
… c) Signs exclusively constituted by the shape imposed by the nature or function of the product or which give the product its substantial value.
(3) Distinctive nature may be acquired by use, except in the case referred to in item (c)
The content of these provisions is fundamentally similar to that of the respective provisions in the E.U. trademark directive (Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks) and the Council Regulation (EC) No. 207/2009 of 26 February 2009 on the Community trade mark.
The Cour d’appel found that the mark registered by Louboutin in France (n°00 3067674 – can be found here) lacked “clarity, precision, accessibility, intelligibility and objectivity”, the qualities required under EU case-law for a sign to be capable of being represented graphically. From the image in trademark 00 3067674 it was not even clear that it represented a sole. Assuming that it was a sole, it was not clear whether it was its inner or outer side. This prong of the analysis pertained to Article L711-1 of the French Code (“capable of graphic representation”). The court then inferred from the inadequacies in the graphic representation that the sign could not distinguish Louboutin’s goods. The Cour de cassation accepted this reasoning.
The Cour d’appel also briefly stated, and the Cour de cassation agreed, that even supposing that the image represented a sole, the shape of the mark (the sole) was “imposed by the nature or function” of the product. This wording, of course, is rooted in Article L711-2, para. 2, the first part of recital (c), of the French Intellectual Property Code, and it pertains to utilitarian functionality – which, regarding the issue at bar, the courts found to exist, rendering the mark unprotectable.
The Cour d’appel did not directly refer to the remaining part of recital (c) – “…or which give the product its substantial value” – in Article L711-2, para. 2, the part which covers aesthetic functionality. If the court touched upon aesthetic functionality at all, it did it in a roundabout way, by pointing at the pronouncements of Christian Louboutin in which the company hailed the “screaming red” (un rouge vif “qui claque”) color as instantly attracting viewers’ attention. What the court implicitly said here was that the function of the red sole was to enhance the inherent attractiveness of the product. That takes us to the territory of aesthetic functionality, even if no such designation – or even its European analogue (“give the product its substantial value”) – is used in the judgment. Interestingly, the Cour de cassation, while restating with approval all other points of the Cour de apel’s holding, omitted this one.
The last point the two French courts addressed was that of acquired distinctiveness. Louboutin argued that its mark was famous, and that the reputation itself was evidence of the distinctiveness of the mark. The judges rejected that argument, stating that the reputation attached to the use of the shoes and not to the mark.
One would have expected here that the courts, having established that the shape of the mark was imposed by the nature or function of the goods, would point to the provision in the Intellectual Property Code (Article L711-2, para. 3) which expressly negates the possibility of acquired distinctiveness for a functional mark. However, neither the Cour d’appelnor the Cour de cassation mentioned the provision. (The Court of Justice of the European Union and the Court of the First Instance have often stressed that a sign which is refused registration because of functionality can never acquire a distinctive character by the use made of it (Case C-299/99 Philips v. Remington [2002], paras. 57 and 75; Case C-371/06 Benetton v. G-Star [2007], para. 26; Case T-508/08 Bang & Olufsen v OHIM (II) [2011], para. 44)). It may be that this idea is actually expressed in the French courts’ assertion that the reputation is attached to the use of the shoes and not to the mark. This is an example where the approach taken by the courts to leave the briefly stated arguments undeveloped takes a toll on the judgments’ clarity.
The court in New York dealt, in considerable detail, with only one issue concerning the Louboutin mark registered in the U.S. (No. 3,361,597 – lacquered red sole on footwear): whether its attractiveness was essential to its use and purpose. The court ultimately answered the question affirmatively. The lacquered red, therefore, served functions other than the function of a mark, which is to identify the source of the goods. Like the Cour d’appel in Paris, the judge in New York turned against Christian Louboutin’s his own words spoken in praise of the lacqured red (“engaging”, “sexy”, and gives the shoes “energy”), as proof that the mark had significant non-trademark functions. The judge looked with utmost disapproval on Louboutin’s pretension to hinder competition among shoe-producers by effectively appropriating more than a dozen shades of red in the design of high-fashion footwear. The court also reiterated the rule developed by U.S. case law, according to which a functional sign is not entitled to trademark protection even if it has acquired distinctiveness (“secondary meaning”).
