Updates on Christian Louboutin v. Yves Saint Laurent

There have been some interesting developments in the Christian Louboutin v. Yves Saint Laurent case (first reported here).  Hold on to your seat because it turns into a bumpy ride.

Louboutin is claiming trade-mark infringement and seeking an injunction and damages against Yves Saint Laurent’s use of red shoes with red soles.  

Yves Saint Laurent has come back hard seeking to cancel Louboutin’s trade-mark registration upon which the trade-mark infringement claim is based.  Yves Saint Laurent is claiming that Christian Louboutin’s trade-mark registration was fraudulently obtained. Yves Saint Laurent claims that as part of the trade-mark registration process Christian Louboutin included a false statement that its use of red soled shoes was substantially exclusive.  Yves Saint Laurent claims that this was a false and misleading statement, given that the marketplace demonstrates that other companies use the red soled shoe. 

Christian Louboutin sought to dismiss Yves Saint Laurent’s counter-claim to cancel Christian Louboutin’s trade-mark registration on the basis of fraud. 

Christian Louboutin then proceeded to seek to obtain a preliminary injunction against Yves Saint Laurent.  (A preliminary injunction is a court order that restrains a party from continuing its questionable conduct until the case has been decided.  In this matter, Christian Louboutin is asking the court to force Yves Saint Laurent from selling its allegedly infringing shoes until the case has been decided).  

As part of its submissions to obtain the preliminary injunction, Christian Louboutin took an interesting position.  Christian Louboutin concedes that it is not claiming a monopoly over the color red for soles of shoes, but rather exclusivity over “lacquered red” soles:

“Louboutin’s trademark covers a specific red for outsoles, not the broad spectrum of red hues.  Many shades of red and other colors are available for use by any party who wants to produce a shoe, “monochrome” or otherwise, without infringing [Christian Louboutin’s] Red Sole Mark. Even Louboutin’s red color is available for competitors on other, more visible, parts of the shoe”.

This is interesting as Christian Louboutin seems to paint its circle of exclusivity very thinly. 

Christian Louboutin also maintains that its red lacquered soles are well-known in the marketplace and have acquired significant secondary meaning through its substantially exclusive use in the marketplace for 19 years and extensive media coverage and celebrity endorsement.  Christian Louboutin maintains that competitors in the marketplace that also use red soled shoes are “copyists”, that should not be recognized as legitimate actors that diminish the success of Christian Louboutin’s trade-mark.  

Ultimately, Christian Louboutin is pressing the court to grant a preliminary injunction as it sees this case as a possible “flood gate” for other infringers:

“Louboutin actively polices the Red Sole Mark to shut down copyists.  This task will become impossible if competitors can copy the Red Sole Mark at will, as YSL has done here.  Already another competitor has signaled its intent to follow suit.  A flood of red soles in high fashion women’s footwear creates the danger that Louboutin’s goodwill, market prominence and fame will be destroyed, thus threatening its entire goodwill.”

Christian Louboutin has a lot riding on this case.  It will be interesting to see how this case will unfold.  Stay tuned to CanadaFashionLaw.com for regular updates.

Update From The IDPPPA Trenches: Interview with US Fashion Attorney Charles Colman

The US is looking to revise its copyright act to extend copyright protection specifically to fashion designs, which has been a lengthy and somewhat controversial process.  CanadaFashionLaw.com previously provided a summary of the latest attempts at legislative reform.  The IDPPPA hit parliament hill in July for a congressional hearing, which caused a flurry of commentary from the fashion community. 

Meet Charles Colman, who is a Manhattan-based fashion lawyer.  Charles serves as the Co-Chair of the Fashion Design Legislation Subcommittee at the American Bar Association and recently sponsored the creation of a Fashion Law Committee at the New York City Bar Association.  I wanted to get the inside scoop from Charles on what is happening with the IDPPPA and fashion law in the US.  Here's what he had to say:

1. You have participated in the Fashion Design Legislation Subcommittee of the American Bar Association. What were the major themes of debate between the advocates of legislative change and those that objected?

