Red Shoes diary has a new entry – Louboutin trademark revived

In a reversal of the lower court and its fortunes Christian Louboutin, the Second Circuit reversed the determination of the District Court to hold that the red outsoles flashed by the fashionable does indeed have secondary meaning in the fashion marketplace – at least when used when not matching the color of the uppers.

Writing for the unanimous panel, Judge José A. Cabranes, acknowledged that the Louboutin outsoles have “the requisite ‘distinctiveness’ to merit protection.”

Louboutin’s trademark, consisting of a red, lacquered outsole on a high fashion woman’s shoe, has acquired limited “secondary meaning” as a distinctive symbol that identifies the Louboutin brand. … [W]e limit the trademark to uses in which the red outsole contrasts with the color of the remainder of the shoe. We conclude that the trademark, as thus modified, is entitled to trademark protection.

At the core of the debate is the concept of aesthetic functionality. Purely aesthetic product features can be protected as trademarks if they are source-identifying and non-functional.

Functionality has two definitions: “a functional feature is one the exclusive use of which would put competitors at a significant non-reputation-related disadvantage. … [A] feature is also functional when it is essential to the use or purpose of the device or when it affects the cost or quality of the device.” (TrafFix Devices, Inc. V. Marketing Displays, Inc. 532 U.S. 23 (2001) (internal quotes omitted)).

Color is generally not functional for a product unless the color changes the effectiveness of the product. So pills can be marketed based on color (e.g. little blue pills) as can home insulation (pink). Like any other trademark, the color identifier is still limited to the specific goods (so pink can also designate cancer-awareness organizations).

In the case of fashion shoes, it has worked. “As a result of Louboutin’s marketing efforts, the District Court found, the “flash of a red sole” is today “instantly” recognizable, to “those in the know,” as Louboutin’s handiwork.”

Nonetheless, the law has long recognized the concept of aesthetic functionality. As the 1938 Restatement of Torts explains, “[w]hen goods are bought largely for their aesthetic value, their features may be functional.” I have elsewhere described the importance of aesthetic value as of the social relevance of a product. Objectively identical items (such as stuffed animals) are subjectively more or less important to the consumer. For example, Elmo is more valuable to a toddler than other puppets. In the absence of copyright protection, trademark should not provide a monopoly over such relevance.

Keeping with this line of reasoning, the Louboutin court updated the aesthetic functionality test by stating “a mark is aesthetically functional, and therefore ineligible for protection under the Lanham Act, where protection of the mark significantly undermines competitors’ ability to compete in the relevant market.”

At the same time, the Louboutin trademark works because of its contrast with the shoe upper. But more importantly, Louboutin cannot own the ability to make red shoes that have matching uppers and outsoles. It has no trademark in such use precisely because other designers need to make monochrome shoes and the public does not identify such shoes from a single source. Matching the uppers and outsoles is a more general style and therefore aesthetically functional.

The approach of the Second Circuit provides a reasonable balance between trademark holders and competitors. It helps the public because it recognizes both the value of the trademarks for the purchasers and the needs for other designers to remain competitive and creative.

The decision will motivate competitors to seek signature colors as yet another tool to separate their products in crowded and competitive marketplaces. Purple tablets, anyone?

Kentucky remains special as Sixth Circuit affirms bourbon’s dominant appeal.

Just as “all bourbon is whiskey, but not all whiskey is bourbon,” it is equally true that all trade dress constitutes trademarks but not all trademarks are trade dress. The U.S. Court of Appeals for Sixth Circuit made a series of fine distinctions recently in upholding an injunction against Jose Cuervo tequila from adopting a confusingly similar form of trade dress. The Sixth Circuit has found that the red wax seal on the Maker’s Mark bourbon whiskey is protected trade dress. The opinion by Judge Boyce Martin Jr. celebrated the uniqueness of bourbon and by extension easily afforded trade dress protection to a leading manufacturing.

Maker’s Mark had been using the red dripping wax seal since at least 1958 and had federally registered the trade dress. In 1995, Jose Cuervo began producint a premium tequila, “Reserva de la Familia.” In 2001 Cuervo modified the seal on the premium tequila to include the red dripping style of seal.

Two years later Maker’s Mark brought a lawsuit to stop the competition, suing Casa Cuervo S.A. de C.V., Jose Cuervo International, Inc., Tequila Cuervo La Rojeña S.A. de C.V., and Diageo North America, Inc. During the litigation, Cuervo reverted to its original red straight-edged wax seal but continued to seek cancellation of the Maker’s Mark trademark.

