A recent decision from the federal appeals court in Louis Vuitton's lawsuit against Dooney & Bourke offers some lessons about protecting intellectual property in accessories design. The Court of Appeals for the Second Circuit reversed a decision that had denied trademark protection and a preliminary injunction to the celebrated Vuitton Murakami handbag. While the appeals court ruled in Louis Vuitton's favor in some respects, its decision also underscored what had been the difficulty of proving dilution claims under federal law, prior to a legislative amendment last month (see below).

Background

Vuitton enjoyed great success with the introduction in 2002 of its Monogram Multicolore handbags. The design was an updated version of a registered trademarked design (the "Toile Monogram," with entwined letters "L" and "V" in three motifs), coupled with the use of 33 vivid colors against a white or black background, created by Takashi Murakami. Vuitton sold 70,000 Multicolore bags worth $40 million by 2004. In 2001, defendant Dooney & Bourke began selling handbags with interlocking "D" and "B" initials at much lower price points. Beginning in the summer of 2003, D&B brought out the "It-Bag," using the D&B monogram in various bright colors against white, black and other backgrounds, also at a lower price point.

Vuitton sued D&B in federal court. But the trial court found there was no likelihood of confusion between the two sets of handbags, relying, in part, on a side-by-side visual comparison. It found no trademark infringement, rejected a number of other claims, and also denied Vuitton a preliminary injunction prohibiting the sale of D&B's "It-Bags."

The New Decision

First, the appellate court agreed that the Multicolore mark, which the court referred to as a "design [styled shapes and letters] plus color trademark," was a "strong" mark that was original and inherently distinctive and had acquired secondary meaning. Because the mark had not been registered with the Patent & Trademark Office (which would have given Vuitton the benefit of a presumption disfavoring D&B), the court analyzed the mark under Section 43(a) of the Lanham Act, which bars the use of words, symbols and devices that are likely to cause confusion as to the origin, sponsorship or approval of goods.

The appellate court rejected what it called the trial court's "inappropriately focusing on the similarity of the marks in a side-by-side comparison instead of when viewed sequentially in the context of the marketplace." The court also found that the trial court wrongly required Vuitton to show a "strong likelihood of success," when the proper standard for a preliminary injunction is simply a "likelihood of success" on the merits. The court sent the case back down to reassess the trademark claim (as well as the New York State law claims for trademark infringement, unfair competition and trademark dilution) and to weigh the appropriateness of a preliminary injunction.

Although the court ruled in Louis Vuitton's favor on a number of issues, the case is another reminder of the difficulty of proving dilution under the federal statute after the Supreme Court's 2003 Victoria’s Secret decision. Before passage of the Trademark Dilution Revision Act, only actual confusion would do the trick, and Louis Vuitton didn’t show it.

Three Lessons

1. Register, register, register. Although the Court of Appeals allowed Vuitton's trademark claim to proceed, life would have been much simpler if the design and colors combination had been federally registered.
2. More is not less – so protect more. The clever combination of design and color is what is found to be distinctive and source-identifying here. Had both elements not been included, it seems unlikely the claim would have prevailed.
3. Plan ahead. It's too late to think about intellectual property protection after you've created the next "must have" accessory. Treat the planning for protecting your most precious property as part of the design process.

The New Trademark Dilution Revision Act

This brand new federal statute overrules the Victoria's Secret requirement of actual confusion. The trademark owner need not wait for the barn to burn down to ask the Court to put out the fire, because § 43(c) of the Lanham Act now permits injunctive relief if a famous mark "is likely" to suffer dilution by blurring or tarnishment, "regardless of the presence or absence of actual or likely confusion, of competition, or an actual economic injury."

The statute clarifies that the protection applies not just to inherently distinctive marks (think Kodak or Xerox) but also to those which acquire distinctiveness (think Federal Express). Factors to be considered in deciding whether a mark is famous are set out, tweaking the previous law. Six factors are set out to help define dilution by blurring, but dilution by tarnishment is described only as "an association arising from the similarity" of the marks "that harms the reputation of the famous mark." Finally, the statute gives another reason to pursue a federal registration – it is a complete bar to a claim of dilution by blurring or tarnishment.

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