The new AG Opinion in Louboutin: is it really bad news for the famous red sole?

As this blog reported a couple of days ago, following his first Opinion in June 2017, last Tuesday Advocate General (AG) Szpunar issued his new Opinion in Louboutin, C-163/16.

Since then, the content and value of the Opinion have not been arguably correctly picked by some media, with some even summarizing it as follows: “Can Christian Louboutin Trademark Red Soles? An E.U. Court Says No” [there are so many reasons why this headline is just wrong …].

All this has led Christian Louboutin to issue a press release, suggesting that some of the reports of the Opinion could be considered … ‘fake news’ [here, here, here]:

“While ordinarily Christian Louboutin does not comment directly on pending matters, we are making an exception in this instance to correct what appears to be misleading reports of the opinion of M. Szpunar, advocate general, which is seen to impact our trademark adversely. We disagree”

According to Louboutin, in fact, the Opinion of AG Szpunar, if nothing else, “supports trademark protection for our famous red sole, rather than threatening it.” This would be because: “Advocate general Szpunar states that ‘The concept of a shape which ‘gives substantial value’ to the goods … relates only to the intrinsic value of the shape, and does not permit the reputation of the mark or its proprietor to be taken into account.” It would follow that: “Applying Mr. Szpunar’s opinion to our case support the validity of our trademark since the shape of the outsole to which the red color is applied is not intrinsically valuable … As for the Christian Louboutin’s red color, the only reason it has value is because of our marketing efforts as well as the public’s association of such color applied to a women’s heeled shoe outsole with Christian Louboutin.”

Is Louboutin correct in its reading of the Opinion? In my view, yes. 

Similarly to the previous Opinion, in fact, the AG appeared to suggest that – while the red sole could not be considered just a colour mark – this trade mark might not fall in concreto (although yes potentially) within the absolute ground for refusal concerning signs consisting exclusively of shapes (or other characteristics) that give substantial value to the goods or services, as per Article 3(1)(e)(iii) of Directive 2008/95/EC.

Let’s take a closer look at the second Opinion of AG Szpunar.

Classification of the mark at issue

First, the AG confirmed his view that the mark at issue should not be considered a colour mark. Rather, what is at stake is not protection of a colour as such (which, on its own, would not be possibly even capable of performing the essential trade mark function as badge of origin), but rather a colour that has a certain spatial delimitation (that of the shoe sole to which it is attached).

Then, the AG tackled the issue of classifying the Louboutin trade mark as a ‘position mark’ within the meaning of Article 3(3)(d) of Implementing Regulation 2017/1431 (which in any case applies with effect from 1 October 2017). Also taking into account the reformed language of the absolute ground for refusal for signs consisting exclusively of shapes or other characteristics that give a substantial value, the AG concluded that classification of a sign as a ‘position mark’ does not exclude that a mark of this kind could fall within the scope of such ground.

Change in the language of the absolute ground

The AG then turned to consider the change in language between Article 3(1)(e)(iii) of the previous Trade Mark Directive and Article 4(1)(e)(iii) of Directive 2015/2436.

He reiterated his view that the change is merely formal, in the sense of clarifying the law as it was already under the 2008 directive. The rationale of this ground is (and was) to ensure that certain signs remain available to use and do not result in anti-competitive restrictions.

Hence, Article 3(1)(e)(iii) of Directive 2008/95 can be potentially interpreted as meaning that it applies in the case of a sign consisting of the shape (or another characteristic) of the goods and which seeks protection for a certain colour.

The mark at issue

The ‘substantial value’ given by a shape may change over time

The AG achieved the conclusion above but with an important caveat (also discernible in his first Opinion). 

Recalling his earlier Opinion in Hauck [the Tripp Trapp chair case], the AG highlighted that in assessing the ground in Article 3(1)(e)(iii) of the 2008 directive, “account must be taken both of the perception of the sign at issue by the relevant public and the economic effects which will result from reserving that sign to a single undertaking.” [para 48]

The AG also stressed that not all absolute grounds for refusal for shapes should be intended in the same way. 

