Much has been said and written about Christian Louboutin’s iconic red sole brand. It has sparked endless debates about trademark law in various courts around the world, including in the U.S., France, Switzerland, and most recently at the EU Court of Justice.
Christian Louboutin began selling his high-heeled red-soled women’s shoes in the early nineties. The red soles gradually became a signature brand, somewhat comparable to the famous Burberry check pattern. The creator’s idea starts as a mere decorative design, just like any fashion design. But over the years, it gradually becomes a brand in itself because the public begins to perceive it as a source identifier even without any concurrent word mark on the product. Burberry registered its design as a two-dimensional trademark around the world; it recently sued Target in the U.S. for selling scarves with a similar design. As has been the practice of Burberry over the years, that is a trademark claim, not a copyright claim—which would present greater challenges to Burberry under U.S. law.
Back to Louboutin’s red soles: The United States Court of Appeals for the Second Circuit ruled in 2012 that Louboutin owns a valid trademark for his red sole shoe design. Louboutin had taken Yves Saint Laurent to court for trademark infringement. The red sole trademark was deemed inherently distinctive, Louboutin having given ample evidence that the trademark had acquired secondary meaning. Those words sound like music for the fashion brand owner and its lawyers because it means that the court rewards years of investments in sales, advertising and free publicity. (As the court duly noted, Louboutin shoes are popular items to wear when walking red carpet events in the entertainment industry.) Louboutin’s victory was unfortunately limited to the court having confirmed the validity of the trademark; the court also ruled that the same trademark registration could not be invoked against shoes – such as those sold by YSL – that are monochrome red, covering the insole, outsole, heel and upper part.
The U.S. thereby paved the way for Louboutin, which is, after all, a French brand. A long-awaited judgment in the European Union was recently rendered by the EU Court of Justice. This time, it was the Dutch discounter Van Haren that was selling red-soled women’s shoes. The court held, after a long debate, that a red sole applied on the sole of a shoe can be a valid trademark in the EU. Under pre-2018 EU law, the shape of an object that “gives substantial value” to the product itself could not be registered as a trademark. (An example would be the distinctive shape of the Perrier bottle.) The court that the color red, as applied to a shoe, was not as a “shape,” as Van Haren had asserted; after all, Louboutin had not sought to register a shoe but merely a color applied at a certain location on shoes. Following the EU court’s guidance, the District Court in the Netherlands that had referred the issue will now ban the sale of Van Haren’s shoes throughout the European Union.
A crucial takeaway from this case is the reward given for the smart way in which the trademark had been registered. In many trademark systems, the registrant is allowed to specify its two- or three-dimensional object with a brief description. Louboutin’s lawyers had wisely specified the filing as follows: “The mark consists of the color red (Pantone 18‑1663TP) applied to the sole of a shoe as shown (the contour of the shoe is not part of the trade mark but is intended to show the positioning of the mark).”
That victory may not last very long, however. EU trademark law was recently amended, with the effect that not only “shapes” but also “other characteristics” giving substantial value to the product may be barred from trademark registration. This change in the law opens a new can of worms: in particular, it remains to be seen whether pre-2018 trademarks, such as the one owned by Louboutin, can be invalidated on the basis of the new law.
Credit: Diederik Stols | Guest Post
Phillips Nizer would like to thank Diederik Stols for the contribution of this post to the Fashion Industry Law Blog. Diederik is a partner at the law firm BOEKX Advocaten in The Netherlands where he specializes in intellectual property, media and entertainment and e-business. (http://www.boekx.nl/en/)
When one speaks about trademarks, the familiar adage “use it or lose it” comes to mind. But there is another important principal that can equally endanger your trademark rights: You must police the market, monitor the trademark register and take action to stop infringements, or you may find yourself without a trademark to enforce. Two recent cases demonstrate the importance of this latter principle.
