Source: https://oliverciappara.com/2019/06/28/the-louboutin-saga-a-monopoly-too-far/
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The Louboutin Saga: A Monopoly Too Far? – Oliver Ciappara
The Louboutin Saga: A Monopoly Too Far?
by oliverciappara.In Trademarks.Leave a Comment on The Louboutin Saga: A Monopoly Too Far?
Has the CJEU coloured outside the lines when upholding Louboutin’s trademark? This analysis will focus on the impact the final ruling has in terms of significance to the broader industry when creating a colour monopoly vis-à-vis the fine print that gave way to this ruling. This writing will refer to the two Attorney General (the “AG”) Opinions, and the case against Yves Saint Laurent to draw on differences to the CJEU ruling.
Footwear has been at the forefront of trademark litigation as of late, with; Adidas victory over their three stripes (C-102/07 Adidas), Crocs having their patent revoked (T-651/16 Crocs v EUIPO), and Converse suing for trademark infringement, however, none so controversial as the case in question, where Louboutin was allowed to trademark his red sole shoes.
Christian Louboutin set up his company in Paris of 1991, his boardroom famous red sole stiletto became synonymous with its creator and became the company’s signature look. The now world-famous brand has become the subject of litigation over the validity of the trademark.
The unconventional trademark protects the colour red specifically [Pantone 18-1663] on the sole of the shoes, which Van Haaren had allegedly infringed when selling his red sole shoes (C/09/436517). Subsequently, a case was brought to the District Court of The Hague where the first party alleged infringement of his trademark and the second argued that under Article 3(1)(e)(iii) of Directive 2008/95 the trademark held by Louboutin was invalid due to that which; “consists exclusively of the shape or another characteristic which gives substantial value to the goods.” (C/09/450182). As such, the Dutch court referred a question to the CJEU which asked if colour is considered a shape within the meaning of this Directive.
CJEU Judgment – Analysis
Given the interpretation of the Directive by the AG, the ruling by the CJEU was expected to have broader guidance regarding the notion of “Substantial value” within the meaning of Article 3(1)(e)(iii) – now Article 4(1)(e)(iii) of the new Directive. – Yet, in this case, the CJEU limited the ruling strictly to answering the referred question ultra petita.
Although taking this narrower scope, the preliminary judgment still has had an impact on the Trademark community, which this essay will extrapolate, by building on jurisprudence and academic works to give its conclusions. As a starting point, the CJEU ruled that the trademark held by Louboutin is valid, but only on the basis of the small print which came alongside the registered mark. In summary; the CJEU said that given no formal legal definition of “shape” a de facto meaning must be understood, as such the CJEU first explained that in everyday language a shape does not constitute a colour, and therefore a colour mark or position mark, as categorised by the AG does not fall within the meaning of the prohibition. In lieu of this the CJEU looked at if the mark in question is considered exclusively of a shape, to which the CJEU explained that the mark in question attempts to protect the colour within the definition of the shape of the product but does not attempt to protect the shape of the product per se, therefore it cannot be held that the mark consisted of the shape of the product when the mark was only registered within the meaning of that shape. The CJEU further expressed that given the registration description which expressed that the shape of the product is not part of the mark, but rather used to show the positioning of the mark, the CJEU held that the mark cannot be regarded as consisting exclusively of the shape when the principle element of this mark is a colour (Pantone 18-1663).
However, the new Directive under Article 4(1)(e)(iii) includes “another characteristic” which is likely to encapsulate colours as one of these characteristics, however, the question that comes up when considering this change is if marks such as the one by Louboutin will be automatically captured by this new wording in the Directive when transposed, or if these marks will be safe until such a date of their renewal, which will then subject them to this scrutiny. As such, the CJEU has limited its ruling to what it was asked and marked Louboutin trademark as safe – for now – until such date when this new wording becomes relevant. In this regard, the Opinion by the AG becomes highly relevant and can provide insight into how things might play out at a later date.
AG Szpunar Opinion – Analysis
The key issue analysed by the Attorney General (the “AG”) Szpunar in his Opinion is; “What gives substantial value to the goods?”
In the first instance, the AG considered if the mark in question consists of a colour per se or a sign which consists of the shape and colour of the goods. The relevance of which comes from Article 3(1)(e)(iii) as its prohibition would not apply to colour marks but would apply to a mark which consists of the shape of the goods. In his second opinion, the AG explains that the colour matches the spatial delimitation of the shape; therefore, the shape delimits the colour. As such the shape matters, as in the AG’s opinion protection is sought for a colour within the context of the shape, and not protection for a colour per se. This examination becomes even more so relevant when considering that the prohibition Article will not apply to marks consisting of colours per se that ab initio prove they acquired distinctive character (secondary meaning) within the market space. Alternatively, such distinctive character (secondary meaning) cannot be applied when the mark is categorised as a mark which consists of the shape of the goods.