The litigation first established that the Maker’s Mark wax seal was not functional. It does not, in fact, seal the bottle. Other bourbon distilleries such as Buffalo Trace still use wax as a functional sealant, but the red dripping seal has no function. Secondly, the litigation established that for the market of distilled spirits, the red dripping seal served to distinguish Marker’s Mark from other brands.

The district court found and the Court of Appeals affirmed “that the Maker’s Mark red dripping wax seal is an extremely strong mark due to its unique design and the company’s singular marketing efforts.”

The Wall Street Journal enjoyed the flavor of the opinion.

Judge Martin’s opinion includes some interesting points:

Justice Hugo Black once wrote, “I was brought up to believe that Scotch whisky would need a tax preference to survive in competition with Kentucky bourbon.” While there may be some truth to Justice Black’s statement that paints Kentucky bourbon as such an economic force that its competitors need government protection or preference to compete with it, it does not mean a Kentucky bourbon distiller may not also avail itself of our laws to protect its assets. This brings us to the question before us today: whether the bourbon producer Maker’s Mark Distillery, Inc.’s registered trademark consisting of its signature trade dress element—a red dripping wax seal—is due protection, in the form of an injunction, from a similar trade dress element on Casa Cuervo, S.A. de C.V.’s Reserva de la Familiatequila bottles.  We hold that it is.  The judgments of the district court in this trademark infringement case are AFFIRMED.

The name “bourbon” at that time meant whiskey made from mostly corn in Kentucky or points west. But it was likely not until “sometime between 1823 and . . . 1845” that Dr. James Crow “perfect[ed] the sour-mash method of whiskey-making”—the dominant process in use today that, when coupled with aging in charred new oak barrels, produces modern bourbon’s familiar caramel color and distinctive taste.

Congress in 1964 designated bourbon as a “distinctive product[] of the United States,” 27 C.F.R. § 5.22(l)(1), and prescribed restrictions on which distilled spirits may bear the label “bourbon.” Federal regulations require that bourbon whiskey to, among other things, be aged in charred new oak barrels, contain certain proportions of mash ingredients, and be barreled and bottled at certain proofs. § 5.22(b). Importantly, whiskey made for consumption within the United States cannot be called bourbon unless it is made in the United States. § 5.22(l)(1).

The Court notes that ninety-five percent of bourbon is made in Kentucky. While the Court provides a footnote regarding the other five percent, as a member of a Kentucky law school, I’ll refrain from reproducing that here.

Since the injunction does not prohibit Cuervo from using a red wax seal located on the same areas of the neck of its bottle. The injunction applies merely to the red wax seal that includes the stylized drips of the Maker’s Mark trademark. For companies hoping to imbue support from the decision, trade dress remains a useful, but extremely limited, marketing strategy.

The decision was consistent with recent Supreme Court decisions such as Walmart Stores, Inc. v. Samara Bros., Inc. in which the Court upheld but restricted the role of trade dress under trademark law. Earlier decisions by the Court in Qualitex and Two Pesos, Inc. v. Taco Cabana, Inc. had been much more expansive, so the narrowing has been a better balance between competitors which better serves the public.

LII Presents Ethics in Informatics Program on proposed changes to ABA guidelines and SEC Technology Guidance

Information and registration for our next even is now available.

Ethics in Informatics:

Changing Ethics Rules and New SEC Guidance Redefine the Competency of the Lawyer

featuring

Dean Dennis R. Honabach, Chair of the ABA’s Standing Committee on Professionalism

Professor Jon M. Garon, Director of the NKU Chase Law & Informatics Institute

Friday, May 4, 2012

Cincinnati, Ohio

The practice of law has largely gone digital in the past decade.  In response, the American Bar Association’s Commission on Ethics 20/20 is examining technology’s impact on the legal profession.  It has proposed a revision to the Model Rules of Professional Responsibility to make explicit the affirmative duty to prevent “the unintended disclosure of, or unauthorized access to, information relating to the representation of a client” to data privacy, security and reliability.  Not to be outdone, the Corporate Finance Division of the Securities and Exchange Commission has taken steps of its own to require greater awareness, disclosure and reporting of issues relating to technological knowledge held by a company – including its lawyers.

