August’s Notable Hirings, Firings & Promotions

August 31st, 2011

Richard Palmese is leaving his post as EVP of Promotion at RCA Music GroupTom Corson, another longtime executive there, was named the label group’s president and chief operating officer.

David Bohrman, the former chief of CNNs Washington bureau, is now the president of Current TV.

David Foster will soon lead UMG-owned Verve Music Group.  He is expected to focus the label’s roster on adult contemporary music.

Rob Stevenson joins Universal Republic as Executive VP of A&R, reporting into CEO Monte Lipman and COO Avery Lipman.

Peter Edge has been named CEO of RCA Music Group, the umbrella group of RCA, J, Arista, and Jive.

RIAA president Mitch Bainwol has officially stepped down, moving away from the music industry to the position of chief executive at the Alliance of Automobile Manufacturers.  Replacing Bainwol as chairman and chief executive will be Cary Sherman, the organization’s president since 2001.

Pandora named Steven Kritzman as Senior Vice President of Advertising Sales.

The Orchard has taken on former Random House executive Peter McCarthy as SVP of Marketing.

Philip Ginthör is now CEO of Sony Music Entertainment GSA (Germany, Switzerland and Austria).

Edgar Berger has been named President & CEO of International at Sony Music Entertainment.

Don Was is now Chief Creative Officer at EMI-owned Blue Note Records.

Ethiopia Habtemariam, an influential young executive from Universal’s music publishing arm, has been named Motown’s senior vice president.

Stephen White is the new President of Gracenote.

Clear Channel Radio promoted Tom Poleman to President of Clear Channel National Programming Platforms and moved  Michele Laven to EVP of Strategic Partnerships.

Eric Dingman was ousted from his role as leader of Classics at EMIDavid Kassler will become the Chairman of Classics and Amanda Cupples will function as the Chief Operating Officer for the Global Classics business, focusing on strategy development and global coordination.

TAG Strategic has just named Jeff Becker as VP Social Media and Brand Marketing.

Bruno Mars manager Brandon Creed is now an A&R consultant for Universal Republic and Island Def Jam Motown, reporting into group chairman Barry Weiss.

More changes at Island Def Jam with layoffs including Garrett Schaefer (Bon Jovi, M Etheridge, Taio Cruz), Paul Resta (The Killers, Neon Trees, Noel Gallagher, Portishead, Noah and the Whale, Jon McHugh (head of Film/TV), JP Robinson (head of Creative) Sam Dailey (head of Phys Retail) and 30+ staffers.

Shortly following the layoffs at Island Def Jam, Sony Music Entertainment cut an estimated 25 employees, including Larry Kanusher (senior VP of business and legal affairs for global digital business), Tom Glaser (VP of sales and marketing research), and Linda Ury Greenberg (VP of consumer research).

Edgar Bronfman, Jr. is now Chairman of the freshly-acquired Warner Music Group, while Stephen Cooper will take on Bronfman’s former position of CEO.

And some news in lawyer-land…The Directors Guild has moved David Dreyfus from associate general counsel. Tiffanie Baker has been promoted to assistant general counsel to fill his spot. The moves come a few days after the guild’s Russ Hollander, David Korduner and Bryan Unger were promoted to associate national executive directors.

Steve Jobs has resigned as Apple CEO.  He will remain a chairman of the company. Tim Cook is taking over the CEO position.

NARM appointed five new board members.  They are: Christina Calio (Director, Relationships and Strategy, Media and Entertainment Group, Interactive Entertainment Business, Microsoft); Michael Davis (President; Alliance Entertainment Corporation); Adam Klein (President & CEO, eMusic); David Krinsky (Head of Label Relations & Business Development, Rhapsody); and Alyssa Vescio (Senior Buyer/Music & Digital Entertainment; Target).

Universal Music Group named Andrew Kronfeld as its first President of Global Marketing, reporting to Max Hole, COO of Universal Music Group International.

CMT named Leslie Fram Senior Vice President of Music Strategy.

Rightsflow promoted Michael Kauffman to Senior Vice President of Corporate Communications and Content, and Chris Lydle to Vice President of Sales and Marketing.