In the final part of his first opinion, the AG addressed the notion at the core of this case, namely the; “substantial value to the goods”. In his analyses, the AG examined the intent of the Article saying that the purpose of which is to prevent creating monopolies over shapes, to which it would serve the public interest better if such shapes and colours are to stay in the public domain. In light of this, the AG expressed that consideration should only be given to the intrinsic value of the goods and should give no regard to the artistic attractiveness or the inherited reputation of the mark. In this regard the AG tacitly tries to protect the mark in question, by saying that although the characteristics that give substantive value to the goods is based on the perception of the public, it must be avoided in analysis so that rights-holders don’t become victims of their own success, and the attractiveness that they created through reputation becomes grounds for refusal.
The AG in his first and second Opinions looked at Libertel for direction and applied the reasoning of colour depletion to the case in question; which says that in line with the public interest the public is better served if colours are not restricted to allow for competitive goods and services. Secondly the Opinion categorised the mark in question within the meaning of Article 3(3)(d) of the Commissions Implementation Regulation [EU 2017/1431] as a position mark and said that such categorisation does not exclude the mark from the prohibited clause. However, an issue arises from the AG’s opinion, where it was expressed that no legal consequences arise from this categorisation, yet this categorisation alone without considering other aspects, on the one hand, stops the mark from acquiring secondary meaning, and on the other, creates a far more reaching Judgment in terms of the CJEU ruling, as it gives any previously categorised position marks the ability to apply the Louboutin judgments to their marks.
Unlike the CJEU ruling, the US and Opinion by the AG seem to strike a better balance between keeping available signs that are attractive based on their acquired market reputation vis-à-vis signs that should stay in the Public Domain.
Yves Saint Laurent (the “YSL”) was selling monochrome shoes with the sole of the shoe also red, in which Louboutin contested that the product was infringing on his Trademark. After making its way to the second circuit court, the Judgment read; that in the first instance, the mark was not capable of acquiring protection, but accepted that the colour mark had achieved secondary standing within the market it operates, and therefore allowed limited protection to situations where the red and the shoe had a contrasting effect, therefore declaring the monochrome shoe by YSL was not infringing.
The relevance of this case becomes evident when considering that the AG Opinion aligns to some degree with this ruling. Both the AG and the US courts categorised the mark as in the first instance a position mark and the second instance a colour mark, as such considering the respective jurisprudence and law, these marks are unable to be registered. As already expressed, the US allowed the mark based on achieving secondary standing, however when considering the same the EU jurisprudence set in Benetton v G-Star meant that it could not acquire the same distinctiveness to overcome the absolute grounds for refusal. Which is possibly why the CJEU limited its ruling to answer specifically what it was asked so that it does not cause confusion with existing Jurisprudence.
EU Law vs US Law
By way of comparative analysis with the US, with regards to colour marks, various tests are available in the US to assess if the mark can be registered. Depending on various facts of the case different tests are applied.
In the first instance, the ornamentation test is applied to colour marks of purely ornamental value, to say that such signs lack distinctiveness, as such registration is not allowed. However, if the mark holder can prove that it has acquired secondary meaning, then the mark will be considered as such and allowed, usually in a very limited scope.
This reasoning is similar to that in Europe in that a colour mark on prima face is considered to have no distinctive elements, however, if proof is presented that the mark has achieved secondary meaning within the market than registration is allowed.
In continuation the doctrine of functionality, as explained by Gommers et al., considers signs which are essential to the use or purpose of the mark as expressed in (TrafFix Devices, Inc. v Mktg. Displays, Inc., 532 US 23, 33.), which provides for an absolute grounds for refusal, even if the mark is proven to have acquired distinctive character in its market space.
In this regard, the EU has Article 4(1)(e)(ii), which excludes a shape that is necessary to obtain the technical result. This aligns with its US counterpart, in that, even if the mark has obtained secondary meaning, it is still considered an absolute ground for refusal.
As a final aside, the US provides for a test which regards marks that have an astatic functionality. This test is applied when a mark cannot be considered under the doctrine of functionality but is still regarded as giving a competitive advantage. Such as; colour marks which enhances the attractiveness of a product, this is done because giving exclusive use, would have an unfair competitive advantage and thus limiting the possibilities of the market. As with functional signs, this has grounds for absolute refusal and cannot be considered to have achieved secondary meaning.
This reasoning follows the colour depletion doctrine, which is also found in the EU under Libertel. This judgment explains that a colour mark per se should not be allowed registration, unless in exceptional circumstances, as it limits the number of available colours in the market, therefore restricting competition.
With regards to this astatic functionality, the EU has no direct match, however, in the case in question if the CJEU did not take such a limited scope to the question and answered it more broadly it could have set Jurisprudence in this regard. However, void of such decision we look at the Opinion by the AG who in line with the US argued that a position mark would give an unfair advantage to Louboutin and should, therefore, regard “shape” as to mean colour marks as well. Furthermore, as already discussed the new addition to Article 4(1)(e)(iii) with regards to; “another characteristic” shows a move in this direction, and colour marks would possibly fall under this modification. Nonetheless, the AG did consider this change and, in his Opinion, said that this change is merely formal and has no bearing on the question asked by the referring courts.
