Red Sole Diaries: another chapter

Louboutins

Following two Opinions of Advocate General (AG) Szpunar [here and here], the CJEU saga of the Louboutin red sole trade mark came to an end last June with the decision in C-163/16 [here]. 

The IPKat has now learned that the court which referred the case to the CJEU - the Court of The Hague - has now also delivered its judgment: the Louboutin trade mark is valid and Van Haren infringed it.

Katfriend and Louboutin litigation expert Carina Gommers (Hoyng Rokh Monegier) reports on this new chapter of the Red Sole Diaries ... and reflects on whether this is actually the last one in this complex saga.

Over to Carina:

"Valentine’s day is good day to think about red roses, but not only roses are red… For IP enthusiasts, the colour red also evokes the red sole trade mark of Louboutin, as well as Louboutin’s battle in several jurisdictions where this red sole trade mark has come under attack. 

One of the most famous battles in this respect, is the one fought out in the Netherlands, where Louboutin initiated infringement proceedings before the Court of The Hague against Van Haren that commercialized shoes having red soles. Last week, on 6 February 2019, the Court of The Hague rendered its final judgment (the Dutch version is available here). 

Back in 2015, a first intermediary judgment had been rendered between the parties, in which the court already established that, in so far as Louboutin’s red sole trade mark would be valid, Van Haren would be liable for trade mark infringement. 

Van Haren had indeed argued that the red sole trade mark should be excluded from trade mark protection in view of the (then applicable) absolute ground for refusal enshrined in article 3(1(e)(iii) of the Trade Mark Directive 2008/95, since it concerned a shape conferring substantial value to the product. This would bar the red sole trade mark from any protection, since this ground for refusal cannot be overcome by proving acquired distinctiveness. 

The Court of The Hague sought guidance from the CJEU and referred a preliminary request to Luxembourg (Case C-163/16). The Court in particular asked: 

Is the notion ‘shape’ in the sense of article 3.1.e.(iii) of the Trade Mark Directive 2008/95 (in the German, English and French language versions of the Trade Mark Directive respectively Form, shape and forme) limited to the three-dimensional properties of the product such as the (in three dimensions to be expressed) contours, sizes and volume thereof, or does it also relate to other (not three-dimensional) characteristics of the product such as colour?

In other words, the court wanted to know whether or not the notion of a shape, which confers substantial value to the goods, is limited to the three-dimensional characteristics of the goods in question. 

The referral received a lot of attention both from IP experts and the general press. 

Also at the level of the CJEU the case was deemed of critical importance. Indeed, after a first Opinion by AG Szpunar on 22 June 2017, the case was referred to the Grand Chamber, which rarely happens in IP cases. AG Szpunar subsequently delivered his second Opinion on 6 February 2018 and the CJEU rendered its judgment on 12 June 2018. 

Kat heels from Irregular Choice

In its rather concise judgment, the CJEU formally relied on the registration of the trade mark as is apparent from the register, from which it inferred that when the trade mark owner does not seek to protect the shape as such, but only the application of a colour to a particular part of a product, such colour cannot be considered as a sign consisting of a shape (see §23-26 of the judgment). Louboutin had indeed explicitly mentioned in the registry that the contour of the shoe is not part of the trade mark. The CJEU deemed this to be of critical importance. Moreover, for the exclusion ground of article 3(1)(e) of the Trade Mark Directive 2008/95 to be applicable, the sign should consist exclusively of a shape. 

The CJEU’s ruling seemed to have provided a safe harbour for Louboutin as it excludes altogether the application of the absolute ground for refusal, so that the notion of 'substantial value' would not even needed to be addressed. 

In the ensuing proceedings before the Court of The Hague, Louboutin indeed argued that it was apparent from the CJEU judgment that it should prevail in its claims against Van Haren. With respect to the validity of its red sole trade mark and, following the CJEU’s ruling, Louboutin argued that the court could not hold otherwise than that the absolute ground for refusal is not applicable. In addition, considering the Court of The Hague’s intermediate judgment of 2015, the infringement should also be upheld. 