Termination Rights Explained

August 30th, 2011

The subject of copyright “termination rights” has been a recent focus of the New York Times, The Hollywood Reporter, Billboard, and countless other news sources, as artists are beginning to reclaim their copyright interest in sound recordings owned by record labels.  In this post, I’m going to attempt to clearly explain the concept and structure of the Copyright Act’s “termination clause” as well as discuss various issues and arguments that both sides (labels and artists) are making to support or counter the provision.  Even though I mostly discuss the provision as it applies to sound recordings and record labels, as that is the most ambiguous area of this law currently, it is important to realize that the termination rights also apply to other copyright protected works, such as musical compositions (i.e., this will be an issue for music publishing companies too).

§ 203 of the US Copyright Act: The “Termination Clause”

The 1976 US Copyright Act § 203 provides that any license or transfer of copyright or any right under copyright executed by the author after January 1, 1978 may be terminated after 35 years of the date of the license or transfer (or 40 years in certain circumstances) as long as the termination is done within 5 years after the 35 year mark begins.   Authors must also give notice of their intent to terminate the license no less than 2 years and no more than 10 years before they intend to terminate the grant.  There is a provision also built in for grants executed before 1978, but the rules are a different and those terminations won’t come due until 2018 at the earliest date for the first notice, so in the interest of simplicity, I will not get into the details at this point.

If there are more than one authors of a copyrighted work, the termination can be effected if a majority of authors who granted the original license decide to terminate.  Significantly, the termination right does not apply to works made for hire (which I discuss more below).

As an example of how this would work, let’s say the copyright of a sound recording was exclusively transferred to a record label in 1978.  35 years later, in 2013, the author or joint-author of the original work (the artist, most likely, in this case) could terminate this grant and take back the copyright from the label.  Because there is a minimum notice requirement of two years and a maximum of ten years, the author(s) can first give notice to the label in 2003.  There is a five year window within which the grant must be terminated (i.e., 2018 here), so the latest to give notice would be 2016.

Why are there termination rights in the first place?

The Copyright Act has gone through a number of versions, the most recent being the 1976 Act.  The 1909 Copyright Act had completely different term provisions for copyright.  The initial term of copyright protection was 28 years, and this protection could be renewed for an additional 28 year period, making the total 56 years.  An important feature of the renewal term was that even if an author had assigned all of his rights to a publisher or somebody else during the first term, the author would reacquire those rights at the beginning of the renewal term.  This renewal copyright would allow authors to renegotiate terms of licenses so they could better benefit from and get a larger share in the success of their careers.  Even at this stage in copyright law, one exception to this renewal period was for works made for hire.

The 1976 Act got rid of this two-term copyright protection structure, in its place imposing a single term of life of the author plus 50 years (later amended to 70 years in 1998) in most cases (there are exceptions where the term is different).  The amendment did not seek to abandon the ability of authors to regain control of their work after a given time period, so the termination provision was drafted.

The Labels’ Arguments…

As artists are now trying to reclaim their copyright interests in sound recordings, the labels are using two primary arguments to protect their interests in the sound recordings: (1) that the recordings are work for hires created by the artists for the label, and (2) that the artist is not the only author of the recording.

The Work for Hire Issue

Traditional record contracts almost always provide that the recordings made by the artist under the agreements are works made for hire.  Then, because (as I’ll get into below) sound recordings may not as a matter of law be able to be included under the work-for-hire umbrella, the contract provides that in the event the recordings are not deemed to be works made for hire under the copyright act, the artist assigns his or her copyright interest in the recordings to the record label.  It seems like these two sentences accomplish the same thing, but for purpose of the termination clause, the effect of the language makes all of the difference.  If the recordings are in fact works made for hire, the record company owns them and the artist never had a copyright interest to transfer; however, if the recordings were assigned by the artist, this would be a transfer for purposes of the termination clause and the artist could reclaim ownership and control over the copyrights 35 years later.

I think I got a little ahead of myself, so let’s take a step back to the basics of the work made for hire.

§ 201(b) of the Copyright Act provides the following:

Works Made for Hire. — In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

I’m sure you can already see the issue starting to unfold.  If a work is made for hire, the author who actually created it has no interest in the copyright or work, the employer or commissioner is considered the author for purposes of copyright.

But what qualifies as works made for hire?

