Here is what I know about Louboutin shoes — the bottoms (what I have now learned are called “outsoles”) are bright red.  Given how far removed I am from the vanguard of women’s shoe fashion, my association of red outsoles with the Louboutin brand ought to be conclusive evidence that red outsoles are one very powerful trademark.  That the red outsoles clearly operated as a symbolic indicator of the source of Louboutin’s goods, however, was not enough for one federal district judge in New York, who last year rejected Louboutin’s attempt to enjoin Yves Saint-Laurent from marketing its own red-outsoled shoes, holding that in the fashion industry color was an inherently “functional” feature, and therefore could not be granted trademark protection.  Now the U.S. Court of Appeals for the Second Circuit has partially reversed that ruling.  According the Court of Appeals opinion released yesterday, the red outsole may indeed be  a valid and enforceable trademark, provided it is limited to shoes, like those pictured, in which the color of the outsole contrasts with the other parts of the shoe.  Because the YSL shoes were monochromatic, the denial of an injunction was affirmed.

An explanation of how the Court arrived at this Solomonic result follows the jump.

It all comes down to how the somewhat oxymoronic concept of “aesthetic functionality” is applied.  Courts have long recognized that even though an ornamental product feature may have no “utilitarian” function, it may nonetheless be ineligible for trademark protection if, in the Second Circuit’s formulation of the doctrine, it “would significantly limit the range of competitive designs available” and therefore would “significantly undermine competitors’ ability to compete in the relevant market.”  The district court in Louboutin found that in the fashion industry color was per se functional in this sense, emphasizing by use of an analogy to painting (and specifically a hypothetical in which “Picasso alleges that Monet, in depicting the color of water, used a distinctive indigo that Picasso claims was the same or too close to the exquisite shade that Picasso declares is ‘the color of melancholy'”) that granting trademark protection to a color would severely limit the creativity of others.

The Court of Appeals, however, rejected the notion that the aesthetic functionality doctrine guarantees “a competitor ‘the greatest range for [his] creative outlet,'” but rather  it protects “only the ability to fairly compete within a given market.”  The Court thus rejected a special per se rule of functionality in the fashion industry.  It went on, however, to limit the scope of Louboutin’s protection, finding that the red outsole only had the distinctiveness necessary to operate a trademark where it contrasts with the color of the remainder of the shoe.  Among other evidence, it relied upon “Louboutin’s own consumer surveys show[ing] that when consumers were shown the YSL monochrome red shoe, of those consumers who misidentified the pictured shoes as Louboutin-made, nearly every one cited the red sole of the shoe, rather than its general red color.”  The Court ordered the Trademark Office to so limit the scope of Louboutin’s registration.

Notably, although the Court of Appeals rejected the per se fashion industry rule, it actually left open the question whether the Louboutin trademark as modified (i.e., a red outsole that contrasts with the remainder of the shoe) is protectible.  Because the YSL monochromatic shoes clearly did not infringe the modified trademark, it was not necessary to reach that issue.