Louboutin red sole trademark dispute gets Tiffany-twisted

Authors:  Robin Barnes and Hamad Hamad             

Whether you are a regular fashionista or a certified shoe fanatic, you probably know about Christian Louboutin’s suit against Yves Saint Laurent alleging infringement of Louboutin’s registered trademark for red soles.  After the district court denied Louboutin’s preliminary injunction request and set a hearing to consider cancelling Louboutin’s registration, Louboutin appealed to the Second Circuit. Last week, Tiffany & Co. filed a brief supporting Louboutin’s position.

You can watch this CBS News segment for a quick recap of the case.

One issue on appeal is the breadth of Louboutin’s registration, which simply recites that the “mark consists of a lacquered red sole.”  While the court’s opinion is not perfect, it astutely questioned the breadth and vagueness of this description.  Imagine the difficulty for competitors – are fire engine, cherry, and brick red all covered by Louboutin’s registration?  There are difficulties on the consumer side too – can multiple shades of red establish sufficient secondary meaning to support the registration, and can the average person even tell the difference between certain shades?


 Interestingly, the red color depicted in Louboutin’s registration for the color of the sole of a shoe

is not the same color used in its design mark registration,

, which makes you wonder if Louboutin even knows his own shade of red. 

Tiffany’s interest is not surprising given the trademark registrations on its famous blue boxes and little blue bags.  In an effort to protect its own blue registration, Tiffany argued that the court erred by creating a rule that a single color can never be a valid mark for fashion items.  While the court did seriously question the ability to protect a single color for fashion items, its decision was ultimately based on its determination that Louboutin didn’t have a protectable mark, not just because a single color was claimed.  Although functionality issues were addressed by the court and by Tiffany, what’s interesting here is the discussion and concerns over the broad assertion of trademark in the single color “red.”

The issue of the breadth of a single claimed color is interesting because of the contrast between Louboutin’s and Tiffany’s registrations.  Tiffany’s registrations claim “robin’s-egg blue.”  Would a similar level of specificity have satisfied the Louboutin court?  Who knows, but Tiffany could at least rely on a distinct shade of blue if it were in Louboutin’s position, perhaps alleviating the court’s concerns about an overly broad and vague registration.

Even more interesting (in a non-legal sense) is the Tiffany twist: the law firm that wrote Tiffany’s amicus brief also prosecuted its robin’s-egg blue registrations AND Louboutin’s red sole registration.  Was there a strategic decision by counsel to go broad in Louboutin’s application and narrower in Tiffany’s?  It’s also possible (perhaps probable?) that Louboutin instructed his counsel to seek broad trademark protection for “red.”  Until the Second Circuit rules, however, it’s too early to draw concrete conclusions for prosecution strategy, but this distinction suggests that specificity in single color mark descriptions (at least in the fashion industry) may avoid future litigation complications.

Easy To Digest: 7th Circuit Affirms Preemption Dismissal And Spares Labelers From Going Bananas

Last week, the United States Court of Appeals for the Seventh Circuit did its part to stem the tide of consumer fraud food labeling class action claims by dismissing with prejudice a preempted claim concerning fiber in chewy bars.  Turek v. General Mills, Inc. and Kellogg Co., No. 10-3267 (7th Cir. Oct 17, 2011) (Posner, J).   Ms. Turek alleged that the defendants misled her and other similarly situated consumers by failing to disclose the source of the inulin – the primary fiber –  in the chewy bars.  Ms. Turek alleged that the defendants used inulin extracted from chicory root, which she further alleged is inferior to unprocessed inulin within, for instance, bananas and onions. 

The Seventh Circuit assumed that the allegation was true but irrelevant.  The National Labeling and Education Act of 1990 (21 U.S.C. 341 et. seq.) (“NLEA”) and various regulations explain how food manufacturers must label fiber content.  The NLEA precludes states from imposing any labeling requirement which is “not identical” to the requirements in the NLEA.  As the Court put it:

It is easy to see why Congress would not want to allow states to impose disclosure requirements of their own on packaged food products, most of which are sold nationwide.  Manufacturers might have to print 50 different labels, driving consumers who buy food products in more than one state crazy. 

