Saturday, May 31, 2008

Louis Vuitton loses, verily

Louis Vuitton Malletier v. Dooney & Bourke, Inc., SDNY (May 30, 2008) – thanks to Sarah Trombley for the copy of the opinion.

In the latest ruling in this “seemingly endless and often contentious litigation,” the district court ruled once again in favor of D&B on LV’s claim that DB infringed and diluted its multicolor trade dress. (Other phrases from the intro: “shamefully long,” “painfully thin distinctions,” “immature posturing.” Also, Susan Scafidi will presumably be interested to see that the court uses “fashionista” as a noun not requiring any definition.)

LV’s Multicolore bags earned it $145 million in the US as of November 2006, while D&B’s multicolored “It Bags” earned $100 million. LV sued D&B; the court denied relief, but the Second Circuit reversed, holding that it had been error for the court to subject the marks to a side-by-side comparison. Notably, the court appointed special masters to deal with the large volume of expert testimony, and adopted the special masters’ report and recommendations with some modifications.

Because LV sought damages and began the suit in 2004, the court applied the FTDA standards (requiring proof of actual dilution, and, under Second Circuit precedent, both inherent and acquired distinctiveness for fame) rather than the newer TDRA standards.

The court expressed some exasperation that LV continued to tinker with its definition of the mark at issue (a classic problem in trade dress litigation, though also a classic benefit to the plaintiff in terms of tailoring the definition to what the defendant did). The court defined the mark as the LV monogram in 33 colors set against a white or black background. The Second Circuit had already held that the mark is inherently distinctive and has secondary meaning. (I would have thought this was product design, since the mark is a repeated pattern that’s inseparable from the product being sold, and Wal-Mart seems on point. That is, LV isn’t really complaining about a single use of the DB monogram in LV-like colors; its objection is precisely that the whole handbag is covered with monograms, so this isn’t an ordinary case in which a mark is affixed once or in a couple of places to the product. Rather, the design as a whole is what consumers recognize. Sounds like trade dress to me. However, the parties apparently agreed that this was not a trade dress case—and I can see why D&B, a trademark owner with its own powerful interests in enhanced fashion protection, would go along with that.)

In any event, despite strength and proximity favoring LV, D&B prevailed. On similarity, there was no evidence that the similarity was enough to cause a likelihood of confusion among ordinary consumers, whether through initial interest, pre-sale, post-sale, or at sale. The differences between the marks are memorable enough to dispel any likely confusion. The different monograms, and their different positions on the bags, particularly the LV bags’ use of geometric shapes as well as letters, distinguish the bags even “from a distince, in a store window, from across a room, from a passing car,” etc. While all LV monograms use the same color for both letters, the D&B monogram uses different colors. D&B creates a “softer, unfocused” effect, while LV uses “crisp, bold, individual colors that appear more as a collection of distinct colors.”

LV claimed that it had actual confusion evidence; D&B replied that LV had failed to produce a single actually confused consumer, and that after 4 years and hundreds of millions of dollars in sales, such an absence pointed towards no likelihood of confusion. The court agreed with D&B. A “very generous[]” reading of the evidence revealed de minimis confusion at best. Rather, what the evidence suggested was that D&B’s bags were capable of calling LV bags to mind. One young girl, for example, reportedly held her D&B bag up to a LV display and said, “Look, my bag looks almost identical to the Louis Vuitton!” (As smoking guns go, it’s no “Chicken step on Barney.”) The court held that the fact that consumers thought D&B copied LV favored D&B, because it showed that they were distinguishing the two sources. LV may hate being associated with D&B, but association isn’t confusion.

The next key factor was intent. The court had previously found no deliberate fraud by D&B, but LV argued that there was bad faith, including in the creation of a fake “waiting list” for It Bags imitating the actual waiting list for LV Multicolore bags. In addition, LV submitted expert testimony that 6 of the 7 DB monogram colors were similar to LV colors, which allegedly showed bad faith because of the thousands of possible colors D&B might have used. Awareness of the plaintiff’s mark isn’t bad faith if there’s no evidence of intent to deceive. The court held that, while the evidence was thin, a jury could conclude that D&B was “inspired” by the LV mark; however, it went no further than that.

On consumer sophistication, D&B argued that its fashion-conscious consumers were likely to make clear brand distinctions. LV contended that this wouldn’t affect post-sale consumers, and that D&B’s It Bags were targeted at teenagers, who “are presumptively not sophisticated.” (Comment: Hah! The common denigration, in trademark law, of the sophistication of younger consumers just baffles me. The teens targeted by D&B may give out personal information on MySpace and Facebook inappropriately—they are certainly not “sophisticated” for all purposes—but they are board-certified forensic investigators when it comes to fashion.) The court said that it couldn’t “reasonably be disputed” that both parties’ consumers are sophisticated and discerning. In fact, they are “sophisticated, hyper fashion-conscious, and are not likely to be easily confused regardless of their youth.” Even if these factors are diminished in the post-sale context, most cases finding post-sale confusion involve counterfeits.

In the end, the factors pointed towards summary judgment for D&B. Mark strength plus product proximity couldn’t suffice when the other factors tilted against LV.

On dilution, Second Circuit precedent made clear that a dilution claim can’t succeed unless the marks are “very” or “substantially” similar. The differences discussed in the confusion analysis made the marks too dissimilar for a dilution finding, as well. Nonetheless, and doubtless anticipating yet another appeal, the court reviewed the other elements of a FTDA claim. Though LV established fame as of the time D&B entered the market, LV’s evidence of actual dilution was still insufficient as a matter of law. Moseley was clear that evidence of mental association—which was present—was not sufficient to show actual dilution. There was no evidence of impact on the ability of the LV mark to identify and distinguish LV’s products; in fact, much of the evidence of association suggested that consumers thought less of D&B for copying. LV’s market share has only grown since the It Bags were introduced.

As for state dilution, LV’s mark was distinctive, but, using the Mead Data six-factor test for blurring under state law, no reasonable juror could find a likelihood of dilution. Dissimilarity, again, was key. Consumer sophistication favored D&B. Though there was some evidence of intent to associate the D&B bags with LV, that evidence was de minimis and insufficient to outweigh the other key factors. Here, product proximity and renown of the senior mark, while favoring LV, were also insufficient. Renown of the senior mark is only important to the extent that there’s similarity between the marks. No amount of fame can create actionable dilution in itself; fame can lead to dominance in a category, so that people will almost always think of Coke when they think of soda, and even when they think of Pepsi—but that doesn’t mean that Pepsi dilutes Coke.

1 comment:

F Torres said...

Timely post, Congratulations!

What this case also brings to the fore is the imperfect, if any, IP protection available in the fashion/apparel industry.

And, as the elaborate trademark definitions illustrate, IP owners face quite a challenge in differentiating the non-functional, protectable, essence of the trademark asset.