LUSH is the trademark for a global brand of “hand made” cosmetic, fragrance and bath products sold by Cosmetic Warriors Limited (“CWL”), a company founded in England in the mid-1990’s. CWL opened its first Canadian retail store in 1996 and expanded to the United States in 2002. It now operates in excess of 940 stores in 49 countries, including 250 stores in North America, 200 of which are located in the United States. In 2002, it registered the LUSH trademark for use on t-shirts in Canada, but never filed a US registration for apparel. Pinkette Clothing Co. is a California company that, since 2003, has sold women’s clothing under the LUSH mark to retailers in the US and Canada, principally Nordstrom. Pinkette secured a US registration for the LUSH trademark for apparel in 2010. CWL did not oppose the issuance of registration for the mark, although its outside counsel apparently was notified through a trademark watch service of the application’s publication for opposition. In December 2014, CWL applied to register the trademark LUSH in the United States for clothing. When its application was rejected due to Pinkette’s pre-existing registration, it filed an application to cancel Pinkette’s mark. Instead of defending in the cancellation proceeding before the Trademark Trial and Appeal Board, Pinkette commenced a court action seeking a declaration that it did not infringe CWL’s trademark or, alternatively, that CWL’s failure to oppose Pinkette’s application in 2010 and its subsequent delay in seeking to cancel Pinkette’s registration barred CWL from enforcing its trademark rights against Pinkette. CWL counterclaimed for trademark infringement and to cancel Pinkette’s LUSH trademark registration. After trial, a jury found that Pinkette had infringed CWL’s LUSH trademark and that Pinkette’s registration should be canceled, but it also found that CWL had unreasonably delayed in asserting its claims. The court held that the delay barred CWL’s action and dismissed its claims. On appeal by CWL from the dismissal of its claims, the U.S. Court of Appeals for the Ninth Circuit held that CWL should have known of Pinkette’s usage as early as 2010, when Pinkette’s application for registration was published for opposition, that CWL had not been diligent in asserting its rights, and that Pinkette had been harmed by the delay because, in the interim, it had expended time and resources to develop its LUSH business. As a matter of equity, therefore, CWL would not be permitted to assert its claim either for trademark infringement or for cancellation of the Pinkette mark.
The second case demonstrates what can happen when many uses of a trademark for competitive goods are tolerated by the trademark owner for an extended period. The essential function of a trademark is to identify the source of the goods to which it is applied. Trade dress in the form of the design of a product or its packaging can also serve to identify a source and can serve as a trademark when it does. But if the design does not have a source-identifying function, referred to as “secondary meaning,” the design is not registrable for trade dress protection. When other third parties are permitted to use the design in the market for similar goods, the design cannot achieve the required secondary meaning.
Converse learned that lesson the hard way. In 2013, Converse registered a trademark for the “midsole” design of its Chuck Taylor All Star sneakers, consisting of the toe cap, textured toe bumper and two thin stripes along the side of the sole of the shoe. It claimed common-law trademark rights in the design based upon decades of its use prior to securing its registration. It subsequently filed a complaint with the International Trade Commission against Walmart, Skechers, Highline and New Balance seeking to bar the importation of sneakers it claimed infringed its registered midsole trademark and its common law trademark rights in the design. The International Trade Commission found that there was a likelihood of confusion between the Converse sneakers and the competitors’ sneakers. But the Commission also found that there had been a proliferation of competitors using the same design, on the same goods, sold to the same class of consumers over many years. As a result, the Commission concluded that the design could not be said to identify Converse as the source of the goods and, therefore, its trademark registration was invalid.
The lesson of these cases is clear. Adopting and registering a trademark is only the beginning of your work. To preserve and protect the trademark, you must police the market and assert your rights on a timely basis when you discover infringement by others. If you fail to do so, you may find that your investment in the trademark has been lost.