In true lawyer form, I’m going to begin my answer with a disclaimer: that I’m not authorized to speak on behalf of the ABA, or any subdivision thereof.  The ABA’s official resolution on the Innovative Design Protection and Piracy Act should be released to the public fairly soon.  In the meantime, however, I can say that the Intellectual Property Section of the ABA has actually been on the record as supporting some type of additional IP protection for fashion designs since 2008, when the industry and its lawyers were focused on the now-defunct “Design Piracy Prohibition Act.”  As a result, when I first became involved with the ABA in late 2010, my Fashion Design Legislation Subcommittee wasn’t starting on a blank slate; in other words, it was no longer a question of whether legislative change in this area was desirable or not – though it’s certainly a discussion many others are still having.  Rather, the Subcommittee engaged in a more granular evaluation of the merits and flaws of specific provisions in the latest iteration of the protection-for-fashion bill, the “Innovative Design Protection and Piracy Prevention Act.”  To give you some sense of our discussion, certain Subcommittee members felt it was important to provide further clarification on the scope of immunity for “innocent retailers” under the proposed law.  Some members were troubled by language in the bill – “likely to be mistaken” – that seemed to pull the infringement inquiry back toward trademark law, contrary to its apparent purpose.  We also spent a lot of time examining what might be considered the “core” language of the bill – the threshold requirement that a qualifying design display “a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs” – and whether that requirement was too stringent… or not stringent enough.

2. I understand that there was initially some serious objection from some within the fashion industry (i.e. the American Apparel and Footwear Association). Why? How were their concerns addressed?

I wasn’t involved in the debate at that time, but my understanding is that the AAFA was primarily concerned about frivolous lawsuits.  (Of course, this is a point of controversy anytime proposed legislation would create a new cause of action.)  The bill’s advocates eventually managed to get the AAFA on board, in large part by changing the required showing for liability from “substantial similarity” (the standard applied in copyright infringement lawsuits) to a higher standard that would require a plaintiff to prove that an alleged knockoff is “substantially identical” to her design.

3. How do you think the protection of fashion designs under copyright law will impact the fashion industry in the US? How will it impact the consumer? Will we see any impact to the economy?

I wish I could answer that question with any degree of certainty.  But as I’ve said in the past, I think it’s very difficult to make predictions about the impact of the bill – either on the industry or on consumers.  With that said, I have to imagine the law would have some prophylactic effect on unabashed knockoffs of original designs.  This could be very beneficial for small designers, who frequently can’t make the necessary evidentiary showing to prevail in so-called “trade dress” lawsuits.  But of course, even if the bill passes, it will be just as expensive to bring a lawsuit as it is now, so startup designers may remain vulnerable, even if they have a meritorious claim. 

Some feel the impact of the law will be minimal, speculating that the required showing for liability has become so demanding that only a trivial number of designs will qualify for protection.  Interestingly, this point has been made by both advocates and opponents of the bill: at a House of Representatives subcommittee hearing last Friday, the CFDA (a longtime champion of additional IP protection for fashion designs) and its allies simultaneously stressed that the proposed law is desperately needed and that relatively few designs – only those “that are truly original” – will receive protection, even if the bill passes.  As some observers have pointed out, there’s an interesting tension there.

4. You recently championed the creation of a fashion law committee within the New York City Bar Association. Why was this necessary? What is the role/function of this committee?

Every bar association has a trademark law committee, a copyright law committee, a real estate law committee, and so on.  But I felt that a central forum was needed for practitioners serving fashion industry clients to come together and share their expertise on fashion-specific issues arising in distinct legal realms.  To illustrate, the pending, highly controversial Christian Louboutin v. Yves Saint Laurent lawsuit raises legal issues that are, at least arguably, unique to fashion.  So the members of a conventional trademark law committee would have little reason to devote extensive time and attention to the case, while every self-professed “fashion lawyer” is watching it like a hawk.  The new Fashion Law Committee can explore and evaluate legal developments of particular concern to fashion industry clients in a way that a more general committee never could.  Because the Committee is still in its infancy, I don’t think anyone knows for sure what it will evolve into, but for now, it is – at the very least – an excellent forum for discussion.

