How does Advocate General Szpunar’s opinion affect fashion’s most famous sole trader?

Louboutin’s red lacquered soled shoes are famous internationally and are instantly recognisable by fashionistas worldwide. Mr Louboutin has spent decades trying to protect his distinctive branding and stop copycats from applying a red finish to the soles of shoes.

In the latest development, Advocate General Szpunar issued his second opinion on the interpretation of the shape provisions of the Trade Mark Directive (2008/95). The comments made by the Advocate General have been widely interpreted as being bad news for Mr Louboutin’s Benelux trade mark, but is this correct?

The famous red sole

Inspired by an assistant’s bottle of red nail polish, Louboutin has applied red lacquer to the sole of its heels for over 25 years. Mr Louboutin aims to create shoes which make women feel beautiful, confident and empowered.

The brand became increasingly popular during the 1990s and 2000s and Louboutin shoes have graced the feet of dozens of celebrity customers including Beyoncé, Kim Kardashian, Madonna and Sarah Jessica Parker. One fan allegedly owns over 6,000 pairs!

Van Haren dispute

A retailer in the Netherlands, Van Haren, began to sell red soled high heels in 2012 and Louboutin successfully brought proceedings for trade mark infringement against them in the local court. On appeal Van Haren argued that Louboutin’s Benelux trade mark is invalid.

The Benelux trade mark included “… the colour red (Pantone 18 1663TP) applied to the sole of a shoe as shown…”.

Under EU law, trade marks which consist exclusively of a shape which gives substantial value to the goods may not be registered, or must be declared invalid. Van Haren argues that Louboutin’s red trade mark adds substantial value to the goods when applied to the sole of the shoes, therefore it should be declared invalid.

The local court referred questions to the Court of Justice regarding the interpretation of this aspect of EU trade mark law; namely whether a ‘shape’ under the Directive is limited to physical 3D properties such as the contours and measurements of the goods, or if it also includes other properties, such as colour.

Court of Justice

In his initial opinion of 22 June 2017, the Advocate General confirmed that a sign combining both colour and shape could be caught by the prohibition. Therefore if characteristics of a trade mark combining colour and shape adds substantial value to the goods, they risk refusal or invalidity.

This opinion arguably left Louboutin’s trade mark at risk, although the Advocate General made it clear that it was for the referring court in the Netherlands to make the final factual assessment.

In October 2017 the Court reopened the oral procedure and a further hearing was held on 14 November 2017. Following this hearing the Advocate General issued a second opinion.

In the opinion the Advocate General solidified his prior conclusion that Louboutin’s trade mark is a shape mark which also seeks protection for a colour. He believes that the red colour could not identify Louboutin as a seller of the goods if used out of context, i.e. not on the sole of a shoe, therefore it could perform the essential function of a trade mark.

However, the main development in the Advocate General’s position relates to the assessment of substantial value. He explains that the analysis of the mark should relate to the “intrinsic value of the shape, and must take no account of attractiveness of the goods flowing from the reputation of the mark or its proprietor.”

Media reception

Following the publication of the press release the Advocate General’s conclusions have been widely reported in the press, with commentary overwhelmingly reporting that Louboutin’s trade mark is in jeopardy.

In an unusual step, Louboutin issued a response to what they claim to be “misleading reports” arguing that “… A close reading of the full opinion of M. Szpunar in fact supports trademark protection for our famous red sole, rather than threatening it,”

Louboutin argues that the value in the brand’s red colour is down to their own marketing efforts and public association, therefore cannot be taken into account in the assessment of substantial value. Their positivity stems from the Advocate General’s comment that the value in the shape (and colour) sign must be in the “intrinsic value of the shape”.

Assessment

A review of the full written second opinion of the Advocate General shows some basis for Louboutin’s optimism.

Whilst paragraph 13 of the second opinion confirms that the referring court in the Netherlands has already decided that the red sole gives substantial value to the goods, paragraph 14 reads as if the Advocate General trying to steer the referring court away from this finding. In this paragraph he explains that the analysis of substantial value “must take no account of the attractiveness of the goods flowing from the reputation of the trade mark or its proprietor”.

It is most realistic that the value in Louboutin’s red sole stems from the public’s perception of the brand, not due to intrinsic characteristics of the shape. There is no inherent value in adding a red colour to the sole of a shoe. This is in contrast, for example, to a streamlined cycling helmet, as without this characteristic the goods would be significantly less valuable.

Another issue which is discussed in detail in the Advocate General’s opinions is the risk of monopoly rights in certain shapes/colours hindering competition. There are clear public policy concerns relating to access to colours in safety related goods e.g. colours on fire extinguishers and visibility clothing. Louboutin argues that this public policy concern does not apply in the aesthetic field. The Advocate General was sympathetic with this position, particularly given that fashion trends can change on a seasonal basis.

W&B Comment

Louboutin has good arguments that the value in its red sole are not in the “intrinsic value of the shape”. However, given that the court in the Netherlands, who will be tasked with applying the guidance to the facts in this case, has already decided that the red colour of the sole gives substantial value to the goods, Louboutin is facing an uphill battle.

The Advocate General’s opinions are not binding and the Court of Justice of the European Union may answer the question posed by the referring court differently. However, ultimately it is for the District Court in the Netherlands to apply the advice to the facts.

This case raises some interesting issues relating to the validity of non-traditional trade marks, but also in relation to the inherent risk involved in pursuing intellectual property infringement claims that valuable intellectual property rights will be challenged, and potentially invalidated.

This article was written by White & Black Associate Abigail Nicholls, who specialises in Technology and Intellectual Property Litigation.