Credit: Helene M. Freeman
Earlier in this series of posts (here and here), I reported on my interview with Arthur Wayne, the vice president, global public relations of Brooks Brothers. We discussed how the brand maintains continuity throughout hundreds of points of sale (wholesale and retail). In business and legal terms, here is the short and simple version:
- Stylistic consistency creates trademark consistency. Brooks Brothers maintains uniformity of cut, pattern, SKUs and style names worldwide. I own suits and jackets in the 1818 line, which is the company’s standard, positioned between its premium Gold Fleece line and Red Fleece bridge line. My pieces are of Italian fabric, sewn, variously, in Italy, Thailand and the company-owned workrooms in Haverhill, Massachusetts. All bear the trademark 1818, all are in the slimmest of the company’s fits, which is branded Milano. As a customer, I know that, wherever I find Brooks Brothers in the world, I can put on an 1818 Milano jacket made in any of three continents and know it will fit just as do the ones in my suitcase. In legal terms: The more consistent the message, generally speaking, and the more clearly a trademark represents just one source of origin, the stronger will be that trademark.
- Control the message, but respect regional differences. Japanese customers much prefer the company’s products made in its US factories—which they view as a mark of authenticity. French customers, in contrast, want to experience the brand, but they care relatively little where items they buy are sourced. (Interestingly, offered Mr. Wayne in an aside, when foreign buyers visit, it is the Japanese men who typically have the best interpretation of “American traditional style.”) United States trademark law does not permit the registration of geographically descriptive marks, so from a legal point of view, where it is made is of no matter: if customers get that the brand is about the American experience (reinterpreted and, to my taste, noticeably improved, by Italian ownership), that is what matters most.
- As in the movies, story is everything to a brand. Marketers and lawyers do not always see eye-to-eye. Every business day, in multiple places around the world, marketing teams are presenting to their lawyers exciting new trademarks, only to hear the lawyers say that they are unavailable for use. On the importance of story for a fashion or luxury brand, however, there should be no disagreement. Just as the mere mention of Veuve Cliquot brings to mind the story of the taste and luxury of Champagne and the mention of Leica brings to mind the story of precise German optics, so does a reference to Brooks Brothers open a page on a story about the American experience—in style of dress and in style of living. When Ralph Waldo Emerson said, “A foolish consistency is the hobgoblin of little minds,” he omitted any reference to wise consistency. That is the path taken by Brooks Brothers and by other international brands that know that, from consistency comes the strength to endure and prosper in multiple territories, among multiple customer bases.
- Newness is the best tradition. “People think of us as a traditional brand,” said Mr. Wayne, “but our founder, Henry Sands Brooks, was a fashion guy—a dandy. Look at what followed: collars with buttons; readymade suits; pink shirts on men. All of these things were innovative in their time—probably even shocking to many.” Tradition, in other words, is what happens when innovation meets inheritable acceptance. And that is the best way a marketer, together with his or her lawyer, can build, expand and ultimately preserve a fashion brand.
Credit: Alan Behr
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Recently, the New Balance footwear company won a landmark $1.5 million trademark decision in the Suzhou Intermediate People’s Court, near Shanghai, China. Daniel McKinnon, the New Balance senior counsel for intellectual property, told the New York Times: “If the China marketplace can be thought of as a schoolyard, New Balance wants to make it abundantly clear we are the wrong kid to pick on.”
The schoolyard brawl all started when New Balance alleged that three Chinese brands infringed upon its well-known New Balance “N” trademark. The three Chinese shoemakers, New Boom, New Barlun, and New Bunren, saw fit not only to use similar brand names, but also to trade off of New Balance’s international acclaim by mimicking its slanted “N” design on their shoes. A Suzhou Court cited the defendants’ free-riding, consumer confusion, and market harm as the basis for its ruling in favor of New Balance.
What makes this case important is not only that New Balance was prepared to fight for its rights in China—often a challenging thing to do—but also that it was willing to do so over a single-letter trademark.
