Don’t step on my red-soled shoes!

You can do anything, but don’t step on my red-soled shoes!

Christian Louboutin, Christian Louboutin SAS v Van Haren Schoenen BV (Case C-163/16), opinion delivered by the Advocate General, Maciej Szpunar on 22 June 2017

A recent opinion by the Advocate General (“AG”) in the Court of the Justice for the European Union (“CJEU”) has highlighted fascinating trademark issues pertaining to the relationship between colour and shape.

Although opinions handed down by the AG are not legally binding on the CJEU, this specific opinion – if accepted by the CJEU – may have huge ramifications for trade mark law in the EU, UK and, by extension, Africa and South Africa.

A clear confirmation that “non-traditional” trademarks may be registrable, subject to certain specific requirements, was set out in this opinion. The AG re-affirmed that it remains crucial that for a sign to constitute a mark – the first hurdle to overcome, in terms of registrability – it must be “capable of graphical representation”.

Furthermore, the AG offered an incisive view as to whether colour can be incorporated into the concept of shape as a trade mark, when assessing its registrability or validity.

Additionally, his opinion was a significant and noteworthy reminder that context is a factor to be considered when assessing the registrabilty and validity of trademarks – whether in prosecuting or enforcing them.

Finally, in line with prior judgments acknowledging the evidentiary weight of “acquired distinctiveness” as a basis for registrability, the AG referred briefly to this concept in the context of the question posed to him; but he placed less importance on this element. Instead, his stance was to give preference to the “public interest” requirement of keeping certain signs in the collective domain when assessing their registrability or validity.

But first, some background

Since 1992, Christian Louboutin (“Louboutin”), famed Parisian fashion designer of women’s footwear and accessories, has applied a high-gloss red lacquer to the “outsoles” of his high-heeled shoes.

In 2008, he registered the red sole as a trademark (‘Red Sole Trademark’) with the US Patent and Trade Office (USPTO). The application featured an endorsement that read: “The color(s) red is/are claimed as a feature of the mark. The mark consists of a lacquered red sole on footwear.” The written description was accompanied by a diagram indicating the placement of the colour. For an example in practice of the ‘Red Sole Trademark’, see below:

Subsequently, the ‘Red Sole Trademark’ has been the subject of several legal disputes in the USA and elsewhere.

The first challenge to the validity of the ‘Red Sole Trademark’ emerged in 2012 in the United States Court of Appeals. The case involved Louboutin and Yves Saint Laurent Am. Holdings, Inc. (“YSL”), a rival ‘high-end’ fashion house. The Court of Appeals was faced with deciding whether Louboutin’s ‘Red Sole Trademark’ had been infringed by YSL, which, in 2011, had brought out a line of single-colour shoes in purple, green, yellow and red. Louboutin initiated infringement proceedings against YSL, alleging that the sale of these shoes would cause confusion amongst consumers. Louboutin cited trade mark infringement and counterfeiting, false designation of origin, unfair competition, and trade mark dilution, and sought a preliminary injunction preventing YSL from selling any shoe, of any colour, incorporating the ‘Red Sole Trademark’.

YSL counterclaimed that the ‘Red Sole Trademark’ was not valid in that it was merely ornamental or functional[RT1] , as it relates to a “non-traditional mark” i.e. a colour mark. In addition, YSL alleged that the ‘Red Sole Trademark’ was secured by fraud at the USPTO.

The Appeal Court found that the ‘Red Sole Trademark’, as registered, was (at least partially) ineligible for protection, as it would preclude competitors’ use of red soles in all situations, including YSL’s single-colour use. Thus, the Court affirmed that the so-called “colour depletion doctrine” took precedence over granting single colour per se trade mark monopolies to specific undertakings (in particular markets).

The Court also concluded that the ‘Red Sole Trademark’ had, in fact, acquired a secondary meaning in the marketplace for women’s high-heeled shoes, by virtue of its contrast to the remainder of the shoe. Thus, the acquisition of such secondary meaning by virtue of “acquired distinctiveness” merited some protection.

However, since YSL’s single-colour shoe was determined by the Appeal Court not to be confusingly similar to the ‘Red Sole Trademark’s “contrast to the remainder of the shoe”, the USPTO was ordered to limit the scope of Louboutin’s ‘Red Sole Trademark’ accordingly. It is significant that the recent opinion by the AG, again, illustrates the need for further clarity in determining what level of “prior use” is needed for “non-traditional trademarks” to be registrable.

In a similar case, in 2016, the Swiss Federal Administrative Court refused to protect Louboutin’s ‘Red Sole Trademark’. The court held that the mark was merely a ‘decorative’ or ornamental element of the goods, i.e. the high-heeled shoes, and lacked the necessary “distinctiveness” to be registrable as a trade mark.