5. Are there any key cases/developments in the US that we should be watching for?

The most important issue on the legislative agenda right now, at least for IP-oriented practitioners, is the “Innovative Design Protection and Piracy Prevention Act,” discussed earlier.  For decades, it’s been gospel that items of apparel are, by and large, “useful articles” and thus ineligible for copyright protection in most instances.  So any change to this legal landscape, even if the real-world impact does turn out to be minimal, would represent a major doctrinal shift.

Certainly the most “colorful” fashion-related case being decided right now is the Louboutin v. YSL dispute mentioned above.  But for reasons I’ve delved into on my blog, the case could also have major repercussions for the fashion industry at large.  YSL seems to have taken the position that trademark protection is never appropriate for “a single color on a portion of an article of apparel.”  If the district court agrees with this argument, there will undoubtedly be an appeal – perhaps all the way to the Supreme Court – and the outcome could be very significant for fashion design and branding.

While less accessible than the Louboutin case, many intellectual property lawyers are closely watching a case called Omega v. Costco Wholesale, currently pending in California federal court after a torturous round of appeals.  This case involves “gray goods” – here, luxury watches – that are sold outside the United States through authorized channels, but find their way back into the U.S., where they are often sold for far less than the brand would like to charge American customers.  The case made it all the way up to the U.S. Supreme Court on a fairly esoteric copyright law issue involving the “first-sale doctrine,” where the Court was poised to declare whether brand owners can exercise border control over gray goods on the basis of copyright.  But the Court ended up in a 4-4 tie (Justice Kagan having recused herself), so we don’t yet have a definitive answer on the crucial issue.  Because Costco lost at the Ninth Circuit (a federal appellate court) on the copyright issue, it’s now pursuing a different argument on remand: that Omega’s use of copyright to control the importation of otherwise non-copyrightable goods is a form of “copyright misuse”.  It will be interesting to see how this specific dispute plays out, and also to see whether other appellate courts side with the Ninth Circuit on the first-sale question.  Though the relevant issues are quite “legalistic” and inaccessible, their resolution has major ramifications for the fashion industry (and many other industries, as well.)

Banking on Patriotism to Help Launch Your Brand?

Emerging Canadian designers oftentimes target the Canadian market before venturing off into more lucrative international pastures.  Pulling on the patriotic heartstrings of Canadian consumers can be a useful marketing strategy: “support Canadian talent, buy Canadian fashion”.  This is all fair and valid…but it is important to know that the Canadian Competition Bureau is watching you.

The Competition Bureau is an independent law enforcement agency that governs competition in the marketplace.  It wants to make sure that everybody is playing fair.  The Competition Bureau has taken it upon itself to ensure that Canadian product claims are valid.  Last year the Competition Bureau issued guidelines (“Made in Canada Claims” and “Enforcement Guidelines Relating to ‘Product of Canada’”).  These guidelines kick in only when you start to claim and promote that your merchandise is from Canada.  If you don't make any country of origin claims, these guidlines do not apply.  Also, these guidelines only relate to non-food products.

There are two possible patriotic claims, “Made in Canada” and “Product of Canada”, which have different thresholds to satisfy.

Made in Canada:

The requirements to make this claim are easier to satisfy:

a)                 the last substantial transformation of the goods must have occurred in Canada; and

b)                 at least 51% of the costs of producing or manufacturing the goods have occurred in Canada.

If you claim that your product is “Made in Canada”, a qualifying statement must also be included.  For example: “Made in Canada with imported materials”.

If you do not expressly include the term “Made in Canada”, the Competition Bureau may interpret suggestive marketing ploys to insinuate that the product was Made in Canada, such as pictures of the Canadian flag or the maple leaf.  Thus, these criteria apply.

Product of Canada:

This claim has a higher threshold to satisfy:

a)                 again, the last substantial transformation of the goods must have occurred in Canada; and

b)                 at least 90% of the costs of producing or manufacturing the goods have occurred in Canada.  

Breaking This Down

The “last substantial transformation” means that the goods are fundamentally changed in form, nature or appearance so that they appear new.

