The long-awaited Advocate General’s second opinion in Louboutin (C 163/16) was delivered in February. In a nutshell, Christian Louboutin sued Van Haren Schoenen BV for trade mark infringement in the Netherlands of its Benelux trade mark shown below:
Following Van Haren’s counterclaim that the above trade mark was invalid, the Dutch national court referred the case to the CJEU and asked for a preliminary ruling concerning the interpretation of Article 3(1)(e)(iii) of Directive 2008/95/EC. This provision provides for an absolute grounds refusal for signs which consist exclusively of the shape which gives substantial value to the goods.
Not surprisingly, the Advocate General’s second opinion and his evaluation of the notion of “substantial value to the goods” which is “given by the shape” within the meaning of said Article has received a lot of attention. The majority of the reactions have branded the opinion as being a setback for Louboutin.
In order to correct such misleading reports, Christian Louboutin, who originally did not want to comment on pending proceedings, issued a press release (content here), arguing that the opinion could in fact not be regarded as a defeat for its mark. Rather, “Applying Mr Szpunar’s opinion to our case supports the validity of our trademark since the shape of the outsole to which the red colour is applied is not intrinsically valuable.”
Indeed, the Advocate General’s opinion seems to support the validity of this mark: At paragraph 54, he explicitly stated that the reputation of the trade mark or its proprietor itself was not a decisive factor for giving “substantial value” to the goods. This statement indicates that – according to the Advocate General – the following test needs to be applied:
- If the red sole as such, namely the red sole intrinsically, gives substantial value to the shoe, the conditions of Article 3(e)(iii) are fulfilled.
- If, however, the substantial value results from Louboutin’s reputation / the trade mark’s reputation, the mark does not fall foul of Article 3(e)(iii).
By introducing this test, the Advocate General has not called into question the trade mark’s validity. On the contrary, applying this test, the answer seems to be that it is not the red sole itself that gives substantial value to the shoe. There is nothing about the colour red that would indicate or convey intrinsic value in relation to shoes. What gives the shoe value – market value as opposed to product value – is not the red sole by itself, but only the knowledge that it is Christian Louboutin who produces and offers red-soled shoes; in other words (merely) the proprietor’s reputation.
So why does the press find the opinion to be a setback for Louboutin? It is certainly not due to the legal test the Advocate General applied, but may stem from his reference to the national court view. At paragraph 13 of the opinion, the Advocate General states:
“The same goes for the answer to be given to the question whether the red colour of the sole gives substantial value to the goods. It appears to me that the referring court’s position is clear on that point, and that it is proceeding on the assumption that that question must be answered in the affirmative.”
As such, the Advocate General seems to believe that the Dutch national court has already come to the conclusion that the mark falls under the scope of Article 3(1)(e)(iii) and that it fulfils the requirement of that ground for refusal.
Keeping in mind that only the Dutch national court is competent and has jurisdiction to decide on the validity of the trade mark, this statement of the Advocate General may be assessed as a setback for Louboutin. Whether it is or not depends on the Dutch national court’s assessment of the origin of any “substantial value” they identify. If the court follows the Advocate General’s test and decides that the value originates from the shape’s red colour alone then it is bad news for Louboutin. If however, the court assesses that all value originates from Louboutin’s reputation for red-soled shoes then, as he claims, it is good news.