In the United States, the “functionality” doctrine exists to stop a party from obtaining exclusive trade dress or trademark rights in the functional features of a product or its packaging. The doctrine developed as a way to preserve the division between what trademark law protects and areas that are better protected by patent or copyright law. Thus, the functionality doctrine serves to prevent trademark owners from inhibiting legitimate competition.
In 1998, the U.S. Congress formally adopted the functionality doctrine explicitly to prohibit trademark registration or protection under the Trademark Act for a functional product feature. 15 U.S.C. § 1052(e)(5) (prohibiting registration of a mark that “comprises any matter that, as a whole, is functional”). And, although the Trademark Act does not define the term “functional,” the Supreme Court had previously explained that a product’s feature is functional “if it is essential to the use or purpose of the article or if it affects the cost of quality of the article.” Inwood Laboratories, Inc. v. Ives Laboratories, Inc.
, 456 U.S. 844, 850 n.10 (1982).
The doctrine of “aesthetic functionality” considers whether purely aesthetic features might be considered “functional” because, essentially, they are pretty and therefore desirable for that reason alone.
Courts sometimes hesitate to grant broad trade dress rights in mere ornamentation, because, as with mechanically functional features, doing so would stifle legitimate competition. Thus, for instance, when faced with claims that particular designs on a plaintiff’s china should be protected under the Trademark Act, the Ninth Circuit Court of Appeals held that the designs were not protectable because they were aesthetically functional. Pagliero v. Wallace China Co
., 198 F.2d 339 (9th Cir. 1952). The court understood that consumers bought the plaintiff’s china because they thought it was beautiful, but it did not see source-identifying significance in the design.
Similarly, when a plaintiff silversmith asked that it be granted broad trade dress rights in a baroque design on its silverware, the Second Circuit Court of Appeals declined to do so, holding that the design was aesthetically functional because silversmiths commonly wish to embellish their silverware with baroque patterns. Therefore, the baroque design was aesthetically functional because other silversmiths had to replicate it simply to compete. Wallace International Silversmiths, Inc. v. Godinger Silver Art Co.
, 916 F.2d 76 (2d Cir. 1990).
The common denominator in these cases was that an element of a product feature was seen as “functional” if that element was an important ingredient in the commercial success of the product. If, however, the feature or the design was adopted to denote the product’s source or origin and was otherwise unrelated to the basic consumer demands regarding the product, it was protected under trademark law.
However, devising a predictable and easy-to-define test to determine aesthetic functionality proved to be a challenge. In its decision in Qualitex Co. v. Jacobson Products Co.
, 514 U.S. 159 (1995), the U.S. Supreme Court decided that color alone could serve as a trademark provided it had acquired secondary meaning. The Court recognized, however, that color may sometimes make a product more desirable. In trying to balance these two concepts, the Court held that a design is functional if it is “‘essential to the use or purpose of the article or if it affects the cost or quality of the article,’ that is, if exclusive use of the feature would put competitors at a significant non-reputation-related disadvantage
.” Id. at 165 (emphasis added). Rather than clarifying the issue, this language spawned a line of cases in which plaintiffs seeking exclusive rights in trade dress that would previously have been seen as functional now claimed that those features were not functional because their exclusive appropriation would not put competitors at a “significant non-reputation-related disadvantage.”
It was in this landscape that Christian Louboutin S.A., owner of a U.S. trademark registration for shoes with a red-lacquered outsole, sued Yves Saint Laurent (YSL) for trademark infringement when YSL introduced a line of entirely monochromatic shoes, including red shoes with red outsoles. The parties did not dispute that Louboutin started selling women’s high-heeled shoes with high-gloss red lacquer soles as early as 1992. It was also undisputed that Louboutin had invested substantial amounts of capital building a reputation and goodwill in its signature footwear, and that Louboutin had succeeded in promoting its shoes “to the point where, in the high-stakes commercial markets and social circles in which these things matter a great deal, the red outsole became closely associated with Louboutin.” As a result of Louboutin’s marketing efforts, the trial court found, the “flash of a red sole” is “instantly recognizable” today as Louboutin’s handiwork. Christian Louboutin S.A. v. Yves Saint Laurent America, Inc.
, 778 F. Supp. 2d 445, 447-48 (S.D.N.Y. 2011).
Nonetheless, the trial court held that Louboutin’s red outsole was not protectable as a trademark. The single question, as the court saw it, was whether the Trademark Act “extends protection to a trademark composed of a single color used as an expressive and defining quality of an article of wear produced in the fashion industry.” Id.
at 451. Holding that it did not, the court concluded that, in the fashion industry, single-color marks are “aesthetically functional,” and therefore not protectable as trademarks.
The court saw the use of color itself as the type of configuration that was essential to use or purpose of articles of fashion. While recognizing that the public already identified red outsoles with Louboutin as its source, the trial judge believed that the red outsole served the aesthetically functional, non-trademark functions of decoration and beauty. “[T]here is,” he wrote, “something unique about the fashion world that militates against excluding trademark protection to a single color, although such registrations have sometimes been upheld in other industries.” Id.
Louboutin appealed to the Second Circuit, in a case in which INTA filed an amicus brief
. The Second Circuit reversed the district court’s decision, explaining that it was error to subject the fashion industry to a different standard than that used for any other industry. Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc.
, 696 F.3d 206 (2d Cir. 2012). This, said the appellate court, conflicted with the Supreme Court’s decision in Qualitex v. Jacobson
, in which the Court held that “no special legal rule prevents color alone from serving as a trademark.” A determination of aesthetic functionality
involves the fact-sensitive test of whether the element in question has a significant effect on competition. Thus, the Second Circuit held that a mark is aesthetically functional
, and therefore ineligible for trademark protection, if: (1) the design feature is essential to the use or purpose of the article, (2) the design feature affects the cost or quality of the article and (3) protecting the design feature would significantly undermine a competitor’s ability to compete. It cautioned, “[C]ourts must avoid jumping to the conclusion that an aesthetic function is functional merely because it denotes the product’s desirable source.” Louboutin
, 696 F.3d at 222.
The Second Circuit’s decision in Louboutin
has been criticized for not resolving the difficult issues raised by the aesthetic functionality defense. While the court held that aesthetic or ornamental trade dress can be protected as long as it does not significantly undermine competition, it provided no guidance concerning when competition is “significantly” undermined. The decision did, however, clarify that in the Second Circuit—where New York City is located—fashion brands can successfully acquire distinctiveness in a color in some configurations and protect those designs.
Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers
are urged to check independently on matters of specific concern or interest.
© 2013 International Trademark Association