“Costs of producing or manufacturing” includes labour costs and costs to produce the materials.  It generally does not include overhead costs.

What Happens if you Don’t Comply?

The Competition Bureau can enforce the guidelines.  If you insinuate that your product is Canadian when it does not comply with these guidelines, the Competition Bureau can look to the Competition Act for enforcement.  False or misleading representations in relation to product advertising can elicit substantial monetary fines and, in some instances, criminal liability.  

eBay Irony: Liability in Europe, Anti-Counterfeiting Guru in America

In an ironic twist, the same week that eBay announces its joint anti-counterfeiting awareness and advocacy campaign with the Council of Fashion Designers of America, it was also held to be responsible for facilitating the sale of counterfeit merchandise on its website www.e-bay.co.uk in Europe.  Here’s a summary of the decision.

The case is interesting as eBay plays an interesting role in the dissemination of counterfeit product globally.   

The Parties

L’Oreal SA and its subsidiaries launched a proceeding against individual defendants and eBay Inc. and its subsidiaries with regards to the sale of L’Oreal products on the website www.e-bay.co.uk, without L’Oreal’s consent. 

The Facts

L’Oreal is the owner of a number of UK trade-mark registrations and Community Trade-mark Registrations, which grants Europe-wide trade-mark protection, for a myriad of products. The individual defendants were selling counterfeit L’Oreal products, as well as products intended for markets outside of Europe and products not intended for sale at all, on e-Bay. 

L’Oreal took issue with e-Bay’s capacity of facilitating the sale of counterfeit and unauthorized product in Europe.  Moreover, L’Oreal maintains that e-Bay’s sale of keywords and sponsored links further facilitated the sale of counterfeit product.

Judgment

Given that e-Bay is online, its reach is global.  The Court was clear that just because a website is accessible globally that may not be sufficient to impose liability.  If the website is targeted toward a specific geographic region, and the plaintiff has trade-mark rights in that country that are being infringed, it is appropriate to bring an action against the operator of the website.  In this instance, it was very clear that the website was targeted toward Europe and L’Oreal had trade-mark rights in Europe.  

The Court also held that as L’Oreal had clearly marked some of the product as “samples” or “not for sale”, it was clear that L’Oreal had specifically withheld its consent to allow these products from being sold in the marketplace.  

Some of the products available, although they may not have been counterfeit, were sold without the appropriate packaging.  The court held that especially in respect of perfumes and cosmetics, the packaging of the product is an integral component of the product branding.  The removal of the packaging negatively affects the goodwill and reputation of the brand.  Moreover, there are safety concerns as the packaging oftentimes contains important use guidelines. 

eBay, by selecting search words that corresponded to L’Oreal’s trade-marks to those counterfeit or unauthorized products, elevated the opportunity to buy those products.  The court held that eBay’s actions placed it as an advertiser of the online marketplace, which places eBay in an intermediary position, rather than as a passive by-stander.  I wonder if this decision would have been different if eBay did not provide the opportunity to buy sponsored links or keyword advertising.

European Union and Louis Vuitton Pledge to Break Through Gender Glass Ceiling

On March 1, 2011, the European Union Justice Commissioner issued a challenge to publicly traded European businesses in an effort to create gender equality:

increase women's presence on corporate

boards to 30% by 2015 and to 40% by 2020

Companies can support this initiative by voluntarily signing the "Women on the Board Pledge for Europe".  Acknowleding the influence that government guidance (or intervention, depending on your political leanings) has on encouraging (or mandating) gender equality in the workforce, the Commissioner also saw great value in encouraging companies to voluntarily institute programs to facilitate gender equality.  This Board Pledge is the first step.  

The Commissioner advised that she would use the 2012 International Women's Day as a marker for progress.  If there has not be sufficient progress relying on the corporate world's initiative, she would be happy to intervene in a regulatory capacity.  

Frankly, the facts are a little depressing and there is room for improvement.  Today, only 12% of board members are women and 97% of the time, the board is chaired by a man.  

Louis Vuitton is the most signatory to the Pledge, which is reflective of its corporate policy to support gender equality in the corner offices. 

LVMH: je voudrais dire, merci!