In the definitions portion of the Copyright Act, a “work made for hire” is defined as follows:

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, . . . as a compilation, . . . if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. …

Notice a word missing in part (2)?  You’ll see that “sound recording” is nowhere to be found.  Whereas motion picture and other a/v works are included, sound recordings are not expressly stated.  In 1999, the RIAA tried to quietly insert “sound recording” after “other audiovisual work” in the work for hire provision through The Satellite Home Viewer Improvement Act of 1999.  The addition was not related to the subject matter of the bill and was only added in later drafts.  The amendment was enacted by Congress and President Clinton without discussion or debate.  Once musicians caught wind of this significant change, their disapproval led to a brief hearing which led to Congress retroactively repealing the amendment.  One might think that by Congress removing the “sound recording” language from the Act, it is confirming that sound recordings are not works made for hire.  Not necessarily, the RIAA did get Congress to add language to the Copyright Act stating that no such presumption could be made, that the removal of the language did not express approval or disapproval or any other legal significance.

Even though sound recordings aren’t expressly included in the work made for hire definition, the record labels will likely argue that the recordings were commissioned as a “contribution to a collective work” as a “compilation”, the full album in this case.   The artist would contend that each individual recording is a distinct work protected by copyright and its use as part of an album is incidental.  Unfortunately, some contracts may have this “collective work” language expressly included, further weakening the artist’s argument.  However, the emerging dominance of digital distribution as the primary method for music sales has led to a weakening of the album format.  Single recordings can be (and very often are) purchased independently of the album, a clear sign that the recording does not just exist to serve the collective whole of the album.

A separate argument may exist for the labels as to whether the artist may be considered an employee of the label, acting within the scope of his or her employment when recording the songs.  The law of agency determines whether a person was acting as an “employee” for purposes of the work for hire doctrine.  Some factors to be considered are: (1) control by the employer over the work; (2) control by employer over the employee; and (3) status and conduct of employer (such as providing benefits to the employee or withholding taxes) (CCNV v. Reid).  Applying these factors to the case of artists as employees of the record label, it seems that the artist would not be considered an employee.  In many cases, record companies now simply provide funds at the “front-end,” and distribution at the “back-end,” of a sound recording’s production.  Outside of this involvement, the label itself does not usually take control over the artist or the work (although this may vary in cases), the artist is responsible for engaging musicians and the producer, the artist does not usually record the work at the label’s office, the label does not provide employee benefits for the artist, and in most cases the label does not withhold taxes.  The labels could argue that they do have some control over the creative work, final creative control, and approval rights for the budget; however, the argument could subject them to back  tax liability.

An interesting historical sidenote – one theory for why sound recordings were not expressly excluded as work for hires in earlier copyright acts was because in the 1960′s the labels exerted much more control over the production and recording of the album – from engaging in-house producers and musicians to owning the recordings studios.  Because of the employment relationship developed through these practices, the labels did not initially seek out inclusion of sound recordings in the work for hire definition.

Producer as Author

Another issue that complicates termination rights is that the artist may not be the only author of the recording.  The producer may be an author too.  Producers also sign work for hire agreements with record labels.  Although not true in every case, most producers contribute creatively to the project, making decisions about the sonic characteristics and artistic quality of the sound to be captured in the recording.  And further, what if the session musicians and recording engineers are contributing creatively in the recording process?  If the producer is deemed to be a “joint author” and had transferred his or her rights to the label in a separate document than the artist, the producer would have an independent basis to terminate the grant and regain copyright in the recording.  The label could still exploit the recording as long as at least one of the other joint authors had not terminated their grant of rights to the label.  This could get very messy because if one but not all of the authors chooses to terminate the original grant and then re-license to another company, there would be multiple “versions” of the same sound recording on the market competing with one another.

As a side issue – what about foreign artists who signed recording agreements? Does it make a difference if the agreement was signed abroad, but the recordings are distributed domestically? What about if they were signed here, but relate to international sales or sub-publishing/distribution agreements?

Moving Forward

There is currently a push in Washington from the House Judiciary Committee to amend the Copyright Act in order to clarify the ambiguities as to who can benefit from the termination provision and reclaim their copyrights. “For too long the work of musicians has been used to create enormous profits for record labels, radio stations and others, without fairly distributing these profits to the artists,” said Michigan Representative John Conyers Jr. who was chairman of the Committee until January.  “Copyrights are a tool to be used by creators to earn a living from their work,” so it is important to ensure “a fair marketplace.”  Unfortunately, the amendment process is likely going to be long and complicated.

In the meantime, lawsuits are looming over many record labels as artists are beginning to take action to reclaim their copyright interests.  An anonymous source disclosed to the New York Times his understanding that some of the major labels (he distinguished the indie labels’ approach to this matter) want to take these issues to court, regardless of the time or money spent, while others think that that approach would alienate artists and prevent a more favorable renegotiation of these agreements.