This program provides attendees guidance on three key areas:

  • The existing and proposed ethical rules regarding technologically mediated client confidentiality;
  • The lawyer’s role in assisting clients meet their affirmative duties of disclosure; and
  • The lawyer’s duties regarding social media and cloud computing in the context of client communications, ex parte communications, and interactions with the judiciary in social media and cyberspace.
Date: Friday, May 4, 2012
Time: 7:30 a.m. to 9:35 a.m.
Continental Breakfast will be served from 7:30 a.m. to 8:00 a.m.
Location: Wood, Herron & Evans, Floor 36, 441 Vine Street, Cincinnati, OH 45202
Registration fee: $99.00 for general public and $89.00 for alumni
CLE credits: 1.5 Ethics CLE in Ohio & KY
For more information: www.lawandinformatics.org/breakfastseries
Online registration: Register online
Fax Registration: Download a fax registration form
Call in registration: (859) 572-7853 to reach Admin. Dir. Lindsey Jaeger

Dean Dennis R. Honabach is the co-author of D&O Liability Handbook and the Proxy Rules Handbook. He has published law review articles on topics ranging from managerial liability and Enron to toxic torts and legal education. Dean Honabach is the chair of the ABA’s Standing Committee on Professionalism, the co-chair of the Business Law Education Committee of the ABA’s Business Law Section and a member of the Misconduct and Irregularities Subcommittee of the LSAC.

Jon M. Garon is an attorney and professor of informatics, entertainment, intellectual property and business law. He has extensive practice experience in the areas of entertainment law (including film, music, theatre and publishing), data privacy and security, business planning, copyright, trademark, and software licensing.

“Ethics in Informatics” is the first presentation in the Law & Informatics Breakfast Series, which will address various topics on privacy, data security, social media and ethics. These programs will be hosted in downtown Cincinnati. We are very grateful to the law firms of Wood Herron & Evans LLP, Frost Brown Todd LLC, Baker & Hostetler LLP and Dinsmore & Shohl LLP for their support as hosts for this coming year’s program.

                         

NKU Law & Informatics Symposium Tickets Now Available

Northern Kentucky Law Review – Law & Informatics Symposium

Presented in association with the NKU Chase Law & Informatics Institute

10.5 hours of CLE (anticipated)

Registration is now available for the Northern Kentucky Law Review – Law & Informatics Symposium presented in association with the NKU Chase Law & Informatics Institute. https://supportnku.nku.edu/ChaseLII

Your registration fee includes the general and special sessions, breakfast and lunch, as well as all published materials.

This two-day conference will gather academics, lawyers, and industry leaders from throughout the United States, Europe, and Asia to focus on cutting-edge issues involving data privacy, cyber-security, international trade, and internet regulation.

The first day’s topics will include criminal justice and the media, antitrust, HIPAA/HITECH Act compliance, GLBA reporting, social media marketing, and international internet regulations. The second day will include international cyber-crime cross-border transactions, international publicity, cyber currency, privacy legislation, and many related topics.

The Symposium is an opportunity for academics, practitioners, and students to exchange ideas and explore emerging issues in informatics law, disruptive innovation, and the increasingly interconnected information environment. The agenda is available online at http://chaseinformatics.org/symposium/.

Speakers:

  • P.J. Blount, National Center for Remote Sensing, Air, and Space Law, University of Mississippi School of Law
  • Galina Borisevich, Perm State University, Russian Federation
  • Eric Chaffee, University of Dayton School of Law
  • Natalya Chernyadyeva, Perm State University, Russian Federation
  • Jorge Contreras, American University Washington College of Law
  • Edward Fore, Barry University Andreas School of Law
  • Evelina Frolovich, Perm State University, Russian Federation
  • Vaibhav Garg, Indiana University School of Informatics and Computing
  • Anne Gilliland, The Ohio State University College of Medicine SBS-Biomedical Informatics
  • F. Enrique Guerra-Pujol, Barry University Andreas School of Law
  • David Harris, Harvard Law School Charles Hamilton Houston Institute for Race and Justice
  • Henry Judy, K&L Gates
  • Kalyan C. Kankanala, Brain League IP Services Ltd. (India)
  • Deborah Keeling, University of Louisville College of Justice Administration
  • Michael Losavio, University of Louisville College of Justice Administration
  • Rachel Lyon, Northern Kentucky University College of Informatics
  • Jasmine McNealy, Syracuse University S.I. Newhouse School of Public Communication
  • Mark McPhail, University of Wisconsin-Whitewater College of Arts and Communication
  • Svetlana Polyaskya, Perm State University, Russian Federation
  • David Satola, The World Bank
  • Susan Stephan, Kretsch & Gust PLLC
  • Lauren Solberg, Meharry Medical College
  • Judith Wiener, The Ohio State University College of Medicine SBS-Biomedical Informatics
  • Peter Yu, Drake University School of Law

Advance registration is strongly encouraged. Seating is limited. Individuals registering on a walk-in basis will be limited to available seating. Registration will not be accepted once the event is sold out.