A trademark is a source indicator that can convey a range of messages about your brand such as quality, price, taste and reputation—the sometimes obvious and sometimes mysterious factors that, in total, are the goodwill of the brand.
Brand owners often reflect upon the value and protectability of words, names, logotypes, slogans and even colors as trademarks. The victory by New Balance in a famously tough territory tells us that a lot can ride on who is found to own and have the rights to exploit a single letter.
Minimalism is as much a factor in trademark recognition as anywhere else in the broad field of visual expression. Mercedes Benz has made a simple three-pointed star one of the most recognizable marks on earth. In the USA, Louboutin owns the color red for the soles of shoes, and Federal Express owns the truncated version of its mark popularized by the public: FedEx. Take it down even further, and you get marks with one or two letters: PayPal is recognized by two cerulean stylized “P’s” and Facebook by a solitary but consequential byzantine blue lower-case “f”. Uber upgraded its former “U” mark to a modernized “U” enclosed by emerald green.
In fashion, designers have been using single-letter marks for decades. Hermès uses its elegant “H”; and of course, New Balance is using its slanted “N”. A few logos have doubled letters: Gucci has made the twin “G” into a brand; as with the seemingly reflective Tory Burch “T”, the mirrored Fendi “F”, and the interlocking “Cs” of Chanel.
Single-letter marks can be significant in fashion because a single letter can serve not only as a logo, but also as a design that can be emblazoned on clothing, handbags, shoes, etc. Meanwhile, the boom in online retail—where a mark may be only barely visible—has been the basis for the further simplification of marks. The large British online retailer Asos recently abbreviated its trademark to the letter “a,” the better to identify the brand on its mobile app.
Credit: Candace R. Arrington
Candace Arrington provides research support as a law clerk to our corporate and business law, intellectual property law and entertainment law practices.
If you were hoping that following the Supreme Court’s decision in Star Athletica you might learn whether common stripes, chevrons, color blocks and zig zags are sufficiently original to be copyrightable—a question expressly reserved by the Supreme Court and the Sixth Circuit– you will be disappointed. On August 10, 2017, the district court permitted Varsity Brands to voluntarily dismiss its copyright infringement action against Star Athletica with prejudice, over the objection of Star Athletica, which wished to pursue its counter-claims seeking to invalidate the Varsity Brands copyrights.
You might well ask, as we did, why after seven years of largely successful litigation, Varsity Brands would be permitted to walk away. Or you might ask, as we also did, why Star Athletica would object to having the suit end with no apparent injunctive or other relief awarded against it. Both are fair questions and the answer to each is unusual: The insurance company that was defending Star Athletica reached a settlement agreement with Varsity Brands, without the participation or approval of Star Athletica. The terms of the settlement are confidential. The only clue is the court’s reservation to Varsity Brands of the right to return to court if it does not receive the payment from the insurer required by the settlement. As far as Varsity Brands is concerned, not only does it get money, but it also avoids the potential for invalidation of its copyrights, having made its point that the two dimensional designs reflected in its uniforms are separable from their utilitarian features and theoretically capable of copyright protection. It now has a stronger threat to hurl at potential competitors.
But what of Star Athletica and its interest in settling its rights to compete with Varsity Brands in the cheerleading uniform market? In the view of the court, Star Athletica receives what is in effect immunity from future claims of copyright infringement related to the copyrights and uniforms at issue in the action. And also in the court’s view, Star Athletica’s counter-claims to invalidate the copyrights were only defenses to the copyright infringement claims and not independent bases for legal action once the threat of copyright liability was removed. And that is the rub: Varsity Brands has many other copyright registrations for which similar challenges to their validity might (or might not) have merit. Because the court did not provide guidance on that fundamental point, competing uniform makers remain exposed to similar infringement claims.
One can’t help feeling that the broader fashion public had an interest in the resolution of the question of whether stripes and chevrons are original when applied to garments. But it is an axiom of federal court litigation that the courts do not decide hypothetical cases or controversies for the edification of the public.
