United States: Trademark Infringement In The Fashion World: Aesthetic Functionality And Other Defenses

Last Updated: September 14 2015
Article by Leonard N. Budow

It is a truism that a fashion company is nothing more than its brand, it is an identity affixed to clothing so the purchaser may adopt by osmosis the brand's genre.1 The brand, the trademark, encapsulates all of the good will and secondary meaning associated with apparel and accessories. Essentially the same garment produced and labeled from parallel, divergent sources will be perceived and priced accordingly. Moreover, the art of valuation goes beyond a multiple of EBITDA in the present or projected; it captures, or should capture, the intangible value represented by the trademark.

Since the trademark or brand is so core to a fashion company it is no wonder that prosecution of trademark claims2 is replete to the extent of its own parody.3 To effectively protect and enforce a company's true, bona fide and essential commercial rights without the speciousness of broad fire prosecutions incurring unnecessary legal costs and diversion of business efforts, it is important to have a familiarity with likely defenses to claims of confusion4 and therefore infringement.

Aesthetic Functionality is a key defense for a fashion brand against a trademark infringement claim due to design. There exist two types of functionality: utilitarian and aesthetic.

Very simply trademark protection cannot be granted for an item or product which is utilitarian that is inherently useful. Utilitarian functionality has three fundamental considerations:

  1. Whether the feature or aspect is essential for the product use;
  2. Does the feature impact cost and quality; and
  3. If the grant of a trademark would place newcomers or competitors at a commercial, in contradistinction to a reputational, disadvantage.5

If one is subject to claim of trademark infringement based upon a trademark which is functionally utilitarian, as determined by the factors set forth above, then such claim will fall. However, the more interesting defense for the fashion company accused of infringement is aesthetic functionality. To conceptualize this issue of aesthetic functionality it is best to ask whether the purported trademark identifies a source (a bona fide trademark) or the product (an invalid trademark). If the trademark places a competitor at a non-reputational commercial disadvantage then that trademark should not stand.6

The Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F. Supp. 2d 445, 447-48 (S.D.N.Y. 2011), often mischaracterized, is simply a dispute as to aesthetic functionality. The district court held against Christian Louboutin because its red outer sole served an aesthetic function which was vital for competition in the fashion industry. To claim exclusive use of the color red for outer soles would place competitors at a commercial, not reputational, disadvantage. So the Court reasoned Christian Louboutin was not entitled to trademark its outer red sole.

The Circuit Court reversed due to what it viewed as a misapplication of Qualitex v. Jacobson Products, 514 U.S. 159 (1995). The Court ruled that in Christian Louboutin S.A. v. Yves Saint Laurent America, Inc the red outer sole with a contrasting upper did serve to identify the source so the issue was reputational. While there was no aesthetic functionality defense to the Christian Louboutin red sole trademark, the court concluded that no confusion was likely to arise since Yves St Laurent used a monochromatic look and had no contrasting upper. In sum, Christian Louboutin had a valid trademark, was not aesthetically functional and the red sole did have secondary meaning, but factually there was no confusion, so no harm to Christian Louboutin.

The take away is that aesthetic functionality is laser like, fact specific. Is the design functional, i.e. is it essential for the function or affect costs and quality? If it is, then it is not a valid trademark. If the design is not functional then it still must show whether there would be an adverse effect upon competition. The purpose of the aesthetic functionality review is to ensure the integrity of the marketplace, avoiding the adverse impact of a trademark registration.

Aside from aesthetic functionality there are various other trademark infringement defenses perhaps not so relevant in fashion specific cases but nonetheless a staple in infringement cases. One can look to the Trademark Dilution Revision Act of 2006 ("Act") which encapsulated certain defenses theretofore recognized by the courts.7

The Act also adopted a fair use defense, meaning use of a trademark other than for designation of source for one's own goods and services. There are two prongs to the fair use defense: classic and nominative. The statutory provision states that fair use is "the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark . . . or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin."8 Classic fair use occurs when a junior user uses the existing trademark of another (1) as description of the junior user's goods (2) in good faith and (3) other than as a trademark.

Nominative Fair Use occurs when one refers to another brand for advertising, parody, commentary or news reporting.9 In Playboy Enterprises, Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002) the concept of nominative use was extended to identification of oneself when Ms. Welles used the trademark "Playmate of the Year" to identify her role in that capacity.

Other defenses against confusion claims include invalidity of the trademark. The most common claim for invalidity is prior use. In the United States use ordinarily trumps registration. So if a claim is made by a registrant of a trademark but it can be shown that another party made prior use of the trademark before the registrant, then the registrants claim will fail.10 Some other standard defenses to trademark infringement include fraud on the trademark office11, laches12 and unclean hands13.

There exists panoply of defenses to trademark infringement which expand as the claims for trademark effloresce. Before acquiescing to a random cease and desist, measure the trademark against the above defenses and push back.

Footnotes

1. See Fashion Brands by Mark Tungate (2012), Introduction, "You don't buy clothes, you buy an identity"

2. The provenance of trademark claims for confusion can be found in 15 U.S.C. § 1114 which states the holder of a registered trademark can file a trademark infringement claim against any person who, without the registered trademark holder's consent,...(4) where such use is likely to cause confusion, or to cause mistake, or to deceive.

3. See Under Armour is suing pretty much every company using the name 'Armor', The Washington Post, August 19, 2015.

4. Lack of confusion is the ultimate defense and is fact driven. Courts look to a variety of factors, namely, similarity of the overall impression as well as the goods and services, whether the trademark is strong, arbitrary or fanciful, or weak generic or descriptive (See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992), the existence of actual confusion, the intent of the junior party in using the mark, channels of distribution in the marketplace, sophistication or degree of care to be exercised by a consumer and possible bleed or expansion of product lines.

5. See Qualitex v. Jacobson Products, 514 U.S. 159 (1995)

6. See Tarfix Devices Inc. v Mktg Displays 532 US 23 (2001)

7. See 15 U.S.C. § 1125(c)(3) which states: (3) EXCLUSIONS—The following shall not be actionable as dilution by blurring or dilution by tarnishment under this subsection: (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person's own goods or services, including use in connection with— (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark

8. See 15 U.S.C. § 1115(b)(4)

9. See New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302 (9th Cir. 1992).

10. See Bauer Bros. LLC v Nike Inc. 2012 WL 1900047 (SD Cal. May 24, 2012)

11. See Bauer Bros. LLC v Nike Inc.

12. Precision instruments Mfg v Auto Maint Mach Co 324 US 806 (1945)

13. Chattanoga Mfg Inc. v Nike Inc. 301 F3rd 789 (7th Cir. 2002)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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