Breaking: Second Circuit rules in Louboutin v. Yves Saint Laurent: Score one for Louboutin

The Second Circuit here in New York has just issued its long anticipated decision in the Louboutin v. Yves Saint Laurent case. (Decision here: Louboutin v YSL_Sept 5 12). Having just skimmed the decision, it appears that Louboutin can score this as a victory, but only partially.

Here are some excerpts from the opinion, written by Judge Cabranes:

“We conclude that the District Court’s holding that a single color can never serve as a trademark in the fashion industry, Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 451, 457 (S.D.N.Y. 2011) (“Louboutin”), is inconsistent with the Supreme Court’s decision in Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 162 (1995) (“Qualitex”), and that the District Court therefore erred by resting its denial of Louboutin’s preliminary injunction motion on that ground.”

In other words, yes, you can have a trademark in a single color, even in the fashion industry.

“We further conclude that Louboutin’s trademark, which covers the red, lacquered outsole of a woman’s high fashion shoe, has acquired limited “secondary meaning” as a distinctive symbol that identifies the Louboutin brand. As explained below, pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119, we limit the trademark to uses in which the red outsole contrasts with the remainder of the shoe (known as the “upper”). We conclude that the trademark, as thus modified, is entitled to trademark protection. Finally, we conclude that, because the monochrome design employed by YSL is not a use of Louboutin’s modified trademark, we need not, and indeed should not, address whether YSL’s use of a red outsole risks consumer confusion or whether the Louboutin mark, as modified, is ‘functional.'”

The court also held that “the District Court’s conclusion that a single color can never serve as a trademark in the fashion industry was based on an incorrect understanding of the doctrine of aesthetic functionality and was therefore error.”

In other words, yes Louboutin, has an enforceable trademark, but because YSL’s shoe was monochrome (non-contrasting), it loses on the infringement question. Had YSL’s shoe had a red sole and a contrasting upper, the result may have been quite different.

I think Louboutin should look at this as a victory, considering that their color mark has been much under attack for some time now. At least now Louboutin knows that (at least in the US), the mark is valid and enforceable (as long as the infringing shoes have red soles and uppers of a contrasting color).

This is my takeaway from a very quick skimming of the opinion. Further analysis will follow as soon as I’ve had a chance to give it a thorough reading. Stay tuned… (Question of the day: will either party appeal?)

Hat-tip to my friend and colleague Lorraine Fleck for alerting me to the issuance of the decision.

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Another take on IP TRANSLATOR, via the IPKat

Here’s a very nicely thought out take on the meaning of the IP TRANSLATOR decision, from Richard Ashmead via the IPKat.  I’m particularly impressed with the conclusions reached in this piece, especially that “it’s not over.”

 

The IP Translator Decision – My 2 Cents…

On June 19, 2012, the European Court of Justice (“ECOJ”) handed down a decision in what has been christened the IP Translator Case (decision here).  The case concerns a dispute between The Chartered Institute of Patent Attorneys and the Registrar of Trade Marks (of OHIM, the registrar of community trademarks) concerning the latter’s refusal to register the mark IP TRANSLATOR.

It seems everyone is writing about this decision, so obviously I couldn’t resist adding my 2 cents, though I seem to be a bit late to the party (I simply have not had time to write this post until now).  However, I have had the benefit of looking at what other commentators have had to say.

Because I have not seen any postings addressing the issue, I want to look at it from the angle of what this means for European trademark owners intending to register their marks in the United States (assuming they avail themselves of the opportunities made available to them by this ruling).

The facts and background are really not of great importance to this posting, but the decision certainly is.  The important rulings can be found in paragraph 64 of the decision:

–        Directive 2008/95 must be interpreted as meaning that it requires the goods and services for which the protection of the trade mark is sought to be identified by the applicant with sufficient clarity and precision to enable the competent authorities and economic operators, on that basis alone, to determine the extent of the protection conferred by the trade mark;

–        Directive 2008/95 must be interpreted as meaning that it does not preclude the use of the general indications of the class headings of the Nice Classification to identify the goods and services for which the protection of the trade mark is sought, provided that such identification is sufficiently clear and precise;

–        an applicant for a national trade mark who uses all the general indications of a particular class heading of the Nice Classification to identify the goods or services for which the protection of the trade mark is sought must specify whether its application for registration is intended to cover all the goods or services included in the alphabetical list of that class or only some of those goods or services. If the application concerns only some of those goods or services, the applicant is required to specify which of the goods or services in that class are intended to be covered.