For now, if you are interested in whether stripes can be protected in fashion, you will have to focus on trademarks and not copyrights. There is always Gucci’s suit against Forever 21 for knocking off what it claims is its stripes trademark. And then, too, there is Adidas’ pending suit against Skechers for knocking off its three stripe trademark. The district court in Oregon just decided that Adidas’ trademark infringement suit can proceed.
Credit: Helene M. Freeman
Recently, the Federal Court of Appeals for the Ninth Circuit upheld an injunction issued for the benefit of members of the Kardashian family against their cosmetic products licensee.
The Kardashians had terminated the license agreement due to the licensee’s alleged failure to pay royalties, among other alleged breaches. The licensee continued to exploit the license and sell products bearing the Kardashian trademarks, asserting, among other things, that “the Kardashians’ termination of the license agreement was invalid because the Kardashians breached the license agreement first . . . .”
The district court found for the Kardashians, holding, unremarkably, that a licensee has but two options when faced with a breach of the license agreement by the licensor: “First, the licensee can consider the contract terminated and stop performance. Second, the licensee can instead continue making royalty payments under the license agreement, continue using the trademarks, and then sue for damages. Regardless, the licensee cannot both stop paying royalties but nevertheless continue using the trademark.”
Although the options presented to a licensee by the district court decision are seemingly reasonable, they can present real risk to the licensee. For example, if the licensee had made significant investments and engaged a large staff to support the licensed business, terminating the agreement and closing down the licensed business not only will put any number of people out of work without advance notice, but also may result in defaults under the licensee’s banking arrangements and the loss of its entire business, thus giving rise to consequential damages potentially far in excess of any award for actual damages to which the licensee may be found to be entitled. Under the district court decision, the licensee’s option in these circumstances would be to continue the licensed business and bring an action against the licensor for damages, with the attendant relationship issues potentially adversely affecting performance, while continuing to make royalty payments with no guaranty that the licensee’s damages can be recouped, even after years of expensive litigation.
There is another quite unremarkable statement in the decision, which, although not in any way undercutting the ruling, may give some guidance as to how a licensee may attempt to protect itself in circumstances like those that the Kardashian licensee alleged it was facing. The court wrote, “like all contracts, trademark license agreements are governed by general principals of contract law.”
Among the most wonderful aspects of our contract laws is that the parties can, in effect and with few limitations, create their own law as to their rights and obligations under almost any circumstances. Accordingly, a licensee familiar with the Kardashian case might look to create a contractual structure whereby it would not have to pay royalties in the event of a significant breach by the licensor or, more realistically, a contractual structure by which it would not have to chase the licensor, at great expense, to recoup royalty payments in order to continue to exploit a generally valuable license agreement.
It is not uncommon to see license agreements in which the licensor has included a right for the licensor to set off amounts due and owing to it by a licensee against any outstanding payment obligations it may have to the licensee. However, even if a licensor would be willing to make this provision bilateral, these provisions are objectively problematic because they cannot be reliably drafted to prevent with certainty a party from merely alleging that the other owes it money in order to trigger the clause (unless, of course, a claimant party is required first to obtain a final judgment as to the amount allegedly owed, which brings us back to the problems with option number two). A better and more objective protection would be to allow the licensee to put its payments of royalties into escrow, with an obligation to take some formal legal action in accordance with the license agreement’s arbitration or litigation provisions before, or reasonably soon after, it notifies the licensor that the escrow account has been established. Assuming that the licensee establishes in the proceeding that it is entitled to damages, the escrow fund, even if less than the damage award, will be available to be applied toward the satisfaction of the judgment. It also is possible that establishing an escrow account and making payments into the escrow account will help relieve at least some of the tensions arising from awkward efforts to work together while the parties are adversaries in court or in an arbitration and perhaps even salvage the relationship after the legal action has ended.
Credit: Jonathan R. Tillem