“Another Characteristic” – More than Formal
In his Opinion the AG said that this change is merely formal, however, this analysis finds that given the Guidance note on transposing the Directive and the reasoning behind the change, the addition of this wording is far from formal and has legal implications both in terms of this case and in terms of astatic marks in general terms.
As an introduction, the Guidance note explains that the change was introduced to address issues of nonconventional marks and gives the example of scents and sounds. With this consideration in mind, the abstract and non-conventional nature of a sound and a scent is identical to the abstract nature of colour, and astatic marks. Therefore, in terms of legal implication, the addition of this wording captures the case in question in its prohibition Article.
Simply put, this Guidance note puts the case in question directly in contention, however, is saved by the fact that this addition was put in only after the referring court posed the question to the CJEU, as such an ambiguity arises if this change should be applied to already registered marks, or should be applied from the date of introduction going forward, which would exclude Louboutin from having to consider this wording until such a time the mark in question requires renewal.
Seeing All Shades of Red
To the now more pressing argument; does the ruling by the CJEU give Louboutin an absolute monopoly on all colour shades of red? Possibly more? To answer this let us first consider other issues that arise from colour marks beside the already discussed colour depletion rational.
When considering traditional marks, such as logos and words, infringement can be more easily defined, in general terms a mark is considered infringing if the visual and aural similarities, match the conceptual components of the mark registered. More specifically it can be broken down into five elements;
Identical marks as explained in (LTJ Diffusion C/291/100), is a mark which reproduces a shape without any modifications or presents minute modification, that when viewed by the average consumer becomes indistinguishable from the registered mark.
Similar marks are considered such; when in the opinion of the relevant public they are partially identical based on one or more elements of the shape or design, which was established in (Maratzen T-6/01). Furthermore, (Limoncello, C-334/05) expressed that when negligible elements exist, the EUIPO can skip comparing such elements, after explaining why they are considered as such.
Typically, this is based on the number of letters and numbers in the mark, however, as expressed by the AGP group in their article, this is not sufficient. The average consumer considers the mark as a whole, and therefore, a difference in the number of letters is not enough to exclude a shape from being visually similar. Furthermore, they highlight that marks can still be considered visually similar if they have different typefaces, font or colours. As such the overall figure is what is considered and if found to have critical similarities it is found to be infringing.
Phonetic & Conceptual Marks
Phonetic consideration can be grounds for infringement, and consideration must be given to all official languages of the EU, however, in analysis the EUIPO can focus on areas and languages where infringement is more likely to cause confusion. This is done by considering the syllables and sequence of stress; however, it does not consider accents and dialects with this regard. In addition to the already mentioned Sabel, marks are also considered to be conceptually similar if they have the same analogues meaning.
As such, the above five elements cannot be applied to colour marks, as they present none of these characteristics, which makes it harder to examine infringements. At its core, colure is an abstract construct perceived differently by different individuals. To this effect, and in consideration of the mark by Louboutin, at what point does the colour red applied to the sole of the shoe stop being infringing? especially when considering that similar, but different marks are still considered infringements within the meaning of the law.
This raises the question; if the CJEU ruling has given Louboutin a monopoly on all shades of red (and possibly all colours), applied to the sole of a shoe. In abstract terms, the trademark does not just protect the colour in question, but the concept in general terms, and makes that which may cause confusion infringing. To this effect, who is to say that blue applied to the sole of the shoe and in contrast, would not cause confusion within the relevant public? as analogously the abstract concept belongs to Louboutin.
In effect, this ruling does not support reality, as in practice the trademark protects the colour within the context of a shoe, and the shape of that product. Although the text alongside the mark specifies that the colour is dissociable from the shape, the practicality is that the mark is indissociable, and only possible within that context of that shape. Therefore, giving substantive value to the goods in question, i.e. the shoe.
Despite the ruling by the CJEU, the mark gives its owner an advantage and allows him to enjoy the benefits of a prohibited trademark – in all but a registered technicality – Which critically sets the stage for trolls and others to achieve the same level of protection based on the same technicality exposed in this case.
Litigation in this area is seldom to go away as the power that Louboutin gains from the combined shape and colour trademark will be worth holding regardless of the litigation costs. Moreover, it will be interesting to see how far Louboutin will push his rights in terms of litigation, and if he will explore the fringe areas of litigation that this mark possibly gives him, such as the abstract protection of any colour applied to the sole of the shoe, which is tacitly read within the final ruling.
Finally, it will be interesting to see if the courts and the CJEU will examine if “another characteristic” applies to colours, and if so, does it apply retrospectively to already registered marks.
Colour MarksLouboutinTrademarks
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