I love shoes. I really do. I am quite famous for my fabulous shoes around the office. I also love talking about economic damages (yes, I realize that’s a little geeky). BUT a new case that’s brewing between Christian Louboutin and Yves Saint Laurent has brought my two passions together.
Christian Louboutin (famous shoe maker known for its red soled shoes) has sued Yves Saint Laurent (YSL) for infringing on Louboutin’s 2008 copyright of its red soled shoes by introducing red soled shoes of their own.
Louboutin made their mark in iconic shows like Sex in the City and the little flash of red as a celebrity walked down the carpet letting you know that they were wearing Louboutins. Last week, in the latest phase of the lawsuit, a Manhattan federal judge denied Louboutin a preliminary injunction against YSL, which will allow YSL to continue to sell red-soled shoes.
The judge wrote that placing restriction on a single shade could limit art and commerce…“Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection, even if it has gained enough public recognition in the market to have acquired secondary meaning.”
From a damages perspective the denial of the injunction and the lawsuit itself raises some very interesting issues:
- Typically trademark cases don’t make it to the damages phase. Most file for preliminary injunctions (as Louboutin did) and so damages don’t have time to occur if the preliminary injunction is granted. However, in this case, because the injunction was not granted (at least not initially) damages could be an element.
- If damages do become an issue, monetary relief may be available from (1) Defendant’s profits (2) Plaintiff’s lost profits (3) Plaintiff’s reasonable royalty or (4) Cost of the action (which may not be insignificant).
- Louboutin must only prove gross sales and then it is the infringer’s (YSL’s) burden to prove the following:
- Under the Federal Lanham Act, it is the infringer’s burden to prove what, if any portion of the total profits were not generated due to the use of the infringing mark. In other words, if YSL sells these red soled shoes, it will be up to YSL to prove that the shoes sold not because of the red soles, but because of some other trait (i.e. the YSL brand, the style of the shoe etc…)
- YSL will also bear the burden of proving any deductions or costs from the gross sales.
- Louboutin’s damages can also be measured by their profits lost to YSL because of the alleged infringement. Louboutin may be able to prove this by showing difference in the sales and profits before and after the alleged infringement occurred.
- In this instance, YSL could introduce evidence that the entire decline in sales was not due to YSL’s infringement (there were outside factors involved).
Stay tuned as this case progresses…It will surely keep you on your toes.