The legal battle in a New York court pitted two fashion leaders in a bitter contest for what Louboutin said was the soul of its extravagantly expensive shoes -- the signature scarlet outsole.
In federal court, US District Judge Victor Marrero ruled that Louboutin -- even if widely recognized for its trailblazing use of red under the shoe -- could not stop competitors like YSL from doing the same thing.
"Because in the fashion industry color serves ornamental and aesthetic functions vital to robust competition, the court finds that Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection," said Marrero, who revealed himself as an ardent admirer of the sexy slip-ons.
The million-dollar suit for "trademark infringement, unfair competition and false designation of origin" was filed in April in New York claiming that a series of YSL shoes would mislead consumers familiar with Louboutin's scarlet soles.
An attorney for Louboutin told AFP he was "profoundly disappointed."
"Even though the judge agreed that Louboutin's red sole mark was famous and well known, he appears to have concluded 'sua sponte' that in the fashion industry one ought not be able to use a single color as a trademark," Harley Lewin added.
"We are currently evaluating all alternatives."
Louboutin's glam footwear was featured on the consumer-worshipping television series "Sex and the City" and sells about 240,000 pairs each year in the United States alone, with revenues of about $135 million.
A pair typically costs hundreds of dollars, but can sell for far more, with the Maggie Leopard-Toe Pump, complete with red-lacquered under soles, listed at $1,095 in the Neiman Marcus department store.
Peppering his ruling with references to sources as diverse as pop star Jennifer Lopez and poet Walt Whitman, Marrero acknowledged Christian Louboutin's "bright idea."
Louboutin's "bold divergence from the worn path paid its dividends," he said.
The judge even waxed lyrically about the sheer appeal of the shoes.
"When Hollywood starlets cross red carpets and high fashion models strut runways and heads turn and eyes drop to the celebrities' feet, lacquered red outsoles on high-heeled, black shoes flaunt a glamorous statement that pops out at once," he wrote.
But allowing the color red to be trademarked was a step too far -- even for shoes that good, ruled Marrero.
"Awarding one participant in the designer shoe market a monopoly on the color red would impermissibly hinder competition among other participants. YSL has various reasons for seeking to use red on its outsoles."
YSL's spat with Louboutin was over four shoes from the fashion house's 2011 Cruise collection: the Tribute, Tribtoo, Palais and Woodstock models. They all have red outsoles.
However, YSL says it has featured red soles all the way back to the 1970s.
As for Christian Louboutin's claim to a breakthrough in fashion design, YSL is scornful.
The idea for red soles was "copied from King Louis XIV's red-heeled dancing shoes or Dorothy's famous ruby slippers in 'The Wizard of Oz,'" Judge Marrero quoted YSL as saying.
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