The NLEA does not create private rights of action, so putative consumer class action representatives must allege violations of state law.  Those allegations either must address issues which the NLEA does not cover or must assert state law standards identical to NLEA standards.   Ms. Turek technically alleged violations, but Judge Posner analyzed the NLEA label requirements for fiber and determined that the defendants’ fiber label statements complied with the NLEA and applicable regulations.  Thus, Judge Posner easily found that the NLEA preempted Ms. Turek’s state law claims which sought additional “non-identical” disclosure regarding the source of the fiber on the product labels.

The opinion is not limited to fiber labels.  The opinion contains a helpful curt statement regarding the standard:  “consistency is not the test; identity is.”  Perhaps this blunt clarification of the “identity” standard will dissipate the next label litigation wave concerning other products.  The lesson:  If the NLEA and applicable regulations cover statements on a food label, a label which complies with those requirements should not be subject to liability under state law claims.   

Judge Posner further clarified that the preemption decision is on the merits, under Federal Rule 12(b)(6).  The District Court dismissed for want of jurisdiction, after reaching similar conclusions about NLEA preemption.  Judge Posner altered the original judgment to render the dismissal with prejudice. 

Food makers must continue to be vigilant about complying with established federal food label guidelines, and the Turek decision provides additional support for that vigilance. 

Authors:       Terrence P. Canade        Gregory T. Casamento

  

Think Your Ad or Package Claims Have Adequate Substantiation? The Reebok Case Has Some Lessons

    

            Recently the FTC announced a high-profile agreement to settle its lawsuit against  athletic shoe maker Reebok The agreement requires Reebok to pay  $25 Million for refunds to people who bought Reebok EasyTone or RunTone shoes or apparel. Reebok also agreed to an onerous injunction against making claims that the shoes were effective in strengthening muscles or that wearing the shoes will result in quantified percentage or amounts or muscle toning or strengthening.

            The FTC press release seemed to imply that Reebok had taken almost no steps to substantiate its claims.  According to the FTC complaint, Reebok made unsupported claims in advertisements that walking in its EasyTone shoes and running in its RunTone running shoes strengthen and tone key leg and buttock (gluteus maximus) muscles more than regular shoes.  The ads claimed, for example: “Get a Better Butt.  Get Better Legs.  Get EasyTone.  EasyTone sole technology gives you up to 28% more toning in your calves, hamstrings , and, oh yes, your butt.”

            Here is one of Reebok’s EasyTone advertisements:

            A close examination of an earlier proceeding  of the National Advertising Division (NAD) of the Better Business Bureau suggests that Reebok had undertaken scientific testing to support its claims, but that its testing was inadequate to serve as “reliable and competent substantiation for the claims” required by Sec. 5 of the FTC Act.

Actual Testing by Reebok

            The NAD examined some of the same products and claims as in the FTC action  While the NAD found that Reebok had conducted an independent lab study by a qualified expert, it. concluded that the study was too small and did not necessarily reflect real world conditions of women using the shoes.  In other words, Reebok lacked adequate substantiation for the claims made in its advertisements .

Definition of Adequate Substantiation

            The Reebok case demonstrates that good faith substantiation efforts do not necessarily immunize a company from charges of failure to meet the FTC standard of reliable and competent evidence. The agreed injunction gives some guidance on the type of scientific testing the FTC deems adequate substantiation: “For purposes of this Section, competent and reliable scientific evidence shall consist of at least one

·         clinical study . . . of at least six weeks duration;

·         [that] uses an appropriate measurement tool or tools (e.g., a dynamometer if measuring strength);

·         . . . is conducted by persons qualified by training and experience to conduct and measure compliance with such a study;

·          conforms to acceptable designs and protocols, and

·         the result of which, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true.”

[bullet points and indenting added for clarity]           

            In light of the guidance provided by this high-profile settlement, the key question companies should ask themselves is, do the company’s advertising claims (or that of its competitors) meet these elements of competent and reliable substantiation?