Meanwhile, in 2012, Dutch shoemaker, Van Haren, released its own shoe with a red sole. Louboutin sued Van Haren for trademark infringement, and a Dutch court ruled that the latter should stop manufacturing and selling black and blue shoes with red soles.

Louboutin’s case was based on his Benelux trade mark registration number 0874489, which ultimately (after amendment) led to the following class 25 goods being covered: ‘high-heeled shoes (other than orthopaedic shoes)’. The registration is endorsed as follows:

The trade mark consists ‘of the colour 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)’. It is reproduced below:

The District Court of The Hague, decided, prior to ruling thereon, to ask the CJEU for a preliminary ruling as to whether “[T]he notion of ‘shape’ is limited to the three-dimensional properties of the goods, such as their contours, measurements and volume, or does it include other (non-three-dimensional) properties of the goods, [like] colour?” The CJEU turned to the AG for his opinion, prior to making its own observations.

The Opinion of the AG

The AG began his opinion, published in June earlier this year, by referring to the trite principle that there needs to be a balance between the granting of monopolies – as in trade mark registrations – and market competition.

The District Court stated that ‘signs consisting of colours per se give rise, in principle, to the same objections with regard to the risk of practical characteristics of goods being monopolised’. The AG addressed this crucial concept in the law of trade marks by exclusively utilizing article 3 of the EU Directive 2008/95 –

‘1. The following shall not be registered or if registered shall be liable to be declared invalid:

e) signs which consist exclusively of:

i) the shape which results from the nature of the goods themselves;

ii) the shape of the goods which is necessary to obtain a technical result;

iii) the shape which gives substantial value to the goods;

…’ (My emphasis)

The above absolute grounds of refusal are reflected in article 2.1 of the Benelux Convention, which governs Netherlands trademark law.

The AG advocated that before addressing the main question asked by the District Court, it is important to delineate to which category of signs the contested mark belongs i.e. those consisting of colour per se or those consisting of the shape of the goods. Nevertheless, he stated that, regardless of how such marks are classified, it is also vital to take cognizance of the public interest in keeping certain signs in the public domain.

The difficulty the District Court had, prior to addressing its question to the CJEU, was that it, indeed, observed that the contested Benelux ‘Red Sole Trademark’ is indissociable from an aspect of the goods. However, it ‘hesitated’ to decide that this ‘aspect’ was “shape” as referred to in the Directive (see above). The Parties, which included Louboutin, Van Haren and several member states, diverged on this important point.

The AG affirmed that the classification of the contested mark is a factual question to be decided by the District Court. Further, the AG stated that, in this case or scenario (at least), it is of no consequence what category the mark is ultimately placed. ‘[T]he classification of the contested mark as a “position mark” [and/or colour per se mark] does not, of itself, prevent that same mark from consisting of the shape of the goods.’ In the opinion of the AG what the District Court is required to determine is whether the mark ‘is a per se colour mark or a mark consisting of the shape of the goods, but also seeking protection for a colour’.

The AG took a stance on the above issue. He opined that ‘the mark at issue is better conceptualized as a mark consisting of the shape of the goods and seeking to protect a certain colour in relation to that shape’. Notwithstanding the fact that the ‘Red Sole Trademark’ sought protection for a certain colour, the AG asserted that when deciding on the registrabilty of the mark in question (and by inference to all “non-traditional trademarks”), ‘protection is not sought in the abstract’. Instead, the placement of the colour, specifically on the sole, and in contrast with other parts of the high-heeled shoe, resulted in the AG’s conclusion that a colour applied to a feature of the article can be considered as a trait reflected in the shape of the goods themselves.

Futhermore, he contended that, if the CJEU agreed with his stance, then the ‘Red Sole Trademark’ would ‘potentially be caught by the prohibition contained in article 3(1)(e)(iii) of the Directive 2008/95’. This provision bars a trade mark from registrability or, if registered, allows for its removal from the register, should the contested mark consist exclusively of a shape which gives substantial value to the goods.

To complete his analysis, the AG reminded us of the importance of the context in which the mark finds itself. When dealing with the fashion industry, the “colour-shape combination” of the goods is an integral part of the attractiveness and commercial appeal of the goods. Thus, if registrable, such marks would distort competition in this sector.

The AG added one key caveat to the above by suggesting that the analysis related exclusively ‘to the intrinsic value of the shape…’ The reputation that resides in the trade mark or its owner’s business was not a significantly critical factor in the above analysis. This raises essential and fundamental questions in relation to “acquired distinctiveness” as it relates to the registrability of “non-traditional trademarks” or their continued validity.

Comments

In my opinion, the true, crucial question, notwithstanding the AG’s remarks above, is whether the public is moved in any degree to buy an article (like shoes) because of its colour alone, particularly single colours? Is colour per se a source identifier or capable of distinguishing the goods of one proprietor from that of its competitor (within certain sectors or markets)? In my humble opinion, it is, at least, conceivable that colours per se (even single colours) are more easily seen as distinctive, and therefore registrable, in relation to services as opposed to goods; and when considering goods, colours per se would only be seen as capable of distinguishing in relation to certain types of goods, i.e. where a colour or combination of colours are not “reasonably required for use” in that particular trade.