Artists Taking Action

What artists have (allegedly) begun taking action on these termination rights?

  • Victor Willis,  the cop in the Village People is seeking to regain control over a 35-set songlist that includes ‘Y.M.C.A.’ (note – this is for their publishing, the rights in the composition, rather than the master recording).
  • Steven Greenberg, writer of the disco classic “Funkytown.”
  • Bob Dylan
  • Tom Petty
  • Bryan Adams
  • Tom Waits
  • Kris Kristofferson
  • Loretta Lynn

References

In writing this article, I consulted the following resources (among those cited above).  These would make great further reading for anyone interested in the subject. [randomly ordered]


 

Court Upholds Strip Club Fee; Not Infringement on Free Speech

August 29th, 2011

Back in June, I wrote about a New York case brought by an adult entertainment establishment seeking to apply for a tax exemption because of the “arts performances” taking place at the restaurant (i.e., the strip dance).  The court in that case held that the adult dancing did not fall under the requirements of the statute sufficiently to qualify for the tax exemption.

On August 26, the Supreme Court in Texas released an opinion regarding a similar issue. The Court held that a fee imposed on nudie bars (i.e., any adult establishment with nude entertainment and alcohol consumption) did not violate the businesses’ rights to free speech.

A Texas statute, the Sexually Oriented Business Fee Act (287 S.W. 3d 852 (Texas 2009)), requires that any business offering live nude entertainment as well as the consumption of alcohol on its premises must pay a $5 fee per customer to the state comptroller.  One of these “sexually oriented businesses” sued the Attorney General for declaratory and injunctive relief, arguing that the fee violates the First Amendment’s guarantee of freedom of speech.

After discussing in detail the “essence” of the content of artistis expression using examples such as a “wet T-shirt contest,” the appellate court applied the strict scrutiny standard and affirmed the trial court’s holding that the statute does in fact violate the First Amendment.

Upon review, the Supreme Court reversed, instead holding that the fee does not violate the First Amendment.  “The fee in this case is clearly directed, not at expression in nude dancing, but at the secondary effects of nude dancing when alcohol is being consumed.  An adult entertainment business can avoid the fee altogether simply by not allowing alcohol to be consumed.  For these reasons, we conclude that the fee is not intended to suppress expression in nude dancing.”  After deciding that the fee was content neutral, it looked to the 4 factors of the O’Brien test, holding that the fee furthers the State’s important interest in reducing negative secondary effects of adult businesses and does not impose a greater burden than is essential to further this interest.

The Legality of LegalZoom

August 23rd, 2011

A Missouri class action filed in July against LegalZoom.com has settled right before heading to trial.

The suit alleged that LegalZoom’s sale of do-it-yourself wills, leases, and other contracts constitutes an illegal practice of law.  Missouri law bans non-lawyers from preparing legal documents, and many of LegalZoom’s employees are not lawyers.

Plaintiff’s counsel David Butsch made a statement last month to WSJ LawBlog:

The state licensure of attorneys was established to protect the public from those untrained and uneducated in the practice of law. [The preparation of wills and other legal documents] may seem simple to a layman, but they aren’t. There are consequences of signing a will . . .and those consequences can be great and they can’t be properly communicated by a company over the internet.

LegalZoom had made the point that by removing online contracts, acquiring basic legal forms will become much costlier for small businesses and individuals.

Does LegalZoom’s activity violate the Missouri statute?

We won’t find out from this case.  The settlement “does not involve a change or abridgement of Legal Zoom’s business practices in Missouri” but will compensate Missouri users of LegalZoom, including the 15,000 named class members.

Jerry Leiber, 1933 – 2011

August 22nd, 2011

Songwriter Jerry Leiber passed away today in Los Angeles at age 78 of cardiopulmonary failure.  Leiber, with his songwriting and production partner Mike Stoller, was responsible for numerous hit songs, including “Jailhouse Rock,” “Hound Dog,” “There Goes My Baby,” “Love Potion No. 9,” and “Stand by Me.”

Leiber was born in 1933 in Baltimore.  He first met Stoller in Los Angeles in 1950.  Their songwriting partnership garnered them two Grammy awards, seven Tony nominations for the musical revue of their work Smokey Joe’s Cafe, and induction into the Songwriters and Rock & Roll Halls of Fame.  In 2009, Simon & Schuster published Hound Dog: The Leiber & Stoller autobiography.  Leiber and Stoller’s songs were featured on American Idol on May 11, 2011.  Leiber is survived by his songs Jed, Oliver, and Jake.

