Suddenly, a red sole has become much more than the bottom of a shoe. The trademark of designer Christian Louboutin, his red soles are supposed to represent glamour, luxury and hidden status. Or, as stated by Mr. Louboutin, “A shoe has so much more to offer than just a walk.”
Agreeing, fashion house Yves Saint Laurent (YSL), designed its own line of luxury shoes with colored soles and wound up in a Manhattan courthouse. Louboutin claimed trademark infringement. Saying a red shoe sole is “ornamental and functional,” the court supported YSL.
In a TED talk, Johanna Blakley explains that a jacket and most other clothing cannot receive intellectual property protection because they are “utilitarian”. A logo on the jacket can be protected but not the jacket or shoe. Contrary to what I would have expected, she believes that the industry is helped by the absence of protection. Copying begets trends; copying stimulates innovation. The threat of copying makes people repeatedly move onward to newer, better, and more unique designs.
The Economic Lesson
Shoe designers compete in monopolistically competitive markets. The characteristics of monopolistic competition include many sellers with a similar product, sellers creating an individual, unique identity, and sellers having some control over price. The competitive behavior of beauty salons, supermarkets, and clothing manufacturers is also shaped by a monopolistically competitive market structure.
From most competitive to least competitive, the four basic competitive market structures are: perfect competition, monopolistic competition, oligopoly, monopoly.
An Economic Question: In a monopolistically competitive market, why have Louboutin’s red soles been valuable?