     Authors:       Paul Van Slyke               Greg Casamento                 Tom Casagrande



FTC proposes to extend Mail or Telephone Rule to e-commerce

By:  Paul Van Slyke

The FTC recently announced it proposes to extend its Mail or Telephone Order Merchandise Rule (the “Rule”) to orders placed online. If ultimately adopted, the proposed changes will affect advertising agencies and marketers of consumer goods doing business over the Internet.

The FTC is accepting public comments on the proposed extension of the Rule through December 14, 2011.  Comments can be filed online.

Proposed Changes to the Rule

In addition to extending the Rule to online commerce, the FTC is also proposing to make certain other changes.   Some examples of what is  in the proposal are:

·         an amendment to allow sellers to provide refunds and refund notices to buyers by any means at least as fast and reliable as first-class mail;

·         a clarification on sellers' obligations when buyers use payment methods not spelled out in the Rule — debit cards or prepaid gift cards, for example; and

·         a requirement that companies make refunds within seven working days for purchases using third-party credit, like Visa or MasterCard.  (For credit sales where the seller is the creditor — for example, when merchants have their own store charge cards — the refund deadline would remain one billing cycle.)

Other FTC Rules and Guides for Online Advertising

The Rule proposed to be added to online advertising is an addition to several existing statutes and FTC rules and guides bearing on the subject of online advertising and commerce.  For example:

·          the FTC has issued  the Advertising and Marketing on the Internet: Rules of the Road as an overview of all the FTC rules and guides that apply;

·         The FTC Staff paper Dot com Disclosures: Information About Online Advertising offers practical tips on how to make effective disclosures online;

·         In 2000, the FTC issued a report Privacy Online: Fair Information Practices in the Electronic Marketplace with guidelines for websites that collect personal information from consumers; and

·         In 1998, Congress passed the Children's Online Privacy Protection Act ("COPPA"), which governs collection of personal information from children under the age of 13.  The FTC guides Children's Online Privacy Protection Rule and How to Comply with the Children's Online Privacy Protection Rule give additional guidance and practical suggestions on compliance with COPPA.

Locke Lord has an Advertising & Marketing team experienced in compliance with FTC rules and submitting comments on proposed rules.  

E.D. Tex. denies class certification in Lanham Act challenge to Google AdWords program

Author:  Tom Casagrande

Not to gloat, but . . . we told you so!

In the Spring of 2009, two putative class action complaints were filed against Google and several other defendants.  Both lawsuits alleged that Google’s AdWords program violated the Lanham Act because the resulting ads were likely to confuse Internet searchers.  Locke Lord attorneys issued a Client Alert discussing the potentially significant implications of these suits if they succeeded, but opining that they were unlikely even to be certified as class actions because they required the court to resolve too many detailed individualized issues, such as the strength of each class member’s mark, whether each resulting “Sponsor Link” ad was likely to cause confusion, and individualized defenses such as fair use.

On Sept. 29, 2011, U.S. District Judge T. John Ward issued a short order adopting the detailed recommended ruling of the Magistrate Judge denying class certification for precisely these reasons (and a few more).  The Magistrate Judge’s detailed opinion in FPX, Inc. v. Google, Inc., No. 2:09-cv-142 (E.D. Tex.) is available here.

9th Circuit Apple software decision offers another lesson for software sellers: license restrictions vs. competition

Author:  Tom Casagrande

The 9th Circuit recently offered additional clarity for software sellers about what kinds of license restrictions are permissible.  In short, even very strict restrictions are permissible as long as they do not, by their terms or in effect, prevent users from developing competing products.


Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011) concerned Apple’s claim that Psystar infringed Apple’s copyright when it bought Apple MAC OS X operating system software, imaged it on to non-Apple computers, and then sold the computers.  Psystar’s activities violated a restriction in the license Apple purported to grant purchasers at the point of sale, which prohibited “licensees” of the software from using the system on non-Apple computers. 


Psystar argued that this restriction was either inapplicable or invalid.  Specifically, Psystar first argued that the transaction was a sale and, as such, first sale doctrine precluded Apple’s attempt to restrict how Psystar used the software.  In the alternative, Psystar argued that even if the transaction was license, the use restriction constituted misuse of Apple’s copyright. 