For details, registration, and additional restrictions please see http://chaseinformatics.org/symposium/ or call 859.572.7577.

PROTECT IP Act may be open to some Reasonable Amendments

In response to concerted objections to aspects of the PROTECT IP Act, legislation sponsor Senator Patrick Leahy (D-Vt.) announced by radio and press release that the sponsors may eliminate a controversial provision requiring Internet Service Providers (ISPs) to interfere with the Domain Name System as a technique to prevent consumer access to foreign websites deemed “rogue” or havens for pirated goods.

According to the press release, the Senate is set to hold a procedural vote January 24, 2012. With over 40 co-sponsors of the bill, the position may face internal opposition, but Senator Leahy remains an influential voice on such topics and in the Senate.

According to the press release:

The PROTECT IP Act provides new tools for law enforcement to combat rogue websites that operate outside our borders but target American consumers with stolen American property and counterfeits.  One of those tools enables law enforcement to secure a court order asking Internet Service Providers (ISPs) to use the Domain Name System to prevent consumer access to foreign rogue websites.  This provision was drafted in response to concerns that law enforcement has remedies it can take against domestic websites, but does not currently have the power to stop foreign rogue websites.  I worked closely with the ISPs in drafting this provision to ensure they were comfortable with how it would work, and I appreciate their support. …

I and the bill’s cosponsors have continued to hear concerns about the Domain Name provision from engineers, human rights groups, and others.  …  I remain confident that the ISPs – including the cable industry, which is the largest association of ISPs – would not support the legislation if its enactment created the problems that opponents of this provision suggest.  Nonetheless, this is in fact a highly technical issue, and I am prepared to recommend we give it more study before implementing it.

Though described as a balanced bill, the legislation and SOPA – the even more extreme House legislation – have split the intellectual property industries, with strong support from many in the creative community and nearly unanimous opposition from the tech industries. Even within the media industries, concerns run high and I have spoken to a number of publishers and media representatives who feel that the proposals will do more harm than good.

A hearing on SOPA designed to allow critics of the legislation to be heard is now scheduled for January 18th.

Senator Leahy’s announcement may be the first step towards slowing an otherwise out-of-control legislative disaster.

Business Law Today Features Rich Array of Cyberspace Issues

In the December 2011 of Business Law Today, The Cyberspace Law Section has weighed in with a series of articles discussing critical issues for online legislation, policy and security. The first is my introduction to the Protect IP Act and SOPA, the second focuses on international regulation, the third on the SEC move into disclosure of data threats, and the last on the internal regulations for updated policies.

All four articles are helpful and interesting. Please take a look.

As a postscript, let me point out that my article was intended to provide a neutral overview of the proposals currently before Congress. This was difficult for me to do. SOPA has a number of well-known problems and undermines data security. Moreover, the involvement of credit card companies and advertising companies will create a host of unintended consequences that will add to the cost of doing business while having only marginal impact on piracy. Nonetheless, the article was written to provide context to the current debate and help the public understand just how much additional regulation has been added in recent years.

New Legislation Renews Conflict Between Content Creators and Content Distributors
By Jon M. Garon

Business Interests Under Attack in Cyberspace: Is International Regulation the Right Response?
By Henry L. Judy and David Satola

The SEC Staff’s ‘Cybersecurity Disclosure’ Guidance: Will It Help Investors or Cyber-thieves More?
By Roland L. Trope and Sarah Jane Hughes

Going Mobile: Are Your Company’s Electronic Communications Policies Ready to Travel?
By Kathleen M. Porter

So What is Law & Informatics and Why Study it in Law School?

On November 4th the NKU Chase Law & Informatics Institute held our opening reception at the beautiful, new LEED certified Griffin Hall, host to the NKU College of Informatics. Well over one hundred attorneys, business leaders, faculty and students attended, including representatives of NKU and many other Tri-State universities.

Among the presentations made by NKU President, Dr. James Votruba, deans Dennis Honabach (Law) and Kevin Kirby (Informatics) was a short video directed by Informatics undergraduate student Kyle Breitenstein.

You can see the video here:

We are very grateful for the time and effort from everyone who worked on the event and attended the event.

As you watch the short video, I hope you find the answers to the questions of this post. Please let me know.

What is Law & Informatics? Visit YouTube to learn more: http://www.youtube.com/watch?v=Muk5n1aDX0k