In particular, when it comes to the ‘substantial value’ ground, he noted how the rationale may be such that a shape (or another characteristic) remains “available for all market participants over the period during which that characteristic has a particular effect on the value of the goods.” However,

“From the point at which that is no longer the case — inter alia, as certain interested parties allege, because the public’s preferences have changed and that characteristic is no longer sought and valued by the public –, the trade mark at issue would no longer potentially be caught by the prohibition laid down in Article 3(1)(e)(iii) of Directive 2008/95.

Under those circumstances, it would follow that — unlike the grounds for refusal or invalidity laid down in Article 3(1)(e)(i) and (ii) of Directive 2008/95 — Article 3(1)(e)(iii) of that directive would relate to characteristics which are dependent on external factors.” [paras 51-52]

The AG continued by stressing that:

“the fact that the characteristics giving substantial value to the goods are, in part, determined by the public’s perception does not, in my view, mean that account may be taken of the reputation of the trade mark or its proprietor as part of the assessment to determine whether the shape at issue ‘gives substantial value to the goods’ within the meaning of Article 3(1)(e)(iii) of Directive 2008/95. Indeed, if the concept of a ‘shape [giving] substantial value to the goods’ were to be acknowledged as being, even in part, determined by characteristics which are perceived as attractive by the public, it would then be necessary to exclude the characteristics linked to the reputation of the trade mark or its proprietor, in order to prevent the appeal created by that reputation being attributed to a shape which, taken on its own, would not be attractive. Otherwise, the ground for refusal or invalidity laid down in Article 3(1)(e)(iii) of Directive 2008/95 could be interpreted very broadly and improperly having regard to its objective” [para 54]

The AG ruled out that the trade mark’s reputation is to be considered as part of the assessment for this ground for refusal. 

By suggesting an ‘evolutionary’ interpretation of the ‘substantial value’ ground and rejecting the idea that a sign’s reputation (and distinctive character) matters, it would appear that – similarly to his previous Opinion – the AG tried implicitly to ‘save’ the Louboutin trade mark. 

In other words, in a case like Louboutin, the question to ask would be: is the red sole sign which gives substantial to the shoe, or is it rather the reputation of the trade mark represented by that particular sign that confers such value?

This suggestion may be read also in light of the AG’s considerations regarding assessment of distinctiveness for signs which are indissociable from the appearance of the goods in question.

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Distinctiveness of signs indissociable from the appearance of the goods

This part of the Opinion is considered useful “in the event that the Court were to take the view in its future judgment that, in the present case, Article 3(1)(e)(iii) of Directive 2008/95 cannot be applied.” [para 59]

By referring once again to Libertel, the AG reiterated that public policy considerations (including pre-competitive ones) underpin the decision whether to allow registration of signs of this kind.

In a case like the one at issue, the correct approach would be one that also takes into account case law on 3D signs, and acknowledges the existence of a distinctive character only for those signs that depart significantly from the norm or customs of the sector [wouldn’t that be indeed the case of the Louboutin soles as opposed to black, brown, or grey soles?].

In addition, if a sign has acquired a distinctive character following a normal process of familiarization of the public concerned, then Article 3(1)(b) of the 2008 directive, read in conjunction with Article 3(3) thereof, would not apply.

Conclusion

The Opinion of AG Szpunar is not binding on the CJEU, and it will be important to see whether and to what extent the latter follows his Opinion.

It is not a matter for the Court (or its AGs) to comment on the facts of the cases referred (although in recent times this has not always been so … let’s think for instance of copyright cases like Deckmyn, GS Media or The Pirate Bay). In the present instance, I am not convinced that the Opinion of AG Szpunar can be necessarily interpreted as a defeat for Louboutin.

Nonetheless, as the AG mentioned in his Opinion, the referring court (which will be tasked with applying the forthcoming CJEU decision to the background dispute) seems to think that the red colour of the sole gives substantial value to the goods [para 13 of the Opinion], and hence the Louboutin trade mark might be an invalid one. But would an outcome of this kind be correct?