A good example of this enquiry is the registration of the colour pink for insulation (all across the world). Any colour would not be “reasonably required for use” by any trader in the manufacturing and selling of insulation field or market; thus making the registration of the colour pink for such goods capable of distinguishing. Also, the qualities that the goods (insulation) require in order to serve there purpose are not dictated by their colour. The colour is a capricious element of the goods; and as such, the view of Trade Mark Offices the world over, including South Africa, has been to view this colour trade mark as distinctive and registrable.

What is very interesting to be taken from the AG’s opinion is the link that he drew between colour and shape as marks. This link has not (to my knowledge), as yet, been explored by the courts. If the CJEU accepts the line of argument raised by the AG in this opinion, it would seem that an additional layer of enquiry needs to be addressed for colour per se marks to be registrable; and perhaps for all “non-traditional trademarks”.

In this case, despite Louboutin’s complying with the recommendations made in a previous case (see Libertal) for the filing and ultimate registrability of a colour per se trademark, the AG looked beyond this and addressed the absolute bars to registration i.e. whether the colour per se as applied to an article (3-D shape) results from the nature of the goods themselves and/or whether the shape gives substantial value to the goods in question. Also, the AG’s opinion shows how closely the four basic requirements for trade mark registrability – a sign must constitute a ‘mark’ and be ‘capable of graphic representation’; the mark must constitute a ‘trade mark’ in that the mark must be used or proposed to be used for the ‘purpose of distinguishing’; “distinctiveness”, whether inherent or acquired; and the absolute (and relative) grounds for refusal or invalidity of a trade mark – interplay with each other.

Whilst the South African Trade Marks Act contains a prohibition, in section 10(5), against marks that consist exclusively of a shape which derives from the nature of the goods themselves, there is no specific prohibition – as there is in article 3 of the Directive (see above) – against shapes that give substantial value to the goods. In UK and EU law, these two prohibitions are dealt with separately in their legislation: although this does not mean that they are mutually exclusive.

From the AG’s opinion, and, in particular, his reference to the context and marketplace milieu in which the mark finds itself (like the fashion industry in this case), I am inclined to believe that a court in South Africa would derive this line of argument through the development of either of subsections 10(5) or 10(11) of the South African Trade Marks Act, or in conjunction. In this way, the balance between the granting of a monopoly right and the public interest of keeping certain signs free for use by all – which the AG referred to at the beginning of his opinion – can be maintained.

As intricate and nuanced as the AG’s opinion is, it is not binding on the CJEU, as I mentioned earlier. Therefore, it will be interesting to see if the CJEU comes to the same conclusion. If so, this could be far-reaching, not only for brands, but also for the future of trade mark law – with a potentially chilling effect on brand owners seeking to obtain registration for colour marks per se, or those seeking to rely on “acquired distinctiveness through prior use” to support their applications for registration of “non-traditional” trademarks.

It is also noteworthy to advise readers that the second phase of the European Union Trade Mark Legislative Reform came into effect from 1 October 2017. Critical elements of this legislative reform are: 1) that the requirement relating to “capable of graphic representation” has been removed completely, as long as the mark can be represented electronically with ‘certainty and precision’ (so any format that can be easily represented and accessed, including electronic formats using “generally accepted technology”); and 2) the introduction of ten non-exhaustive “types” of trade marks –

a)    word

b)    figurative

c)    shape

d)    colour

e)    sound

f)     position

g)    pattern

h)    motion

i)      hologram

j)      multimedia.

This should, theoretically, make “non-traditional trade marks” easier to register. The above types of trade marks should be indicated when filing an application.

What is pleasing for South African trade mark/IP practitioners and owners is that the South African Trade Marks Office has already made provision for the additional (last 5) types of trade marks in the above list in its Guidelines for the Registration of non-traditional trade marks (available on www.cipc.co.za).

It will be interesting to see how these changes will affect the decision of the CJEU in this case. Will the Siekmann principles, as extended in the Libertal case, take a back seat to the new legislation reform referred to above? Will the CJEU mould a new test for “capable of graphic representation”? Will its discussion deal only with “certainty and precision”, excluding the other Sieckmann principles? How the CJEU deals with these issues will affect our court’s interpretation of this requirement, or prompt our own legislative reform.

In conclusion, it has come to my attention that the CJEU heard arguments in this case earlier this month, November 2017. I have yet to receive the CJEU’s judgment. But, we know that we will receive some form of clarity on the topics discussed above. Obviously, I will report on this as soon as I can.

THIS ARTICLE WAS FIRST PUBLISHED IN THE SEPTEMBER EDITION OF IP BRIEFS