Katie Graham is an IPilogue Writer and a 2L JD Candidate at Osgoode Hall Law School.

On December 26, 2022, the Japanese IP High Court dismissed an appeal from Christian Louboutin (“Louboutin”), a shoe designer known for its iconic red-bottom heels, in its action against Japanese shoe designer, Eizo Collection Co., Ltd. (“Eizo”), to shut down Eizo’s use of red soles on high-heeled shoes.

In May 2019, Louboutin sued Eizo under the Unfair Competition Prevention Law, seeking a permanent injunction against Eiko’s production of red-soled high heels and damages of approximately CAD 43,500. The Tokyo District Court ruled against Louboutin by finding red soles insufficient as a source indicator, and that the likelihood of confusion among consumers is therefore low. The IP High Court affirmed the judgment and placed particular emphasis on the to assess the likelihood of confusion:

1. The relevant consumers in the Japanese shoe market (women from their 20s to 50s) are likely to try on multiple shoes before purchasing ones that fit in a physical store;
2. The market can be divided into three categories: (i) luxury brand products, (ii) affordable brand products, and (iii) inexpensive no-name products;
3. The shoes in question, as well as most high-heeled shoes, bear a brand name or logo on the insole so that consumers can distinguish between trade sources; and
4. E-commerce websites post images of ladies’ shoes and identify the trade source for the respective goods in advertisements ().

While Louboutin’s products retail for and over and fall within the luxury brand market, Eizo’s shoes occupy the affordable or no-name brand markets, with an average retail price of JPY17,000 ($130). As such, the court ruled that, despite the resemblance of the colour of Louboutin and Eiko’s outsoles, the likelihood of confusion amongst consumers is low since each company occupies a different position in the market.

Relying on the fact that Louboutin is not the exclusive supplier of red-soled high heels in Japan and only 51.6% of targeted women in their 20s to 50s residing in major Japanese cities recognized Louboutin at the sight of a red-soled high-shoe, the IP High Court Louboutin’s assertion of its remarkable reputation amongst consumers. The court also took with Louboutin’s market research. The 3,149 individuals surveyed were luxury retail shoppers and were only presented with Louboutin’s products, not Eizo’s.

This loss for Louboutin follows several years of from the Japan Patent Office (JPO) and JPO Appeal Board to register its trademark for a colour mark consisting of a red (Pantone 18-1663TP) coloured in soles for use in high heels filed on April 1, 2015 (TM App no. ). In April 2015, Japan opened the gate for non-traditional trademarks, including colour, sound, and motion . As of November 2020, however, the JPO only registered out of 543 applications for colour marks. The JPO based on Article 3(1)(iii) of the Japan Trademark Law, stating that Louboutin’s colour mark lacks distinctiveness to be deemed as an indicator of source for Louboutin in the Japanese market.

(Alt Text: EIZO shoes with red soles; Source: ()

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Burberry has been trying to take control of this issue. Earlier this year, Burberry Limited (US) and Burberry Limited (UK) filed a complaint against Target Brands Inc. for “offering for sale and selling various products featuring the BURBERRY CHECK Trademark or confusingly similar variants.” They claim these actions are “willful, intentional, and damaging to Burberry.” [1]

Burberry builds their image of luxury by pricing their items appropriately and ensuring that they are exclusive and coveted. Target’s designs included scarves of at least five different colour variations, eyewear, luggage, and bottles at much cheaper prices. In their original lawsuit, Burberry claimed Target had committed trademark counterfeiting as described in Sections 32 and 43(c)of the . Introduced in 1946, the Lanham Act protects owners of registered trademarks from the use of similar marks that result in “consumer confusion” or “dilution” of a mark. Additionally, Burberry referenced , claiming that Target’s actions “affected the public interest of New 91��ɫ and have resulted in injury to consumers in New 91��ɫ” and damaged Burberry’s business reputation. Finally, Burberry claimed trademark infringement and unfair competition under the common law of the State of New 91��ɫ. Burberry sought $2 million dollars for each trademark violation and additional damages in an undetermined amount. The case was  this past fall after the parties settled the trademark dispute. Although the specific terms of the settlement were not released publicly, it seems likely that Target agreed to cease production and sale of the specific items and paid Burberry for violating their trademark. Burberry had also filed against JC Penney for similar infringements but  the case.

In their , Burberry’s independent auditors’ report stated the company’s need to assess the number of items that are “ultimately destroyed or sold below cost.” In 2018, a whopping 28.6 million pounds worth of merchandise and 10.4 million pounds worth of beauty inventory were destroyed. This was done to ensure that these products would not be sold significantly below retail price or sold off-market.

Historically, it has been extraordinarily difficult to trademark fashion items because often the items serve a . To become recognizable and distinctive, brands must establish a reputation for producing a specific design over time exclusively. In Canada, trade dress can be protected under the if the “distinguishing guise” is recognizable to the public and associated with a specific brand. However, a company can only register a distinguishable guise once it is recognizable by the public, and it is their responsibility to prove its distinctiveness. Similarly, in the United States, trade dress constitutes a “symbol” or “device” under the and has been expanded to cover not only the packaging of a product or good but also the overall design and product’s features. According to the , the examining attorney must separately consider functionality and distinctiveness in determining whether a trade dress can be registered.

With some retailers, such as Forever 21 and Zara, selling numerous clothing pieces that are similar to designer items, it has become easy for consumers to purchase affordable versions of expensive designs. With Zara’s ability to produce an item from a runway show in less than two weeks, it has become the go-to place for consumers to find current fashion trends and goods disconcertingly similar to designer items. Although Zara has been sued numerous times by indie artists, small businesses, and well-known designers alike, the success of their claims has been varied due to differing levels of the distinctiveness of their designs. For this reason, large retailers have gotten away with producing items “inspired” by other brands on a regular basis.

Often, it can be difficult to determine the precise boundary between trade dress or trademark infringement and drawing inspiration from other designers. What is clear, however, is that brands such as Burberry will continue to fight to protect their designs and their brand. While these actions can only be taken retroactively, it is ultimately up to consumers to voice their opinions with their purchase decisions.

Written by Lauren Chan, IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

��1����Burberry Limited (UK) et al v. Target Corporation et al, 1:2018-cv-03946 (SDNY)

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