A Tragic Week in Live Performance; Two Stages Collapsed, Lives Lost

August 21st, 2011

On August 13th, due to extreme winds, the stage at the Indiana State Fair collapsed, killing five and injuring around 40 people.  The confirmed deceased are Indiana residents Alina Bigjohny of Fort Wayne, Tammy Vandam of Wanatah, and Glenn Goodrich and Nathan Byrd of Indianapolis, as well as Christina Santiago of Chicago.

Sara Bareilles, who had performed just prior to the accident, has released the following statement:

The accident at the Indiana State Fair felt like a bad dream.  The weather changed in a matter of minutes and the stage collapsed in a matter of seconds. We are shocked and saddened by this horribly tragic circumstance and we are all praying for those affected.  The emergency response was incredibly speedy and the people of Indiana as well as the crews from the show were beyond brave and working hard to help each other.  My heart aches for the lives lost or injured as well as their families.  We will do whatever we possibly can to help heal the hurt from this very sad day.

State Officials update the media and public on the tragedy at the Indiana State Fair through a press conference the following day:

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Only five days later, another tragic accident occured at a live music festival, this time at Pukkelpop in Belgium, when a heavy storm uprooted a tree and slammed it into the main stage, causing its collapse.  Five are dead with over 50 people suffering injuries.

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Show Recap: Charlene Kaye, Quintus @ Rockwood Music Hall

August 19th, 2011

Last night, I had the pleasure of seeing Charlene Kaye play a last minute set at Rockwood Music Hall, Stage 1.  It was just Charlene on piano (and sometimes guitar) and a handful of special guests trickling on and off the stage.

Charlene’s new material is excellent, and I can’t wait to hear her new album.

One of the special guests was Darren Criss of Glee fame (he’s Kurt’s boyfriend Blaine on the show).

Here is a video of Charlene and Darren singing “Dress and Tie.”

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Later on in the evening, I returned to Rockwood to see the band Quintus.  I hadn’t seen them play for probably 5 years, and it was a really solid show.  I love seeing bands when its clear they’ve played together for years.  These guys love to play with each other, and it comes across through their music.  I loved their new tunes (well, new to me at least) and can’t wait to check out the recorded versions.

After Quintus, on the way out, I listened to about a song of the next band.  I’m watching them play and noticing that something is a little off.  See if you can spot in this video what makes this band different from all other rock bands (at least all that I’ve seen) – warning: spoiler after the video.

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Drumming with his BARE HANDS! Ouch! It hurts just watching it.

Completely Unrelated but.. How to Travel Around the World for $418

August 18th, 2011

Just a heads up, this post has absolutely nothing to do with law, music, or IP.

My iPhone recently “broke” (long explanation omitted here but thankfully it happened 3 days before my warranty was expiring).  While I was at the Apple store genius bar, I had a great chat about travel with my assigned genius.  She told me about a recent article she had read about a guy who booked an around the world plane ticket, with 15 different destinations on the itinerary, for $418.  Traveling is a huge passion of mine, so, of course, I was intrigued.

Basically, if you open credit cards linked to airline mileage perks, you can rack up a substantial amount of miles quickly.  No need to change spending style or live extravagantly.

Here is the article.  - http://gizmodo.com/5710654/how-to-fly-35000-miles-visit-4-continents-9-countries-and-15-cities-for-418

Read at your own risk.  You will definitely spend the next two hours on an airline alliances website planning out your journey, so if you have a lot on your plate today, I’d hold off on reading until the weekend.

My around the world adventure (if / when it ever actually happens) will take me down through South America, across to Austrailia, up to Jakarta and Bali, then through Singapore, Thailand, Vietnam (and I’ll do Laos and Cambodia while I’m there), a couple stops in China, Korea, ending in Japan, then back to NY.

Where would you go??

Vevo Partners with Rcrd Lbl

August 16th, 2011

Via Digital Music News

Most likely motivated by a desire to build up some indie cred, Vevo has finalized a content partnership with Rcrd Lbl.  The arrangement will consist of a featured Vevo video every Monday on the both the Vevo and Rcrd Lbl sites, in conjunction with a download of the track and/or remixes.