The 9th Circuit noted held that Apple validly structured the transaction as a license and not a simple sale.  Invoking its recent discussion of the sale/license issue in Vernor v. Autodesk, Inc., 621 F.3d 1102, 1111 (9th Cir. 2010), the court noted that the document accompanying the purchase contained the three earmarks of a license:  (1) it stated that it was a license and not a sale; (2) it contained significant transfer restrictions; and (3) it contained significant use restrictions.  First sale doctrine therefore did not immunize Psystar’s activities.

Nor did the restrictions in the license amount to copyright misuse, because they reasonably restricted use of the software but did not prevent the development of competing products.  The court distinguished decisions in cases where similar types of restrictions on the types of products with which software could be used effectively made it impossible for users to develop competing software.

Protection under the Copyright Fashion Bill (ID3PA)

Author:  Jason Nardiello

The Innovative Design Protection and Piracy Prevention Act (HR.2511, formerly the IDPPPA, now called the ID3PA) is a proposed amendment to the Copyright Act. The bill (which I will refer to as the “Fashion Bill”) is now in its fourth version and if it passes, it will be the most significant law for both the apparel design industry and individual designers.

The aim of the Fashion Bill is to address a “loophole” in current IP protection for apparel. Under current copyright law, companies engaged in the wholesale copying of apparel--essentially pirates--do so with little threat of liability. This is the result of years of judicial decisions which, in the aggregate, now provide a substantial degree of immunity from copyright infringement for apparel copyists. In contrast, copying literature or music to the extent that apparel is currently copied would certainly be considered unlawful under copyright law.

On July 15, 2011 Congress again heard testimony in support of the passage of the Fashion Bill, which seeks to address this gap in the protection of apparel. The testimony and supporting documents can be found here.

Apparel protected under the Fashion Bill

To be subject to protection, the article of apparel must be new and novel. The types of apparel protected are:

•  men’s, women’s or children’s clothing

•  underwear

•  outerwear

•  accessories (gloves, footwear, headgear, handbags, purses, wallets, duffel bags, suitcases, tote bags, and belts)

How protection is obtained under the Fashion Bill

In order to be protected under the Act, the article must be created after the enactment of the Fashion Bill.

Further, although registration is not required, design owners must include a notification on the article’s label along with the year and owner’s name.

What is not protected

•  Designs more than 3 years old, measured from the time the design is made public

•  Designs created prior to the enactment of the Fashion Bill

•  Designs that are “substantially identical” to a protected design

•  An advertisement, book, periodical, newspaper, photograph, broadcast or motion picture of an article of apparel (if you photograph a dress that is a protected design, the photograph would not infringe the Fashion Bill)

Other features of the Fashion Bill and some thoughts

To address objections that earlier proposed versions of the Fashion Bill were too protective of leading designers and would hinder competition, proponents of the Bill agreed to inclusion of the narrower “substantially identical” standard for infringement, which both advances the agenda of stopping pirates while still permitting “inspired by” designs . Under this standard, only a true copy would likely be actionable under the Fashion Bill.  For instance, companies such as Forever 21, which do not hide the fact that they copy hit designers and sell the clothing at a fraction of the original price of the authentic article, would likely find themselves in violation of the Fashion Bill, should it pass. Can you tell which dress is the original created by top designer, Jonathan Saunders and which is the one coped by Forever 21?

Here’s a hint: The dress on the right was offered for sale for $22.80 while the one on the left sold for over $1000. This kind of “reproduction” would probably not be considered merely “inspired by” but rather a substantially identical copy of a protected design.

If the Fashion Bill finally becomes law, the two biggest battle grounds for litigation will likely be centered on (1) what constitutes “substantially identical” and (2) what design is considered “new” or “novel” sufficient to trigger protection.

Through the author’s contact with general counsel of some luxury goods companies, future articles will discuss how some proponents of the Fashion Bill view “substantially identical” and “new” or “novel” under the Act. You may be surprised.