So, what does this mean in the context of U.S. applications?  Short answer: absolutely nothing, but there are some important issues to keep in mind.

As most practitioners know, the USPTO has very stringent rules for specificity in a description of goods or recitation of services.  As anyone who has filed a U.S. application under Sections 44 or 66 of the Lanham Act knows, you usually can’t get away with the broad descriptions common in European trademark registrations.  As a matter of fact, an office action issued by the USPTO requiring greater specificity is an almost unavoidable by-product of an application filed in the U.S., be it based on a home registration (Section 44) or as an extension of an International Registration (Section 66).

Let’s be clear about this: NOTHING in the IP TRANSLATOR decision affects the USPTO’s specificity requirements.  If an owner uses the mechanisms available under Sections 44 or 66 of the Lanham Act and the application or registration that is the basis of the US application includes class headings, the applicant will still have to comply with the USPTO’s specificity requirements.

Here is where I see the potential for major problems, arising out of another policy of the USPTO, namely Trademark Rules of Practice 2.85, which provides in pertinent parts:

(d) Section 66(a) applications and registered extensions of protection. In an application under section 66(a) of the Act or registered extension of protection, the classification cannot be changed from the classification assigned by the International Bureau of the World Intellectual Property Organization, unless the International Bureau corrects the classification. Classes cannot be added, and goods or services cannot be transferred from one class to another in a multiple-class application.

(f) Classification schedules shall not limit or extend the applicant’s rights, except that in a section 66(a) application, the scope of the identification of goods or services for purposes of permissible amendments (see § 2.71(a)) is limited by the class, pursuant to § 2.85(d).

The effect of this rule is that, if an application includes a non-specific description of goods/services in a particular class and, upon submission by the applicant (in response to an office action) of a description that satisfies the specificity requirements of the USPTO, the USPTO finds that any of the goods/services have, in the view of the USPTO, been misclassified, said goods/services must be deleted from the application.  This may not be much of an issue if the deleted goods or services are not at the core of the applicant’s business.  But, if they are, the applicant is left with what is essentially a worthless registration (at least in the United States).

Another issue to be considered is that, when an applicant files an application for extension of protection of an international registration to the United States, the applicant is required to make a declaration that there is a “bona-fide intent to use” the mark on all of the goods and services listed in the application.  Accordingly, even though recent decisions have significantly eroded the ability to successfully prosecute oppositions or cancellation actions on the basis of fraud, unless the applicant has a bona-fide intent to use the mark on every single one of the potentially thousands of goods or services covered by a class heading, by filing an application with just class headings in the US, that applicant is proffering a false declaration, with all of the various consequences that entails under the USPTO’s rules and regulations, applicable case law and, yes, even criminal law.

Therefore, the following is my advice to European applicants tempted to avail themselves of this apparent new advantage: DON’T DO IT if the intent is to use the Community Trademark either as a basis of filing in the US under Section 44 (because of the false declaration issue) or Section 66 (because of both the potential of having core goods deleted from the application and the false declaration issue).

Now, to some readers the possibility of getting into trouble in the US over these issues might seem remote, and with respect to criminal liability for giving a false declaration they certainly are (I’ve never heard of a prosecution in such a case).  But why tempt fate?  The fact is that it might be easier and safer just to file a national application in the US, where reclassification is possible and where a qualified US attorney can advise beforehand regarding the requirement of having a bona-fide intent to use the mark on all of the goods/services listed in the application.

Finally, I can’t say that I can welcome the decision in this case.  While I believe that the USPTO’s specificity requirements sometimes, maybe even often, go too far, I also think that a requirement for some specificity is a good thing.  It is my belief that opening up the possibility of using class headings in CTM applications invites applicants to file overly broad applications and invites unnecessary disputes between owners, because it will not be possible to ascertain from the registry what a mark is actually intended to be used on.  Therefore, it is my view that the ECOJ’s decision in this matter was ill advised.