“With a high-quality video to view and a download to take along with you, it’s like a musical party with a downloadable goody bag that you can attend every Monday,” the company described the feature.  Musical party + goody bag sounds good to me!

The first feature is retro-indie-pop band the Cults’ track “Go Outside,” a clear departure for Vevo away from its most hit up videos (Jennifer Lopez, Nicki Minaj, Pitbull, Beyonce, etc).

Louboutin Loses to YSL; Red Sole not Trademark Protected

August 11th, 2011

As I mentioned in a previous post, Christian Louboutin sued Yves Saint Laurent in April, alleging that YSL’s use of red colored soles infringed Louboutin’s trademarked red sole.

The court yesterday denied Louboutin’s request to grant a preliminary injunction restricting YSL from marketing the shoes at issue during the pendency of the action.  The court held that Louboutin did not establish a likelihood of succeeding on the merits because 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.

Overview of the case is below; full opinion can be read here.

Background

The USPTO approved registration of Louboutin’s red sole mark in 2008.  In early 2011, Louboutin approached YSL about a number of shoes in YSL’s Cruise 2011 Collection that incorporated red soles of a shade that Louboutin thought closely resembled its trademark protected color mark.  YSL refused to remove the shoes from the market, so Louboutin filed suit against YSL for  federal claims of trademark infringement and counterfeiting, false designation of origin and unfair competition and trademark dilution, as well as state law claims for trademark infringement, trademark dilution, unfair competition and unlawful deceptive acts and practices. YSL then asserted counterclaims seeking cancellation of the Red Sole Mark on the grounds that it is not distinctive, ornamental, functional, and was secured by fraud on the PTO, as well as damages for tortious interference with business relations and unfair competition.

The issue at hand was whether, despite Louboutin’s “innovation” and widespread public association between the brand and the red sole, trademark protection should have been granted.

Discussion

To obtain a preliminary injunction, Louboutin must establish (1) irreparable harm and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair ground for litigation, plus a balance of the hardships tipping decidedly in [its favor].

The court looked to whether trademark infringement had occurred, first evaluating whether the mark at issue should be protected by trademark.  The registration of the red sole mark gives rise to a statutory presumption of protection; however, this presumption can be rebutted.  A color can be a protected trademark when it has acquired a secondary meaning associated with the brand, but it may not serve a function aside from being a brand identifier.  Specifically, when related to fashion, the court noted, “color serves not solely to identify sponsorship or source, but is used in designs primarily to advance expressive, ornamental and aesthetic purposes.”  Some color marks used in fashion have merited trademark protection, usually being a combination of colors in a distinctive pattern that identifies the brand (think Louis Vuitton or Burberry).

The court here addressed the narrow issue of whether a single color mark can be granted for use in the fashion industry.  By comparing fashion designers to painters, the court recognized the importance of the use of color in this specific industry and the role of color serving a creative, rather than commercial, purpose. “No one would argue that a painter should be barred from employing a color intended to convey a basic concept because another painter, while using that shade as an expressive feature of a similar work, also staked out a claim to it as a trademark in that context. If as a principle this proposition holds as applied to high art, it should extend with equal force to high fashion. The law should not countenance restraints that would interfere with creativity and stifle competition by one designer, while granting another a monopoly invested with the right to exclude use of an ornamental or functional medium necessary for freest and most productive artistic expression by all engaged in the same enterprise.”  Additionally, Louboutin himself acknowledges that the red sole serves nontrademark functions.  Specifically, it is “sexy,” “engaging” and “attracts men to women who wear [the] shoes.”  The court also found that granting of trademark protection over the mark would significantly hinder competition.  Hence, Louboutin could not prove a likelihood of success on the merits of the case, so the court denied the preliminary injunction.

Of note is the fact that the court did not actually find in favor of YSL because YSL had not brought a motion for summary judgment.  The court did note that if YSL had brought summary judgment, ”the Court’s conclusion that the Red Sole Mark is ornamental and functional in its fashion industry market would compel it to grant partial summary judgment in favor of YSL on YSL’s counterclaims seeking cancellation of Louboutin’s mark.”

The court did order all parties to appear at a “case management conference on August 17, 2011 at 2:00 p.m., at which Louboutin shall show cause why the record of this action as it now exists should not be converted into a motion for partial summary judgment cancelling Louboutin’s trademark at issue here for the reasons stated in the Court’s decision above.”