Van Haren did not agree with this stance and argued that the CJEU had not answered the question referred by the Court of The Hague. It considered that the CJEU did not rule what precisely is to be understood by shape, but instead ruled on the facts of the matter and qualified the red sole trade mark as not being a shape. However, only the Court of The Hague had exclusive jurisdiction over the facts of the matter and thus the qualification of the trade mark. In that respect, Van Haren also referred to both Opinions of the Advocate General, which did - in Van Haren’s view – provide an answer to the question referred by the Court of The Hague. In the Opinion of 6 February 2018, the AG in particular considered that the shape of the sole matches the spatial delimitation of the colour, which means, in other words, that the colour delimits the shape and such shape matches the spatial delimitation of the colour (see §19). This point, according to AG Szpunar, demonstrates that the shape does matter and that the protection is not sought for a colour per se without delimitation. Following that qualification, the exclusion ground could become applicable, i.e. when such shape in addition would confer substantial value to the product. Van Haren therefore requested the Court of The Hague to either adopt the considerations of the AG or to refer a new question to the CJEU. Finally, Van Haren argued that the CJEU judgment in any event was not capable of resolving the case between the parties, since the new Trade Mark Directive 2015/2436 had meanwhile modified the exclusion ground. Article 4(1)(e)(iii) of the new Trade Mark Directive now reads "the shape, or another characteristic, which gives substantial value to the goods”, which can include colours. 

Whether or not this modification is immediately applicable to pending proceedings has also been the subject of debate. In fact, with respect to the corresponding article in the new Trade Mark Regulation 2017/1001, a referral from Sweden is pending at the CJEU in the Textilis case (C-21/18) [see Katpost here]. The Swedish court has specifically requested whether the new wording, after the entry into force thereof, is immediately applicable in a court’s assessment of invalidity, even if the action was initiated before that date and thus also concerns a trade mark registered before that date. Van Haren requested the Court of The Hague to suspend the proceedings until the CJEU has rendered its judgment in Textilis. 

The Court of The Hague did not follow the line of argumentation put forward by Van Haren. In the Court’s opinion, the CJEU had effectively answered the question and had, in doing so, considered differently than the AG. There was no reason why the Court of The Hague should follow the reasoning of the Advocate General rather than that of the CJEU. In addition, the CJEU had given sufficient guidance so that no new referral was needed. 

With respect to the new Trade Mark Directive 2015/2436, the Court refers to the lack of implementation in the Benelux despite the fact that the term for doing so expired on 15 January 2019. 

Therefore, the Court of The Hague deemed that it should still apply the old regime; only after the implementation of the directive, questions can arise as to what the consequences are for the pending proceedings. There was, by consequence, also no reason for a suspension in view of the Textilis case. 

Moreover, but this was not included in the reasoning of the Court of The Hague, the General Court already considered for its part that the new regime would not be immediately applicable, namely in a judgment of 24 October 2018 in the Pirelli case (T-447/16, in particular §§18-21). 

Kat in heels
(possibly not Louboutin's)

The General Court made a distinction between new procedural rules and new substantive rules. 

Whereas new procedural rules are in principle to be applied with immediate effect, new substantive rules are only of immediate effect in so far as that follows clearly from their terms, their objectives or their general scheme on the other hand. The modification of the exclusion ground, adding next to shape, another characteristic of the goods, is subsequently qualified by the General Court as a substantive rule. 

However neither the terms, the objectives, nor the general scheme allows to conclude that this new substantive rule has immediate effect and would thus also immediately apply to pending proceedings. 

If the General Court is to be followed, then the new exclusion ground could in any event not be applied to the pending proceedings and moreover also not to existing trade mark registrations. The final word however will lie with the CJEU either in the Textilis case or the appeal which is now also pending in the Pirelli case (C-6/19, to date only the reference to the case is available on the website of the CJEU, without any further information). 

It thus seems that the Louboutin battles have not all been fought yet and even within the EU, we may still get into another chapter if the CJEU would hold that the new regime would have immediate effect and thus also be applicable to the red sole mark. But even in that respect, not all would be lost for Louboutin. In that case, the notion of substantial value would come into play. In that respect, the AG stated in his first Opinion (see §70) that this notion relates exclusively to the intrinsic value of the shape and that no account must be taken of attractiveness of the goods flowing from the reputation of the trade mark or its proprietor. Only in cases where the shape ‘or other characteristics’ inherently, from the very outset, give substantial value to the goods, would it indeed seem reasonable to apply the exclusion ground. Louboutin would therefore probably still have good arguments to prevail in a next battle regarding its red sole trade mark.